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Alejandro Cremades
When startup metrics match, investors use added benchmarks to evaluate what makes one founder more investable. Investors come across several investment opportunities each week with similar growth rates, retention rates, revenue, market sizes, and business models.
Every founder has faced this situation at some point when funding deals collapse right before the finish line. You may have secured that elusive term sheet and successfully navigated the hurdles of due diligence. Everything seems to be going well—until it suddenly doesn’t. Months of work wasted.
Ironically, pattern recognition traps can cause investors to miss great companies. After viewing dozens of pitches each week, venture capital (VC) representatives invariably develop mental pathways to quickly identify potential winners. But this mindset also creates blind spots.
Why investor interest suddenly accelerates after months of silence is a question that often perplexes founders. You might have delivered the perfect pitch, and follow-up meetings may have ended on a positive note. Then you find yourself waiting for months for a term sheet that never appears.
Contrary to what most founders think, three meetings quietly decide most fundraising outcomes. Typically, they assume that a fundraising initiative is won or lost during the first meeting with potential investors. However, conviction is gradually built over at least three meetings—sequentially.
Your nervousness before entering the presentation room isn’t one of the founder red flags investors detect during the first meeting. Instead, other signals can undermine their conviction well before due diligence.
Investors don’t just invest in startups based on pitch decks; they evaluate 10 risks behind every investment decision. When reviewing the deck, they’re looking for opportunities with the least risk. Most founders believe investors are searching for reasons to invest.
Why some startups get term sheets faster is entirely about how founders shape investor conviction by tapping into their psychology. Experience teaches founders that fundraising is not just about delivering information; it’s about creating conviction in the audience’s minds.
The core market sizing aspects that most founders overlook, such as QTAM and QSAM, are actually what investors focus on. When reviewing the pitch, they want to know: "How big can this company potentially become?" And, next, “Is this company capable of delivering venture-scale returns?”
When drafting your pitch, you’ll focus on answering the core 50 questions investors are quietly asking. Experienced founders are well aware that the principal/investor reviewing the deck is well-trained in pattern recognition. All evaluations are driven by an informal checklist they maintain.
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Before setting out to raise capital, entrepreneurs should understand the tax implications of different startup funding sources. Fundraising isn’t cheap, and you should be prepared for the multiple costs that impact the net amount you receive. Taxation is one of them.
Regardless of whether you’re bootstrapping and using personal savings or raising equity–learn about the applicable taxes. These can include corporate, income, capital gains, and various others. Taxes can impact your new company’s valuation, net profits, and cash flows.
Don’t forget to factor in each applicable tax and strategize the company’s financials accordingly. You’ll also work with an expert CPA for solutions to minimize tax liability. Let’s start by understanding how startup taxation works.
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Bootstrapping the StartupEntrepreneurs often have this misconception that since they’re leveraging their personal savings to start the company, taxes don’t apply. You might think that bootstrapping allows you to build the startup without worrying about getting investors, board seats, and dilution.
With bootstrapping, you’ll run the company and reinvest revenues to scale it gradually; however, taxes do apply. Also, keep in mind that taxation schedules vary according to jurisdictions and the location where you work. You should always check with a local CPA who can guide you.
You’ll also check with the accountant for the organizational type to save you the maximum taxes. Registering the startup as an LLC will incur fewer taxes than if you were to register it as a C Corporation.
Applicable Taxes* Firstly, you must pay income tax on the personal income you divert into the company. * Before the company stabilizes and starts earning revenues and profits, you won’t need to pay income tax. However, several other federal and state taxes, not linked to revenues, apply to the company and its operations. * Some states tax your gross revenues even if the company is not profitable. * If you incorporate the company as a separate entity and it earns profits, you’ll incur corporate tax on that income. * As the owner, you retain a sizeable equity share that will likely appreciate in value as the startup scales. You’ll pay capital gains tax when liquidating the shares or exiting. * If you’ve set up a franchise, even if you haven’t raised funding, you’ll pay the franchise tax. Again, this tax is payable regardless of whether the company generates revenues and profits. * Be prepared for additional taxes, including payroll, sales, and SaaS. Property taxes on the company premises and any furniture and equipment you may have procured also apply.
What You Need to DoThe above-mentioned are only an overview of what to expect for a bootstrapped company. The actual taxes you pay depend on several variables, including the business vertical in which you operate. The current taxation policy in your state can also influence the final tax burden.
A crucial factor to remember is that relying on the CPA’s recommendations is good. But researching to stay on top of your tax obligations doesn’t hurt. Maintain a careful record of the company’s income and expenses and ensure you deduct operational expenses from the taxable income.
Rolling profits back into the company is a great strategy for deferring tax liability.
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Crowdfunding the StartupCrowdfunding is an excellent low-cost capital source for your startup. However, before you dive into it, understand the tax implications of different startup funding sources. In crowdfunding, you’ll raise money through online crowdfunding platforms where investors pool small amounts of money.
Several top companies, such as Doorvest, Oculus Virtual Reality Headset, Pebble Wearable Devices, and Beta Bionics, have their roots in crowdfunding. This funding strategy has several advantages, like building an available customer base when the products are ready for marketing.
Other benefits include market validation, customer feedback, advertising, and building a presence. However, raising capital through crowdfunding involves tax liabilities, which you should prepare for.
Applicable Taxes* The IRS treats the capital you raise via the crowdfunding platform as income subject to income tax. You’ll report it in your tax return and pay applicable taxes. Of course, researching tax calculation methods and working with a trained CPA is always advisable. * Entrepreneurs may choose to offer their investors product prototypes, services, or other perks in exchange for the money they invest. These types of investors offer capital through a reward-based program. * If you have raised equity–capital and offered investors an ownership stake in the company, taxes will apply accordingly. Any loan investments do not attract taxes. However, if the investment is structured as equity, investors must pay capital gains tax when they sell the shares. * Any profits the startup earns will attract corporate tax if you’ve incorporated the company and it’s a separate legal entity. * If you use crowdfunding capital to purchase inventory, equipment, or other company supplies, you’ll pay sales tax. * If you hire employees and pay wages, this expense will attract a payroll tax.
Know that raising crowdfunding can make the company a more valuable asset and boost its valuation. You’ll also incur higher taxes moving forward, so factor this possibility in as you strategize for the company’s future.
What You Need to Do* Consult an expert tax professional and get help with structuring the crowdfunding campaign. * Weigh the pros and cons before offering incentives to your investors. For instance, offering them rewards and products may cost you lower taxes than offering them equity. * Before investing the crowdfunded capital into the company, set aside a portion to cover the taxes. * You’ll issue receipts and invoices to your investors. * When you initiate the campaign, maintain detailed and accurate records of the funds you receive. Your records should reflect the date and denomination of each contribution and the rewards or equity you provided. * Maintain records of how you used the funds. When it’s time to file your annual tax returns, this information can help you avoid the risks of penalties because of oversights.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Equity FinancingStartups raise equity funding from venture capitalists, angel investors, and private equity firms. Family offices are another option that is quickly emerging in the fundraising ecosystem. Aside from substantial amounts of capital, you’ll expect industry-specific expertise and access to their networks.
Many such investors are also typically open to backing viable companies through subsequent funding rounds. Before considering this option, you’d want to understand the tax implications of different startup funding sources.
Applicable Taxes* Any equity capital you raise for the startup will not attract taxes since it is not considered taxable income. The law works on the premise that the funds will appear in the company’s balance sheet. Since the money will fuel the company’s operations and growth, it is treated as an investment, not revenue. * How you deploy the capital can have tax implications. For instance, expenses for purchasing inventory, supplies, and equipment are taxable. * If you’ve incorporated the company, expect to pay corporate taxes on the profits it generates. * Any dividends and distributions you make to the company’s shareholders are taxable and attract dividend tax. * When selling the shares, stockholders must pay capital gains tax on the difference in the fair market value and cost basis. * If the company owners use the funds to pay themselves, they’ll incur capital gains taxes. * The startup may invest funds or purchase equity in other companies by way of venture capital. In that case, those investments are subject to taxes. Your CPA will advise you accordingly. * Paying salaries and wages to employees are also taxable expenses.
Entrepreneurs should understand the taxation structure before reaching out to investors for equity financing. An expert tax advisor can assist you in accounting for the applicable taxes during the negotiation process. You’ll discuss the equity financing terms and valuation to minimize taxes.
What You Need to DoTake Advantage of Tax Credits, Rebates, and IncentivesThe federal and state governments offer different tax credits and rebates to encourage job creation and innovation. Companies that delegate resources to research and development can avail of federal R&D tax credits to offset costs. This credit can substantially impact their expenses.
Companies that have yet to start generating revenues cannot take advantage of tax credits against income. However, they can use the rebates to offset their payroll tax in the first five years to hire top-notch talent and skill sets.
Alternatively, you can accumulate the tax credit and leverage it as an asset when selling the company. This benefit can drive up the company’s valuation and price. However, you must work with an expert CPA to understand the tax implications of different startup funding sources.
The professional will help you evaluate the company, its structure, and operations for tax credit eligibility. You’ll also need assistance compiling the required documentation and other details to demonstrate that you qualify. Always remember that tax regulations can change from time to time.
Ensure you have updated information about the tax credits you can claim for maximum benefits. Tax incentives, rebates, and credits can significantly impact your financials, so use all the advantages you can get.
Calculate Taxes When Issuing Option Pools to EmployeesOffering stock options to employees can be a powerful incentive to a company’s employees. You’ll raise engagement and retention rates and lower attrition by enticing them to align their interests with the company’s growth. At the same time, you can lower the immediate outgoing cash flows in wages and salaries.
However, you must factor in the tax implications before issuing stock options and structure them accordingly. For starters, make a clear distinction between non-qualified options and incentives. Know that Incentive stock options (ISOs) have tax benefits for employees.
However, these benefits are subject to strict conditions pertaining to eligibility and holding periods. If you offer non-qualified stock options (NSOs), employees will have more flexibility when exercising their rights. However, they’ll also pay income tax at regular rates.
Depending on the company’s cap table, valuation, and core goals, you’ll use the optimum stock options structure. Other than stock options, you can offer other non-cash incentives, such as profits interest and carried interest. Synthetic equity and restricted stock are other reward forms.
Before calculating your incentives, consult the CPA to understand their tax implications for the company and its employees.
Before you start your funding campaign, you’ll factor in the different costs you’ll deduct from the amount raised. So, how do you determine the amount to raise in your financing round to include taxes? Check out this video, in which I explain how.
Tax Implications of Different Startup Funding Sources–Think About Future RoundsWhether bootstrapping the company or raising funding through crowdfunding and equity, you’ll plan for future fundraising rounds. As mentioned above, your capital deployment and expenses can attract taxes, but you can also get tax credits.
Claiming tax credits and using them to lower taxes and improve your bottom line impacts the company’s present cash flows. However, you should also think about the impact on future funding rounds–debt or equity–and the tax implications of different startup funding sources.
With the advice of a qualified CPA, you’ll determine the costs you’ll deduct from revenues in the current balance sheet. Also, check the costs you should amortize or depreciate in the ensuing years’ balance sheets. Cost management can appear differently in the financial statements and tax returns.
Pay careful attention to how the tax credits and deductions will appear to future investors and lenders you approach. Think about how the returns and financial statements will impact due diligence results, investor perceptions, and valuation.
You’ll balance short-term gains against your chances of getting funding and indicating the company’s long-term value to investors. Demonstrating a robust financial standing should be higher on your list of priorities.
Another crucial factor to remember is that companies pay federal, state, and local taxes, which may vary according to jurisdiction. Further, since they operate in a global economic ecosystem, they must also account for applicable taxes across state and international borders.
To Sum Up!Funding is the lifeblood of any organization, but before initiating a campaign or even using personal funds, explore all aspects. Factor in the tax implications of different startup funding sources and plan your strategies carefully.
You’ll determine how to deploy the capital for minimum taxation and the tax credits you can claim. Also, pre-plan how and when to defer tax credits to maximize your company’s valuation and continue attracting investors. You’re going to need them for future funding rounds.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
Disclaimer: The information above is only intended to give you an overview of the possible taxes you’ll pay when raising capital for the startup. It is by no means comprehensive, and we advise you to rely on the recommendations of a qualified professional.
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In the AI industry, where innovation evolves at lightning speed, some founders set the pace by combining a unique cultural perspective with a relentless drive to create groundbreaking technology. Gaurav Misra, founder and CEO of Captions, is one of these visionaries.
Raised between the U.S. and India, Gaurav’s journey from an early programming passion to founding a $500M AI startup has been marked by persistence, creativity, and a deep understanding of the evolving tech landscape.
Gaurav’s insights reveal the challenges of achieving product-market fit, scaling a startup, and building a product that resonates with users. His company, Captions, currently employs around 60 employees and is making great strides in the AI space.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From the U.S. to India: A Childhood Shaped by Two WorldsThough born in the United States, Gaurav’s family moved to India when he was just four. His memories of growing up are rooted in India, where a robust early education in computers cultivated his love for technology.
Gaurav’s father was doing his Ph.D. in the US and headed back to India on completing his course. But that stay gave Gaurav his birthright citizenship, which became an advantage when he wanted to move to the US.
Unlike many Western cultures where programming is often introduced later, Indian schooling introduced Gaurav to programming from a young age in grades 2 and 3, giving him a substantial early advantage.
By the time he was in 12th grade, he was tackling coding challenges that would be considered college-level in other parts of the world. But despite his strong ties to India, Gaurav was intrigued by his American roots, particularly the stories of meritocracy and opportunity his parents shared.
This curiosity eventually led Gaurav to pursue higher education in the U.S. After applying to multiple colleges, he eventually landed at Boston University, where he felt he would get the right balance of academics and a more holistic education.
Here, Gaurav discovered an environment brimming with energy, ambition, and a new perspective on the tech industry.
Boston University and the Spark of Entrepreneurial AmbitionArriving in Boston in 2008, Gaurav witnessed a unique moment in American history—the election of Barack Obama, which brought about an infectious optimism and a sense of boundless opportunity.
Gaurav was inspired by the bustling, diverse environment at BU, where he was exposed to new ideas and possibilities. For him, Boston wasn’t just about coding or technology; it was a gateway into understanding how to build, scale, and sell products that could impact people’s lives.
Gaurav began to see technology as more than just algorithms and data structures; it was a tool for transformation and connection.
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Pivotal Moments at Snapchat: From Engineer to InnovatorAfter BU, Gaurav immersed himself in machine learning, a field still in its nascent stages at companies and startups. His big break came when he joined Snapchat in 2016, just before its IPO.
At the time, Snapchat was pioneering novel uses for AI and machine learning in consumer-facing applications, like morphing user faces in real time to entertain them. This was groundbreaking compared to the more routine business applications of AI Gaurav had encountered before.
Earlier, Gaurav had been exposed to machine learning and its applications in sales leads and figuring out the high likelihood to convert or a low likelihood to convert which is, undoubtedly, interesting. Although he enjoyed sales lead tasks, he was fascinated by Snapchat.
During his tenure, Gaurav transitioned from an engineering role to working closely with the design team, experimenting with new ideas and products. This phase of his career opened his eyes to the importance of marrying design and engineering to fuel innovation.
Gaurav led a team dedicated to rapid prototyping and product market fit, shaping several products that could appeal to Snapchat’s vast, dynamic audience.
His work culminated in Snapchat’s “Spotlight,” a response to TikTok’s rising influence in 2019. It highlighted his skills in understanding shifting market demands and user behavior. People were telling stories and sharing ideas, and TikTok was becoming a veritable “town square.”
TikTok was much more than just text written on a text-only platform like Reddit or Twitter, which is why it quickly gained traction. People were recording videos and sending them to each other on Snapchat way earlier than TikTok came along.
However, TikTok pioneered the public sharing of short videos adding an entertainment angle to them, which was highly transformational. The company eventually started running ads on Snapchat worth around $100M a month to acquire users.
Founding Captions: Building on Experience and the Power of “Talking Videos”In February 2021, Gaurav took the plunge into entrepreneurship, founding Captions. His vision was inspired by his experience at Snapchat and the rise of platforms like TikTok, where videos with personal, story-driven content were quickly catching interest.
Gaurav’s goal with Captions was ambitious: to create a platform that would allow people to communicate and share their narratives through videos in new, impactful ways.
Captions’ early days were marked by trial and error. Gaurav initially aimed to build a social network focused on “talking videos,” but quickly realized the challenges of building a two-sided network—content creators and consumers—from scratch.
Although the creation side of the platform took off, he faced difficulties in building the consumption side and attracting a large enough user base to make the network aspect feasible.
This led Gaurav to pivot the business model, focusing instead on content creation tools that consumers could access through a subscription-based model.
The Challenges of Product-Market Fit: Persistence and Unlikely BreakthroughsFor Gaurav, finding product-market fit was a journey of persistence. He likens it to running a marathon without clear mile markers—you never quite know how close you are until you cross the finish line.
Unlike other goals where you see incremental progress, product-market fit can seem elusive. Startups often spend years without tangible signs of success. This relentless pursuit finally paid off with Captions, albeit unexpectedly.
Facing mounting costs, Gaurav considered shutting down the app, which was costing $10,000 a month to maintain. As a last-ditch effort to offset expenses, he decided to place a paywall on the app, requiring users to pay $10 a month just to open it.
Much to his surprise, users were willing to pay, proving demand for Captions’s product in a subscription-based model. This pivotal moment marked the company’s shift from a free social network to a thriving subscription service, setting Captions on a path to profitability.
Gaurav recalls his pleasant surprise when he opened his personal bank account and found $500K in it from Captions subscriptions.
Business Model Evolution: Capturing Value Through Consumer SubscriptionsCaptions’s business model evolved into a consumer subscription service catering to both individual users and enterprise clients.
This model allows content creators and professionals to use Captions’s advanced AI-driven video tools, enabling them to produce high-quality content that resonates with audiences.
The company’s rapid growth and strong market reception indicate that Captions successfully tapped into a growing demand for user-friendly video editing tools that empower creators to easily tell their stories.
Gaurav explains that Captions lands right in the video and AI spaces, which turned out to be the right bet since six to eight months down the line, ChatGPT was launched. The AI revolution shortened what would have been a 10-year roadmap into a two-year roadmap in the blink of an eye.
The timing was perfect. It was pure luck.
Reflections on Building and Scaling in AIReflecting on his journey, Gaurav emphasizes the importance of resilience and adaptability in the entrepreneurial process. He notes that in tech, especially AI, the landscape changes swiftly, making it crucial to pivot and respond to market shifts effectively.
The challenges of product-market fit taught him to focus on creating value and finding joy in the journey of innovation, rather than obsessing over a fixed endpoint.
Today, with $100M raised and a team of 60+, Gaurav is building Captions into a leader in AI-powered content creation, helping individuals and businesses unlock the power of storytelling through video.
Storytelling is everything that Gaurav Misra was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
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Your email address is 100% safe from spam!Gaurav underscores the importance of building and maintaining networks. He has kept in touch with everyone he has ever worked with, including CEOs, executives, and co-workers. They ended up being great references for him when reaching out to VCs.
One of Gaurav’s references was Snap’s co-founder who came through for him when he needed seed funding. Years of relationship building, delivering great results, and trying his best to impress people while doing his part as well as he can has paid off for Gaurav in a big way.
In his opinion, although several variables are involved, such as the success of the product, the most significant factor in raising additional rounds is being able to tell a great story. Demonstrating the vision of societal transformation has helped attract funding for Captions.
Getting investors is exactly like hiring employees, Gaurav says. You have to be able to inspire them to see the vision that nobody else sees but that, you believe, will become a reality. Founders need to have that conviction to bring them along through the journey.
Vision for the Future of CaptionsAsked about the future, Gaurav explains that he envisions a world in which video is generated by default–whether making a podcast, TikTok video, ads, movies, or educational, sales, and marketing content.
Captions is building foundation models and user software that serve how people create videos. Gaurav talks about understanding how legendary companies like Facebook, which has been in business for around 20 years, work.
Founders should refine their skill sets and have a generalist mindset of not just going specifically into one thing but understanding different parts of the company. They need to think about:
- How does engineering work?
- How does data science work?
- How does marketing work?
- How does sales work?
Building out that knowledge helps in a big way when the company starts to work. Founders need to use their knowledge and experience to drive the company in the right direction.
Final Thoughts: Embracing Change and Fostering InnovationGaurav’s story is a testament to the power of resilience, adaptability, and vision in entrepreneurship.
His experiences—from childhood programming projects in India to pioneering machine learning applications at Snapchat and finally founding Captions—illustrate the value of an open mind and a willingness to adapt.
In an industry defined by constant evolution, Gaurav has built a company that not only meets current needs but is poised to thrive in the future of digital storytelling.
As he continues to scale Captions, Gaurav remains focused on fostering innovation, supporting a team that values creativity, and pushing the boundaries of what’s possible in AI and video technology.
Gaurav’s journey inspires aspiring founders, particularly those navigating the complex world of tech, AI, and product development. For him, the excitement lies not just in reaching milestones but in the endless possibilities that lie ahead.
Listen to the full podcast episode to know more, including:
- Gaurav Misra’s journey reflects the power of resilience, adaptability, and cultural diversity in shaping successful tech entrepreneurship.
- Early exposure to programming and a bicultural background set the foundation for Gaurav’s innovative approach in AI.
- Experience at Snapchat taught Gaurav the importance of blending engineering with design for market-driven product innovation.
- Finding product-market fit is challenging but essential; Gaurav’s persistence led to a pivotal shift to a subscription model for Captions.
- Building strong professional networks is crucial, as Gaurav’s relationships proved instrumental in securing VC funding.
- Captions’ success highlights the growing demand for AI-driven video tools that empower creators to tell impactful stories.
- For founders, understanding all aspects of a company—engineering, marketing, sales—is key to steering it effectively toward growth.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that founders worldwide are using to raise millions below.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $100 Million To Develop AI-Powered Tools For Video Editing And Creation appeared first on Alejandro Cremades.
In this insightful conversation, Amir Ben-Efraim takes us on a journey through his remarkable career in cybersecurity, from growing up in Silicon Valley to building and scaling two successful ventures—Altor Networks and Menlo Security.
With a background that blends deep technical expertise with business acumen, Amir shares his unique insights on starting a business with a big idea, raising over $260M, exiting a company for over $100M, and building companies with over 500 employees.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A New Beginning: Silicon Valley RootsAmir’s journey began with a significant life shift. At 12, he moved from Israel to Silicon Valley, a budding tech innovation hub in the early days of companies like Apple. The move wasn’t easy, especially as he navigated language barriers and the challenges of adapting to a new culture.
Yet, it planted the seeds of Amir’s fascination with technology. He views Silicon Valley as a place that attracts technical minds from all over the world and where innovation happens constantly.
Living in Cupertino, Amir started experimenting with an Apple II, sparking his passion for engineering and problem-solving. He remembers watching all these Apple buildings pop up. He started programming as a kid on a PC, which became a natural stepping stone to his future career.
Amir later pursued electrical engineering and computer science at UC Berkeley, setting the stage for his career in Silicon Valley’s vibrant tech scene.
The Turning Point: From Engineering to BusinessAmir’s career began at Amdahl Computers, a company focused on the final phases of developing mainframe machines. He was hired to program software and build simulation programs to simulate new CPU subsystems.
These subsystems actually had quite advanced capabilities, and mainframes were doing better than anything else in the world. However, as the industry evolved and personal computers, Sun Microsystems, and workstations gained traction, Amir witnessed project after project canceled.
Users started looking at these products as replacements for mainframes. This experience highlighted a critical lesson for Amir: innovation alone is not enough—products must also succeed in the marketplace.
Eager to bridge the gap between technology and market needs and get exposure to the business side, Amir pursued an MBA, which brought a quantitative rigor that, combined with his engineering background, made his transition to business roles surprisingly smooth.
After completing his MBA, Amir joined Check Point Software Technologies, a cybersecurity pioneer that created the first commercially successful firewall. At Check Point, he gained valuable exposure to the emerging cybersecurity ecosystem.
Amir also worked on business development initiatives that expanded the company’s partnerships. This position gave him a firsthand view of the cybersecurity industry’s rapid innovation and growth, igniting his entrepreneurial aspirations.
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The Entrepreneurial Spark: Founding Altor NetworksAmir’s first venture, Altor Networks, was inspired by a market gap he noticed during the rise of VMware and server virtualization.
What made VMware famous was server virtualization and the idea that multiple servers could be run on a piece of physical hardware, which revolutionized the whole industry. Server virtualization was becoming the new standard for the data center.
The industry was transitioning to virtual environments, yet traditional cybersecurity measures focused on physical systems, leaving virtual machines unprotected. Amir saw an opportunity to develop a virtual firewall to secure this new “East-West” data flow within virtualized servers.
Amir noted that the physical machine and the world of virtual machines were talking and exchanging data and network flows.
Switches are built into the virtual machine world–right into VMware—and there should be security wherever communication between different machines occurs. However, there was zero security inside the box.
With the backing of venture capital firms like Accel and Foundation Capital, Amir founded Altor Networks and built strong partnerships, including one with VMware. This collaboration allowed Altor to gain traction quickly, establishing itself as a leader in virtual firewalls.
Within four years, Altor was acquired by Juniper Networks for over $100M—a remarkable feat for a company with only 40 employees and $20M in funding. At the time, there were only three major firewall vendor companies worldwide–Juniper, Check Point, and Cisco.
Juniper recognized it had no capabilities in the virtual world or a virtual firewall. They had only nascent capabilities in virtualization and wanted to get a team with the expertise.
Altor Networks started as an OEM with Juniper, helping them supplement their physical firewalls with a virtual firewall. Soon, however, the OEM became strategic, and Juniper offered a term sheet to acquire them. At that time, Juniper had a market cap of nearly $20B.
For Amir, the acquisition was a thrilling and transformative experience, demonstrating the value of his idea in addressing a real industry need.
A Challenging Integration: Lessons from Juniper NetworksFollowing Altor’s acquisition, Amir joined Juniper Networks to lead the integration of Altor’s virtual firewall technology into Juniper’s product portfolio. While the integration process on the product side was relatively smooth, challenges arose as Juniper faced internal disruptions.
The company’s flagship product, the SRX Firewall, struggled to gain traction in the enterprise market, affecting the broader security division. SRX was a big chassis firewall with the highest speeds and feeds out in the industry, serving customers like AT&T and Verizon.
Juniper had acquired many high-end firewall and security companies and intended to market its winning product in the enterprise world. However, the product fit in the enterprise world was more challenging. Although they developed a new product for enterprises, it was unsuccessful.
This experience underscored the difficulties of aligning entrepreneurial innovation within a large corporate structure, especially when broader company priorities shift unexpectedly.
Reinventing Cybersecurity in the Cloud: The Birth of Menlo SecurityDespite the challenges, Amir’s entrepreneurial spirit remained undeterred. He prides himself on always looking out at the market and identifying gaps to identify new opportunities.
As cloud computing began to reshape the tech landscape around 2013, Amir saw a new opportunity: delivering cybersecurity as a cloud-native service.
Traditionally, 99.9% of cybersecurity still relied heavily on physical appliances within corporate data centers, a model that didn’t align well with the emerging cloud computing and AWS environment.
This realization led Amir to co-found Menlo Security, which harnesses the cloud’s virtually limitless resources, such as infinite CPU, network, and storage, for a more effective cybersecurity solution to persistent challenges.
He explains that their cloud-based solutions are not about taking solutions from the physical world and transforming them into the cloud in a form factor shift. It’s more about thinking from the ground up.
The Menlo Vision: Transforming Security from the Ground UpAt Menlo, Amir and his team developed an innovative, cloud-delivered approach to security that went beyond simply migrating existing solutions to the cloud. They focused on isolating and securing web browsers, a primary vector for malware and ransomware attacks.
Amir’s approach at Menlo Security was driven by a desire to challenge the status quo in cybersecurity. He rejected the industry’s “defense in depth” model, which relies on layered security measures, often leaving gaps for attackers to exploit.
Instead, Menlo aimed to guarantee 100% protection by isolating threats at the source. The early success of Menlo’s browser isolation technology confirmed they were onto something big.
Initial customers and potential clients expressed enthusiasm for a solution that addressed their security concerns.
Raising Funding for Menlo SecurityRecalling his fundraising experiences, Amir reveals that their seed and series A rounds progressed similarly to those of his earlier company, Altor Networks. Menlo has successfully raised over $260M, including a series B from JP Morgan, which is also a top customer.
Storytelling is everything that Amir Ben-Efraim was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Amir explains that enterprise software takes time to mature and requires initial investment to build a team, deliver a product, deploy that product into enterprise hands, and get feedback. Investors must be willing to risk funding a team based on a vision and the team’s expertise.
Since ransomware and malware remain significant problems, there’s no shortage of market size. Amir was a repeat founder with a successful exit under his belt, which is why raising funding became easier.
Valuations were also higher because people were willing to back a team and give it credit because it had already delivered a win. Amir explains that many of the founding team members came from Altor. They had worked together before, and the entrepreneurial team was strong in experience.
Menlo Security now has over 500 employees, and eight of the ten largest banks worldwide are using Menlo Security. Having a famous customers has helped Menlo break into verticals and scale quickly.
However, Amir underscores that every phase of the journey comes with its own challenges. Having a vision in the early stages does not always translate into success. Delivering the ideal product-market fit and getting capital is tough.
Future Vision for MenloAmir explains that Menlo delivers browser security, or secure enterprise browsers, and builds additional layers into the browser that stop malware and ransomware on the way in and stop data loss on the way out.
They have recently added AI to the Menlo browser footprint to enable the recognition of scams, phishing, and impersonation attacks. It addresses users’ risks when connecting to the outside world and protects that browsing layer.
Menlo’s vision is not to compete directly with industry giants like Google and Microsoft in the browsing space. Instead, they aspire to partner with such companies, leveraging their strengths to create a complementary solution.
According to Menlo, its technology aims to become the standard for securing enterprise browsers and access to the Internet.
They envision a future where browsers like Chrome and Edge are automatically “hardened” with Menlo’s solutions, making it the universal approach to secure online access for enterprise users. Achieving this would be the ultimate realization of their mission.
Looking beyond the enterprise world, Menlo’s ambition extends to consumer protection. They recognize that individuals at home face challenges similar to those corporate users face regarding online scams and data loss.
Although the types of scams may differ, the underlying problems remain the same. Having developed highly effective solutions for enterprises, Menlo hopes to one day extend its protective reach to consumers globally.
While Amir’s primary focus is currently on the enterprise market, he sees an opportunity to serve individuals and families, addressing the shared vulnerabilities between corporate and consumer internet users.
Looking Back – Lessons for Aspiring FoundersReflecting on Menlo’s journey, Amir emphasizes choosing the right investors. In the early days, entrepreneurs often focus solely on selling their vision to every investor they met.
However, it’s equally critical to consider who these investors are and how their interests align with the company’s long-term goals.
Menlo’s experience with Series A investor General Catalyst, who has remained a steadfast partner for over 11 years, underscores the value of investors committed to the long haul.
These long-term partners support Amir’s vision and avoid placing pressure on the business to sell prematurely or compromise its mission. In contrast, investors with a short-term perspective can push for actions that may not align with the company’s bigger ambitions.
Another essential piece of advice is to choose co-founders and team members carefully. Long-term ventures require trusted, like-minded partners who share the same commitment.
Misalignment among founders or within the team can lead to unnecessary distractions and, in some cases, organizational instability. Therefore, surrounding oneself with the right people—team members and investors—forms the foundation of a successful, enduring enterprise journey.
In ConclusionThrough his story, Amir Ben-Efraim illustrates the power of combining technical expertise with market awareness, adaptability, and an unwavering entrepreneurial spirit.
Amir’s journey is both a roadmap and an inspiration for anyone looking to venture into cybersecurity or any tech-driven field.
Listen to the full podcast episode to know more, including:
- Amir’s tech journey began early, when he moved from Israel to Silicon Valley, which sparked his passion for engineering and innovation.
- His time at Amdahl Computers taught Amir that successful tech products need both innovation and strong market fit.
- Seeing the rise of virtual environments, Amir founded Altor Networks to secure “East-West” data flow within virtual servers, later acquired by Juniper Networks.
- At Menlo Security, Amir leveraged cloud-native cybersecurity to transform browser security and protect against online threats.
- With over $260M raised and renowned customers, Amir emphasizes the importance of backing from trusted, long-term investors.
- Menlo aims to set the standard for enterprise browser security, potentially extending this protection to consumers in the future.
- Amir highlights the importance of aligning with committed investors and choosing co-founders and team members who share a long-term vision.
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Your email address is 100% safe from spam!The post This Serial Entrepreneur Sold A Company To Juniper For Over $100 Million And Has Now Raised $260 Million To Make Internet Browsing Safe From Threats appeared first on Alejandro Cremades.
In a world driven by data, it takes a visionary to see beyond the noise and build something truly scalable. Viraj Parekh, co-founder of Astronomer, didn’t have a clear roadmap. His journey from childhood curiosity in technology to becoming a key figure in data orchestration is fascinating.
In this interview, Viraj talks about having close calls and almost going out of business before making strategic pivots. He also reveals insights into thinking about scalable business processes and value propositions.
Here’s how Viraj navigated the challenges of building, scaling, and financing his company to become a leader in open-source data orchestration and raised a whopping $290M.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Early Years: A Curiosity Sparked by Family and TechnologyViraj’s story begins with supportive parents and a strong work ethic, similar to many immigrant success stories. He is a first-generation American raised in a small town, Wappingers Falls, in upstate New York, in a close-knit, working-class family.
Viraj grew up in a household that prioritized education. An older cousin who introduced him to computers sparked his interest in technology. By fifth grade, using a computer gifted to him by that same cousin, Viraj had an early and transformative experience with technology.
As a young kid with an Internet connection, Viraj’s fascination with technology grew, leading him to study mathematics and computer science in Boston, BC. He didn’t initially envision himself as an entrepreneur.
Instead, Viraj was drawn to the practical application of technology in early-stage companies, fueled by a passion for problem-solving. His exposure to tech startups and private equity through various internships deepened his interest.
Ultimately, Viraj was steered toward the world of venture-backed tech companies. He was confident this was the environment where he would learn the most.
Finding His Footing at Astronomer and Venturing into Open SourceViraj’s professional journey began through a fellowship with Venture for America (VFA), an organization that connects recent graduates with startups outside major tech hubs. This program led him to Cincinnati, Ohio, where he joined Astronomer as the fifth employee.
Astronomer, a small startup at the time, focused on marketing analytics. To power the back end of this product, the team started looking at many different open-source technologies. Soon, however, they faced the kind of pivot that could make or break a company.
Astronomer’s initial product was a Clickstream data tool that powered marketing analytics. It used Apache Airflow, a powerful, open-source data orchestration platform developed by Airbnb. Apache Airflow helped users get Clickstream data into their data warehouse.
As they introduced Airflow to more customers, Viraj and his team realized their customers were more interested in Airflow than their Clickstream solution.
This led to a critical decision: rather than focusing on marketing analytics, they would shift their entire model to become the “Apache Airflow company,” building a comprehensive orchestration platform around this powerful technology.
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The Big Pivot: Embracing Customer-Driven InsightsAs Viraj explained, the decision to pivot wasn’t easy but was driven by an essential lesson in customer listening. Customers consistently showed more interest in the technology behind Astronomer’s product than the product itself.
In retrospect, Viraj explains, “Many times customers are going to tell you things that you don’t want to hear, things that aren’t easy to hear, but ultimately are in your best interests.”
Through conversations with these customers, Viraj discovered a common pain point: data orchestration, the process by which companies transform raw data into actionable insights. Customers wanted the underlying technology itself.
Airflow had the potential to bridge that gap but wasn’t user-friendly or easily scalable for every business. With this insight, Astronomer’s mission shifted toward making Airflow accessible and manageable for organizations, large and small.
This pivot was high-risk, but it proved to be transformative. Viraj describes this period as a series of close calls and near-death experiences for Astronomer where survival was on the line.
However, it also allowed them to align more closely with customer needs, setting the stage for the success that was to come.
Building the Business Model: The Rise of a Data Orchestration PowerhouseAstronomer’s new direction led to a compelling business model. At its core, Astronomer provides a managed service for Apache Airflow, allowing companies to use Airflow without managing the complex backend infrastructure themselves.
This “easy button” approach appealed to data-driven companies that lacked the resources to build custom Airflow solutions in-house. The move to Airflow wasn’t merely about profit but also about democratizing access to data orchestration.
Viraj’s team created a platform where data teams could seamlessly build, run, and monitor their data pipelines, helping them generate real business value.
Astronomer’s service enabled organizations to extract insights from data without dedicating engineering resources to maintaining complex infrastructure. They could free up time and bandwidth to focus on business-generating activities.
In Viraj’s experience, most founders make the mistake of building things based on assumptions rather than data. A valuable lesson he learned was to get the product-market fit right and adjust it to market requirements–simply by listening to customers to understand their needs.
When they first decided to pivot to Airflow, their primary objective was to provide services to earn revenues and keep the company afloat. But, as they continued working, they started asking crucial questions that helped them understand how and why orchestration is valuable to companies.
- Why is this important to you?
- What are you doing with this?
- What happens if this breaks?
- Why are you paying for the service?
- Why are you looking for a managed service?
Viraj and his team learned that orchestration was the path to production and how companies got business value from their data. They took an insight that happens in a vacuum and turned it into a process that runs every aspect.
These aspects could include building a dashboard for the CEO, delivering a data set to an external vendor, or developing a machine learning model that predicts customer churn.
Airflow was definitely the best underlying technology for data orchestration, with the biggest community of users in the entire Apache Software Foundation. But It wasn’t always easy for everybody since learning and scaling was a bit hard.
This is particularly true if companies are trying to be multi-tenant on Airflow because they have a large number of data users and would have to invest their own resources into making that happen.
Raising $290M: The Journey of Financing and GrowthThe pivot to Airflow not only redefined Astronomer’s value proposition but also caught the attention of investors. With Apache Airflow becoming widely recognized as a vital tool for data management, the team attracted significant funding, raising $290M over several rounds.
However, as Viraj pointed out, raising large amounts of capital was only part of the story. Each financing round allowed them to unlock new growth phases, from product development to expanding customer support and scaling their infrastructure.
Storytelling is everything that Viraj Parekh was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!The funding journey wasn’t smooth, especially since Astronomer was based in Cincinnati, a location far from the typical tech investment hotspots.
However, as Viraj emphasized, the investment was less about the location and more about their alignment with a rapidly growing community of Airflow users who valued the platform’s potential.
Investors saw the strong user adoption and high-value business cases tied to Airflow, making Astronomer an attractive investment.
Scaling for Success: Building a Robust, Customer-Focused TeamFor Viraj, scaling Astronomer has been about building a company culture that attracts and nurtures top talent. He envisions Astronomer as a place that encourages professional growth, creativity, and resilience and motivates people when things aren’t working well.
This company could potentially develop the next generation of tech entrepreneurs, akin to the “Stripe” or “PayPal” mafias that have seeded many successful startups. In terms of operational scale, Astronomer’s growth has been about balancing customer needs with scalable solutions.
As Viraj explains, each scaling decision was made by assessing the impact on the customer experience. When the team identified repetitive tasks or resource-intensive processes, they evaluated automation options to maximize efficiency.
This approach allowed Astronomer to scale not only through people but by building sustainable systems and processes.
A Vision for the Future: Democratizing Data OrchestrationAs Astronomer continues to grow, Viraj remains committed to his vision of democratizing data orchestration. The Astronomer value proposition is about ensuring that any data professional, regardless of their organization’s size, can easily build and deploy data pipelines.
Viraj’s vision aligns with a more significant trend of empowering companies to harness data without requiring specialized engineering teams to build or manage backend infrastructure.
According to Viraj, Astronomer’s future will involve continued product innovation to streamline and enhance the data orchestration experience. For him, success isn’t measured solely by fundraising milestones but by their platform’s tangible impact on customers’ businesses.
Viraj is proudest when clients tell him that Astronomer’s platform is mission-critical, enabling them to hit key targets or avoid regulatory issues. He explains that they are in the growth stage and consistently thinking about scaling and turning the wheel faster by building technology.
Astronomers focus on working backward from the customer experience and determining the primary objectives, regardless of how to achieve them. Processes can be done manually or automated, but ultimately, the customer experience matters.
Company Culture at Astronomer and Personal GrowthAstronomer currently employs more than 250 people and is growing quickly. Its culture is possibly one of the most collaborative, as people who work here often opine. Viraj takes pride in never tasking a particular worker to solve a problem alone.
Although everyone is competent and focused, asking for help is encouraged. That’s the core tenet of the company’s stature today. Asked about his personal growth in keeping pace with the company, Viraj underscores that growth is never linear but happens in spurts.
He has had his share of struggles and challenges but hasn’t hesitated to get help when needed. In his experience, the most crucial driving force behind growth is learning to approach things with general curiosity.
Building startups is hard, and Viraj has dealt with hiring issues, dissatisfied customers, and emotional fluctuations, which are only human. As he says, it’s essential to step back, ask why, and keep a curious mindset.
As the interview winds up, Viraj gives a last shout-out to the other early founders at Astronomer, whose hard work has made the company what it is today.
Closing ThoughtsViraj Parekh’s journey with Astronomer is a testament to the power of adaptability, customer focus, and bold pivots. By embracing open-source technology and betting on Apache Airflow, he transformed Astronomer from a struggling startup into a powerhouse in data orchestration.
Viraj’s journey underscores that the entrepreneurial path is rarely straightforward but that listening to customers and adapting to their needs can be the key to long-term success. With $290M raised and a growing influence in data orchestration, Astronomer’s future looks promising.
For Viraj, the real reward is seeing Astronomer help customers bring their data to life, one orchestration at a time.
Listen to the full podcast episode to know more, including:
- Product pivots often reveal themselves through direct customer feedback, as Viraj discovered when demand for Apache Airflow exceeded interest in their original product.
- Success rarely follows a rigid plan; flexibility and responsiveness to market signals are essential in entrepreneurship.
- Creating value by simplifying complex processes, like Astronomer’s managed Apache Airflow, can be a winning strategy for startups.
- While large fundraising numbers are impressive, they should be used to deliver real value to customers and support long-term growth.
- Building a company where smart, motivated people thrive is key to fostering innovation and resilience in a high-growth environment.
- Prioritize process automation and scalable solutions only if they enhance the customer experience and reduce manual work effectively.
- Investors are drawn to companies with a clear vision that addresses genuine market needs, which helps secure funding even outside traditional tech hubs.
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Your email address is 100% safe from spam!The post They Raised $290 Million To Allow Data Engineers And Data Scientists To Orchestrate Data Workflows appeared first on Alejandro Cremades.
In the field of enterprise SaaS, some founders set out with clear roadmaps, while others, like Khadim Batti, blaze new trails through sheer determination, pivots, and a deep-rooted commitment to solving customer pain points.
In a recent conversation, Khadim delved into his journey from growing up in Mumbai to scaling his current venture, Whatfix. This global digital adoption platform has raised over $270M to date. This journey wasn’t straightforward—it involved multiple pivots and relentless problem-solving.
Khadim reveals his strategic insights into building a new SaaS category from scratch and raising funding for his company. Here’s a glimpse into his transformative journey and the invaluable lessons he learned along the way.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From Hardware to Software: A Relentless Pursuit of PassionKhadim was born and raised in Mumbai, where he completed his schooling and developed an early fascination with computers. Although initially pursuing electrical engineering, he soon realized his passion lay in software.
Khadim’s transition from hardware to software engineering indicates his willingness to pursue what truly intrigued him, even if it meant returning to school. He enrolled at the Indian Institute of Information Technology in Bangalore, where he deepened his expertise in computer science.
This drive led Khadim to Huawei Telecom, where he developed network management systems and later spearheaded a business intelligence reporting platform, which quickly became a full-fledged product line.
By managing and growing an R&D team from a few people to almost 100, Khadim gained crucial experience that laid the groundwork for his entrepreneurial ambitions. However, despite his success at Huawei, he yearned to build something of his own.
Khadim looks back at his transition to a hardware engineer. He recalls constantly getting support calls to fix printer issues or configure machines. He would also watch people doing programming tasks, which elicited excitement and interest. Khadim was now ready to take the leap.
Getting Higher Education to Fuel His DreamsHowever, getting a job and switching to computer science was highly challenging for an electrical engineer. Khadim started researching and investigating ways to make that happen. The best option that came up was doing his Master’s in computer science.
The course involved a lot of programming during the initial one and a half years, but later, it went deeper into data mining and other similar areas. After getting his degree, Khadim got a job in the telecom sector, going through multiple protocols and IEEE papers.
Gradually, after a couple of years, Khadim did business intelligence, got to the application layer, and worked for nine years there. Having gained experience building multiple products from the ground up, Khadim was ready to start his own company.
That’s when he came up with the idea of SearchEnabler, along with co-founder Vara Kumar.
Early Entrepreneurial Ventures: The Birth of SearchEnablerIn 2011, Khadim launched his first venture, SearchEnabler, a platform aimed at helping small businesses improve their online presence by optimizing search engine and social media visibility.
At the time, he noticed a growing demand for digital solutions among small businesses.
Khadim believed he could capture this market. SearchEnabler aimed to crunch data and deliver actionable insights, guiding business owners on improving their websites and social media content to drive traffic.
However, Khadim soon realized that small business owners required more handholding than anticipated. The platform’s self-serve model struggled with high churn rates, as many business owners didn’t implement the recommendations and, consequently, didn’t see the promised ROI.
A second crucial aspect was that startups operating out of India could only cater to smaller businesses since they worked remotely. But, to cater to enterprise customers, they had to be present within their geographical location, such as the US or Europe, where their customers were.
The only recourse left for the startups was to cater to local businesses based in India. Khadim also realized that the customers using their platform for the long term were SEO and social media professionals, but that was not the target market SearchEnabler was looking for.
Khadim wanted to cater to small businesses by giving them materials and videos that they didn’t really use. Customers needed something in the flow of work, such as tips, guidance, and recommendations on how to fix their issues.
This misalignment between the product and its target market led Khadim and his co-founder to a crossroads. They could either continue with SearchEnabler or pivot toward something new.
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Pivoting to Whatfix: A New Vision and a Game-Changing IdeaThe pivot that gave rise to Whatfix was born from an unexpected insight. Khadim observed that while SearchEnabler wasn’t resonating with small businesses, some customers were asking for more interactive, on-the-spot guidance for their users.
This idea evolved into “Fix-It,” a feature that provided in-app help by guiding users through tasks within their software environments. In SearchEnabler, a click would show users tutorials or take them to their WordPress, Joomla, or Magento website and show them what they should do.
This functionality sparked interest from a few enterprise customers who wanted to deploy similar solutions for their own end-users. Khadim recognized this new concept’s potential and boldly decided to pivot entirely to Whatfix.
Whatfix is a platform focused on digital adoption that provides on-demand guidance to users within applications. Khadim reveals that, at the time, they were a two-person company, working tirelessly to define their niche and establish a unique product in the market.
Khadim and Vara Kumar, co-founders of Whatfix, found that it was an innovative concept that could disrupt ticketing or learning management systems. Over the next few days, they brainstormed and decided to shut down SearchEnabler entirely.
Shifting from small businesses to enterprise customers, Khadim and his co-founder refunded their SearchEnabler customers and dove headfirst into building Whatfix.
Breaking into Enterprise SaaS: The Role of GSF AcceleratorBreaking into the US-European market and positioning Whatfix as an enterprise solution was no small feat. Khadim and his co-founder were software programming engineers with limited exposure to sales and marketing. Their objective was to scale Whatfix into a $100M company.
To bridge this knowledge gap, they joined the GSF Accelerator, which offered not only mentorship and workshops but also their first opportunity to visit the United States. Khadim remembers there were 11 companies in their cohort, and the program lasted two months.
During their time in the GSF cohort, they were exposed to Silicon Valley’s culture of innovation and learned valuable lessons about building the company, pricing, market size, and sales strategies. This experience broadened their vision for Whatfix.
Initially, they had assumed a $100 price point was ideal, but upon seeing the demand for robust enterprise solutions in the U.S., they re-evaluated their business model.
By targeting the U.S. as a primary market, Khadim positioned Whatfix to tap into a much larger pool of potential clients and revenue.
Evolving the Business Model: From Usage-Based to Seat-Based PricingAs Khadim explains, Whatfix is primarily a Software-as-a-Service company that is building an entirely new category of Digital Adoption Platforms. As Whatfix grew, the co-founders faced another challenge: finding the right pricing model.
Initially, the platform operated on a usage-based model, but this proved complicated given the wide range of applications and customer needs. Enterprise clients demanded predictability in payouts.
Whatfix could sell to an e-commerce company for hand-holding their affiliates or to banks for their corporate banking customers, which could be millions. The platform could also sell to SaaS companies for their enterprise customers or SMBs or to large enterprises for internal ERP and CLM software.
The incredible number of variations included places where there were millions of users of consumer-facing software, but the usage would be low. However, ERP, CRM, CLM, and internal usage would be high, though there would be fewer users.
Since it was virtually impossible to predict the usage base, Khadim shifted to a seat-based pricing model, where clients paid based on the number of users. Whatfix further customized pricing based on the type of software being supported.
For instance, high-use platforms like CRM systems were priced higher per user than lower-use platforms like HR software. By anchoring their pricing to the type of application, Whatfix established a sustainable revenue model aligned with enterprise needs.
As Whatfix progressed further, several large enterprises wanted to start expanding. Several companies started with one or two software, and then started implementing Whatfix on up to 40 software. Thus, the company and its pricing model continued evolving to cater to demand.
Khadim reveals how the pricing evolved from a few thousand dollars to an average of $150K to $200K annually.
Scaling Challenges and Funding SuccessesRaising capital was a unique journey for Whatfix, especially since they pioneered a new product category from India.
During the seed and Series A rounds, Khadim and his team faced skepticism from investors who questioned digital adoption solutions’ market viability and scalability.
At the time, SaaS companies from India were primarily focused on small businesses, and it was rare for an Indian company to target Fortune 500 clients globally. Most VCs believed in backing existing categories, small businesses, or mission-oriented startups.
Then again, investors from Japan, China, and other countries preferred to invest in the consumer market and large eCommerce companies like Flipkart and Uber. Attracting seed funding for a SaaS company in India was next to impossible.
Despite these hurdles, Khadim secured early funding by demonstrating the tangible impact Whatfix had on improving software adoption and productivity. As they achieved significant traction, subsequent rounds of funding became easier.
By this time Whatfix was ready for its series B round, but Khadim and Vara had to work out whether to approach investors in the US. The task seemed daunting since their company was located 10,000 miles away.
By Series C and beyond, Whatfix had established a compelling value proposition, and the numbers spoke for themselves. Khadim managed to raise a total of $270M without needing investment bankers, a rare accomplishment that underscored the company’s market potential.
Storytelling is everything that Khadim Batti was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Enterprise SaaS: Lessons in Product-Market Fit and PerseveranceKhadim attributes much of Whatfix’s success to its relentless focus on finding product-market fit. The company started by targeting small businesses but quickly pivoted to enterprises when they saw a clear opportunity in helping large organizations manage software adoption.
The team also had to continuously evolve the product, adapting to the needs of different sectors, departments, and software applications. Although Whatfix had a consumer-facing application, Khadim realized that large companies and banks needed simple software solutions for end users.
Attending several conferences and events in the US like Dreamforce and others, Khadim and Vara saw that enterprises were investing several hundreds of millions of dollars every year on software which were large and complex, but poor adoption can lead to wasted resources.
Whatfix’s digital adoption platform provided a solution that directly addressed this challenge, creating a strong product-market fit and reducing customer churn. It got a few initial customers in the enterprise segment and took off from there.
The journey wasn’t without its challenges. Breaking into the enterprise SaaS market required perseverance, especially when Khadim faced questions about the viability of selling from India to Fortune 500 clients.
Yet another challenge Khadim faced was the sales cycle. Small businesses had a single founder and reaching out to them was easily done. However, enterprise clients had several decision-makers and complicated budgeting processes–particularly for a new product category.
Khadim also had to deal with multiple departments and issues like security vendor registration in IT deployments. He traces the Whatfix journey through cross-application flows, understanding the processes and utilizing organizations and their friction points.
Khadim and Vara rebuilt an analytics tool from a single adoption tool to help enterprises realize the ROI of their software stack. Whatfix also gave them different tools to improve their productivity at the organizational level.
Future Vision for WhatfixEssentially, the company evolved per changing customer needs. Khadim stresses we need to learn technology and be tech-savvy. However, we are moving into an era where technology should become user-savvy rather than users becoming tech-savvy. This philosophy is called userization.
Khadim and his team have written several white papers and coined this term. His vision for the world is one where users get the desired outcome and become very productive. He underscores the importance of a robust company culture, considering they have multiple offices worldwide.
As Khadim sees it, culture has to be accommodative for employees across the world. Very early, they articulated that Whatfix would have a one-team concept. Anyone can lead a global team regardless of where they are.
The capital core culture of hustle mode is that people should be very proactive and not wait for others. They should proactively reach out, and everybody should be able to respond.
Transparent communication is the key, where every number, detail, and individual expectation is available–regardless of geography, function, or department. These things have helped keep the teams together. Whatfix has what they call collective global leadership.
Since 65% of its market is in the US, Khadim has learned to build a team and have a strong geographical presence. They have aligned with the local culture and worked to attract the right talent there.
ConclusionKhadim Batti’s journey with Whatfix is a testament to the power of perseverance, adaptability, and a customer-centric approach. By navigating multiple pivots, embracing mentorship, and evolving his business model, he built Whatfix into a global leader in digital adoption.
Today, Whatfix continues to help enterprises maximize the value of their software investments—a success story that underscores the potential of Indian SaaS companies on the global stage.
Listen to the full podcast episode to know more, including:
- Recognizing when to pivot is crucial. Khadim and his team shifted from SearchEnabler to Whatfix based on user feedback, evolving their product to directly meet customer needs.
- Creating a unique category comes with challenges, especially in articulating the value and pricing to investors and customers, but it can unlock vast market potential.
- Despite initial doubts, Whatfix proved that a global SaaS company could thrive out of India, selling successfully to Fortune 500 companies.
- Whatfix adapted its pricing strategy over time, learning that flexibility is essential when navigating diverse customer use cases and applications.
- GSF Accelerator exposed Whatfix’s founders to the US market and gave them crucial insights into scaling, pricing, and sales strategy.
- Initially, fundraising was tough, but with traction and proof of demand, Whatfix raised $270M without using investment bankers.
- Realizing the challenges of software adoption in large enterprises allowed Whatfix to tap into a lucrative market by enhancing user experience and productivity.
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Is an LOI legally binding? The short answer is no–and yes! Legally, a standard LOI or Letter of Intent for fundraising campaigns is always non-binding. This document only indicates the investors’ interest in backing the company, but does not create a legal obligation.
Typically, a non-binding LOI explicitly states that the document is not legally binding and is only a preliminary agreement. Both parties to the agreement underscore that they intend to further negotiate the terms and conditions before finalizing the deal.
A letter of intent is used in various business transactions, such as startup fundraising and mergers and acquisitions. Companies collaborating on joint ventures and other complex deals may also create an LOI in the early stages of discussions. It indicates their mutual interest in dealmaking.
A non-binding LOI is not enforceable in a court of law but lays down the framework or scope of talks. Parties to the deal use this tool to establish the underlying terms of the transaction. As a result, neither can back out of the deal without a genuine cause. They must act in good faith.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Standard Letter of Intent is Assumed to be Non-BindingEssentially, even when not expressly specified, a standard LOI is considered non-binding. It does not bind the investor to offer funding in a capital-raising deal. Both parties have the right to withdraw from the deal without closing without the fear of incurring a penalty.
The LOI evokes confidence in fundraising campaigns and entices investors to back the company. At the same time, founders should be aware that the letter of intent does not guarantee a successful round. Even if the investor has signed the LOI, they can choose to withdraw their offer.
For this reason, until the deal is finalized, you’ll continue with outreach activities and continue talks with other potential investors. However, if the deal closes, the terms in the LOI act as a precursor to drafting the definitive agreement.
Similarly, in an M&A transaction, the LOI indicates the buyers’ intention to purchase the company. It outlines the basic framework and sets the tone for negotiations. It also infuses flexibility to allow dealmakers to modify the terms if needed.
Is an LOI Legally Binding?Although the LOI, in its entirety, is NOT legally binding, you can include certain conditions that are enforceable. By including certain terms and language, specific aspects of the LOI can be binding. For instance, confidentiality agreements and exclusivity clauses.
For that to happen, the LOI must clearly specify which provisions are legally binding and which are not. If the LOI does not expressly state that it is binding, both parties can assume it is not binding.
In case of a dispute, the court will examine the language used in the letter of intent. It will also scrutinize the terms of the document. For instance, if the document clearly specifies that the parties will create a definitive agreement, the LOI becomes non-binding.
If there is no mention of a future definitive agreement, the court can consider the LOI to be binding. That is if the parties determine the material terms in the LOI. But if the final terms and conditions of the deal are open for discussion and negotiation, the LOI is non-binding.
A typical letter of intent discusses the potential terms and conditions of the agreement. For instance, purchase price and payment terms in M&A transactions. Due diligence processes are universal for fundraising or M&A deals and both parties agree on the scope and costs.
They also discuss who will carry the expenses if the deal falls through. Other clauses include the timeline within which the deal should close, along with representations and warranties. In the case of an M&A deal, the LOI specifies the scope of sale or the precise assets included with the company.
The LOI is a precursor for the purchase agreement, which is updated according to discoveries made during due diligence.
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Provisions that Make the LOI BindingBoth parties to the business transaction can include certain provisions that are enforceable by law. If that happens, the parties express the binding provisions in clear and precise language to avoid any chance of ambiguity. These clauses are designed to protect their interests in case the deal fails.
To answer the question–is an LOI legally binding, here are some of the provisions they might add.
Exclusivity in M&A TransactionsIn an M&A transaction, the exclusivity clause prevents the seller from contacting or negotiating with other potential buyers. The clause comes with a time limitation and protects the buyer’s interests. It reassures them they will not lose the acquisition while conducting due diligence.
The LOI clearly specifies the exclusivity period, ranging from 30 to 60 days. However, this period can also be as long as 120 days or more, starting right after the parties sign the LOI. This period depends on the complexity of the deal and the company’s operations.
The buyer may need more time to meticulously examine the company they intend to purchase, specifically if they have received only limited information about it. The exclusivity clause has provisions for this possibility, and both parties agree to extend the period if necessary.
Exclusivity permits the buyer to change the terms and conditions of the deal depending on the due diligence results. They may find additional issues with the company that did not come to light when signing the letter of intent. After the process is complete, buyers may want to renegotiate the pricing.
Conversely, the seller may want to include a contingency clause. The clause allows the seller to opt out of the deal if certain benchmarks are unmet.
For instance, if the due diligence takes longer than expected or the buyer offers a purchase price much lower than the seller’s expectations, the seller should retain the right to negotiate or terminate the LOI. Know that exclusivity clauses are enforceable when expertly crafted.
Exclusivity in Fundraising DealsTo answer the question–is an LOI legally binding, the exclusivity clause in a fundraising LOI is binding. It works similar to an M&A transaction. The key difference is that the clause prevents the owner from reaching out to other investors during the due diligence.
Through the exclusivity clause, the investor can impose certain restrictions on the company, such as marketing certain products and services, serving specific customer categories or geographical locations, or leveraging marketing channels.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
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Your email address is 100% safe from spam!Why Entrepreneurs Should Be Cautious of ExclusivityWhether selling their company or raising capital for it, entrepreneurs and owners should be cautious about accepting the exclusivity clause. This clause dilutes the seller’s negotiating position and puts them at a disadvantage.
By the time the due diligence process is complete, the seller has also invested thousands of dollars and time. They may also have retained the services of attorneys and advisors and are anxious for the deal to go through. The other party is well aware of this expense.
The buyer may take advantage of this situation to push for more favorable purchase terms. Also, know that the exclusivity clause does not prevent the buyer from evaluating other companies as potential acquisitions.
Losing out on the deal has yet another drawback. It may weaken your chances of getting good offers from other buyers who may hesitate to purchase the company. They may have reservations about why the other buyer backed out, further weakening the valuation and your negotiation power.
You’ll examine the language and provisions carefully to ensure they don’t prevent you from taking the deal to other interested parties. That is if the initial offer doesn’t pan out. Also, be aware that geo-political and economic landscapes can change quickly during the exclusivity period.
If the changes favor the target company, it may have a higher valuation. Accordingly, you may want to renegotiate for better terms and conditions. On their part, buyers in an M&A deal may want to secure the purchase at the previous price. That is until they can finalize and sign the purchase agreement.
It is always advisable for the company owner or founder to first draft the clauses in the LOI. They gain an advantage in the negotiations.
ConfidentialityKeep in mind that the LOI and its clauses set the framework for the final terms of the deal. If you ask the question–is an LOI legally binding–the confidentiality clause is undoubtedly enforceable. Both parties agree to keep the details of the deal private even if it falls through.
Sometimes, the deal participants may draw up and sign a formal NDA also. A Memorandum of Understanding (MOU) is another good alternative for the LOI.
Is an LOI Legally Binding?–Other Binding ClausesAn LOI can include other contingencies enforceable in a court of law. For instance, in an M&A deal, the LOI may clearly state that the deal will close only if the buyer successfully raises the required funds.
This clause may also include a pre-determined time frame within which the buyer should have the funds ready. If the financing is not ready on time, the seller can terminate the deal. The LOI can include any other contingencies, prerequisites, and conditions that both parties agree on.
The LOI is only one of the aspects of fundraising that entrepreneurs should learn about. If you need more detailed information about how the process works, check out this video I have created. In this video, I have explained in detail how to raise startup capital for your business.
Legally Binding Clauses to Streamline the TransactionAlthough the LOI is not legally binding, including certain binding clauses can ensure that the deal goes through smoothly. Here are some suggested clauses to include:
Define What Constitutes the Company Assets and Purchase PriceThe LOI should clearly specify how the working capital is calculated in an M&A transaction. Both parties should be clear on whether it is included in the purchase price. This factor is crucial since the buyer will want assurance that the company will have adequate liquidity to continue operating.
Calculating working capital is a complex process requiring professional expertise. Once the deal closes, the buyer adds up the actual available working capital. Next, they compare it with the estimate the seller presented. The final purchase price reflects any adjustments made.
Sellers often make the mistake of defining a price range in the LOI, for instance, between $35M and $50M. More often than not, after the due diligence, the lower limit becomes the final offer. To avoid unpleasant surprises, working out the correct language to define the limit is advisable.
Including earnouts as part of the purchase price is quickly becoming a preferred negotiation strategy. Before committing to this structure, sellers should be clear on the terms, such as the EBITDA or revenues.
The buyer may want to change the earnout terms after the due diligence process, arguing that the projections are overestimated. Adding a binding clause in the LOI can prevent this situation.
Escrow ConditionsAn LOI specifically mentions the payment terms and how the purchase price is calculated. Sellers in an M&A should also specify the payment amount placed in escrow. And, the timeline and criteria for releasing it to the company owner.
Clarifying this issue when drafting the LOI eliminates the confusion when the deal is about to close. Negotiating escrow when drafting the purchase agreement often leads to disagreements that both parties want to avoid.
Transition and IntegrationA seamless transition to the buyer and integration with the acquiring company can make or break the deal. Both parties in an M&A can include specific binding clauses that outline how to structure them.
They must also discuss the terms under which the seller stays as a consultant and the time frame for their tenure.
The Takeaway–Is an LOI Legally Binding?According to the law, an LOI is not legally binding. However, certain clauses in the LOI can be enforceable in a court of law which expects them to act in good faith. Dealmakers can include clear and precise language defining the contingencies and criteria for enforcing the clauses.
The parties drafting the LOI typically have the upper hand in the negotiations and set the tone for the final agreement. In addition to binding clauses, the LOI can highlight and address specific issues that can potentially derail the deal.
This is why having expert legal advisors on board is crucial to ensuring the deal reaches a successful conclusion. This factor holds for an M&A transaction or a fundraising contract.
You may find our free library of business templates interesting as well. There, you will find every template you will need when building and scaling your business completely for free. See it here.
The post Is An LOI Legally Binding? – Implications For Fundraising And M&A Success appeared first on Alejandro Cremades.
Savvy entrepreneurs should know how to run a lean startup fundraising campaign. Such campaigns come with various hidden costs. If you’re not on top of them, you’ll end up with less money than you bargained for. When planning your strategy, work out how to minimize the costs.
Hiring a fundraising consultant, broker-dealer, and legal counsel is an unavoidable expense. You’ll need their expertise to guide you through the process. They’ll help you create a list of potential investors to approach and design customized pitch decks for maximum impact.
How to retain professional assistance will depend on your company’s needs and budget allocation. Accordingly, you can choose to hire them on an hourly basis or per project or task. Then again, some entrepreneurs prefer long-term contracts with them and pay a retainer fee.
You’ll also factor in the due diligence costs that the company must bear in case the fundraising is successful. Also, account for overheads like travel, food, accommodation, hotel room fares, and more. Adding up all the costs can reduce the final capital you’ll have in hand.
So, how to run a lean startup fundraising campaign so you save more while raising more? Read ahead to find out.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Shop Around for Broker-Dealers Who Offer You Package DealsSeveral firms now offer you end-to-end startup or early-stage fundraising services. They have a full panel of professionals who can handle the entire gamut of tasks. Scout for firms operating within your vertical and compare their fee structure.
Negotiating with the firm is a good first step to discussing your funding needs and their complexities. Depending on your budget and intended capital, discuss terms like a flat fee or an hourly contract. You’ll need help with drawing up contracts and regulatory filings.
Check if the firm has legal counsel on board who can help you ensure regulatory compliance and meet tax liabilities. You may also need help with conducting due diligence. If you’re hesitant about investing this cost, know that it is preferable to hire professionals for assistance.
You can designate the funding process to the experts, which frees up your time and bandwidth to run the company. Don’t risk the company’s growth losing momentum because you shifted focus toward raising capital. This process can take months, and a young startup cannot lose traction.
You can carefully plan and streamline the entire campaign to minimize costs.
Be Mindful of the Costs When Using Bankers and PlatformsIf you need expert assistance in running the funding campaign, be mindful of the costs before diving in. For instance, investment bankers are a good option if you intend to raise substantial funding. Their fees depend on the deal’s complexity, your business vertical, and the assistance you need.
Typically, the fee structure is a percentage of the capital you raise and covers the costs of structuring the campaign. You’ll also pay them for facilitating the deal, though this charge is more of a success fee payable when the deal closes.
Investment bankers may also charge you a fixed retainer over and above the success fee. You’ll cover this charge upfront in addition to the overheads they may incur, such as travel and due diligence expenses. Commit to this expense only if their assistance delivers enough value to make sense.
You can also tap funding platforms like Crowdfunder, GoFundMe, Indiegogo, Patreon, Fundable, and StartEngine, to name a few. These sites have costs like a listing fee for the digital real estate they provide and charge a transaction fee. This fee covers processing charges for the investment.
The platform also takes a pre-determined percentage of the investment amount you raise. Depending on the site where you sign up, you may also have to pay a subscription fee. This charge can be yearly or monthly and is payable for accessing their investor network and other assistance.
Being aware of the possible costs helps you prepare for them. You can also evaluate if the service and capital raised is worth the costs. It’s a good starting point when figuring out how to run a lean startup fundraising campaign.
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Delegate the Campaign Strategy to a Single IndividualThe most basic rule is assigning the campaign to a single individual proficient enough to run it successfully. This person can be someone who knows the company well and has the relevant data to add to the pitch. Keep in mind that data adds authenticated data adds credibility and impact.
It is never advisable to have multiple people handling the funding project. This can lead to confusion and the possibility of misinformation reaching investors. Delegate the task to one of the co-founders or a team member who can work closely with the broker.
If you prefer to take on the task yourself, ensure that the company will continue running smoothly in your absence. Prepare for the possibility of traveling to meet investors personally. Although your consultant can help you design a great pitch deck, you should leverage the various online tools.
Free pitch deck templates are also available, which you can tweak and customize according to the company’s best selling points. You may also have to tailor the pitch for specific investors. Using these tools will help you cut back on billable hours.
Leverage Your NetworkA robust network is an entrepreneur’s best asset; you’ll leverage this advantage when you need capital. Contact the people in your network who can connect you with potential investors. These people can include mentors, colleagues, founders, and industry professionals.
Connecting with friends gives you the advantage of not paying a finder’s fee. They will also give you valuable insights into how to run a lean startup fundraising campaign. Having made the final decision that your company needs funding, look up all the events being organized.
Wrangle invitations and make it a point to attend meet-and-greets, mixers, conferences, and any other events. Remember to set aside a budget for the entry fee, beverages, and clothes. Focus on good grooming and confident body language to make the ultimate impression.
Keep in mind that investors are interested in the founders more than the company and its metrics. They want to know if they have what it takes to run a successful company. Investors back ideas and the people who develop them.
The core selling points are business acumen, enthusiasm, confidence, and perseverance. Before the event, research the guest list and gain some background information. This data will help you target the right people and connect with them.
You should also have an elevator pitch ready and communicate your passion for the company. Ask for contact information and industry-specific questions, and pay careful attention to the conversation. Display a genuine interest in the speaker.
Even though you’re trying to keep costs down, invest in top-quality assets for your campaign. Get professionally designed business cards to give to investors when you meet them. Excellent material and crisp printing will create the right impression.
Keep in mind that storytelling is everything in fundraising. For a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
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Your email address is 100% safe from spam!Use Digital Tools to Enhance the Fundraising StrategySeveral online tools are now available to help you with your capital-raising strategy. For instance, investor search tools, collaboration software, and pitch deck designing tools. Consider scheduling online Zoom meetings with investors to pitch your deck and discuss your ideas.
This approach allows you to save on travel and accommodation costs but, more importantly, on commuting time. Also, leverage secure data rooms to share sensitive documents. These rooms let you monitor who has access and can view the materials.
You can also rescind access if needed and restrict activities like copying, sharing, and downloading without authorization. In the data room, you’ll store all the materials investors might need to complete their due diligence.
These materials can include the concise and long pitch deck, business plan, team resumes, legal contracts, and marketing plan. Also, add the articles of corporation, financial statements, and legal licenses and contracts. Information about the IP assets the company owns can also feature here.
The biggest advantage of the online, cloud-based data room is that you can update the data as the company evolves. Understand that fundraising is not only an ongoing process, but a single round can take months to complete.
Updating the materials ensures that you send the latest information. But, without spending time reaching out to and sending individual emails to all prospective investors. You can find free data rooms online but if your company is bigger and has more complex data, consider subscribing to one.
Unsure of what information to add to the data room. Check out this video in which I have explained what investors look for in entrepreneurs before interesting. You’re sure to find it helpful.
Including the Cap Table to the Data RoomDon’t forget to include your cap table in the data room. Investors want to see the spreadsheet that reveals the ownership details of the company. For instance, option pools given to employees, convertible notes, warrants, and stock distribution among the founding team.
This information allows investors to evaluate ownership dilution and estimate potential exits and their time frames. A robust cap table demonstrates the founder’s business acumen and the company’s health. It tells investors everything they need to know about whether you’re a viable investment.
If you need help creating the cap table, use the downloadable templates available online. These tools can go a long way when you’re working out how to run a lean startup fundraising campaign. They not only help you save time but also make the materials easy for investors to access.
Get Subscriptions for Online ToolsAs mentioned above, raising capital is an ongoing effort, and you’ll need to continue running funding rounds as the company grows. This means you’ll consistently use the tools and resources, so signing up for a subscription could be advisable.
Typically, yearly subscriptions for a data room, pitch deck building templates, financial models, and presentations work out cheaper. That’s what you should go for. Also, sign up for a great user-friendly investor relationship management software.
When you’re thinking about how to run a lean startup fundraising campaign, this platform will help you monitor investor interactions. You’ll maintain a record of the contacts and prospects throughout the deal pipeline. At a glance, you’ll get a comprehensive report detailing your fundraising success story.
These investor management platforms provide real-time data analytics and reports to help you understand the scope of ongoing deal pipelines. You’ll also get information about the campaign status and its projected outcomes.
Using online tools and resources helps you save on the most valuable expense of all–time. The time you save can be used more productively for other tasks, including running the company and ensuring its stability.
Work Out How to Share Due Diligence CostsOne of the most expensive facets of your fundraising campaign is due diligence. If the campaign is successful, the company raising capital bears the costs. However, if it is unsuccessful, the potential investor must bear the expense.
Due diligence costs typically depend on the complexity, scope, and time taken to complete the process. This is why, it is advisable to draw up an agreement to establish a tripartite deal. This contract is between the target company, the investor, and the firm doing the due diligence.
The terms in the contract will clearly specify the parties responsible for paying their charges. A firm offering end-to-end services will include several professionals on its panel. For instance, a financial expert to evaluate the company’s financial health, taxation compliance, books, and statements.
A legal expert on board examines regulatory compliance, legal documents, IP ownership, and other contracts. The firm will also have operational analysts to examine the company’s functioning and management. Negotiate with the firm for economical pricing.
How to Run a Lean Startup Fundraising Campaign–Monitor Your Expenses CloselyThe more money you spend on raising capital, the less money you’ll have in the bank at the end of the campaign. Don’t let that happen. Budget wisely in advance and maintain a spreadsheet to watch your expenses. This strategy will help you track and economize on every unnecessary expense.
Monitoring your costs will help you stay within the budget, and you’ll make the right decisions when allocating money. You’ll ensure that raising capital involves the minimum of expense leaving you with more money to spend on scaling the company.
Most importantly, you’ll achieve your goals from the campaign and ensure growth until the next funding round.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
The post Save More, Raise More: How To Run A Lean Startup Fundraising Campaign appeared first on Alejandro Cremades.
A merger of equals, when executed with a strategic approach to maximize synergies, can result in multiple advantages. The surviving company can maximize revenues and profits and grow quickly thanks to streamlined operations. It can access better funding sources and pool its talent resources.
To take advantage of the benefits, completing the transaction smoothly with complete transparency is crucial for both parties. A great example of a successful merger of equals is Citi and Travelers, which occurred in 1998. Both companies are banking industry titans and led to the building of Citibank.
Another notable example is AOL and Time Warner, which resulted in the go-forward company, AOL Time Warner. Although this was a merger of equals, it is also an excellent example of what not to do. Participants in the merger should be clear on the integration procedures post-merger.
Cultural differences led to the deal’s failure, but anticipating integration challenges could have helped achieve success. Read ahead for more information about how to execute this transaction to ensure success and long-term scalability.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding the Concept of a Merger of Equals (MOE)A merger of equals (MOE) is when two companies with similar sizes and values collaborate to form a new company. Shareholders in both companies surrender existing shares in the original companies and receive new shares the legacy company issues.
The market values of the newly issued shares are similar, making them equal. Participants may have several goals for entering into the deal. These objectives may include a more prominent market presence and share or expansion into vertical or horizontal verticals.
Other reasons include operational synergies, eliminating competition, acquihires, accelerated growth, and economies of scale. Such transactions typically result in a higher share value and can even result in the legacy company going to IPO.
Although a merger of equals is a collaboration of companies of similar sizes, they may not be on similar levels. Chances are that one company has a somewhat higher market standing than the other. Instead of the conventional 50:50% partnership, the deal could be more than 60:40%.
In that case, the deal will involve legal and technical nuances that must be handled carefully. The underlining factor to remember here is that one company is not taking control of the other. Such deals are not acquisitions.
However, like a conventional M&A transaction, handling seamless integration and company restructuring is crucial for the deal’s success.
How a Merger of Equals WorksHere are some of the key aspects of MOE deals:
- Since MOE deals are unlike conventional acquisitions, where the acquirer takes control of the target, no control premium is payable.
- The going-forward company structure reflects a “stock-for-stock tax-free exchange,” meaning share recipients need not pay taxes.
- The new company’s legal structure is designed with regard to tax considerations.
- The new board of directors will comprise members from both participating companies. Both companies agree to share decision-making rights as part of the deal’s terms and conditions.
- Participating companies must carefully assess whether they are a good fit for a merger of equals. They must ensure that the transaction will drive value and benefit all the concerned stakeholders. For example–customers, suppliers and vendors, employees, and stockholders.
- Companies entering MOE deals typically operate within the same sector, providing similar or complementary products.
- Such deals are successful only if they result in enhanced growth, higher revenues, and access to funding with favorable terms. A robust balance sheet is also a goal.
Merger of equals deals come with risks that dealmakers must plan for, such as execution, regulatory compliance, and integration. Executing these transactions is complex, and the possibility of cultural differences and employee redundancies is high.
When entering into a merger of equals transaction, dealmakers should keep the details confidential until they have resolved core aspects. Setting up a fixed timeline for executing the deal helps avoid unnecessary delays in decision-making.
Once participants have finalized the terms, they can design the definitive agreement, which should include representations and warranties. These terms, along with covenants, should ensure that both companies’ interests are protected.
MOE transactions can be structured as:* Asset sale * Reverse triangular merger * Share purchase * Double merger * Section 351 exchange
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Cultural Integration After a Merger of EqualsSeamless cultural integration is the one of the most significant challenges of any M&A transaction. More so in an MOE deal. Dealmakers must create a tactical approach to handle this aspect. The first step in the right direction is clearly defining both teams’ roles, strengths, and weaknesses.
They must identify the cultural characteristics of both organizations and institute a new culture, leveraging their best assets. The most crucial step is to open communication lines with the employees. Inform them about the upcoming changes and how they will impact jobs and positions.
Since members from both companies will sit on the board, it is important to define their roles and responsibilities. Dealmakers must also prepare for invariable ego clashes, corporate politics, and company loyalty issues. The focus should be entirely on logic and reasoning to move the company forward.
Managing cultural integration should be a top priority since transitional delays can cost the legacy company. Unclear decision-making rights can lead to confusion and operational breakdowns. Production, marketing, sales, and other functions may stall or slow down, leading to losses.
Most importantly, employee motivation and morale should be upbeat. Communicating with them and giving out relevant information ensures job security and enthusiastic participation in the merger of equals. Their buy-ins are crucial for a successful transition.
Employees will also be concerned about their salary packages, benefits programs, and future training opportunities. Dealmakers must set up compensation structures using ideas from both companies. Strategies like these ensure trust and loyalty toward the surviving brand and its management.
Managing Share ValuationAlthough, in theory, MOE deals are between companies of similar valuation, some differences in valuation will always exist. Before the agreement, each company should value its shares relative to each other. This strategy will allow dealmakers to make the necessary adjustments in value.
That’s how they can determine the percentage of the go-forward company shareholders will own. Adjustments may need to be made in the working capital, cash, and debt, which can be challenging. Such complexities typically don’t exist in a conventional M&A transaction.
Participants in the merger of equals deal can agree on including covenants to ensure fairness in calculating share value.
Keep in mind that storytelling is everything in fundraising, mergers, or acquisitions. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
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Your email address is 100% safe from spam!Appointing the Executives and New Board of DirectorsTypically a merger of equals is results from two companies agreeing to collaborate for financial and strategic synergies. Since the core executives share a complementary vision and goal, allocating decision-making and management power should be streamlined.
Appointing C-Suite executives will involve people from both companies agreeing to step down and take on advisory roles. However, working out which executives will stay on can result in cultural clashes and disagreements.
Negotiating these issues and arriving at solutions quickly is crucial. Without streamlining the process, the transition and integration become complicated and involve multiple hurdles. These facets must be anticipated and planned for to ensure the merger’s success.
The board composition in the legacy company is one of the most crucial decisions. Dealmakers must agree on the board size and the incumbent directors from both companies joining. Their number will depend on the proportion of the percentage of directors from both companies.
If the number of board seats is not equal, determining the decisions that require a supermajority board vote is a great workaround. Other options include rotating the chairperson role or delegating control and decision-making to different subcommittees.
Adding new, independent directors to round out the skill sets is also advisable. Having non-biased people on board helps maintain balance and lower disagreements. Dealmakers can also assign tie-breaking votes to the new members to ensure the company operates cohesively.
Structuring Pre-Deal Funding ObligationsSince both companies are well-established in a merger of equals, they will have raised funding from external sources. Before entering the merger, they must work out how to handle these obligations and structure the securities previously issued.
For instance, they may have awarded employees with option pools and issued SAFEs, convertible notes, and warrants. Prior to executing the merger, the management must calculate the per-share valuation of each instrument.
Based on the value, they can determine whether the holders will receive shares in the legacy company and their relevant proportion. Employee option pools typically have vesting periods. Managers must calculate the vested to unvested shares outstanding in each company.
As a rule, any outstanding equity awards employees have already vested in transfer to the surviving company. The vesting schedule and related terms and conditions will also remain the same. However, the number of shares and the exercise price will depend on the pre-determined exchange ratio.
Both companies must also agree on structuring future equity awards and option pools. They must design a common game plan to treat both teams fairly and create a new format moving forward. However, this equity structure will also proportionally dilute shareholder ownership.
Clarifying all these nuances in the definitive agreement of the merger of equals eliminates confusion.
Treating Preferred Stock Awarded to InvestorsCompanies raising capital from investors often issue preferred shares to compensate for the capital. These shares award investors with rights over the company’s assets and revenues. However, owners must work out how to handle these preferred shares when the company enters a MOE deal.
At times, the common stock value is lower than the preferred stock value. In that case, the preferred stockholders stand to receive a higher payout per share. As a result, the common stockholders may receive a very low or negligible payout.
Management must choose to make adjustments or cutbacks to ensure that all shareholders receive fair and equitable treatment. This strategy lowers the preferred share value but also honors the preferential rights of preferred stockholders.
Alternatively, the management can issue “mirror securities” in the go-forward company. This strategy awards proportional preferred shares in the new company, which will feature in the cap table. Or, the management may convert all the outstanding preferred stock into common stock.
This approach streamlines the surviving company’s ability to raise future funding rounds after the merger of equals. However, before executing the conversion, the management may have to negotiate with the stockholders for approval.
They will also have to agree on other nuances, like conversion rates for each class of preferred stock. Another aspect under discussion is determining the conversion’s tax liabilities.
Looking for more information about what are preferred shares and how they work? Check out this video, in which I explained how to structure them.
Navigating Anti-Trust and Regulatory ConsiderationsParticipating companies in a merger of equals are typically competitors or complementary brands. This is why they will likely come under regulatory and anti-trust scrutiny to ensure the deal does not violate any laws.
Dealmakers should be cautious about ensuring that their partnership protects consumer interests and does not restrict competition. Before closing the deal and initiating integration, they should identify sensitive areas and work out solutions.
For instance, complying with ESG rules ensures that the legacy company will be compliant. Adopting an inclusive culture and creating equal opportunities promotes the brand and adds value to the market. Customers also appreciate the company’s efforts.
Other nuances that can influence success include adopting a brand name that resonates with teams on both sides. It should encourage and motivate them to work toward the new vision. Consider a name that combines the two brands or an entirely new company persona.
The Takeaway!A merger of equals deal can have strategic advantages and multiple synergies for the participants. Such transactions face the usual integration challenges that most M&A deals go through. Extensive planning can help streamline the collaboration so the surviving company is up and running quickly.
However, executing a MOE integration may involve additional complexities because of the share exchange and compensating stockholders fairly. Accounting for the possible pitfalls can ensure that the transaction proceeds with a high probability of success.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
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Estimating the hidden costs of startup fundraising is a crucial first step before you start reaching out to investors. Most founders and senior executives working out the nuances of bringing in investors tend to focus on key aspects. These include possible dilution, interest, giving up equity, and more.
You may also be concerned about giving up board seats and voting rights or negotiating convertible notes and SAFEs. But, side by side, you need to think about the costs you’ll incur to get money in the bank. Before pitching to investors, you’ll estimate the final amount at the company’s disposal.
Regardless of the funding source you tap, you’ll have to cover the hidden costs. Understanding these additional costs is always advisable so you can make informed decisions about the best strategies to adopt. Read ahead to understand how they work.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Hidden Costs of Startup Fundraising–Who Pays ThemBefore reaching out to investors and creating a pitch deck, you’ll estimate the company’s funding needs. The amount you need to raise depends on how you intend to spend the capital. For instance, research and development, product upgrades, tools and machinery, or high-grade talent.
Also, factor in the fees you’ll pay to get money in the bank. For starters, account for attorney fees, the fundraising consultant fees, broker-dealer fees, legal fees, and due diligence costs. You may also pay the fundraising professional an upfront or monthly retainer fee to secure their assistance.
Other fees can include legal costs to ensure compliance with applicable regulations, administrative costs, and filing fees. Expect the legal costs to consume a big chunk of cash since you’ll also cover the charges for the investors.
If its initiatives are successful, the company raising capital typically covers the costs. However, if the deal fails, the investor must cover the expenses. You’ll iron out these details when negotiating with the investor to avoid the possibility of a dispute.
Setting a cap on the maximum fees is also advisable so you don’t lose a large portion of the money. Startups in their early stages may not be stable enough to carry the expense. If this is you, evaluate the different sources of capital before making a choice.
Considering your expected ROI, carrying the costs and paying for the capital in interest and/or equity has to make sense.
Hiring a Fundraising Consultant–Does it Make Sense?Founders often ask the question–is hiring a professional fundraising consultant a practical choice? The hesitation is understandable, considering their fees. Typically, professional consultants charge a success fee ranging from 3% to 5% of the total capital they help you raise.
This fee depends on the professional’s expertise, years of experience, and the funding round size. Other factors also come into play, such as the vertical where you work, company size, and product category. That’s because they influence the complexities and details the expert must manage.
However, the fee is payable only if the capital-raising initiative is successful. Also, expect to pay a retainer or fixed monthly fee for ongoing tasks the consultant performs. These tasks include developing funding strategies and building your pitch deck.
Many founders partnering with an angel investor may prefer to rely on their assistance. Angels have a robust network of other investors and are willing to invest time, resources, and expertise in helping them. This assistance extends to further funding rounds, but they may not have a specialized team.
However, retaining the services of a dedicated professional is always a better choice. They will work closely with your founding team to understand how the company works and its funding needs. You can also expect a customized pitch deck highlighting the best assets that make your company viable.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
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Founders Fundraising Themselves is Never AdvisableDon’t make the mistake of thinking you can handle the fundraising on your own. For starters, not all founders have the expertise to convince investors they are worth backing. Further, you’ll invest man hours and divert your focus from the company’s growth.
Involving your founding team isn’t a great idea either. Considering that funding processes could take months, the lack of focus could spell disaster for the company’s momentum. That’s something you don’t want to risk.
Experts estimate that founders typically lose over 30% of their growth momentum over six months. When you’re ready to connect with interested investors, your company’s valuation could have taken a significant hit. You also risk losing some of the core talent.
Hiring a professional consultant can more than cover the hidden costs of startup fundraising since they have extensive experience. Further, they’ve built a robust network of contacts across the industry, and strategic partnerships can help lower costs.
Top consultants will leverage their relationships and connections to find the best investment deals with favorable terms and conditions. At the end of the funding round, you’ll not only have capital in the bank but also a stable company.
You’ll maintain valuation since your focus will remain on its operations. The capital you’ve raised can be put to good use to bring you the maximum return on investment. This is why investing in a top consultant is always a win from the long-term perspective.
Fundraising Consultant vs. Broker-DealerIn the US, founders can retain the services of a fundraising consultant or a broker-dealer. Both professionals provide assistance; however, consultants offer tactical guidance and support through the capital-raising process. They are not directly involved in managing the transactions.
Consultants may assist you with creating the pitch deck, building a list of targeted investors, and negotiating terms. Their services are typically payable by the hour. Broker-dealers offer a broader scope of services, acting as intermediaries between the founder and investor.
Unlike consultants, broker-dealers register with FINRA and work under SEC regulations. Considering the kind of services they perform, consultants don’t need to register.
As for compensation, broker-dealers may have different packages, such as:
- A pre-determined percentage of the total capital you raise. The higher the capital amount, the higher the fee you’ll pay. Consider negotiating for economical fees if you’re raising an exceptionally large funding round.
- Alternatively, companies can hire broker-dealer services on a fixed fee basis, paid out at regular intervals. This charge is payable regardless of whether you’re actively raising funding or are between rounds. Experts will tell you that the right time to start planning a funding round is after the last successful fundraise.
- Expect to reimburse broker-dealers for expenses they incur during the funding round. For instance, traveling to meet investors or creating promotional materials. Discuss these charges when hiring their services to ensure complete transparency. Setting limits is also advisable.
- Some broker-dealers may negotiate for a bonus you’ll pay at the end of the successful funding round. This is like an extra reward for the exceptional efforts they dedicate toward your company.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Breakdown of the Hidden Costs of Startup Fundraising–What to ExpectEstimating the possible costs of raising capital helps you prepare for them. On average, expect to pay anywhere from $50K to $300K, though you can economize with an extensive network. Using personal connections, digital tools, and aggressive negotiation can help lower costs.
As mentioned in the foregoing sections, you’ll plan for the fee payable to the fundraising consultant or broker-dealer. Aside from these fundamental costs, you’ll estimate legal fees, due diligence fees, and other overheads. Also, work out who will be responsible for paying the charges.
Legal CostsLegal assistance can be expensive, and the charges are part of the expenses that most founders tend to overlook. Startups should always have access to a top-notch legal firm to assist them with staying compliant with typical regulations. You’ll also need their services when raising funding.
- If you’ve retained the services of a legal team, you’ll cover their fee on a regular schedule. This is essentially a retainer fee ensuring access to their assistance when you need it. The cost is also calculated in anticipation of the services you might need in the future.
- Companies that don’t need regular services can choose to pay the legal team on an hourly basis. The charges will depend on the firm’s expertise, the type of services it offers, and its location.
- Some legal firms have fixed charges for specific tasks, such as drawing up contracts or term sheets. This approach takes away the guesswork, so you know exactly what to expect.
- In addition to the regular legal fees you’ll pay, factor in the regulatory fees you’ll pay for official filings. For instance, when you take the company to IPO.
- Legal fees can depend on the deal’s complexity–for instance, if the transaction involves multiple investors.
Legal costs vary according to the funding round and the capital amount raised. Remember that the company covers any legal costs investors incur. Here’s a quick estimate of the charges to expect.
- Pre-seed round: ~$10K
- Seed round: ~$15K for one party to the deal.
- Series A round: ~$40K, but can go up to $75K for one party to the deal.
- Series C round and beyond: from $250K to $1M.
An essential aspect of the fundraising process is knowing how to navigate the due diligence process. Check out this video, where I explain how it’s done. It will also help you understand how to estimate the costs.
Due Diligence CostsFundraising involves meticulous due diligence, as investors must learn everything about the founder and company. They want assurance that the investment is sound and will bring good returns. Due diligence is part of the hidden costs of startup fundraising that you should plan for.
That’s because the company carries this cost if the investment deal is successful. Due diligence covers financial audits, company performance, team, and founder background. When calculating the final money you’ll have for achieving the company’s objectives, deduct this cost and focus on the net.
Add the fee paid to third party service providers such as industry experts, market analysts, and risk analysts. Investors will also likely hire legal teams to assess compliance risks, IP ownership, and potential liabilities. Legal will also examine contracts and agreements the company may have.
Be open to investing in the best teams to conduct due diligence to reassure investors. It indicates your commitment to building long-term relationships and potential for further funding rounds. Building trust and transparency goes a long way in the business ecosystem.
OverheadsSeveral other hidden costs of startup fundraising may come up that you haven’t anticipated. Here’s a quick look at them:
- Digital age founders rely on secure data rooms to share sensitive and confidential information. Using data rooms allows you to restrict access to the people to whom you want to send the data. It will also help you protect business secrets from reaching competitors.
- Several digital tools are now available to help you not only create compelling pitch decks but also present them. Leverage the best options like Skype, Canva, Attach, and Prezi. Don’t forget to bring the pitch saved on USBs to hand out to interested parties.
- Although pitching the deck remotely via Zoom conferencing is doable, in-person meetings tend to have a bigger impact. Keep in mind that investors invest in founders and how to present the pitch with the right body language works well. Factor in travel expenses to meet investors and the costs of giving product demos to display how the MVP works. Think, air tickets, hotel room fares, and entertaining investors with dinners and drinks.
- Even if you’re organizing local meetings, add up the costs of traveling to meeting sites, gas, parking, food, and more.
- Plan to attend industry trade fairs and roadshows, where you can interact with potential investors and partners. Account for entrance tickets, which can be expensive, as well as travel and accommodations.
Before We Sign Out!!Capital is, undoubtedly the lifeblood of a company and you’ll need it for long-term scalability. Before you start strategizing how to approach investors, work out exactly how much you need to meet the next milestones. Side-by-side, factor in the hidden costs of startup fundraising.
Calculate exactly how much the funding round will cost you and weigh the different sources before making the final choice. Hiring an expert consultant or broker-dealer is also preferable since they will help you economize and derive the maximum value from your efforts.
Considering the multiple benefits of the assistance they can provide, paying their fee is well worth the costs.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
The post The Hidden Costs Of Startup Fundraising: How To Budget For Success appeared first on Alejandro Cremades.
Dealmakers entering into an M&A transaction should understand how to design earnouts to avoid disputes. Including the earnout provision raises the chances of the deal closing with benefits for both parties. M&A advisors suggest using this strategy to cover the gap in company valuations.
Statistics show that at least 33% of M&A deals included an earnout provision in 2023. This is a surprising uptick from 21% during the same period in 2022. Several factors have contributed to this growing trend, and the most crucial is the reduction in the number of M&As.
Rising interest rates over the last couple of years have successfully curbed inflation. But, they have also resulted in an increase in the cost of borrowing.
Buyers looking to purchase companies are hesitant when raising funding because of the lower projected valuation of their target acquisitions.
On the sellers’ side, higher stock market valuations have raised expectations, and they demand a higher price for their companies. Earnout provisions allow the buyer and seller to reach a middle ground, making the deal attractive.
Read ahead to understand in detail what earnouts are and how to include them in the deal.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding How Earnouts WorkEarnouts effectively bridge the gap between the company valuations from the buyer and seller perspectives. They act as an incentive to the seller to accept the offer and proceed with the closing. Buyers use earnouts as leverage to lower the risks when purchasing a possibly overpriced company.
However, considering that earnouts and their conditions are becoming more complex, the chances of disputes and disagreements is also higher. Here’s where the expert M&A advisor comes in. These professionals can help negotiate the terms, conditions, and provisions and draft the agreement.
A well-crafted agreement that includes fair and transparent earnout clauses reassures the seller, allowing the deal to progress without hurdles. Earnouts are essentially payments that buyers must make to the seller after the M&A transaction closes.
These payments are subject to certain conditions or the company achieving pre-determined financial targets or operational milestones. For instance:
- The team reaching specific research and development milestones
- Particular levels of production or production capacity
- Acquiring licenses and certifications or approvals from regulatory bodies
- Reaching milestones like Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), .revenues, or profits
M&A advisors and legal teams on both sides of the table negotiate the provisions and terms. The terms and terminology are determined according to the circumstances under which the deal is taking place.
How to Design Earnouts to Avoid Disputes–Typical Covenants in a Merger AgreementWhen drafting the M&A agreement, dealmakers must include clear and precise terms to indicate how earnouts will be calculated. Keep in mind that in case of a dispute, courts will not accept any implied terms. Only the covenants that both parties expressly agree to are accepted. For instance:
For Calculating Earnout Payments* Conditions that the buyer must maximize the amount of earnouts they’ll pay. * Convenant that the buyer will take the necessary actions and initiatives for the long-term growth of the company post-M&A. These actions may include commercializing and marketing new products, investing in asset purchases, and expanding its production capabilities. Essentially, any actions that can potentially raise profitability and earnouts for the seller. * Both parties agree on a pre-determined schedule and rules for calculating the earnout amount. These criteria can be the EBITDA, number of new customers acquired, synergies, or discounts offered on larger orders. Such discounts encourage bringing in more customers for higher sales volumes. * Both parties accept that a neutral, unbiased third party will calculate the earnout payments. However, the seller and buyer can present their feedback and arguments. While they can object to the calculation, it can only be on limited grounds, such as incorrect information used in the calculations. * The agreement will include different possible scenarios and how the earnouts are calculated based on them. * A covenant that allows the buyer to offset misrepresentations and damages against earnouts. M&A agreements must specify this possibility since courts may not accept the seller’s claim that the two are unrelated. Clear and precise language eliminates the possibility of conflict. * Other documents not part of the M&A transaction should clearly indicate how to design earnouts to avoid disputes. The letters of intent (LOI), board presentations, term sheets, and other documents should consistently express the same criteria. Any ambiguous or nonaligned provisions can cause disagreements. * Sellers can request to add certain covenants to accelerate earnout payments if the conditions are breached. See How I Can Help You With Your Fundraising Or Acquisition Efforts
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For Company Management Post-M&A* If the seller agrees to stay on as a consultant, the buyer cannot terminate their employment during the earnout interval. * The buyer agrees to continue running the company in good faith, similar to the practices the seller has established in the past. These practices include accounting standards, mission, work ethics, culture, and customer service. * Without this condition, the courts may accept any decisions the buyer makes regarding company management. When negotiating earnout terms, M&A advisors specify what they mean by “best efforts” or “commercially reasonable efforts.” * Covenant that specifies whether the buyer can rebrand the company or its products and services. * A covenant that allows the buyer to remove core talent, skill sets, and consultants or may any significant structural changes in the company. This condition will apply to any changes that can influence the earnout payment–whether maximizing it or interfering with achieving milestones. * Buyers should be cautious about their conduct after the M&A deal closes. Any misconduct can raise questions about their compliance with the agreement’s terms and conditions.
Despite adding covenants and conditions to the M&A agreement, disputes and disagreements are real. Both parties may not agree on how the earnout payments are calculated. In that case, it’s advisable to negotiate a resolution or seek dispute resolution and arbitration.
Bringing in an independent accountant to deliver a binding judgment is never a good idea. That’s because they might need expert counsel to examine the facts of the dispute and determine whether the parties acted in good faith.
Benefits of Including Earnout Provisions in the Merger AgreementIncluding earnout provisions can prove to be advantageous for both dealmakers in the M&A deal. If the company continues to perform well or performs above expectations, the seller can hope to get some returns.
From the buyer’s perspective, earnouts incentivize the seller and stakeholders to remain involved and committed to the company’s success. This factor helps the buyer hedge against unexpected events and derisk their investment against claims the seller might make.
Such events can include uncertain market conditions, regulatory changes, and other macroeconomic factors. For instance, the seller may project that the company has the potential to achieve a certain growth level. This can be equivalent to five times the earnings over the next three years.
The buyer can offer to pay a price that matches its current growth profile on agreement of an earnout. If the company delivers on its potential within the projected time frame, the seller can claim the price difference. Or, per the terms of the agreement, a pricing calculated on the actual growth.
Earnout conditions like these present a win-win situation for both parties. On the flip side, disputes have also increased four times over. Experts suggest that most dealmakers resolve their issues privately under the guidance of experts. This is why there may be a higher number of disputes than reported.
So, how to design earnouts to avoid disputes?
Designing Earnout Provisions–Avoiding PitfallsAvoiding disputes after an M&A transaction is possible by crafting the agreements meticulously. Here are some of the steps you can take.
Ensure You Use Clear and Precise TermsYou’ll retain the services of an expert M&A advisor and legal team when designing the agreement and other paperwork. The experts will ensure that they avoid terms that are open to interpretation. Terms and phrases can often be defined in subjective ways.
Instead, use metrics and numbers that can define the goals and milestones clearly. For instance, you can use net revenues, sales, EBITDA, getting licenses or regulatory approvals, and completing clinical trials. You can also further clarify metrics by mentioning the specific earnout that will accompany it.
Let’s assume that you’re using the net revenues metric. Your agreement will specify a percentage of the revenues and thus clearly demonstrate how the earnout will function. Adding deadlines for meeting the targets is also a practical move. For instance, clinical trials were completed within two years.
In addition to metrics, the agreement can also include rights for the seller. These can include the right to access information that can influence the earnout calculation. Sellers should be able to access the data buyers use to make strategic business decisions.
Most importantly, it is never advisable to use standardized earnout clauses and covenants. Each company and M&A transaction is unique, and dealmakers must design their earnouts after accounting for company-relevant aspects.
Keep in mind that storytelling is everything in fundraising, mergers, or acquisitions. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Specify the Buyer’s Efforts and ObligationsWhen understanding how to design earnouts to avoid disputes, don’t make the mistake of assuming the buyer’s best conduct. Accordingly, the earnout provisions should specify that the buyer will make the best efforts and make sound business decisions.
Buyers should commit to running the acquisition to maximize its profitability and the earnouts for the seller. Interpreting best efforts and sound business decisions can be open to disagreement. This is why the merger agreement must include the definitions of the best efforts and conduct.
Some examples include industry-specific benchmarks to assess the buyer’s efforts. You can use terms like: “a party is required to do essentially everything in its power to fulfill its obligation.” Even so, there have been instances where buyers restrict the company’s performance to minimize earnouts.
This factor becomes particularly relevant when the earnouts are paid only within a specific time. Sellers can avoid this risk by including other provisions to prevent the buyer from firing core employees and continuing with ongoing training.
Or, sellers can insert clauses requiring the buyer to maintain promotional campaigns that have proven successful in the past. Here’s another example: binding the buyer to continue funding the research and development department for product improvement.
Assume Disputes Will AriseWhen working out how to design earnouts to avoid disputes, assume that disagreements will happen. Accordingly, you’ll add covenants for resolving disputes quickly and economically without engaging in expensive court litigation.
The merger agreement can have clauses that outline the timeframe within which disputes must be resolved. For instance, set a 100-day deadline. Without these timelines, conflicts can extend for months and even impact company operations and stability.
Specifying the issues that can cause a dispute can also ensure that dealmakers resolve them quickly. Yet another covenant to include is how the dispute will be resolved. Define the specific subject matter experts to bring in, their duties, and if they can retain other consultants.
For instance, specify if the parties can resort to arbitration to resolve the matter. And, if both parties will agree to the solutions brought by the arbitrator. Defining who will have jurisdiction over the dispute is also a good move. An attorney should be assigned to deal with say, legal matters.
Again, if the dispute involves calculating earnouts based on revenues, an independent accountant could satisfactorily handle the issue.
To Wrap Up!Although earnouts have several advantages in streamlining M&A transactions, working out their complexities can be challenging. Rely on expert professionals to guide you on how to design earnouts to avoid disputes.
Include the necessary provisions in the merger agreement to plan for disputes and conflicts. You’ll also include a framework for resolving the issues so both parties can reach a satisfactory conclusion.
Leverage this M&A strategy for the company’s long-term growth, profitability, and sustainability and ensure wins for all the stakeholders.
You may also find interesting our free library of business templates. There, you will find every single template you need when building and scaling your business, completely for free. See it here.
The post How To Design Earnouts To Avoid Disputes appeared first on Alejandro Cremades.
Tanuj Mohan is no stranger to the world of entrepreneurship. From growing up in India to becoming a successful, repeated founder, his journey is a testament to innovation, perseverance, and a deep understanding of technology.
Tanuj shared insights from his journey across sectors like network management, smart building solutions, and energy efficiency in this interview. He highlighted valuable lessons on building effective boards, scaling companies, fundraising, and navigating corporate acquisitions.
Let’s dive into the fascinating story of how Tanuj got started and what drove his successful ventures.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Beginnings: Engineering over MedicineBorn to a doctor father and an English mother in India, Tanuj grew up in a diverse household. The path for middle-class families in India was often binary—one either became a doctor or an engineer.
Watching his father work long hours, even during vacations, Tanuj realized the medical profession wasn’t for him. Instead, his curiosity for how things worked led him to engineering. His education began at IIT Delhi, which laid the foundation for his technical expertise.
But Tanuj wanted to roam the world more than just seek knowledge. Back then, the key to that was a move to the U.S., and that’s precisely what he did after graduating from IIT.
Navigating the Corporate World: A Big-Picture ThinkerTanuj began his career at Hughes Software but quickly realized that corporate life wasn’t entirely satisfying. He questioned why certain things were done a certain way, mainly because he saw things at a systems level.
Many of his tasks were minor components of much larger projects, which didn’t align with his big-picture thinking. One notable anecdote from his corporate days was a project optimizing traffic signals for future self-driving cars that could communicate with the signals.
Tanuj stepped back and asked a simple question: “If all cars are self-driving, do we even need traffic signals?” This type of higher-level thinking set him apart early on. In his mind, traffic signals would be eliminated, meaning optimizing them was unnecessary.
Working in the corporate world as an engineer, Tanuj was given tasks without being allowed to understand the context of the task, which was frustrating for him. However, he recalls learning a lot about how large companies were managed and getting extensive exposure.
Tanuj’s career in networking gave him an incredible vantage point. He worked with early protocols like AppleTalk, Frame Relay, and XNS when IP wasn’t dominant, which gave him valuable insights into how people thought and developed their own protocols.
Apple talked from one extreme ease of use, IPX performance, and IP as somewhere between ease of use and performance. Tanuj learned how the different design choices companies make and how slight shifts in what they’re solving for can lead to entirely different solutions.
The Leap into EntrepreneurshipTanuj’s first step into entrepreneurship was working at Novell in Bangalore. He was part of a team building the next-generation version around fault tolerance high-availability systems for the company.
A couple of years later, three of his colleagues from the U.S. left to start a company called iManage, and they invited Tanuj to join them. He became the first engineer to play a critical role in developing a network management system for Yago, a gigabit operation company.
Eventually, Yago was acquired by Cabletron Systems. As Tanuj recalls, the network management platform was built generically, making it versatile and scalable. Pipelinks adopted it very successfully.
After Yago and Pipelinks were bought by Cisco and Siemens, respectively, they were the network management team for both companies. Ultimately, it became the de facto network management system for Cisco’s optical line of business units.
Tanuj navigated the complexities of acquisitions and saw his early work stand the test of time. His network management platform continued to be used long after the acquisitions, a rare feat in the tech world. His experiences in the corporate world ignited the inspiration to build more.
Enlighted: The Birth of a Smart Building VisionThe idea for his company, Enlighted, struck Tanuj during his corporate days at Cisco. He looks back to the time when he was optimizing small pieces of router code of one packet per second. Optimizing the code, the router throughput could increase by one packet per second.
However, Tanuj saw entire office floors lit and HVAC systems functioning for entire buildings with just five people working where there could have been 1500 people. Outdated sensor technology resulted in inefficient energy use in buildings.
Tanuj’s answer to waste was built-in technology rather than bolt-in technology. Every light fixture should be able to sense its environment and make its own locally optimized decision. That’s the leap they made–combining light sensors with actuation and software.
Tanuj and his team came up with the idea for Enlighted when they decided to install sensors in each light fixture, enabling local optimization of energy use. That’s when Tanuj decided to leave the corporate world and start his own company.
Instead of treating lights, sensors, and actuation as separate systems, Enlighted unified them, enabling each light to sense its environment and make its own decision on when to turn on or off.
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Overcoming Market BarriersEnlighted entered a tough market: construction. Early on, Tanuj faced the realities of the “construction mafia,” a difficult channel to break into which isn’t conducive to startups. Worse, the market had just crashed, and new construction projects had stopped.
The company pivoted to focus on retrofitting buildings with LED lighting combined with their smart sensors, which led to significant energy savings. Tanuj’s unique insight allowed Enlighted to offer these retrofit kits as a no-risk proposition.
These kits could replace existing fluorescent lights with LEDs. The savings from reduced energy use paid for the system itself, making it an attractive deal for companies like Google and AT&T that embraced it directly and instructed the channel and industry to integrate the solution.
The Enlighted product design enabled it to penetrate the market without disrupting the entire chain. Tanuj and his team could come in over the top and sell the proposition directly to the end customers. However, they also realized that most people didn’t understand the impact on savings.
Tanuj had to devise a strategy to make real sales beyond leading tech companies. Then, he realized that the energy savings were significant since around 70% to 80% of the energy spent on lighting was wasted. Enlighted could recover that waste.
To make that happen, Tanuj created a finance model and made it a CFO sale. They approached AT&T and offered to replace all its fixtures with Enlighted technology. Payments would be made over the next three, five, or seven years for the system at a fraction of the savings they’d make.
Eliminating the risk factor would enable Enlighted to scale. However, the true magic lay in the data since Enlighted was not just about lighting control. Its platform collected second-by-second data about building usage.
Enlighted also had a radio that could scan for Bluetooth signals in indoor locations. Although they were adding far more expensive components than regular sensors, they had value from the data, creating the potential for a wide range of SaaS applications.
Tanuj and his team created a global energy optimization program, helping companies analyze energy consumption across entire building portfolios. This program allowed energy rates to normalize in Hawaii versus Texas.
Enlighted also launched a SaaS application because the application could benefit entire corporations, not just local buildings.
Raising Capital: Navigating the Fundraising LandscapeFundraising wasn’t easy for Enlighted, particularly because they were creating a new market. Tanuj recalls a critical piece of advice from an investor–you can draw all investments in four quadrants. Most investments happen when the investor knows both the people and the industry.
The second type of investments happens when the investor knows the people but not the industry. The third type of investments happens when they know the industry but not the people. And the fourth is when they don’t know the industry or people.
In Enlighted’s case, neither was true—Tanuj was known for networking but not in the relatively new energy efficiency market. Enlighted did not have credibility, which made attracting funding more challenging. It would have to move into one of the four quadrants.
The company’s fundraising journey started with seed investors who believed in Tanuj’s vision–Silver Lake, a PE firm. Eventually, he raised over $100M. One crucial lesson Tanuj learned during fundraising is that if you educate an investor about the market, it’s unlikely they’ll invest in you. After all, once they’ve learned, they may just choose to invest in someone else.
The Siemens Acquisition and BeyondEnlighted’s success eventually caught Siemens’s attention. The acquisition was a perfect fit, as Siemens had the scale and reach to bring Enlighted’s smart building technology to markets worldwide.
As Tanuj recalls, when building Enlighted, the key focus was on SaaS and market value. However, several other aspects needed to be worked out, such as installation, the construction industry, construction channels, regulations, Title 24, data business, and SAC–that Siemens would do.
Siemens saw the incredible potential of saving carbon and using its data for other purposes, including HVAC optimization, fire alarms, physical security, and, particularly, contact tracing, which was crucial during COVID-19.
The acquisition also brought credibility to the Enlighted brand, reassuring customers that their decision to install the system would stand for 20 to 30 years.
Working at Amazon SidewalkAfter the acquisition, Tanuj returned to the corporate world, joining Amazon’s Sidewalk division—a unique blend of startup culture within a corporate giant.
Tanuj describes it as a well-funded startup with the backing of Amazon’s brand, providing access to resources and networks that typical startups can only dream of. It had product management, business development, and all the functions of a small team.
This allowed Tanuj to continue pursuing innovation in a fast-moving environment while avoiding some of the common pitfalls, such as fundraising, brand recognition, and longevity issues. Tanuj actually joined Amazon Sidewalk because he passionately believed in its vision.
A good example is a smart tap with a Sidewalk chip integrated into it. The chip can communicate directly with the cloud, allowing users to scan the tap and configure it with a scan to send the user a text message if it is leaking.
Once manufacturers install the Sidewalk sensor, they can sell the smart tap through regular distribution channels and in stores like Home Depot or Lowe’s. The smart tap can automatically find a network and connect to the cloud.
Sidewalk has several such opportunities where the IoT could materialize. Tanuj realized that investors and entrepreneurs were approaching the company from every vertical, and it had extensive applications with any device that could be connected to the internet.
Joining AirEye as CEOTanuj recognized that Wi-Fi-enabled devices like radios, printers, coffee machines, and TVs can be accessed directly over the air. But, they are also vulnerable to remote hackers and lack a first line of defense.
The only defense is the firewall provided by the network. Since devices are designed for ease of use, they have a very low bar for security and are not patched regularly for security.
Tanuj’s critical, out-of-the-box thought processes triggered the thought that critical devices managing critical things didn’t have a first line of defense on their wireless side. When he raised the question, he was told that managing different verticals came with specific processes.
That’s when AirEye approached Tanuj with the offer to join as CEO and take over the company. Although still in its early stages, the company has already raised $8M.
Storytelling is everything, and Tanuj Mohan was able to master it. The key is being able to capture the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Talking about what AirEye is doing, Tanuj cites the example of the airport attack uncovered when users tried connecting to public Wi-Fi. Since every area provides wireless services, they need specific wireless airspace defense.
This defense system prevents users from connecting to rogue networks, evil twins, and bad actors, as well as prevents bad actors from connecting with user devices. This is the vision behind AirEye, which is installing an overlay network alongside existing hardware.
Tanuj believes that access providers will consume this functionality since they have to run more resources to create a continuous active defense at every node.
Accordingly, defense won’t be an afterthought. It will be integrated with the service provided and consume as many resources as delivering the service. Currently, 15% to 20% of resources are assigned toward defense.
Retrospection and Vision for Tomorrow’s WorldVisualizing the world tomorrow, Tanuj envisions integrating Enlighted sensing technology in every commercial light fixture. Because the data stream is consistent worldwide, anybody could write an application for iOS or Android devices.
When Tanuj built Enloghted, they were making money on sensors, but there’s a lot of room and margin for competitors. When lighting companies approached him for licensing opportunities to build their sensors, Tanuj focused on pricing at software margins.
In retrospect, Tanuj would have given away the hardware reference designs and software to enable more data to be collected in the cloud. He would have focused on building a SaaS application, paying a percentage back to the light fixture manufacturer who helped collect the data.
Enlighted was earning great revenues from hardware sales at the time, but licensing the technology to fortify the data platform and applications would have been a strategic move.
Lessons for Aspiring EntrepreneursTanuj Mohan’s journey is filled with lessons for entrepreneurs. He emphasizes the importance of understanding not just your product but the entire ecosystem around it. He advises entrepreneurs to work backward from their vision, know how to achieve it, and not lose sight of it.
Whether it’s fundraising, understanding market channels, or making strategic decisions about scaling, Tanuj’s experience shows that success lies in a blend of technical innovation and business acumen.
From optimizing energy use in buildings to scaling a company for global impact, Tanuj has never lost sight of his mission: solving real-world problems with cutting-edge technology. His story inspires those navigating the complex world of startups, acquisitions, and beyond.
Listen to the full podcast episode to know more, including:
- Tanuj’s career began in engineering. Driven by curiosity and big-picture thinking, he moved away from corporate roles into entrepreneurship.
- His first venture in network management set the foundation for acquisitions by industry giants like Cisco and Siemens.
- Enlighted, Tanuj’s smart building solution, addressed energy inefficiency by integrating sensors into light fixtures, enabling local optimization.
- Enlighted’s pivot to retrofit solutions and data-driven SaaS applications helped overcome market barriers in the construction industry.
- Fundraising was challenging due to a lack of credibility in the energy sector, but Tanuj eventually raised over $100M by aligning with investors who believed in his vision.
- Siemens’ acquisition of Enlighted brought global scale to smart building technology, reinforcing the long-term viability of the system.
- Tanuj’s current role at AirEye continues his mission of solving critical problems, which, this time, focuses on securing Wi-Fi-enabled devices from remote hackers.
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In a rapidly changing world, navigating uncertainty, building scalable solutions, and creating positive social impact are more critical than ever. These were the focal points of the conversation with Maheen Rahman, a trailblazing entrepreneur and finance leader who has raised over $400M.
Maheen also talks about building a product to bridge the gap in the market and thinking beyond the commercial aspects of her company, Infra Zamin. She now leads a unique initiative reshaping access to capital in emerging markets.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Global Upbringing and Embracing ChangeBorn in Lahore, Pakistan, Maheen’s early years were shaped by a dynamic, multicultural upbringing. Growing up in Pakistan, the UK, and Africa, she attended six different schools by the time she graduated high school.
Constantly moving, she learned to adapt quickly and build relationships in new environments—a skill that proved invaluable throughout her life. She moved back to Pakistan in 2005 and started her entrepreneurial journey.
Reflecting on these formative experiences, Maheen shared, “Change is a constant in life, and you can’t get too attached to certain ways of doing things or places. Embracing change rather than resisting it leads to growth.”
This adaptability became a cornerstone of her personal and professional philosophy, allowing her to thrive in the ever-evolving world of finance.
The Fascination with Finance: A Journey from Wall Street to PakistanMaheen’s journey into finance began with an early fascination sparked by Michael Lewis’s book Liar’s Poker, which delves into the rise of Wall Street in the 1980s.
The world of bonds, stocks, and corporate deal-making captured her interest, leading her to pursue a finance degree and, after graduation, a career in the corporate world.
Maheen began her career at major financial institutions such as Merrill Lynch and ABN AMRO Bank N.V., where she was introduced to the intensity of investment banking. She recalls the grueling schedule of the three-month training course that Merrill Lynch sent her for.
“I’ve done the 18-hour days and the all-nighters. It was intense, but the grounding I received in understanding how finance works was exceptional,” Maheen recounted. She also did the investment banking routine way back in early 2000.
Her time at these institutions sharpened Maheen’s financial acumen and solidified her belief that finance, while complex, is accessible. “It’s not rocket science,” she often tells others. “Once you learn the basics, you can apply them anywhere.”
Maheen also learned how to use techniques and tools within the financial sphere to accomplish various tasks.
Taking on the Challenge of RestructuringIn 2009, Maheen took on one of her biggest challenges yet. At just 32 years old, she was appointed CEO of IGI Funds, a struggling asset management company that had lost 40% of its baseline equity and was incurring losses. At the time, it had been acquired by a larger financial group.
With the global financial crisis still casting a shadow, Maheen embarked on a daunting integration and restructuring process of two very different companies. This experience, particularly the cultural challenges of merging two teams, laid the groundwork for her next big leap.
She recalls, “We had to let go of 70% of the workforce, which was the hardest part. You’re dealing with people, many of whom had been with the company for a long time. But we managed to turn the company around in around 6 to 13 months.”
Maheen recalls how they restored investor confidence and ultimately made the company profitable. Despite the layoffs, their primary objective was to give better investment returns to investors and shareholders. Eventually, in 2013, the company was acquired by a larger group.
Maheen reveals that within 36 months of her taking over, an offer was on the table for the company since the sponsors were looking to sell out. She also talks about the challenges of managing an acquisition and viewing the deal dispassionately as a small asset manager.
Maheen looks back at how they didn’t have much in terms of distribution, and since they were a small-scale institutional business, the company’s growth was going to be stunted.
It needed asset managers with more significant investment potential to shift its shareholding structure away from family-owned groups toward large-scale financial institutions with the breadth, width, and distribution capability to take the firm to another level.
After the acquisition, Maheen stayed with the acquirer, AlfalahGHP Asset Management, and served as Chief Executive for eight years.
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The Move into Impact Finance: Founding Infra ZaminAfter 12 years of building a successful career in asset management and raising funds, Maheen felt it was time for something new. She had achieved her personal and professional goals at IGI Funds and was looking for her next challenge.
That’s when the opportunity to co-found Infra Zamin came along. “It was a risky move,” she admits, “but the idea of impact finance appealed to me. It was about more than just making money; it was about enabling access to finance in developing markets where it’s incredibly difficult to obtain.”
Maheen recalls how Private Infrastructure Development Group, based in the UK, approached her. They wanted to create development finance opportunities for people who wanted to start their businesses.
They were interested in large-scale private sector infrastructure projects to raise money from the local domestic capital markets.
The Infra Zamin Business Model and FundraisingInfra Zamin focuses on providing credit guarantees to businesses that struggle to secure financing from traditional banks. The model is simple yet powerful: Infra Zamin offers guarantees, reducing the risk for banks and unlocking capital for companies that would otherwise be overlooked.
Maheen explains that Infra Zamin does the due diligence and runs the numbers. If the project is viable, it gives the entrepreneur a credit guarantee to take to the bank and get funding using the Infra Zamin collateral and guarantee.
Essentially, it unlocks a piece of lending or capital access that would otherwise not have been available. This is the kind of catalytic impact that Maheen wants to bring into the markets. In the last three years, Infra Zamin has demonstrated success in interesting transactions.
Maheen’s transition from leading a corporate giant to becoming the first employee of a startup was drastic. “I went from being a high-end CEO to essentially being the company secretary, CFO, and marketing head all at once,” she laughs.
But despite the challenges, Maheen says the last three years have been incredibly rewarding. Infra Zamin started with $50M in capital and has already leveraged that to issue $400M worth of guarantees in the market.
Storytelling is everything that Maheen Rahman was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Maheen explains that they will soon raise funding for the company since they have a robust balance sheet and alliances with various institutions that offer grant financing. Infra Zamin also provides grant financing for capacity building in the markets or to bring down transaction costs.
This facility assists entrepreneurs who don’t want to bear the transaction costs. At Infra Zamin, they try to create combinations of equity and grants and leverage their balance sheet to stretch the capital. Its structure doubles its capacity to do more guarantee frameworks.
Maheen stresses that funding does not always need to be equity since that takes away from ownership. She advises other forms of financing, including venture debt and debt instruments similar to those available in developed countries like the US.
Unlocking Capital and Scaling SolutionsAt the heart of Infra Zamin’s work is the belief that scaling impact is about more than just growing the company—it’s about creating replicable solutions that banks and other financial institutions can adopt independently without needing guarantees.
One area where Infra Zamin has made a significant impact is solar energy. Five years ago, banks were hesitant to finance rooftop solar projects. Thanks to Infra Zamin’s credit guarantees, banks are increasingly willing to fund such projects without guarantees, unlocking a new segment of lending in Pakistan.
“For us, the goal isn’t necessarily to do all the business ourselves, but to enable the market to recognize and price risk appropriately so that it can scale independently,” Maheen explains.
This is the essence of what she calls Infra Zamin’s “catalytic impact”—opening up new sectors and technologies to financing, which, in turn, drives growth across the board.
Doing Good for the World: The Broader MissionBeyond the commercial aspect, Maheen is deeply committed to ensuring that every transaction Infra Zamin undertakes positively impacts development.
She shared a powerful example of how the company responded to the devastating floods in Pakistan in 2022, which displaced 33 million people and destroyed 5 million homes.
“We launched a bond in the capital market with a microfinance institution to help fund the rebuilding efforts. It’s about more than just finance—it’s about making a real difference.” Maheen explains how the institution lent or used the funds from the bonds to fund women exclusively.
The money was used to reconstruct flood-damaged homes, rebuild schools, and refurbish damaged businesses, effectively providing livelihoods across the gender board. This ended up being the first gender bond of its kind in South Asia.
This is how Infra Zamin demonstrated its impact on the market and development. Initially intended to help around 30,000 women, it has already impacted around 18,000 in low-income segments. Around 15% of the bond proceeds have gone toward housing reconstruction.
Maheen explains how they are trying to build in development impact at every layer. As she sees it, anyone can put together structured project finance and layer in development impact, ESG, climate, and all these nuances, which are so topical today,
Raising Capital and Thinking Outside the BoxOne of the key factors behind Infra Zamin’s success has been its ability to raise and leverage capital creatively. They have effectively brought in mainstream commercial investors to invest in impact projects and gender bonds without compromising their returns.
Moving forward, Infra Zamin hopes to replicate this success across different sectors, such as finance innovation and development finance. Maheen looks forward to when Infra Zamin will be out of a job since it has effectively catalyzed the market to recognize risk and lend to all sectors that would typically get overlooked.
Maheen foresees a world where open access to finance is available to all types of innovations and industries. Domestic institutions, local banks, and local capital markets would lend long-term to infrastructure financing, such as bridges, water plants, and other complex projects.
Maheen’s advice for entrepreneurs is simple: “Think outside the box. Not everything has to be equity. Equity takes away from your ownership, so explore other forms of financing like debt or venture debt.”
Maheen emphasizes the importance of not reinventing the wheel but learning from what’s been done in other markets and adapting those solutions to fit your own business structure.
Looking back at her journey, Maheen would advise her younger self to be more tenacious and to keep going despite the doubt and fear of the unknown. She would also advise tenacity, resilience, and keeping the passion in her beliefs alive.
ConclusionMaheen Rahman’s journey from investment banking to impact finance is a testament to the power of adaptability, resilience, and a commitment to doing good.
Through Infra Zamin, she is not only building scalable solutions that unlock capital for underserved markets, but she’s also creating a legacy of positive social impact.
As she continues to lead Infra Zamin in its mission to democratize access to finance, one thing is clear: Maheen’s story is far from over, and the impact she’s making is just beginning.
Listenhttps://alejandrocremades.com/maheen-rahman/ to the full podcast episode to know more, including:
- Embrace change: Maheen Rahman highlights how adapting to change throughout life helped her thrive in uncertain environments.
- Finance isn’t rocket science: Building a strong foundation in financial principles can open doors across various sectors and opportunities.
- Restructuring is tough but necessary: Successfully turning around a failing company requires difficult decisions, such as workforce reductions, but can lead to long-term growth and profitability.
- Acquisitions can unlock growth: Rahman emphasizes the importance of scaling through mergers, especially for smaller companies aiming to expand their market reach.
- Impact-driven finance: Through Infra Zamin, Rahman is working to provide access to capital for underserved sectors, catalyzing growth in developing markets.
- Scaling isn’t always direct: Creating self-sustaining frameworks, like encouraging banks to lend without guarantees, is key to achieving long-term, scalable impact.
- Business with a purpose: Rahman believes in balancing commercial success with social good, citing examples like helping rebuild after natural disasters through innovative financial instruments.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $50 Million To Build A Credit Enhancement Company To Issue Guarantees For Promoting Private Infrastructure Projects appeared first on Alejandro Cremades.
In an era where environmental concerns are more pressing than ever, Daphna Nissenbaum is a shining example of how passion and determination can spark innovative solutions. She is the CEO of TIPA®, a company dedicated to creating fully compostable packaging.
In this in-depth conversation, Daphna talks about developing an idea and raising funding for it despite not having expertise in a segment that isn’t known for attracting investor backing.
She also talks about her success in building a business with a globally distributed team and reshaping how we think about sustainability.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Growing Up In Tel Aviv and Learning Discipline in the ArmyDaphna’s journey began in the vibrant region of Tel Aviv, where she was raised in a nurturing environment that encouraged curiosity and creativity. From an early age, her affinity for mathematics and computer science set the stage for her future endeavors.
After completing her studies, Daphna gained diverse experiences in computer science, economics, and marketing, mixing them up with entrepreneurship. At 18, like all young people in Israel, Daphna joined the Army.
She had been aiming to enter the computer science field and develop computer software for the Army. Thus, she successfully entered a prestigious but long program.
Daphna was designated to develop specific systems for the Navy, where she learned a lot about the brand, particularly the technological side. This experience instilled in her the practice of being in a disciplined system and building something from nothing, creating ideas out of the box.
Daphna would carry this inspirational educational and spiritual experience into her future business career. After leaving the Army, she worked in the computer science industry for several years, taking different jobs and positions across various countries.
Daphna also went on to earn an MBA. Her first career change was entering the financial markets. She worked as the CEO of a research center on capital markets, particularly risk management in capital markets. She recalls enjoying the experience thoroughly and learning a lot.
However, the desire to create and practice a business lingered in the background. Daphna was keenly inspired by her father, who ran his local business, and her husband, who built two successful companies and later was in the virtual venture capital business.
The Genesis of a VisionDaphna had been reading about several researchers and their take on how new great ideas are born and what to look for in new ideas. Eventually, she understood that the most significant ideas are all around us, and we just have to open our eyes to identify what can change our lives.
Daphna’s “aha” moment came during a casual conversation with her children about the environmental impact of plastic bottles. This simple discussion sparked a profound reflection on the urgent plastic problem and the lack of any imminent changes in the industry.
During her morning jogs, Daphna contemplated nature’s ingenious way of packaging, where even an apple’s remnants biodegrade into compost. The plastic problem seems to grow dramatically and ends up in the sea, causing immense damage worldwide.
Daphna started to think–Why couldn’t we replicate a more intuitive way to use in our packaging materials? This pivotal moment crystallized into a mission: to develop packaging that mimics nature’s processes—packaging that is not only functional but also sustainable.
The idea was to treat packaging exactly as we treat–say, a banana peel–all organic materials. As
We need a package that can be thrown into the organic waste bin after consumption instead of a conventional plastic package that lasts forever, whether 400 or 500 years.
It should turn into an organic material within a very short time–simulating nature. However, Daphna was not a plastic engineer or chemist and did not have a background in materials. Undeterred, she started investigating, bringing in her partner to develop solutions.
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Navigating the Challenges of InnovationWith a groundbreaking idea in hand but lacking expertise in material science, Daphna faced significant hurdles. Rather than deter her, these challenges fueled her resolve. She recognized that her journey would be a long one and one that needed inventing new packaging materials.
Daphna identified two core factors–firstly, the packaging should protect the food effectively. Secondly–actual recycling hardly ever works in terms of the percentages of plastic produced and discarded. Further, the packaged food industry is not only huge, but it is also segmented.
That’s when Daphna decided to focus on flexible or soft packaging, which is very thin and similar to nature’s packages. This packaging would be used for fresh produce, snacks, granola bars, and more.
Current packaging used a blend of polymers that were nearly impossible to recycle. So, Daphna sought partnerships with scientists and experts, diving deep into the world of biodegradable materials.
The TIPA® Business ModelTIPA® has essentially invented IP-protected new materials. Further, Daphna also learned how to process the materials throughout the supply chain of conventional plastic.
The objective was to create a solution that could seamlessly integrate into existing plastic manufacturing facilities and processes without requiring new machinery. Today, TIPA® films are made in five facilities globally.
TIPA’s focus on flexible packaging was strategic because these materials eliminate a significant challenge of recycling. This approach not only lowered the barrier to entry for producers but also accelerated the adoption of sustainable packaging solutions.
The Fundraising JourneyRaising capital for TIPA® was no easy feat, especially as a newcomer to the industry with a software background and no science experience. Daphna’s journey began with early-stage money raised from friends and family who believed in her vision and capabilities.
However, as Daphna sought broader investment, she encountered skepticism. Many investors were focused on more traditional tech sectors, leaving her to navigate a challenging landscape. Despite initial setbacks, TIPA® got funding from an Israeli-Canadian fund.
Daphna’s ability to communicate TIPA’s vision resonated with a growing number of investors who recognized the urgent need for sustainable alternatives. Over time, she successfully raised approximately $140M, attracting a diverse range of investors interested in sustainability.
Storytelling is everything that Daphna Nissenbaum was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that founders worldwide use to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The funding was crucial in scaling TIPA’s operations and reaching a global audience. The company now has teams in Australia, Europe, and North America, demonstrating rapid growth.
Daphna reveals how timing was crucial to her fundraising success. The investment environment was very good at that time, and TIPA® managed to bring significant investors on board. Even so, she went through her share of rejections and time-consuming due diligence before being turned down.
Vision for Tomorrow’s WorldAs she reflects on the past 12 years of TIPA, Daphna emphasizes the importance of sticking to one’s vision and making decisions based on what is right for the planet and future generations. TIPA is a beacon of hope in a world grappling with climate change and plastic pollution.
Daphna envisions a world where nature can recover and be in a better place. Pushing TIPA’s initiative has been a transition to the consciousness and mindset around climate change. But when it started out, there wasn’t any awareness of the magnitude of the problem.
Although countries like China, the UK, and others started to work against conventional plastic, these efforts took a backstage during COVID-19. Daphna points out that companies don’t want to take the first step in changing packaging since it impacts their bottom line.
But big companies are now working on alternatives to plastic. More than the governments, it’s the people, brands, supermarkets, and retailers working to reduce plastic use.
Daphna reminds us that the initial global goal was to transform all packaging into recyclable, compostable, or reusable material by 2023. However, this deadline has been pushed to 2030 because people need to find solutions beyond recycling, which is just ineffective.
As Daphna sees it, demand will increase over the next couple of years, which is a promising start for TIPA®. Sustainability is changing the fundamentals of how we live, and it’s our future. We need to invest in ourselves, our lives, and our minds.
In retrospect, Daphna would have acted faster and relied on her gut feeling. She advises founders to believe in themselves and their vision and stick to it regardless of what others say. Although she had advisors and listened to their suggestions, she eventually made her decisions.
Daphna’s decisions have always been driven by what’s right for the company and the vision. “Don’t be too suspicious about your gut’s feelings,” she says.
Lessons Learned and Vision for the FutureThroughout her journey, Daphna learned invaluable lessons about resilience and the power of belief. Today, TIPA stands as proof of Daphna’s vision and dedication.
With a team that spans the globe and a commitment to innovation, the company is well-positioned to lead the way in sustainable packaging solutions.
Daphna envisions a future where packaging materials no longer leave a harmful footprint on our planet. Instead, they return to the earth, enriching it rather than polluting it.
Daphna’s relentless pursuit of sustainable solutions encourages all of us to rethink our consumption habits and consider the impact of our choices. As we move forward, let us embrace her vision of a cleaner, greener world—one compostable package at a time.
Listen to the full podcast episode to know more, including:
- Daphna Nissenbaum’s journey from tech to sustainable packaging was ignited by a conversation with her children about plastic waste.
- TIPA® focuses on creating compostable flexible packaging, addressing the challenges of conventional plastic recycling.
- Daphna’s background in computer science and finance equipped her with diverse skills to tackle the complexities of material innovation.
- Raising $140M in funding was a significant achievement, highlighting the growing investor interest in sustainability.
- The path to success included learning to embrace rejection and understanding that perseverance is essential in entrepreneurship.
- Daphna emphasizes the importance of believing in one’s vision and making decisions that prioritize environmental impact.
- TIPA® aims to create a future where packaging materials biodegrade, enriching the earth rather than polluting it.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $140 Million To Develop And Manufacture Compostable Packaging Solutions For The Food And Fashion Industries appeared first on Alejandro Cremades.
Tomer London, co-founder of Gusto, a company with over 2,500 employees, relates what it means to go from humble beginnings to building a hypergrowth business. His journey is an exciting blend of personal history, entrepreneurial lessons, and hard-earned wisdom.
In this conversation, Tomer dives deep into how his upbringing shaped his perspective on opportunity, customers, product development, going through an accelerator program, fundraising, and what it takes to succeed in the highly competitive startup world.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Roots of Resilience: Growing Up in a Small Business FamilyBorn and raised in Haifa, Israel, Tomer grew up surrounded by the day-to-day operations of small businesses. His father ran a clothing store for over 35 years, and his childhood was filled with experiences that many entrepreneurial kids might find familiar.
Tomer helped out at the store, interacted with customers, and even learned to sell at a young age. “It wasn’t just about answering the phone or cleaning the store,” Tomer recalls, “it was about being immersed in the ups and downs of running a small business.”
Family dinners were filled with discussions about customers, vendors, cash flows, and the challenges of keeping the business afloat. His father’s ability to juggle the complex emotional highs and lows of entrepreneurship made a lasting impact on Tomer.
One moment, his father would be elated over a major win, like securing a favorable rent deal; the next, he’d be stressed about repaying loans or facing the inevitable lulls in customer flow during holidays. He would often skip family events to take care of the business.
These experiences instilled in Tomer an appreciation for the emotional rollercoaster that comes with running a business. “I saw my dad work through all the stress and challenges, but also saw the joy of building something of his own,” he says.
This environment sparked Tomer’s first foray into problem-solving with technology. At just 11 or 12 years old, he built a simple inventory management system for his dad’s store using Visual Basic, showing early signs of his knack for entrepreneurship and software.
Tomer recalls being frustrated by keeping track of his inventory list and remembering that computers were really good at these things. So he went into the bookstore next door, got this thick book in Hebrew, and taught himself how to build a simple program.
This success blew Tomer’s mind, and he was fascinated by how a PC and software could make an impact. Fast forward to the present day, he and his co-founders still love and maintain direct connections with startups and small businesses.
Early Setbacks and Lessons in Humility: The Military YearsAfter discovering his love for software development as a child, Tomer’s life took a detour when he joined the Israeli military for three years of mandatory service.
Unlike many tech entrepreneurs who hone their skills in military intelligence units, Tomer was assigned to a combat unit—far from his initial preference. This experience, which was far removed from computer engineering and software, proved to be a turning point.
“It was the first time in my life that I wasn’t in control,” Tomer says. “I had to learn humility and deal with things completely out of my hands.” Until then, he was a good student in school, doing homework and working on different projects. He was always two steps ahead.
These lessons served him well in the unpredictable world of startups, where failure and rejection are part of the journey. Despite the challenges, Tomer emerged from his military service with a newfound appreciation for discipline, teamwork, and camaraderie.
He compares the bonds formed in the military to those formed in startups, where founders and teams share the highs and lows of building something from scratch. “In the military, you either succeed together or fail together. That sense of shared destiny is something I’ve carried with me.”
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From Failed Startup to Stanford: A Pivotal MomentAfter the military, Tomer pursued electrical engineering and recalls his keen interest in calculus and physics. He also developed an appreciation for being able to study for an undergrad degree and pave his own path. He also did a bunch of internships before founding his first startup.
The idea was simple but innovative: a system that allowed users to bypass long wait times on customer service calls. Dealing with calls to service centers was part of his adult life, and Tomer quickly realized that millions of people out there were looking for more efficient alternatives.
In 2007-2008, everyone had a feature phone like a Nokia, Samsung, or Blueberry with a simple WAP internet connection. Tomer came up with the idea for customers to self-serve by navigating through a visual menu on their phone screens and avoiding having to talk to somebody.
Tomer quit his part-time job at Intel to dive into his idea full-time. “The technology was there. The product was solid and could be used without needing to download an app,” Tomer says. “But we couldn’t crack the go-to-market strategy.”
Despite early promise and raising small amounts of funding, the startup struggled to find paying customers. Reflecting on that failure, Tomer emphasizes one critical lesson: “You can have the best product in the world, but if you don’t know how to sell it, you’re dead.”
Tomer didn’t know how to approach huge enterprises with millions of dollars in budgets. This painful realization was a humbling experience but also a critical turning point in his journey.
Undeterred, Tomer decided to pursue a PhD at Stanford University. “Funny story,” he laughs, “I actually thought Stanford was in England when I first heard of it.”
Inspired by Steve Jobs’ iconic 2005 commencement speech at Stanford, Tomer leaped to Silicon Valley. His decision to join Stanford not only exposed him to a world of opportunity but also led to a serendipitous meeting with his future co-founders.
Tomer recalls meeting Josh Reeves and Eddie Kim through Stanford’s alumni mentorship program, which connects current students with peers and prior students. Chatting up with Josh, Tomer learned that both had startup experiences and were electrical engineering graduates.
The duo started spending time every week brainstorming ideas and discussing the problems in the world that technology can help. At one point, they also brought in Eddie and continued exploring different areas.
The Birth of Gusto: Small Businesses at the CoreGusto, originally called ZenPayroll, was born out of a shared passion for helping small businesses. Tomer, Josh, and Eddie had all been exposed to the challenges faced by small businesses, and they saw a massive opportunity to build software that could alleviate some of these pain points.
“There’s tons of software for consumers and tons of software for enterprises,” Tomer explains, “but small businesses were often left behind.” The trio identified six million employers in the US with problems that needed to be addressed.
They spent countless hours brainstorming and talking to small business owners before they even touched a line of code. “One of the biggest mistakes founders make is building a product based on assumptions,” Tomer says. “We knew we had to talk to customers first.”
Tomer and his co-founders talked to hundreds of potential customers, gathering data points and information. Their conversations helped build intuition and an in-depth understanding of what the product should be about. They carried this strategy through the later stages of building Gusto.
As Tomer reveals, they ensure that everyone who builds the product, including the product management team, the design team, and marketers, spends time with customers and builds that intuition. They also ensure they don’t overly rely on data points without getting the qualitative side.
Gusto’s Core Mission, Business Model, and Revenue StreamsThrough these conversations, payroll emerged as a universal pain point, and Gusto’s core mission became clear: to make payroll, benefits, and HR easy for small businesses. Tomer and his co-founders also had to ensure their product was cost-effective, user-friendly, and customizable.
As the trio continued with their conversations with potential customers, they also realized that aside from managing payroll, they needed to resolve problems around taxes and compliance. As a result, Gusto became a very broad prompt platform.
Gusto started helping companies with time tracking, benefits and compliance, tax credits, international payment contracts, and so much more. Its business model is simple and has two revenue streams.
The first one is subscription revenue, where customers pay monthly per employee. The subscription can have multiple pricing points depending on the products the customer uses. The second comes from commissions for Gusto’s benefits business.
In the US, small businesses typically use a small group of health insurance providers. Gusto acts as the broker on the health insurance product and charges a commission to the provider instead of the customer.
The Power of Listening to CustomersTomer attributes much of Gusto’s success to their relentless focus on the customer. Instead of building based on assumptions, the team gathered as much data as possible directly from the businesses they aimed to serve.
“We realized that if we got the product right for our customers, the rest would follow,” Tomer reflects. This customer-centric approach has been vital to Gusto’s hypergrowth. Today, the company serves over 300,000 businesses and employs more than 2,500 people.
The Role of Y Combinator: A Crucial Turning PointGusto’s journey was significantly shaped by their participation in Y Combinator (YC), which helped kickstart their financing efforts and provided essential guidance during the early days.
Tomer describes YC as a community that helps founders reconnect and leverage opportunities to help them improve their companies. He remembers looking around and being impressed by the immense talent demonstrated by really smart entrepreneurs, builders, and engineers.
YC’s three-month program, culminating in Demo Day, was a high-pressure environment where 50 to 55 companies had to show investors the progress they’d made in just a short time. Contestants would be vying against their friends to be one of the two to three companies that got investment.
For Gusto, the experience was transformative. During YC, they went from having almost no code to building a prototype used by 30 customers by the end of the program.
Those two and a half months of intense focus collapsed what might have otherwise taken a year, allowing them to build momentum, refine their vision, and raise a successful seed round. Tomer and his co-founders also learned the art of making quick decisions.
Fundraising: A $700 Million Success StoryOver the past close to 13 years, Gusto has raised over $700M, proving its steady growth and increasing profitability. In the early rounds—seed, Series A, and Series B—funding was about building the product and achieving product-market fit. Tomer points out that they already had customers.
Storytelling is everything that Tomer London was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!By the time they reached Series C and beyond, it became more about the business’s economics, profitability, and scalability. The later stages were driven by rational metrics, focusing on profitability and long-term viability, with investors like T. Rowe Price and Fidelity coming on board.
Today, Gusto is a profitable company with over 2,500 employees. That milestone of profitability marks a shift from relying on outside capital to being able to sustain their growth organically.
The Vision of Gusto: A Future Where Businesses and Employees ThriveIf you imagine a world where Gusto’s mission is fully realized, it starts with peace of mind for small businesses. The vision is to empower entrepreneurs to start and grow their businesses without being bogged down by back-office complexities and mechanics like compliance and taxes.
This enables them to focus on what really matters—their product or service. In addition, Gusto aims to help small and medium-sized businesses create great workplaces.
That means places where employees feel valued, get accurate performance evaluations, are compensated fairly, have opportunities for growth, and can build meaningful relationships with colleagues.
Whether offering enterprise-level benefits or simplifying performance reviews and training, Gusto is working to bring professional insights to small businesses to help them succeed. It aims to make it easy and consumable for small businesses so they can also be successful.
Finally, Gusto’s vision extends to personal prosperity for employees. This includes ensuring that when employees get paid, their paycheck works harder for them, including offering early access to funds during emergencies or simplifying savings.
Lessons Learned: The Importance of People in Every Stage of GrowthReflecting on their nearly 13-year journey, the Gusto team recognizes that the most critical and challenging aspects of building a business often come down to people. Finding the right talent, especially in the early stages, can make or break a company.
Sometimes, hiring experienced candidates who have scaled larger companies doesn’t work in the startup environment because what drives success from zero to one differs from what’s needed to scale from one to infinity.
One key lesson learned is that even though experience is important, hiring people open to doing things differently, even if they come with an impressive resume, is essential. Startup success requires flexibility, innovation, and a willingness to challenge conventional thinking.
Conclusion: Gusto’s Journey to Realizing Their VisionAs Gusto continues to grow, they remain committed to their mission of making life easier for small businesses and their employees.
With a business model that has proven both scalable and profitable with a clear vision for the future, Gusto is poised to help more businesses succeed by taking the pain out of payroll and providing the tools to build great workplaces.
Tomer’s journey from a small business family in Israel to co-founding a global company reflects resilience, curiosity, and the power of learning from failure. His experiences have all contributed to his success at Gusto.
Listen to the full podcast episode to know more, including:
- Tomer London’s upbringing in a small business family instilled a deep understanding of entrepreneurship’s emotional rollercoaster.
- His military service taught him invaluable lessons in humility, discipline, and teamwork, shaping his approach to startup challenges.
- A failed early startup experience highlighted the importance of effective go-to-market strategies alongside solid product development.
- Gusto, initially ZenPayroll, was born from extensive conversations with small business owners to address their unique challenges.
- The company’s success is attributed to its customer-centric approach, ensuring product development is driven by direct feedback.
- Participating in Y Combinator gave Gusto critical support and momentum, leading to rapid product development and funding.
- Gusto’s vision focuses on empowering small businesses and their employees, simplifying back-office complexities to foster growth and success.
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Your email address is 100% safe from spam!The post This Serial Entrepreneur Raised $700 Million To Build A Payroll and HR Software Platform Enabling SMEs To Manage And Grow Their Workforce appeared first on Alejandro Cremades.
In a candid and insightful conversation, Bence Jendruszak, co-founder of a leading fraud prevention company, shared his entrepreneurial journey, offering a blueprint for aspiring founders on scaling a global business, leadership growth, and staying ahead of market trends.
Born in Hungary and now based in the U.S., Bence’s path from the early days of cryptocurrency to leading a rapidly growing company offers valuable lessons in adaptability, resilience, and learning from mistakes. His company has accomplished incredible growth and raised over $100M.
In this interview, Bence talks about how Seon has offices in four locations worldwide with over 270 employees. He also talks about relocating from Europe to the US and what it looks like when a company outgrows its teams.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Global Upbringing: The Power of AdaptationBence’s early life, filled with constant movement due to his father’s career, shaped his ability to thrive in uncertainty. Growing up in various countries, including Romania, Russia, Kazakhstan, and Hungary, taught him the invaluable skill of adapting to new environments, cultures, and languages.
This global experience became his “superpower,” making it easier for him to step out of his comfort zone and embrace change. This ability ultimately played a significant role in his decision to expand his business from Europe to the U.S.
“Moving constantly helped me step out of my comfort zone,” Bence recalls. “That sense of adaptability has been a core part of my journey, especially when we expanded into the U.S. market.”
Bence quickly developed an interest in the laws of engineering, maps, and physics. Being a numbers person, he was fascinated by these logic-driven fields. He had always liked to understand why things happen in the way that they happen.
Math, physics, and science were generally able to describe what Bence was experiencing in the world. The logical reasoning inspired him to become an engineer, study economics, and understand the grand scheme of how the world works.
From University Daydreams to a Crypto ExchangeBence chose the path of economics and started studying business and management at university. His journey into entrepreneurship began at university, where he and his co-founder, Tamas Kadar, shared a fascination with the emerging world of cryptocurrency in the early 2010s.
In an era when crypto was far from mainstream, Bence and Tamas began discussing the potential of a crypto exchange as a side project, fueled by their belief in its future relevance.
At the time, many dark net markets relied on cryptocurrencies and Bitcoin, which were being shut down and restarted.
“Cryptocurrency was largely associated with illicit activities and exchanging goods and services back then, but we saw its potential,” Bence explains. “What started as a hobby project quickly turned into something bigger.”
The duo started accepting credit card payments, but the challenges of running a crypto exchange quickly surfaced. One of the most significant issues they encountered was rampant fraud—fraudsters using stolen identities and credit card information.
This challenge was not entirely unknown to Bence and Tamas since they had been reading the dark web forums where people talked about cryptos. It was clear that even kids could learn the most basic script and how to fraud businesses online.
The two realized that anonymity from all aspects was a perfect inflection point for fraudsters to start doing what they were doing on a larger scheme. This fact led to a pivotal moment for the founders, setting them on a new course that would ultimately shape the future of their business.
They decided to start thinking like the fraudsters and how to filter them out. They couldn’t find anything when they researched the market for fraud tools. Everybody was aiming for an enterprise sales motion, and Bence and Tamas weren’t exactly their ideal customer profile.
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Pivoting to Fraud Prevention: A New BeginningAs fraud became a persistent issue, Bence and his team decided to pivot away from the crypto exchange and build their fraud detection tools. Initially, they developed solutions to protect their own business.
But these tools soon became the foundation of a full-fledged fraud prevention company, Seon. “We realized that fraud wasn’t going anywhere,” Bence says. “Almost every online business was affected by it, and we had the tools to help.”
Their proprietary fraud detection system uses various checks, from IP monitoring to checking for VPN and Tor usage. They also started monitoring email addresses to identify discrepancies between billing information, IP locations, and other minor trends.
As Bence recalls, they dived very deep into the intricacies of how fraudsters are thinking. The tools they developed proved invaluable, leading to the decision to pivot entirely from running a crypto exchange to building a robust fraud prevention platform, which paid off handsomely.
Bence reveals that Seon’s business model is very simple. The tools support businesses by conducting various levels of checks and can monitor fraud at the point of registration, logins, the point of a transaction, or a checkout process.
There are many different angles where the consumer integrates the simple Seon API integration. Billing is done on the usage of the system, so the more checks Seon does, the more the customer pays. Bence outlines a ballpark figure of a couple of cents per check.
Expanding into the U.S.: A Founder’s JourneyAs Bence recalls, they initially started building the business out of Budapest, Hungary. Soon, Bence and Tamas were serving customers in Europe, Asia Pacific, and Latin America.
Seon had a decent revenue share, but the duo knew that piercing the intensely competitive US market would be challenging. Each time Bence and Tamas talked to a US prospect, their queries would be about having a US presence, customers, a sales account, or a locally-based account executive.
Seon did not enter the US market for around three to four years. Bence and Tamas felt they could drive enough revenue from the different markets in which they were already working. They also knew they would need more dry powder to tackle the US market basically.
After the Series A funding round sometime in 2020, they realized the U.S. market was crucial for their next growth phase. With that objective, Bence and Tamas hired a few account executives, brought them to Hungary for training, and sent them back to the U.S. to kickstart operations.
However, it quickly became apparent that this approach wasn’t working. Realizing that one of the founders needed to relocate, Bence made the decision to move to Austin, Texas, where the company now has its U.S. headquarters.
The Challenges of Scaling: From 30 to 300 EmployeesRapid growth can be a double-edged sword, and Bence is no stranger to the pitfalls of scaling too quickly. After tripling revenue year over year, the company grew from 30 employees to nearly 300 in just 24 months.
Bence remembers how Seon went from $1M ARR to $3M and $10M ARR in a couple of consecutive years. This period of explosive growth brought new challenges, including the need to implement systems, hire the right leaders, and manage teams across multiple time zones.
“We thought we could replicate what worked at a smaller scale, but we were wrong,” Bence admits. “Scaling isn’t just about doing more of the same—it requires process, structure, and the right people.”
During this phase, the team made several mistakes, particularly around leadership. In some cases, they promoted people internally without having the right experience or processes in place, leading to difficult but necessary course corrections.
Bence’s humility in recognizing and learning from these mistakes has been a key factor in the company’s continued success.
The Importance of Leadership: Letting Go of EgoAs the company continued to grow, one of the hardest lessons Bence learned was the need to let go of ego and recognize when leadership needed to change. The skills that served the company in its early stages were not necessarily the ones required to take it to the next level.
Bence and his co-founder had to make tough decisions about their executive team, sometimes having difficult conversations about bringing in new leadership to scale the business.
“Whatever worked from $1M to $10M ARR isn’t going to get you from $10M to $50M and then to $200M ARR,” Bence explains. “You have to up-level your teams and your leadership as the company grows.”
In some cases, long-time team members decided they preferred the early stages of a startup and moved on, while others stayed and learned from the new leaders brought in.
Bence emphasizes the importance of transparency and setting the right goals to ensure everyone is aligned on the company’s path forward.
A Global Business with Strong GrowthToday, Bence’s company has grown to over 270 employees, with offices in four countries and an impressive $40M in annual recurring revenue (ARR). They’ve raised around $100M, with their Series B round closing in early 2022.
Storytelling is everything that Bence Jendruszak was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Despite the challenges of scaling, Bence remains committed to helping online businesses solve their fraud-related problems and continues to drive the company toward its ultimate goal: taking the business public.
As Bence explains, raising funding for Seon has been streamlined since fraud is a growing economy, and businesses are spending more and more on fraud tools each year. It’s a sticky problem, and investors are interested in cybersecurity and fraud prevention.
Regarding funding cycles, Bence reveals that the seed stage is just about getting product market fit and hustling through early revenue growth. Seed-stage founders typically spend time driving demo calls all day while writing blog posts for the SEO strategy and hope to drive inbound traffic.
From seed to series A onward, the company has likely identified what works, the relevant verticals it can address, and how to solve the use cases. That’s when it starts to add more heads to its organizational structure.
But, by this time, founders should have processed and implemented systems and processes and upleveled the company leadership. In retrospect, Bence recognizes that they missed this crucial step. Seon’s new CRO brought great value to the executive team and steered it in a new direction.
As Bence reveals, Seon is getting good US traction and has closed several deals. They work in a very impactful industry and help stop bad actors from their activities. The implications are to make customers safer and to help businesses save money.
While Seon is focused on staying a step ahead, Bence concedes that bad actors are also good at finding loopholes. However, they are moving toward helping enterprise customers solve their fraud issues. Seon is, essentially, enterprise-ready, and Bence is looking forward to going public.
Final Thoughts: Building for the Long-TermBence’s journey from a curious university student dabbling in cryptocurrency to the co-founder of a successful fraud prevention company is a testament to the power of adaptability, humility, and learning from mistakes.
Bence’s story offers valuable lessons for any entrepreneur looking to build a business that not only survives but thrives in the long term. He is committed to giving back to the community and spends time interacting with aspiring founders, understanding their problems, and guiding them.
“Growth can outpace people, processes, and leadership,” Bence reflects. “But if you’re willing to learn, adapt, and sometimes make the hard decisions, you can build something truly lasting.”
Listen to the full podcast episode to know more, including:
- Bence Jendruszak’s global upbringing instilled adaptability, a critical skill that shaped his entrepreneurial journey and business expansion into the U.S.
- His interest in engineering and logical reasoning inspired him to study economics and later enter the world of cryptocurrency.
- Pivoting from a crypto exchange to fraud prevention, Bence and his team founded Seon to combat online fraud with innovative tools.
- Expanding Seon into the U.S. market required relocating and rethinking the initial approach to achieve growth.
- Scaling from 30 to 300 employees presented challenges, highlighting the importance of structure, process, and experienced leadership.
- Letting go of ego and recognizing when to bring in new leadership was essential to Seon’s continued success.
- Seon’s focus on solving fraud issues has led to impressive growth, raising over $100M and aiming to take the business public.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $100 Million To Build A Fraud Prevention And Anti-Money Laundering (AML) Platform appeared first on Alejandro Cremades.
Few stories in the world of technology and entrepreneurship demonstrate resilience, constantly reinventing technology, and lessons learned from hard-fought battles better than that of Greg Mulholland.
Founder and CEO of Citrine Informatics, Greg has navigated the complexities of scaling a company in an industry not known for digital adoption while remaining deeply committed to a sustainable vision for the future.
In this interview, Greg discusses a range of topics, from his upbringing and technical background to the realities of raising capital, scaling a business, and the importance of trust in relationships with investors. He also talks about navigating funding different cycles and productizing.
His story is a valuable resource for entrepreneurs facing similar challenges in building a lasting company in an old-line industry like chemicals and materials.
Listen to the full podcast to review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Technological Foundation Rooted in FamilyGreg grew up in Kentucky in a family deeply embedded in technical fields. His father managed chemical plants, while his mother transitioned from industrial engineering to teaching technology.
This environment sparked Greg’s early interest in heavy industry and digital technology, setting him on the path of the chemical sector and the stage for his future career.
While studying undergrad computer engineering at North Carolina State University, Greg initially pursued computer architecture and processor design but soon realized his passion lay elsewhere. He was more into the fundamental science.
Thus, Greg transitioned into transistor theory, transistor design, and materials science, ultimately combining his love for chemistry, physics, and computer science. This interdisciplinary focus became the cornerstone of his career, blending the digital and physical worlds in unique ways.
As Greg was about to graduate, he applied for the Gates Cambridge scholarship. Although he didn’t win the scholarship, he had an opportunity to meet a professor at Cambridge and was really excited about working with her.
The Turning Point: Cambridge and Materials InformaticsAt Cambridge University, Greg immersed himself in materials science and data analytics and became part of an “unbelievable academic community,” as he calls it. Here, the idea of materials informatics—using data to drive innovation in materials—began to take shape.
This was a forward-thinking technological concept at the time, but one Greg believed would become an integral part of the future. Returning to the U.S., Greg entered the semiconductor industry, working on power electronics that drive energy efficiency.
Greg strongly believed that the sustainable future of the planet and the ability to support a growing population of the middle class required efficiently delivered electricity. He had done his master’s in solar cell physics and was soon working on power electronics that wasted less power.
Greg’s work contributed to shrinking the size and increasing the efficiency of everyday electronics, like the power bricks for laptops. This commitment to creating impactful, real-world solutions would fuel his path as an entrepreneur.
From Engineer to Entrepreneur: Stanford MBA and the Birth of CitrineAs Greg’s career progressed, he realized that his deep understanding of technology needed to be complemented by business acumen. His decision to pursue an MBA at Stanford introduced him to a new way of thinking, expanding his understanding of bringing technology to market.
As Greg recalls, he learned business culture and language, along with how to manage and grow teams. At Stanford, he met Dr. Bryce Meredig, a PhD in machine learning for material science, who was also getting his MBA.
Together, they saw the potential to marry Greg’s industrial knowledge with Bryce’s academic expertise, ultimately leading to the founding of Citrine Informatics.
Greg and Bryce first tasted success during the summer between their two years at Stanford, where they built a machine learning system that successfully created a new class of thermoelectrics in collaboration with a group at Santa Barbara, University of California.
At that moment, the duo knew they had a disruptive and revolutionary concept that could bring a lot of new thinking to the industry.
The experimental success validated their approach, and Citrine Informatics was born. Greg and Bryce quickly raised an initial $1M to continue developing the company. By the end of 2014, they had graduated and went into it full-time, hiring their first team members.
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The Consulting Phase: Building a Foundation for the FutureDespite their early vision of building a software company, Greg and his team had to adapt to the realities of their market. The chemicals and materials industry was slow to adopt digital technologies, so Citrine initially operated more like a consulting firm than a SaaS platform.
As Greg explains, Citrine had people who could deliver their software. They would use the software on their behalf to help them invent new sustainable high-performance materials and chemicals. Clients owned the IP, and Citrine owned the software, though they had to do a lot of digital work.
They helped clients invent new materials for five years, delivering software and digital expertise. While this was not their long-term goal, it was necessary to deliver what the market needed and build trust and credibility in an industry that was hesitant to change.
This consulting approach allowed Citrine to grow and build a foundation, even if it wasn’t scalable. The turning point came when their largest customers, “mega-companies,” in Greg’s words, told them they could no longer work together unless Citrine developed a scalable software platform.
These companies saw the potential of Citrine’s technology but needed a more robust solution to continue their partnership. The market had changed, and this feedback pushed Greg and his team to productize their offerings fully.
Productizing Citrine: A SaaS Model for Materials InnovationProductizing Citrine’s offering was no small feat. The company transitioned from a consulting-based model to a SaaS platform, allowing clients to use their data science and AI tools to develop and refine materials more efficiently.
Citrine operates like the Salesforce in materials development today, with customers using their platform to invent billion-dollar materials. Unlike many other companies in the space, Citrine avoids a royalty model, opting instead for software fees.
This pricing model has helped them build strong, long-term relationships with clients. When they need help, Citrine offers a professional services team.
Fundraising: The Highs and LowsOver the years, Citrine has raised nearly $75M in capital. However, Greg’s fundraising journey has not always been smooth. The venture capital community has gone through multiple phases since 2014, with periods of rapid growth and times of more conservative investment.
Storytelling is everything that Greg Mulholland was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Greg believes Citrine was fortunate to have raised more modest amounts during the high-flying periods of venture capital, allowing the company to grow sustainably without overextending itself. He reveals how they have continued to maintain their valuation and have evolved with the market.
Despite his generally positive experiences with investors, Greg candidly shares a difficult situation where bad actors nearly derailed the company. Initially, they negotiated and agreed to the terms.
However, after signing a term sheet with an investor, Greg discovered that key terms and definitions had been altered in the final documentation in ways that would have significantly devalued Citrine and ceded control to the investor.
Fortunately, Greg’s existing investors rallied around him, providing the necessary support to walk away from the deal and avoid what could have been a catastrophic situation. This experience taught him the importance of trust and due diligence in investor relationships.
Vetting Investors and EmployeesGreg now emphasizes the need to build relationships with investors who share the company’s values and are in it for the long haul.
Reference checks have become crucial in Greg’s process when selecting investors, ensuring they stand by the company during tough times. He understands that investors may push the company to get bigger and better but ultimately have their own goals and expectations.
When screening investors, Greg asks if they have a perspective about the industry and if it is consistent with his for Citrine. He also asks if they want to build the same kind of company he wants to create.
Sustaining the Company Through COVIDAs Greg looks back, the company transitioned to a software company from 2018 to 2019. At the time, Citrine was getting a lot of positive signals from the market and was poised to grow quickly. It was hiring new teams and was at its apex by the end of 2019-early 2020.
By March 2020, it seemed like an economic disaster, with the chemicals industry suffering the worst hit. Many companies virtually shut down, and while they were still operating, they were not investing. Citrine had to cut its team by approximately 40% in response.
A crucial lesson learned from the experience was only to hire people when they were absolutely needed. Having luxuries during profitable times is great, but when bad days come, the tank quickly runs out of fuel.
Vision for the World TomorrowGreg envisions a world where materials leverage the design features of every product. For instance, when Apple releases a new iPhone, they release a new material with it almost every single time.
Increasingly, we see that materials like metals, plastics, and glass need to be custom-tailored. Every product first needs each part and its materials to be designed digitally.
More sustainable, cheaper, and performance-driven materials result in lighter and better mileage cars, better phones, and better textiles and clothing, for example. Everything is better because it’s tailored to its use case, and we take less of a toll on the planet.
Greg looks back at times when he ceded control and placed the decision-making in other people’s hands. However, he has now found a better balance and has debates with his technical team, pushing each other to be more productive.
Greg reveals how he has gone through periods of faster, more intense, and slower learning. There also have been phases of learning new technology, the market, leadership, and strategy. He works closely with advisors, mentors, and coaches, particularly people with experience.
Greg appreciates how they don’t give him answers but help him develop an understanding of how to think through these problems in the future. He is excited about taking Citrine to the next level and getting through the next growth phase.
Greg likes to think about how Citrine can go from being the best in the industry to being a profitable company that can really step on the gas from a growth standpoint. He is prepared for new challenges and is confident he will learn from them.
Conclusion: A Vision for the FutureAs Citrine Informatics continues to grow, Greg remains committed to using technology to drive sustainable innovation in the materials and chemicals industries.
His journey from Kentucky to Stanford and from engineer to entrepreneur is a testament to the power of combining technical expertise with business acumen.
With nearly $75M raised, a growing SaaS platform, and strong relationships with supportive investors, Citrine is well-positioned to continue pushing the boundaries of what’s possible in materials innovation.
Listen to the full podcast episode to know more, including:
- Greg Mulholland’s journey reflects the power of blending technical expertise with business acumen to drive sustainable innovation in materials science.
- Citrine Informatics evolved from a consulting-based firm to a SaaS platform, enabling clients to use AI and data science for materials development.
- The chemicals and materials industry’s slow digital adoption posed challenges, but Citrine built trust through early consulting, leading to scalable solutions.
- Greg emphasizes the importance of trust in investor relationships after narrowly avoiding a catastrophic deal due to altered terms post-agreement.
- Greg’s vision for Citrine focuses on leveraging custom-tailored materials to enhance sustainability and performance across industries.
- COVID-19 forced Citrine to downsize by 40%-50%, teaching Greg the importance of lean hiring and maintaining efficiency.
- Greg’s focus on continuous learning, guided by mentors and advisors, positions Citrine for future growth and industry leadership.
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Your email address is 100% safe from spam!The post He Raised $75 Million To Build An AI And informatics Platform For Creating Cost-Efficient And Performance-Oriented Materials appeared first on Alejandro Cremades.
Priit Lepasepp’s story is one of navigating the currents of history and reshaping the future of energy. Born in 1986 in Soviet-occupied Estonia, Priit experienced a world that was vastly different from the one he would come to build.
“I was five years old when I started to see capitalism,” Priit recalls, reflecting on how those early years shaped his entrepreneurial journey. His path has taken him from studying law to pioneering renewable energy ventures, raising over €1.3B ($1.44B) in equity and debt
In this interview, Priit talks about overcoming hurdles and successfully scaling companies that fundamentally transformed the energy landscape of Eastern Europe.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and the Soviet Union’s InfluenceGrowing up during the final years of the Soviet Union, Priit was exposed to a stark contrast between East and West. The Soviet system emphasized collective ownership, but Priit had glimpses of a world beyond it through his relatives in the West.
“I saw how different things were in the West,” he says, noting that this awakening opened his eyes to possibilities beyond what was being taught in Soviet Estonia.
The collapse of the Soviet Union and Estonia’s subsequent independence in the 1990s ushered in a period of “cowboy capitalism” in Eastern Europe, as public assets were privatized. Priit absorbed the lessons of this rapid transformation, setting the stage for his future career.
A Shift into Law and Environmental AdvocacyDespite his eventual turn toward entrepreneurship, Priit’s initial path led him into law. Inspired by his brother and a desire to work with people rather than machines, he chose to study law, specializing in environmental issues.
“Our parents were engineers,” Priit explains, “and I saw how complicated engineering could be. I wanted to deal with people.” This early focus on environmental law would later play a key role in his transition to the renewable energy sector.
Priit’s legal education gave him a unique perspective on navigating the heavily regulated energy and finance markets. “Both are very regulated sectors, and to succeed, you must understand not just the technical but also the social and psychological aspects,” Priit notes.
For instance, when establishing a bank, you must understand why and how to execute an asset management company. Similarly, when talking about electricity, you need to know exactly how it will work on paper because money, value, and energy are all very important.
This insight into the intersection of policy, law, and energy would prove invaluable in Priit’s later ventures. As he points out, since the time society or humankind invented fire, it has been very important for us and has been constantly around.
There are a lot of backlogs of standards, laws, and regulations that need not only to be understood but also changed. Priit has been doing business in these fields, and lobbying has been one of the main hurdles he had to overcome in certain countries.
Priit details his journey and the shift from being on the drafting to the execution side of things. He decided he didn’t want to be in the advisory business early on because that meant he focused only on one aspect.
Priit wanted to go into a business and see for himself how renewable energy works internally. Only by understanding it could he do business in that sector.
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Pioneering Renewable Energy: The Birth of Nelja EnergiaPriit’s entrepreneurial breakthrough came with joining Nelja Energia, a renewable energy company that would become a major player in Eastern Europe. He joined the company as general counsel and served from 2011 to 2018, eventually assisting in its sale to a state-owned energy company.
The backdrop for this was the growing global awareness of climate change and the signing of the Kyoto Protocols.
These protocols created a market for renewable energy by introducing CO2 quotas and subsidies. Countries were considering renewables and the energy sector’s impact on the climate and environment.
The wind energy sector, in particular, was beginning to take off, but it was still very much in its infancy. The conventional renewable energy business was just about creating a developer project, building it, and leveraging subsidies and controlled pricing to take it to market for a great profit.
The pioneering part was relevant because the technology was still in the development stages. “When Nelja Energia started, turbine sizes were just one or two megawatt,” Priit remembers. “Now, we’re talking about capacities of 6.5 to 7 megawatts on land.”
Additionally, state-owned incumbent traditional energy companies were resistant to change, dismissing wind turbines as “toys” compared to their larger, steam-driven power plants.
They wanted to retain the old assets and were not open to growth as it looked small and less important than conventional energy.
Nelja Energia’s Acquisition by a State-Owned CompanyNelja Energia thrived, and by 2018, the company was poised for a major exit. At a time when renewable energy had become a crucial part of energy companies’ portfolios, state-owned entities were eager to acquire established renewable players and energy pipelines.
“The acquisition was driven by the fact that investors always want to exit eventually,” Priit explains, likening it to a marriage: “You should always think about how to get out of a deal.”
As Priit recalls, a huge list of companies wanted to acquire the business. The acquisition by a state-owned company valued Nelja Energia at nearly €287M (more than $319M), with the shareholders receiving €287M (almost $319M) in cash, which was an excellent deal.
At the time, the company’s size was 287 megawatts. There was also a pipeline of projects, close to one gigawatt, that new buyers could buy.
Although the three founders of Sunly had to sell Nelja Energia to an acquirer smaller than Nelja Energia, they walked away with experience and new ideas and started a new one.
Eventually, Priit and other founders would build a new company with more capacity under operation and development.
Building Tuleva: Democratizing Pension FundsPriit’s entrepreneurial drive didn’t slow down. One of his subsequent ventures was Tuleva, a company that brought a new model to Estonia’s pension fund market.
In Estonia, the second pillar of the pension system is mandatory, meaning citizens must contribute a portion of their income to a pension fund. However, they can choose from state-run programs, asset managers, and funds where they want to invest.
However, in 2016, banks that owned asset managers controlled the market and offered products. However, they charged exorbitant fees, with total management costs exceeding 2% for engineers. Typically, they offered Estonians index funds, which cost around 1.5%.
A long instrument carrying a 2% cost over 30 years would result in investors investing a lot of funds without returns. Priit saw an opportunity to disrupt this model. Tuleva gathered 3,000 investors, many of whom were regular Estonian citizens.
Priit, together with other founders, created a cooperative fund management company with members, giving them money to manage a fund manager’s financial and legal requirements in Estonia. Next, they reached out to BlackRock and asked them to have different funds.
Tuleva’s innovation was simple but powerful: it significantly reduced the cost of fund management by partnering with BlackRock and offering index funds with fees as low as 0.35%, including regulatory costs.
Today, Tuleva manages nearly €925M (over $1.03B) in assets, demonstrating that long-term, low-cost investments can outperform more expensive, actively managed funds.
Priit looks back at the entire experience of getting investors on board and educating them about the market. Tuleva has over 95,000 fund investors today.
Sunly: Scaling Renewable Energy for the FuturePriit’s latest venture, Sunly, represents the culmination of his expertise in the renewable energy sector. In 2019, the European Union and its member states had new goals for renewable energy by 2030.
Priit recalls the core challenges they faced. In 2019, the renewable energy field had almost non-developed projects to buy. Further, they were expensive or just bad.
This challenge can be compared to a city with an inflow of people in the same amount it already has with existing old building regulations. You need to develop new projects to do anything, but it will take time.
You must comply with old zoning regulations and acquire building permits, which will also take time! Building new projects was almost impossible since it would take at least four to five years to develop new projects capable of producing gigawatts worth of energy.
Priit and his team started developing new projects internally at Sunly. They were one of the pioneers who understood that renewables are like an industrial revolution and that new production units will have to be built in new locations.
They also started hiring new people who were experts in that field. Next, Priit approached landowners to develop assets on their sites and started building pipelines
Launched in 2019, Sunly is at the forefront of a new wave of renewable energy projects, with a pipeline of 18 gigawatts in land developments for wind, battery storage, and solar energy.
Priit puts down their success to the right decisions they made in 2019. Back then, he and his team were ready to start a renewable energy company, owning assets and selling the electricity to end consumers. They have also been consistently investing in hardware startups in their fields.
Unlike Nelja Energia, Sunly’s focus is not just on generating megawatts but also on ensuring that renewable energy directly benefits end customers. “Renewables today are different,” Priit explains. “We need to focus on end customers, not just on building more megawatts.”
This shift in strategy recognizes that while renewable energy is critical to addressing climate change, simply producing more energy is not enough if it doesn’t meet the needs of consumers efficiently and cost-effectively.
Financing the Future of EnergyBuilding a company like Sunly requires significant capital, and Priit has proven adept at raising the funds needed to scale. To date, the company has raised over €1.3B ($1.44B) in equity and debt, including a recent bond deal with Copenhagen Infrastructure Partners and Rivage and KLP.
Storytelling is everything that Priit Lepasepp was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!This capital has allowed Sunly to continue expanding its renewable energy projects, even in the face of global challenges like the war in Ukraine. Interestingly, Priit notes that the most recent conflict in Ukraine has not scared off investors as previous geopolitical crises did.
“In 2008, during the Georgian conflict, investors faded away. The same happened with Crimea in 2014,” he says. “But this time, investors stayed. Eastern Europe is seen differently now. Yes, the risks are higher, but the returns are also better.”
Priit recalls they did their last equity raise on the same day the conflict started, and the situation wasn’t as grim as before. He also points to how Eastern European countries have developed their energy systems and transitioned from Russian natural gas to new facilities.
Investors understand that Eastern Europe, at this time, offers better returns than Western Europe despite the higher risks. Eastern Europe still participates in the OECD, NATO, and European Union. Sunly offered to build new assets and help communities move to expensive Russian natural gas.
A Vision for the FuturePriit’s vision for the future of renewable energy is expansive and extends to the Baltics, Poland, and, soon, Scandivinia. He believes that the energy sector is undergoing a transformation akin to the Industrial Revolution and that companies like Sunlyare are leading the charge.
As Priit sees it, the world is not only about climate change. As of now, Europe has old power plants, and the price maker on the electricity market is natural gas sourced from different regions, in the past primarily from Russia. The formulas they use to build out renewables can prove to be great alternatives.
While PV plants, turbines, and natural gas power plant technology can be purchased from the manufacturer, the latter fuel comes from outside Europe. The opportunities are exceptional for wind farms, PV parks, pump hydro storage facilities, and battery energy storage facilities.
Consumers will also want to switch from old markets to more cost-effective options. “It’s not just about building more capacity,” he emphasizes. “It’s about changing how we think about energy, about making sure that the benefits of renewable energy reach the people who need it most.”
Priit estimates that by 2030, Estonia or the Baltics will be statistically, on an annual average, 100% renewable. Poland is also likely to catch up soon. He foresees a huge opportunity for investors for at least the next ten years.
In Retrospect!Looking back at his journey, Priit would have liked to accelerate his learning. He would have taken more risks. He advises entrepreneurs, “If you start to build a new business and really believe that it will work, then stop doing everything else and concentrate on this one topic.”
If you don’t, someone else will take the idea and run with it, resulting in missed opportunities. However, good things also happen, and there is value to be earned from quickly learning, adapting, and taking risks–professional and personal.
Entrepreneurs should move quickly, not hesitate, try it out, see how it goes, and adapt to that, even if it doesn’t work out. Ambition is also crucial, as is commitment to the ideas that can be great and viable or entirely stupid.
In ConclusionAs Priit continues to build, innovate, and pioneer in the renewable energy space, his journey from Soviet Estonia to leading multi-billion euro energy ventures is an inspiring example of resilience, vision, and the power of entrepreneurship to change the world.
Listen to the full podcast episode to know more, including:
- Priit Lepasepp’s early exposure to Soviet and Western systems shaped his entrepreneurial vision and adaptability in a global market.
- His legal background in environmental law provided valuable insights for navigating the highly regulated renewable energy industry.
- Priit transitioned from advisory roles to working in the renewable field and, after that, founding a renewable energy company, seeking hands-on experience in driving real-world impact.
- Nelja Energia pioneered renewable energy in a skeptical market, eventually leading to a highly successful acquisition.
- Priit’s venture, Tuleva, disrupted Estonia’s pension fund market by offering low-cost, long-term investment solutions, showcasing his ability to innovate in finance.
- With Sunly, Priit shifted focus to end-user needs in the renewable energy sector, building an impressive 18-gigawatt pipeline of projects.
- Despite geopolitical challenges, Priit successfully raised over $1.3 billion in capital, demonstrating the growing investor confidence in Eastern Europe’s renewable energy landscape.
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Your email address is 100% safe from spam!The post From Selling A Renewable Energy Company For $319 Million to Raising Over $1.44 Billion To Offer Renewable Energy to Customers appeared first on Alejandro Cremades.
Mark Slack is a pioneer in medical robotics and one of the key figures behind CMR Surgical, a company now valued at over $3B. His incredible journey and path to entrepreneurial success was shaped by early challenges, military service, and a deep-seated commitment to improving healthcare through innovation.
In this interview, Mark talks about raising a record-breaking $660M in one funding round for his company. He also reveals the main motivations behind building it, the frustrations of being an innovator in a heavily regulated segment, and the challenges of unlocking government support.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Growing Up in South Africa During ApartheidMark’s story begins in South Africa, where he was born and raised during a turbulent period of apartheid. Reflecting on his childhood, Mark shared that his upbringing was shaped by his parents’ left-wing, anti-apartheid views.
“We were brought up complaining about the government,” he said, adding that it was a “difficult time” for many, especially for those marginalized by apartheid’s harsh racial discrimination. Despite these challenges, Mark excelled in sports, particularly middle-distance running.
Playing sports inculcated in Mark the competitive spirit he carried into this entrepreneurial journey. Even today, he prefers to hire people who come from ethnic, particularly Japanese backgrounds, because he knows they also have a competitive streak.
He became a champion athlete, with dreams of competing in the Olympics—dreams ultimately dashed by injury. This setback, however, proved to be a pivotal moment in Mark’s life, steering him toward a new passion: medicine. He stayed motivated and got into university to study medicine.
From Athlete to Aspiring DoctorMark’s transition from aspiring Olympian to medical student wasn’t straightforward. His focus on athletics meant his academic grades weren’t initially strong enough for medical school. But Mark’s competitive spirit kicked in once again.
“I settled down for my last year at school, worked incredibly hard, and got the grades I needed to get a first-class pass,” he recalled. Getting into medical school was just the first step. Mark quickly found himself drawn to the intricacies of medicine and the challenges it presented.
“You had to learn a lot, and to be good at it, you really needed dedication,” he explained. This drive and focus would become key traits in Mark’s later entrepreneurial ventures.
Combat Medic in Angola: A Defining ExperienceOne of the most transformative experiences in Mark’s life came during his time as a combat medic in Angola. In South Africa, compulsory military service was a reality, but he deliberately chose to volunteer in Angola, serving as a medic in conflict zones.
Mark flew in medivacs or helicopters to rescue injured soldiers, providing life-saving care on the front lines. He describes this period as one of immense personal growth. “I learned a lot about myself, about strength of character, and about discipline,” he said.
This experience not only honed his medical skills but also taught him valuable lessons in resilience—lessons that would later prove crucial in his entrepreneurial journey.
The Move to the UK and Cambridge: A New ChapterFearing that apartheid would end in violent conflict, Mark made the difficult decision to leave South Africa and relocate to the UK. Once there, he pursued research in the sub-specialization and landed a prestigious role at Cambridge University Hospital as Head of Gynecology.
Cambridge was a game-changer for Mark. Surrounded by Nobel laureates and some of the brightest minds in medicine, he found himself inspired to explore the intersection of medicine and business. Aside from research, he also spent time in pharmaceuticals and surgery.
Mark began working on innovations in surgery, collaborating with global giants like Johnson & Johnson to bring new medical products to market. “It was an inspiring place to be,” he reflected. “You can’t have an ego in Cambridge—there’s just too much talent around.”
A Frustrating Reality: Observing Failures in Medical InnovationWhile Mark’s career in medicine flourished, he began to notice significant problems in the industry, especially with certain medical devices. He observed how plastic implants, initially used in hernia and prolapse surgeries, were causing complications.
Despite the widespread use of these devices, Mark’s observations and research led him to believe they were harmful. He remembers doing extensive work on animals and laboratory testing that confirmed his hypotheses.
This realization fueled his desire to challenge the status quo. Mark began lecturing on the dangers of these implants, advocating for better, safer alternatives. He stresses the importance of safe innovations in medicine and medical introductions that won’t harm patients.
Mark’s stance, though not always popular, was vindicated when these implants were eventually found to be unsafe, leading to class-action lawsuits in the United States. His willingness to speak out and push for change demonstrated the thick skin required to be an innovator.
As Mark opines, to be an innovator, you need to be an observer and see things that are different from the normal. He also believes you must be willing to explore and see whether something can be done, particularly in an industry as heavily regulated as healthcare.
“You’ve got to be willing to challenge the norm and be different,” he said. This mindset would eventually lead to the founding of CMR Surgical.
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Building CMR Surgical: Revolutionizing Keyhole SurgeryThe idea for CMR Surgical emerged from a frustration with the limitations of keyhole surgery, which, while significantly reducing complications, was difficult for many surgeons to master.
Along with four other co-founders, Mark set out to develop a robot that could assist surgeons in performing keyhole surgery more accurately and efficiently. Robots can help because they provide a three-dimensional view, complete with magnification and instruments with articulated wrists.
The robots available in the market were too big or too expensive. Mark and his co-founders set out to build a builder robot that replicated the kind of surgery that doctors did with standard keyhole surgery. More surgeons can perform operations with accuracy and precision.
Their robot, now known as Versius, is small, highly precise, and easy to integrate into existing surgical theaters without requiring significant modifications. Unlike other surgical robots, Versius is affordable and fits seamlessly into hospital workflows.
Hospitals need not knock down walls, reinforce the floors, or raise the roof to install them. The robots fit easily into existing theaters. Training doctors to use it is relatively easy, thanks to the programs.
“One of the things we focused on was making sure the robot could fit into the flow of a hospital,” Mark explained. “Our robot is small, easy to train on, and can work five or six days a week, reducing costs for the health system.”
Raising $660 Million in a Single Round: A MedTech RecordAs the company grew, so did its financial needs. Initially, CMR raised a small sum, which allowed the founder to quit their day jobs and start building. They went from a computer-generated image to operating in humans in five years.
At this point, Mark and his co-founders raised around $300M. They employed many more people, got buildings, and started building the robot. In 2021, CMR Surgical raised a staggering $660M in one of the largest med-tech funding rounds in history, bringing the company’s valuation to over $3B.
Storytelling is everything that Mark Slack was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that founders around the world are using to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The funding enables CMR to expand the robot to a more mature design and build the infrastructure to sell it in multiple countries. However, Mark points out this success wasn’t just a product of favorable market conditions. It was built on a solid foundation of research and results.
“We had a very credible story,” he said. “We could show the advantages of minimal access surgery and back it up with data. We put a registry in place from the beginning, tracking every patient operated on by the robot. By the time we went for the big raise, we had the evidence to support our claims.”
Mark and his team demonstrated that 60% of patients who still get open surgery have more complications. However, using robots to perform keyhole surgery can reduce these problems. Mark had the data from 2900 cases and published the results in a prominent American journal.
The robot’s designer, Lucas, successfully built a machine that is five foot six inches, folds up into a 38cms by 38cms footprint, and can sit against the wall. It had safety features and could demonstrate the advantages, including the X number of patients successfully treated.
Navigating the Complexities of RegulationWhile the success of CMR Surgical is undeniable, Mark emphasized the challenges posed by regulation. As with many medical innovations, getting regulatory approval for new technologies is time-consuming and expensive.
“Regulations are designed to prevent disasters, but they also slow innovation and raise costs massively,” Mark noted. He points out that the disasters have happened because of bad behavior on behalf of companies, almost criminality.
Mark advocates for a more modern approach to regulation, one that leverages real-world data and more efficient ways of proving the safety of medical devices. “We need to think of modern ways of curating data and proving the safety of these devices,” he says.
Building medical devices has a high burn rate, and innovators with a certain amount of money find it hard to conduct trials. Trials are expensive and can run up to $3M easily. Mark also says there’s a misunderstanding between devices and drugs.
The biggest med-tech companies in the world, like Medtronic, make $20B a year and have 800 products. The return on investment in a tech company is much less than in a pharmaceutical company.
Although the government is trying to put the same regulatory framework on tech as on pharma, it may not be a practical solution. Academics are proposing more efficient, affordable, and better regulations driven by real-world data sourced from databases and registries of outcomes.
Mark points out that researchers can treat thousands of patients relatively affordably, not just in traditional clinical trials. We need to think of modern ways of curating data, keeping data, and proving the safety of these devices.
Unlocking Government Support: A Missed Opportunity in the UKDespite CMR Surgical’s success, Mark expressed frustration with the lack of support from the UK government. While countries like the United States offer incentives and supplementary funding for building factories and creating jobs, the UK has been less forthcoming.
“We built a factory in the UK that will provide employment and bring in revenue, but we got no help building it or selling it to hospitals,” Mark laments. “Governments should think about supporting homegrown businesses more so they can get started and compete internationally.”
Mark’s Vision for CVRMark talks about how when he started, he wanted to prove you could build a very successful med-tech company that could profit ethically and safely for the patients. His inspiration is the biggest robotic company in the world, an American company called Intuitive.
Intuitive occupies about 4% of the minimal access market worldwide and a higher percentage in the US. It has a market cap of around $180B. That’s the kind of success Mark wants to replicate. CVR would supply a significant percentage of the robotic market for keyholes, just 10%.
Mark would like to see CVR with a market cap of $200B, building robots internationally and selling to high-income and low and middle-income countries at the right price. Their robots are affordable for improving health care, so making a profit is not a problem.
Mark reveals how the busiest CVR robot in the world is in Pakistan, a low and middle-income country, and how it works satisfactorily in a low-income setting. Likewise, CVR has robots in England, France, Germany, and high-income countries.
Ultimately, Mark’s dream is a significant worldwide footprint, delivering outstanding health care and, at the same time, supporting and funding excellent medical research so the robots get better and better both medically and engineering-wise.
Mark’s Advice for Aspiring EntrepreneursMark advises upcoming founders to get a mentor who can advise them on the nuances of building and running a successful business.
Coming from a non-business background, he was often clueless about business terms, and having a senior business mentor on board would have been advantageous. Mark also suggests keeping an incredibly close eye on the spending and expansion.
Keeping the company small, consistently earning ahead of spending, and keeping an open mind are crucial strategies. Most importantly, founders should try as far as possible not to lose control of the company to investors, which most have to do. Significant investments typically mean losing control.
Conclusion: The Road Ahead for CMR SurgicalAs CMR Surgical continues to expand globally, Mark remains committed to pushing the boundaries of medical innovation.
His journey—from growing up in apartheid-era South Africa to leading one of the world’s most exciting med-tech companies—is a powerful reminder of the importance of resilience, observation, and a willingness to challenge the norm.
In a world where regulation often stifles innovation, Mark Slack has managed to navigate these challenges while building a company poised to transform surgery’s future. And with CMR Surgical’s continued growth, it’s clear that Mark’s story is far from over.
Listen to the full podcast episode to know more, including:
- Mark Slack’s journey from South Africa to building a $3B company was driven by resilience, discipline, and a passion for innovation.
- Competitive sports and a career-ending injury pushed him toward medicine, shaping his entrepreneurial spirit.
- His military experience as a combat medic in Angola taught him invaluable lessons in discipline, character, and observation.
- Slack’s observations in the medical field led to breakthroughs in surgery, influencing his decision to create innovative solutions like CMR Surgical.
- CMR Surgical’s success is built on creating accessible, affordable, and safe robotic surgery solutions for hospitals worldwide.
- Fundraising success was bolstered by rigorous research, clinical evidence, and a clear value proposition, raising $660M in 2021.
- Navigating complex regulatory frameworks remains a significant challenge for medical innovators, but modern approaches to data curation can help streamline processes.
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In a rapidly evolving world of fintech and entrepreneurship, few stories exemplify resilience, adaptation, and foresight quite like that of Malte Rau.
From a childhood shaped by the fall of the Berlin Wall to leading a multi-million-dollar fintech startup, Malte’s journey reflects his personal growth and the challenges of steering a business through global crises, market volatility, and the rigors of scaling in heavily regulated industries.
In this interview, Malte talks in detail about navigating his company, Pliant, through different countries and currencies. He also reveals fundraising insights, having raised over $70M on the equity side and more than $200M on the debt side.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Years: From Berlin to ConsultingBorn in Berlin just as the Berlin Wall was coming down, Malte grew up amid the excitement of change and transition, though he was too young to fully remember the historic moment.
However, Malte’s move away from Berlin at the age of 10 would be the beginning of experiences that shaped his resilience and adaptability. Reflecting on his childhood, he speaks about the challenges of moving to a new place, making new friends, and adjusting to a new environment.
These early experiences taught Malte the importance of finding stability in uncertain situations. They shaped his personality and developed skills, which later proved invaluable in his entrepreneurial endeavors.
Initially uncertain of his career path, Malte found himself drawn to consulting after studying economics and management. However, he began to hone his analytical mindset in consulting, particularly in the field of risk management.
Malte spent some time in an internship abroad in the US but returned to consultancy. Working with big firms like KPMG, he immersed himself in analyzing data and preparing for worst-case scenarios.
Ironically, though his job was to mitigate risk, Malte would eventually become a risk-taker in the fast-paced world of fintech. He describes himself as a “risk friendly and not risk averse risk manager.”
Although Malte worked for big banks, he quickly saw that the projects took time. As the consultant, he had to leave after the implementation and couldn’t really witness the impact of his efforts.
A Leap Into FintechAfter spending years working with banks and larger corporations, Malte made a critical shift in his career when he was introduced to the fintech world. A chance conversation with a former colleague led him to join auxmoney, a fintech startup in the consumer lending space.
This move marked the beginning of Malte’s entrepreneurial journey as he transitioned from the relatively stable world of consulting to the dynamic and uncertain world of startups. “The impact you have in a startup is immediate,” he recalls.
Malte found the fast-paced environment invigorating, but it required him to think differently. Unlike large banks, fintech startups operate without a safety net, and he quickly realized that traditional risk models used by banks didn’t apply to fintechs.
Malte’s experience at auxmoney, a small company with just 30 employees, and later, ventures in SME lending at Lendico Global Services would lay the foundation for his understanding of navigating the complexities of the fintech world.
During his time with Rocket Internet, Malte played a crucial role in building a venture debt fund focused on refinancing fintechs with lending operations. He saw that SMEs don’t necessarily have as much data.
This experience gave Malte a deep understanding of how startups in the lending space operate and how critical liquidity is to their survival. It also highlighted the importance of balancing risk and reward—something that would become a central theme in his later ventures.
Malte recalls how they had some touchpoints with the equity arm but were disconnected because Rocket had $2B in cash reserves. Instead of investing in equity, they opted also to build a debt practice. They also swapped deals, which was one strategy for building pipelines, and tapped the potential to earn high returns.
As Rocket started shutting down most of its services and debt practice and turned its focus on different areas like fintech, Malte decided to venture out and start his own company.
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The First Bumpy Ride: A Learning ExperienceLike many entrepreneurs, Malte’s first attempt at starting his own company was filled with excitement and challenges. His first venture, focused on risk management solutions in the open banking and data world, didn’t unfold as planned.
Malte recalls starting with an idea and talking to angels and people he had worked with for a while. He had people interested in investing since they trusted in his judgment, which was an exciting experience that built up his confidence.
Malte realized that angel investors have a higher risk profile, and like pre-seed investors, they are also looking for higher returns. While the market opportunity seemed vast, the company ultimately failed to gain traction due to long sales cycles and misalignment with market timing.
As Malte discovered, selling to banks was a slow process that often stretched across years, even though this new data source was super relevant for risk management.
Early FinTechs would utilize the data to close their information asymmetry and convince customers to use their loan products. At that point in time, this way of underwriting was not really available to banks.
“I guess this won’t work out,” he recalls thinking after watching banks show initial interest, only for deals to fall through due to budgetary delays. Despite the company’s failure, Malte reflects on the experience as a crucial learning moment.
The venture may not have succeeded, but it taught him the importance of market timing, building investor trust, and the resilience needed to continue moving forward.
Mentorship and Resilience: The Power of SupportWhen the first venture ended, it wasn’t easy for Malte to pick himself back up. However, he had taken several lessons from his experiences. For one, he learned that investors are well aware of the risk factors when investing.
The support of a mentor made the difference. A former CEO who had hired Malte early in his career saw potential in him and provided both encouragement and tangible support, even helping with fundraising for the next venture.
“It wasn’t like I needed a slap across the face, but more like someone standing behind me, pushing me to take the next step,” Malte explains. This support system, combined with the confidence that others had in his abilities, gave him the courage to try again.
The Birth of a Rocket Ship: Founding Pliant, His Current VentureWith renewed energy and the lessons from his first venture fresh in his mind, Malte set out to found his next company—this time with a clear understanding of the challenges ahead.
The fintech space was becoming crowded, but Malte and his co-founder saw an opportunity in the card-issuing space. Unlike many of their competitors, they focused on enabling partners to tap into the mass market rather than trying to dominate the market as a direct provider.
“We’re more a bunch of nerds in love with the technology and the complexity,” Malte says, describing how the company found its niche in the market. This approach not only differentiated them from their competitors but also proved to be a winning strategy.
Although Malte and his co-founder had an interesting approach to the market, convincing VCs and investors was challenging. However, by offering both direct and indirect business models, they were able to save significantly on marketing expenses while expanding their reach.
The Pliant business model as a B2B card issuer is built around two main revenue streams. First, they offer software around the card, which allows them to charge clients for value-added services.
However, the main revenue driver is the interchange fee—a percentage charged to merchants every time a card is used. Malte explains that the business space in Europe is not regulated or kept like consumer cards, which is why there are fewer cards than in the US.
This approach has allowed the company to scale rapidly while providing significant value to its partners. Pliant makes an average of 2% when it is actually much more per transaction in the US. Malte explains that it’s a big revenue stream, and the customers didn’t really have to pay for it.
Dancing with Black Swans: Overcoming Early ChallengesThe early years of the company were not without challenges. As the world was hit by the COVID-19 pandemic, Malte and his team faced an uphill battle. They had just begun raising funds when the first lockdowns hit, causing some term sheets to be withdrawn.
However, Malte and his co-founder managed to secure funding from a family office and pushed forward despite the uncertainty. In retrospect, Malte concedes that waiting for a while would have made the funding cheaper, and they could have obtained a more favorable cap table.
In any case, they moved forward with the project and hired their first seven engineers, bringing the team to 10 members.
Just as they were finding their footing, they were hit with another crisis—the collapse of Wirecard, a major payment processing company in Germany that had partnered with Malte’s company.
The scandal rocked the fintech world and left Malte’s company in a precarious position. After three months, they had virtually no setup left but continued to push forward with the intention of finishing the product.
Raising Funding for PliantOnce again, Malte’s resilience came through. Despite the setbacks, he started searching for new partners. They didn’t have adequate money to go live at one point, so they raised two pre-seed rounds, which again, was highly challenging to execute.
Even so, Pliant raised a little more than $70M on the equity side, and on the debt side, it needed around $200M for refinancing its card receivables, which is not fully utilized but was committed.
Storytelling is everything that Malte Rau was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Malte used the money to scale the business, particularly for the customer base that has high spending and needs credit lines in millions. He explains that they continue to raise even more funding, especially debt because FinTech has many cash requirements.
Looking back at the fundraising journey, Malte talks about how they absolutely had to raise funding by the end of 2022. Of the 150 VCs they approached, 99% turned down the request. However, they were lucky enough to find one Japanese investor, SBI Investment.
SBI was quite active as a FinTech investor in Europe, so Malte and his co-founder flew to Tokyo for a 20-minute meeting for the final signing. Since he is from a debt background, he finds that debt is easier since it’s very rational and number-driven.
On the other hand, raising equity is about selling a vision, which can be harder to understand for someone more comfortable around numbers and hard data. Looking forward, Malte expects to raise Pliant’s series A round in a more relaxed environment.
Dealing with ChallengesYet another crucial aspect that Malte had to deal with when building Pliant was compliance with regulations. As he explains, this sector is heavily regulated, and the company has to invest heavily in legal advice and fees.
Then again, Malte had to manage multiple partners and vendors, which required time investment because of the extensive discussions about the finer details. They had to acquire the necessary licenses and triple-check everything, so their legal projects cost more than expected.
Malte explains that Pliant’s go-to-market proposition is clearly that best-in-class software and banks, which is their market position. He says, “Businesses have a very strong relationship with their bank, which is a harder bond than having a millennial checking out a new Neobank.”
Malte envisions a future where Pliant can bring the technology to banks so that everybody can utilize or benefit from its digital cards. Customers using the cards can benefit from the many features, facilities, and conveniences.
Pliant is now operating in different countries and currencies. Regarding marketing, Malte and his co-founder have adopted a conservative approach. For them, every market is like a new market marketing channel similar to a Google campaign.
When expanding to a new core market, they hire two people and give them a specific time frame to see if they can start paying off. There have been instances where a market was not viable, so they would delay the project for six to 12 months or perhaps hire a new team.
However, Malte has been cautious about never building big offices and hiring large teams of 10 people. He prefers to work with the bootstrap mindset. Even though Pliant has a broad reach and can also do a lot of cross-border things, it has always stayed quite conservative.
Malte’s strategy is always to follow their highest-bending clients but, at the same time, try to really get market access through their partners. They could have more complexity if they had been more aggressive in these markets.
Malte also explains that multi-currency sounded easier than it was to launch because the liquidity flows behind it were just very complicated. Pliant was not only offering but also lending in many currencies. However, maintaining records and conversions in all of these currencies can be tricky.
Conclusion: The Art of ResilienceMalte Rau’s entrepreneurial journey is a testament to the power of resilience, adaptability, and learning from failure. From navigating the complexities of fintech to overcoming global crises, Malte’s story offers valuable lessons for entrepreneurs in any industry.
His ability to pivot, learn from setbacks, and find innovative solutions has allowed him to build a thriving business in a competitive and highly regulated market. For Malte, the journey is far from over. His company is poised to capture new locations and new currencies moving forward.
Listen to the full podcast episode to know more, including:
- Malte Rau’s entrepreneurial journey is rooted in resilience and is shaped by early experiences of adapting to new environments.
- He transitioned from consulting to fintech, finding excitement in the fast-paced, high-risk world of startups.
- His early ventures taught him the importance of market timing and building trust with investors.
- Founding Pliant, Malte focused on B2B card issuing with a unique value proposition, allowing the company to scale quickly.
- Pliant raised over $70M in equity and $200M in debt, vital for its operations and expansion.
- Malte overcame multiple challenges, including the collapse of Wirecard, pandemic disruptions, and tough regulatory hurdles.
- His conservative market expansion approach ensures sustainability while maintaining a focus on high-spending clients and cross-border operations.
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Your email address is 100% safe from spam!The post He Raised $270 Million To Enable Companies To Issue Physical And Virtual Credit Cards And Integrate Data Into Their FinTech Stack appeared first on Alejandro Cremades.
Funded vs. unfunded startups–what should be your choice for getting the company off the ground? The business landscape has immense possibilities and opportunities, and funding is always the primary concern. How can you raise your chances of success? By raising funding or staying unfunded?
Applying for and getting external capital and support can be a valuable boost for your new company. At the same time, bootstrapping and using your savings and funds from family and friends has its advantages. Autonomy in decision-making and avoiding debt are typically the main pros.
Founders dipping their toes into the startup ecosystem for the first time are understandably hesitant to take on debt. Particularly when they are inexperienced and unsure about the validity and viability of the concept they are exploring.
However, risk-taking is vital to ultimately building billion-dollar companies. Before making your final decision, carefully weigh the pros and cons of funded vs. unfunded startups. Read ahead to learn everything you need to know.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Funded vs. Unfunded Startups–Why Raise Funding for Your Fledgling Company?The core reason is simple–to ensure its long-term success. Interestingly, at least 25% of startups fail before launching because their founders don’t have the money they need. Post-launch, companies need funding to see them through the early-stage, seed, series A, series B, and further growth stages.
Using suitable sources to get capital can help in more ways than just getting money in the bank. They can be valuable launch pads for propelling your company forward and ensuring its success. Keep in mind that capital is not enough, and 30% of startups can fail even if they have money.
You’ll need more than money and a great business concept to get the startup off the ground. Here’s what you need to know.
Structure and OrganizationBefore applying to investors for funding, entrepreneurs must create a compelling pitch deck that outlines the business plan and structure. A great pitch deck comprises 10 slides outlining the concept, target customer base, market, and competition.
A professional pitch also talks about the product-market fit, use of funds, expected revenues, and profits. Creating this deck also helps entrepreneurs visualize, organize, and clarify their goals. Adding well-researched statistics lends weight to the concept with a higher probability of getting capital.
Building the pitch essentially pushes founders to have a clearly defined structure and plan before diving into building the company. It prevents them from investing personal funds into half-baked concepts.
Investor Backing Lends Credibility to the CompanyAn important advantage of attracting external capital for funded vs. unfunded startups is that investor backing lends credibility. Customers, vendors, strategic partners, and later-stage investors are more likely to invest in a business that has already been vetted.
Demonstrating that an accredited investor has shown interest in the brand entices other entities to enter into transactions. Your products will be better received in the market since customers may be willing to purchase them. Adding the investor name to your advertising pitch helps grow the company.
Unfunded or bootstrapped startups may find it harder to convince customers and other entities to partner with them. They may end up investing more in marketing and promotional campaigns to build credibility in the market. Investor support is like an instant validation of the company’s viability.
Regulatory Scrutiny and GovernanceStartups publicly pitching for funding and getting investor attention come under regulatory scrutiny. This is an advantage because it lends an element of accountability to their operations. Founders are more likely to run the company in compliance with local laws and regulations.
As a result, customers are more likely to trust the brand and its products and services for quality and performance. You can count on successful future funding campaigns and collaborations–vertically or horizontally.
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Better Financial Stability Helps in Aggressive Risk-Taking and GrowthEntrepreneurs with investor support and money in the bank have better growth prospects. A bank balance gives them the confidence to take risks to which unfunded startups may be averse. Small mistakes can jeopardize the company’s stability and result in its failure.
Funded vs. unfunded startups–funded companies have the resources to purchase quality inventory and hire top talent available in the market. A robust balance sheet and financials spur them to test and experiment with a broader product portfolio. Or expand to new markets.
Unfunded companies tend to be more cautious in their approach and take calculated risks. The risk-averse strategy often results in delays and the competition overtaking them. At times, founders must be aggressive and quickly capture market shares and opportunities as they emerge.
Autonomy in Decision-MakingInvestors who sink money into a startup expect a board seat and decision-making rights. Their objective is to steer the company in the right direction and ensure its profitability. This can potentially be a downside for entrepreneurs developing disruptive concepts.
Conflicts can stagnate the company’s growth and research and development capabilities. This factor is especially true for startups in IP, life sciences, pharmaceuticals, software, and technology sectors. Research is time-consuming and extensive, and it may take years to reach a breakthrough.
However, innovator founders can benefit from business-building skills that they may lack. Investors can step in and help them with other aspects of organizing the business structure. This assistance can be invaluable in converting an innovation into a market and consumer-ready product.
As a rule, founders need assistance with managing tasks where they lack expertise. Investors can bring in advisors and other key personnel to bridge the gap. That’s how they can ensure the brand makes and retains its market presence.
Autonomy in decision-making in unfunded startups need not always be a good thing. Convincing investors of the viability of your invention will give you the freedom and resources to develop a product. On their part, investors will be open to ensuring profitability and returns on their investment.
If you anticipate extended R&D and product ideation times, you’ll partner with investors specializing in your business vertical. Investors understand how the industry works and enter into the partnership prepared for longer holding periods until they see profits.
Prioritizing Profitability in Management ObjectivesFunded vs. unfunded startups–founders bringing in external capital may have to cede board seats, equity, and preferred shares. This factor can be a downside if the investor is focused solely on making profits and exiting within a fixed time frame.
Such investor objectives can often clash with the management’s approach, which is more inclined toward risk-taking and aggressive growth. You can avoid this potential downside by partnering with the right investors. Also, be clear about the possible dilution and equity you want to give up.
Before accepting capital and signing the investor agreement, you’ll discuss the terms in detail. Make sure both parties are on the same page, and you clearly present your objectives from the partnership. Eliminate any possibility of ambiguity so that the deal proceeds without conflicts.
Founders should also be aware that they will bring on more investors as the company grows. Each of these stakeholders may have their own objectives. This is why it is crucial to be clear about the company’s future direction with regard to its mission statement.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Dealing With Crises and Unexpected DowntrendsFunded vs. unfunded startups–companies with investor backing are more resilient during market downtrends. Investors remain invested as long as the company has displayed good results and is stable with a great product portfolio.
They may also be open to offering cash advances to bridge the gap during recessions and crises like the pandemic. However, companies going through a bad patch may also find investors demanding repayment or pushing for decisions to minimize losses.
The interference in the company’s operations and conflicts in decision-making could make the situation worse than it already is. Management will focus on recovery, while investors may be more concerned with recovering their capital.
Companies pivoting from their original product portfolio and mission statement to adapt to market conditions is a common occurrence. It can sometimes be a crucial strategy to ensure stability and sustainability. At this time, having investor and stakeholder buy-in is vital.
Entrepreneurs cannot afford delays because of conflicts that can be disastrous. This is where robust relationships come into play. Choosing the right investors to partner with and maintaining open lines of communication can help navigate the downturn. Your company will come out the winner.
Building a Stable FoundationHaving adequate capital helps you build a robust foundation for the new startup. You will have invested in an excellent team, dynamic product portfolio, and strategic partners in the early stages. As a result, as the business grows, you’ll retain a dedicated customer base.
Your customer acquisition costs (CAC) and churn rates will be lower, along with advertising and marketing costs. Word of mouth and excellent customer reviews will result in an established market presence and brand value.
Funded vs. unfunded startups–bootstrapped companies tend to keep their costs low and often focus on gradual organic growth. This strategy could also work depending on the specific market share you intend to capture and your long-term goals.
Networking OpportunitiesPartnering with the right investors can ensure valuable networking opportunities since they will help you build strategic relationships. They will open doors for later-stage funding and options for mergers and acquisitions.
Entering into vertical or horizontal collaborations can be valuable for breaking into new markets and grabbing a customer base. You can also diversify your product portfolio or consider opportunities for off-shore M&As. The possibilities are endless.
Associating with accredited investors will also bring in more skilled and experienced talent because of the higher prestige.
VCs, angel investors, incubators, and accelerators investing in your company may promote the brand, adding to its industry reputation. Funded vs. unfunded startups–the latter tend to miss out on these opportunities.
Ready to learn how to raise startup capital for your business and make the most of investor support? Check out this video I have created explaining how it’s done.
Raising Funding During the Early Stages Raises Your Chances of SuccessAlthough raising capital in the early stages of your company’s growth can have multiple advantages, you’ll proceed carefully. Many founders make the crucial mistake of raising too much money even when the company is not growing proportionately.
Dilution, taking on debt too soon, and giving up decision-making rights and board seats can prove disastrous. The easy availability of money can lead to capital inefficiency that can be detrimental to the startup’s long-term success.
Certain industries are, undoubtedly, capital-intensive in the early stages and need heavy capital infusions before getting off the ground. Others may want to time their fundraising strategically and raise only what they absolutely need.
While investor backing can boost your chances of success, don’t overlook getting money from alternative sources to supplement equity. Focus on minimizing dilution as long as possible.
You’ll also stress other essential facets like a product-market fit, go-to-market strategy, and beating the competition. Customer satisfaction, low churn rates, and referrals should also be priorities. Don’t overlook retaining the core talent and offering option pools to offset salary costs.
At the same time, funded vs. unfunded startups–companies that raised funding in their early stages enhance their chances of getting investor backing down the line. Such startups also have a higher potential for getting acquired with impressive valuations or going public.
Ultimately, your goal should be the company’s long-term sustainability and stability. The strategies and approaches you deploy when raising or delaying funding are unique to the startup and its needs. As an entrepreneur, it’s up to you to make the decisions.
Funded vs. Unfunded Startups–Adopt a Balanced ApproachFunding is the lifeblood of a startup–this adage always holds true. The crucial factor is working out just how much to raise and the right time to raise. This is where you’ll need the expertise of a professional consultant.
Rely on the experts to guide you on not just raising capital but also all the accompanying tasks. You’ll need assistance crafting the perfect pitch deck and an array of additional resources to connect with investors. Particularly investors who operate within your industry and understand your needs.
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In the bustling world of biotechnology and venture capital, few stories are as captivating as that of Adam Mendelsohn, the CEO of Vivani Medical.
Adam’s journey demonstrates an inspiring blend of vision, perseverance, and adaptability required to navigate the complex landscape of building and scaling a company–particularly one that transitioned from a private entity to a publicly traded powerhouse.
In this interview, Adam talks in detail about the very interesting sequence of events when it comes to reverse mergers and transactions and how to articulate the value of what you’re selling and your business.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Californian BeginningAdam Mendelsohn’s story begins in the picturesque city of Santa Monica, California. “Growing up in Santa Monica, it’s hard to complain,” he reflects, recalling the year-round sunshine, vibrant community, and inspiring people that shaped his early years.
Enriched by local public schools, Adam’s childhood gave him a solid foundation and a unique perspective on the world. During these formative years, Adam’s dual passions for music and physics began to take shape.
From Music to ScienceAdam’s early exposure to music, starting with piano at age five and violin at eight, initially set him on a path toward a professional music career. However, a pivotal shift occurred during middle and high school when he was inspired by a dynamic science teacher and a chemistry instructor.
This new-found fascination with science and technology and what they could achieve, coupled with early exposure to the world of medical devices through his father’s connections, steered Adam toward a different destiny.
His father connected Adam with incredible medical device entrepreneurs, including Alfred Mann. Alfred was a visionary entrepreneur and billionaire behind groundbreaking medical devices like insulin pumps and hearing restoration technology.
While in high school, Adam had the incredible opportunity to get to know him and work in one of his companies. The experience inspired the desire and interest in finding a way to make an impact in health care with technology.
The Inspiring Experience of Working With Alfred MannWorking with Alfred profoundly impacted Adam, particularly after Adam learned about Alfred’s perseverance when inventing the insulin pump for Type I diabetes.
Despite facing skepticism about the technology and how it could affect the efficacy of treatments on patient outcomes, Alfred persevered and went ahead with the idea.
Once the product was released and demonstrated dramatic improvements in patients, it attracted huge interest. Ultimately, Alfred’s company, Minimed, was acquired by Medtronic in 2001 for $3.7B.
“Al’s perseverance and innovative spirit were eye-opening,” Adam shares. The scientist’s approach taught him the importance of conviction and resilience in the face of skepticism and long development cycles, lessons that would become crucial in his entrepreneurial journey.
Unlike technology companies building software, medical technology or biopharmaceutical innovations don’t get instant traction with users, quickly identifying whether or not the product is going somewhere.
Not only does product development take time, but innovators must also go through a very lengthy and expensive regulatory approval process. However, Alfred’s inspiration spurred Adam to stay willing and motivated to continue working on his ideas.
PhD and the Birth of a StartupAdam’s academic path took him to UC San Francisco and UC Berkeley, where he pursued and completed a PhD in bioengineering. His objective was clear–familiarizing himself with new science and technology, particularly related to drug delivery because that’s what his company was working on.
Adam’s time in the lab, surrounded by cutting-edge research, ignited his entrepreneurial spirit. The lab was at the intersection of micro and nanostructured materials and how they can be applied to studying biology, tissue engineering, and drug delivery.
At Berkeley, Adam met his future co-founders, Kayte Fischer and Lily Peng, who were pursuing their PhDs in the same lab as Adam when they decided to prepare for a business plan competition for nanotechnologies.
Working late, they came up with the idea to apply nanoporous membrane technology for sustained continuous medicine delivery from a small implant.
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Winning the UC Berkeley Business Plan CompetitionTheir business plan won first place at the UC Berkeley Business Plan Competition and provided the confidence and momentum needed to launch Nano Precision Medical right after finishing their PhDs. Adam remembers taking it around the country and getting positive feedback.
In retrospect, Adam recalls having written about the concept separately in one of the courses he took through the management of technology certificate program at the Haas School of Business at UC Berkeley.
The school that hosted the program allowed graduate-level engineers and MBA students to take it together. Adam had written about applying a new type of nanoporous membrane as part of a new drug delivery technology for helping chronic diseases to be treated more easily and conveniently.
Winning the competition helped the co-founders understand the market beyond science and technology. Thanks to the encouragement they received, Adam was ready to leverage his degree and knowledge to go back into the industry.
Adam wanted to work for a company developing a product or start his own. He immersed himself in all the networking opportunities possible, joining all the entrepreneurial organizations at UC Berkeley and UC San Francisco.
Adam and his co-founders attracted limited funding and started researching how to manufacture and test the novel material to be used as part of the drug delivery implant. In the initial few years, they worked in inexpensive facilities that the university, or its affiliations, enabled them to rent.
They started with a bench and a desk in the basement of the bioengineering building at UC Berkeley and then moved off campus. Once they demonstrated the practicality of their thesis, they attracted strategic investment from one of the large pharmaceutical companies, AstraZeneca.
Navigating the Public MarketTransitioning from a private startup to a public company is challenging, and Nano Precision Medical’s journey is a case in point. The company’s path to publicly traded involved a reverse merger with Second Sight Medical Products, resulting in today’s Vivani Medical.
Second Sight, known for its pioneering prosthetic retina, had received FDA authorization but struggled commercially, though it retained valuable assets and potential.
It had raised $75M after having significantly downsized and was evaluating its next steps without its former leadership team with unclear prospects regarding the future of its technology.
The merger allowed Nano Precision Medical to access crucial capital and resources, significantly advancing its mission. The collaboration also happened because some of the directors of Nano Precision Medical were also directors of Second Sight Medical Products.
Second Sight formed a special committee of non-conflicted directors to evaluate Nano Precision Medical as an investment opportunity.
Their objective behind the merger was also to combine the residual team from Second Sight with Nano Precision Medical’s leadership team to try and bring the technology behind the prosthetic retina on a path toward success.
Adam reflects on the experience, noting the unexpected nature of the reverse merger and its timing. “Negotiating the merger at the peak of the market in December 2021 was fortuitous,” he admits.
The collaboration primarily focused on long-term drug implants for chronic disease treatments, primarily for weight management and diabetes, with the very exciting GLP-1 class in which Ozempic and Wegovy are household names today.
Despite the subsequent market downturn, the capital infusion provided by the merger helped sustain Vivani Medical through turbulent times. Adam explains that assets from Second Sight Medical Products have been transferred into a wholly-owned subsidiary called Cortigent.
Before the merger, the team had identified a different application of the technology, stimulating the visual cortex and making it applicable to many times the number of patients. The technology, which was an FDA-authorized application, may now be able to have a commercially viable business.
Adam reveals that they filed an S-1 for Cortigent and are exploring the possibility of independently financing the subsidiary around a new application of that technology. However, they primarily focus on drug implants for chronic disease treatments, which Vivani Medical has been working on.
Adam talks about starting clinical studies with the funding they’ve received. They have also acquired FDA IND clearance for one of their programs and expect approval to conduct obesity studies and programs shortly.
The Public Company ExperienceBeing a public company CEO presents a unique set of challenges. Adam describes the experience as both exhilarating and demanding. “Being public means constant scrutiny, but it also offers visibility and opportunities for growth,” he explains.
Vivani Medical has leveraged its public status to attract further investment and support for its innovative drug delivery systems, focusing on chronic disease treatments such as weight management and diabetes.
The company’s public status also necessitates shifting how value is communicated to investors. Adam emphasizes the importance of articulating the value proposition effectively.
“Initially, I would lead with technical details, but now I focus on the market opportunity and the problems we’re solving. Investors care more about the impact and the team’s ability to execute than the technical details.”
Currently, Vivani Medical has an internal project called Project Radar Screen. Adam explains how they want to get the company on the radar so people know what it is developing.
“Serving as the CEO is like drinking from a fire hose,” Adam notes. He has been navigating the full cycle of quarterly and annual reports, attending investor conferences, and cultivating analysts to write research reports–typically unnecessary in a private company.
However, he appreciates the value of these activities and the opportunity to learn a new skill set and considerations.
Fundraising Insights and Future ProspectsAdam’s insights into fundraising reflect a deep understanding of the complexities involved. Aside from the Second Sight $50M funding, Vivani Medical has raised around $50M from other sources, including friends and family, pharmaceutical giants, and public market investments.
Storytelling is everything that Adam Mendelsohn was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Each fundraising phase brought challenges and lessons, from cultivating relationships with investors to convincing people that they are a good investment to navigating the inefficiencies of private funding.
Adam also emphasizes the importance of having a management team that is seen as credible and trustworthy from the investor perspective.
He also stresses agility and the ability to pivot when necessary to demonstrate to investors that they can assess the situation and make intelligent decisions about what the next steps should be as they go forward.
Vision for the FutureLooking ahead, Adam is optimistic about the future. The company’s focus on innovative drug delivery systems and the potential for new applications of technology, such as the Cortigent subsidiary, positions them well for continued success.
Adam’s vision for the future is a world where people with chronic diseases need not worry about taking pills and injections to live their lives freely and be healthy. They can rely on a tiny implant that is easy to get and replace.
Adam would also want the company to scale operations internally to enable them to have multiple programs developing products to improve treatment options for chronic diseases. They have already built a lot of infrastructure and will build more moving forward.
In retrospect, Adam would have liked to be better prepared for the uncertainties and challenges from the financing, technology, manufacturing, and regulatory perspectives.
He would also have ensured that he was prepared to address challenges associated with working with people, including assessing new employees for long-term compatibility with the company and its culture.
ConclusionAdam Mendelsohn’s journey from Santa Monica to leading a public biotechnology company is a remarkable story of vision, resilience, and adaptability.
His experiences offer valuable lessons for entrepreneurs navigating the complexities of building and scaling a company, especially in the dynamic field of biotechnology.
As Vivani Medical continues to advance its groundbreaking technologies, Adam’s leadership and insights will undoubtedly play a pivotal role in shaping the company’s future.
Listen to the full podcast episode to know more, including:
- Adam’s journey from Santa Monica to bioengineering was shaped by early exposure to music and influential science teachers.
- Working with Alfred Mann taught Adam the importance of perseverance and innovation in entrepreneurship.
- Nano Precision Medical’s success began with a groundbreaking drug delivery technology and a winning business plan competition.
- The reverse merger with Second Sight Medical Products provided crucial capital and resources for Nano Precision Medical.
- Transitioning to a public company, rebranded Vivani Medical, involves heightened scrutiny and offers increased visibility and investment opportunities.
- Adam emphasizes focusing on market impact and execution when communicating with investors rather than just technical details.
- Despite market fluctuations, Vivani Medical remains optimistic, with plans to leverage its innovative technology in upcoming clinical studies.
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In the world of AI, few founders have navigated the intersection of coding, corporate experience, and entrepreneurial vision as effectively as Ulrik Stig Hansen.
As the co-founder of Encord, Ulrik’s path—from a small town outside of Copenhagen to the bustling tech scene of London and, ultimately, Y Combinator—offers a fascinating roadmap for founders looking to build and scale in the rapidly evolving world of artificial intelligence.
In this interview, Ulrik talks in detail about finding the product-market fit early on, planning how to scale the company, and the motions he went through to make it work.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Coding Beginnings in a Small Danish TownGrowing up in a small town outside of Copenhagen, Ulrik had the kind of quiet environment that fostered a deep focus on problem-solving and building. He considers the lack of distractions a conducive environment for aspiring AI founders.
Unlike many of today’s founders surrounded by a buzzing startup culture from day one, Ulrik spent most of five years immersed in coding from his bedroom. He spent time working on different projects and perfecting his skill sets.
Ulrik’s early start in building products and talking to users laid the foundation for what would eventually become Encord. He loved combining problem-solving and building aspects, spending days pondering problems and building things people could implement quickly.
“Coding is unique because you can build things from your bedroom,” Ulrik says. “That ability to turn problems into products that people can use, and to do it quickly, hooked me from the start.”
This passion for building led Ulrik down an atypical path for an aspiring tech founder. Before diving into AI, he sought experience in business and finance since he wanted to start a company someday. He moved to London to join JP Morgan in his early 20s and began his career.
Ulrik recalls how he enjoyed his stint at JP Morgan and learned a lot. However, the corporate world couldn’t quell his desire to build. After a few years, Ulrik left the structured environment of JP Morgan to return to his true passion: building products, this time in the field of AI.
The AI Revolution and Meeting His Co-FounderThe next significant chapter in Ulrik’s journey took place at Imperial College London, where he pursued his master’s in computer science. This was during a transformative period for AI—the debut of transformer models, the rise of GPT-2, and YOLO models.
As Ulrik puts it, AI was “starting to deliver value in the real world for the first time.” Seeing the tremendous potential of AI technologies, Ulrik felt he couldn’t miss this opportunity, which he describes as standing on the precipice of a significant technological platform shift.
Around this time, Ulrik met his co-founder, Eric, in an entrepreneur network in London. Eric brought in a strong background in high-frequency trading and big data systems. He had been putting thousands of models into production to do different things like trade stock futures and ETFs.
Ulrik and Eric quickly realized they had a shared vision. While models and computing were rapidly advancing, the data layer of AI development stacks—particularly in terms of annotation and quality—lagged. This recognition of a gap in the market set the stage for Encord.
Encord: Solving Data Problems in AIEncord’s original focus was on data annotation, a critical component for AI teams to train their models effectively. Through conversations with over 1,000 AI engineers, researchers, and data scientists, Ulrik and Eric discovered a common pain point.
They discovered the challenge of getting high-quality data annotated for AI models. Over time, the problem shifted from data quantity to data quality. Instead of getting high amounts of data, people were more focused on getting the right data into their AI production systems.
Thus, Ulrik and Erik built the Encord platform that manages the full lifecycle of data management, annotation, and model evaluation–from solving the data quantity to the data quality problem.
Encord effectively breaks down the problem with three distinct pieces of data management creation–getting the right data annotation, having humans provide feedback to the model, and then model evaluation.
Encord’s platform allows AI teams to solve the dual challenges of managing large quantities of data while ensuring that the right data is fed into AI systems. This is crucial because bad data can “poison” models, degrading performance.
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Y Combinator: Learning to ScaleIn the winter of 2021, Ulrik and his team joined Y Combinator, the famed startup accelerator. This was during the height of the COVID-19 pandemic, so their YC experience was fully remote.
Despite the lack of in-person interactions, Ulrik found immense value in the YC network, particularly as a first-time founder navigating the complex world of fundraising, product-market fit, and scaling.
“For a first-time founder, you probably can’t find a better accelerator than YC,” Ulrik says. The program helped him and his team avoid common mistakes, particularly in areas like finding product-market fit, acquiring initial customers, and scaling out the production engineering teams.
YC also provided a robust network for fundraising, which was particularly valuable as Encord raised its pre-seed and Series A rounds in 2021 during one of the hottest funding environments in recent memory.
Even so, Ulrik maintains that founders must work hard to get the investors and early capital they want. It’s a common misconception that fundraising is easy for an AI company, but this is not the case.
The Fundraising Journey: $50M RaisedEncord’s fundraising journey has been nothing short of remarkable. Between 2021 and 2023, the company raised $50M across several rounds, including a recent $30M Series B led by N47, with participation from Y Combinator, CRV, and other notable investors.
Storytelling is everything that Ulrik Stig Hansen was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!However, Ulrik emphasizes that raising capital is far from guaranteed, especially in today’s challenging environment. “The Series B market is still reeling from the boom years, and it was definitely the most difficult round to raise,” Ulrik admits.
The funds raised have allowed Encord to build out its product engineering teams, build products that it could sell repeatedly to its customers, scale its go-to-market operations, and make some early-stage mistakes that come with finding product-market fit.
But as Ulrik notes, the journey from early-stage to growth-stage brings its own challenges, particularly when transitioning from a vision-driven early-stage company to a metrics-driven growth-stage company.
As Ulrik explains, back in 2021, during the pre-ChatGPT days, people were only peripherally interested in AI. The main focus was on crypto and blockchain, which were hot among investors. However, Ulrik and Eric had a few positives going for them.
Incredible Fundraising SuccessFor starters, they had an insanely compelling pitch at a time when the AI boom was ready to take off. Encord had already acquired its initial set of customers and had worked with some of the world’s leading AI teams, both at big enterprise models like AI Scaleups.
Since Ulrik and Erich had customer focus and had built the product to support use cases, they could find a set of investors who believed in that vision and decided to back them early on when the team was still small.
Encord raised its pre-seed round in February–the Y Combinator check. It closed the seed round in May and the Series A in early October. Although the typical interval between funding cycles is 18 to 24 months, Ulrik and Erik went ahead with their fundraising.
They had some amazing customers and logos on board early on and knew exactly what they wanted to build. Fundraising was about accelerating the product roadmap to create the pieces of the product that they wanted. Cash gave them the flexibility to hire teams and move faster.
Ulrik explains that they had to consider different stats and metrics like CAC, payback periods, account executive ramp times, efficiency metrics, gross margins, and more when they reached the series B growth stage.
These numbers became more crucial for the later-stage funding rounds than in the early rounds, where 90% of the pitch was about vision and only 10% was about metrics. In the later stages, like series C and beyond, metrics and vision factors are at 50%:50% and up to 30%:70%.
Scaling: The Next FrontierOne of the most significant lessons Ulrik has learned is that scaling a company can be even more difficult than finding a product-market fit. “People don’t talk enough about scaling,” he says. “The air gets thinner the further you go.” Founders don’t have many peers from whom to ask questions.
Encord’s challenge is finding qualified go-to-market talent to sell a technical product in a relatively new market. In other words, it must find high-quality salespeople who can help run the sales functions and deals autonomously.
This has been one of their most significant hurdles as the company has scaled by over 100% in the past two years in terms of employee headcount. To manage this growth, Ulrik has adopted a lean approach to hiring, focusing on bringing in top-tier talent rather than simply expanding headcount.
“More people mean more operational overhang,” he notes, highlighting the importance of maintaining agility in a fast-growing company.
Encord offers higher salaries and equity to bring in a highly concentrated set of highly qualified and talented people who can help accelerate the company’s growth.
Building a Strong Board and Navigating ChallengesAs Encord has grown, so too has its board. It had a small board for much of the company’s early history. Still, with Series B, the board expanded to include more perspectives, adding credibility and fresh insights to Encord’s decision-making process.
However, Ulrik cautions that choosing the right board members is critical, likening it to a marriage you can’t easily exit. “You have to make sure you can work with these people for many years.” CRB, Encord’s series A and seed investor, has been on the board and propelled it to where it is today.
Problem-solving and rallying the team around challenges are other areas in which Ulrik remains deeply involved. As a leader, he believes in diving into the details of the most important problems while delegating less critical tasks.
“The hardest part of scaling is maintaining focus and alignment,” Ulrik says.
The Vision for Encord’s FutureWhen asked what the future holds for Encord, Ulrik’s answer is rooted in his passion for building. “If I woke up tomorrow and Encord’s vision was fully realized, we would be the go-to platform for every AI team in the world, solving the hardest problems in data management, quality, and annotation.”
With a clear vision, a solid team, and a growing market for AI-driven solutions, Encord is well on its way to achieving that goal. Its initial vision was to automate the data annotation process for computer vision, but now it has grown to several new dimensions, ready to solve new problems.
Ulrik’s journey has shown that the path to building and scaling a successful company is filled with challenges, lessons, and opportunities—and he wouldn’t have it any other way. He advises aspiring entrepreneurs not to wait for the right opportunity but to dive right into it.
Ulrik recommends that founders scale and grow with the company and upgrade their skills by leveraging resources and advisors and surrounding themselves with intelligent people.
Meeting the right people and being in social circles where they can openly discuss the various problems and challenges in the business is crucial. These strategies and not being afraid to ask for help can also promote personal growth.
Listen to the full podcast episode to know more, including:
- Early coding experience: Ulrik’s early passion for coding set the foundation for his entrepreneurial journey.
- AI’s potential: The rise of AI models, such as GPT-2, signaled a technological shift Ulrik didn’t want to miss.
- YC impact: Y Combinator helped avoid early mistakes and accelerated product-market fit.
- Fundraising lessons: Raising $50M across multiple rounds required vision, metrics, and perseverance.
- Product-market fit: True product-market fit became evident when the sales team closed deals autonomously.
- Scaling challenges: Scaling Encord involved hiring top-tier talent and navigating a lean, efficient growth strategy.
- Focus on problem-solving: Deep involvement in solving key problems while delegating less important tasks was key to Encord’s success.
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In today’s ever-changing business landscape, few founders possess the experience of building multiple successful ventures across different industries. An Australian entrepreneur, Jason Wyatt, is an inspiring example of such a founder.
With a career from bike marketplaces to SaaS-based platforms that power retail giants, Jason’s journey is filled with lessons about innovation, adaptability, and knowing when to pivot. Let’s dive into Jason’s journey—from his early days in Melbourne to his success with Marketplacer.
Listen to the full podcast episode and review the transcript here,
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Early Foundations: Growing Up in MelbourneBorn and raised in Melbourne, Jason Wyatt had a supportive family and a father who instilled in him a love for business from a young age. His father was an accountant and encouraged Jason to develop a love and passion for business and help people with the problems they needed solved.
Jason’s father would encourage him to read five pages of the financial paper every day. He taught Jason valuable business concepts long before entering university, which helped him score good marks in school.
Although accounting wasn’t Jason’s passion, it became a foundation for his later ventures, giving him the financial literacy and business acumen that would prove invaluable. Initially, he wasn’t sure about his career path forward, so he opted for a commerce degree.
A Journey of Exploration: From Melbourne to LondonAfter completing a commerce degree in Melbourne, Jason’s curiosity led him to London. Armed with little more than four surfboards and a desire to explore, he quickly navigated London’s vibrant yet challenging business environment.
Jason recalls being a little kid in a big city determined to learn survival. He thoroughly enjoyed London’s diversity and cosmopolitan life. He also knew that it can spit you out if you don’t change and adapt and put yourself in an environment where you can be successful.
Working for renowned firms like Morgan Stanley and Reuters gave Jason firsthand experience in finance and accounting, but it also left him yearning for more creativity and innovation. He was working in decimal or basis points and navigating spreads to make a higher margin of 0.001.
“I was working in finance and accounting, but the focus was always on what had happened rather than what could happen,” Jason reflected. This disillusionment became pivotal, sparking his desire to build his own path.
Although the culture was great fun and the companies were good, Jason was ready for something more.
The Birth of BikeExchange: Finding a Market Ripe for DisruptionJason’s first entrepreneurial success came when he co-founded BikeExchange in 2007 with his friend Sam Salter, who was living in Melbourne at the time. Sam’s family was from the cycling industry, and he had a background in classified ads.
Jason and Sam started out exploring classified sites like cars.com, and their research showed that more bikes were sold than cars. Their idea was simple yet powerful: they saw an untapped market in the bicycle industry. And that these companies needed SEO, SEM, and online marketing.
Despite the increasing number of high-end bikes sold, customers needed ease, convenience, and choice for their consumer journey and to make it easier for them to buy–a gap Jason and Sam were ready to fill. From the outset, BikeExchange took off. The industry was ripe for disruption.
“We put the website up, and within an hour, people were already communicating through it. Within a week, there were 500 users, and within a month, there were thousands,” Jason recalls. The market responded, and Jason knew they were onto something.
Over the next seven years, BikeExchange became a leading platform for buying and selling bicycles, garnering significant accolades, including the prestigious Telstra Australian Business of the Year award in 2012.
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The Pivot: From Bike Marketplace to SaaS GiantAs BikeExchange grew, Jason began receiving inquiries from other industries seeking to replicate his marketplace model. This led to the creation of Marketplacer, a technology platform that enabled businesses to build their own marketplaces.
The realization came that their biggest asset wasn’t the bike marketplace but the technology that powered it. “I realized that the true value lay in the technology we’d built. We were enabling other businesses to scale quickly without needing to own inventory or warehouses,” Jason explained.
Marketplacer became a game-changing platform, allowing retailers to offer products they didn’t own by connecting them with suppliers through a seamless, automated marketplace system.
Retail giants like Albertsons, Tesco, and Gap have since used Marketplacer to expand their product offerings and boost their e-commerce capabilities.
Turning the Page: Leaving BikeExchange and Scaling MarketplacerWhile building Marketplacer, Jason faced a hard decision—continue juggling multiple ventures or focus solely on one. “You can’t do everything,” he admitted. “If we were going to succeed, I needed to give Marketplacer 100% of my time and focus.”
Jason was working 18 hours a day and finding it hard to run that many spreads of businesses. He also learned a crucial lesson that if you want the company to succeed, you must invest 100% dedication and 100% passion into it.
Jason made the tough call to step away from BikeExchange and every other board and dedicate himself fully to Marketplacer. Eventually, BikeExchange would go public, and at the time, it had a peak valuation of $80M.
But by then, Jason had moved on, having had a really great journey and story. He has also learned how to build a technology team, skills that he could devote to Marketplacer. His decision paid off.
Today, Marketplacer works with some of the largest retailers globally, offering a SaaS platform that increases their supply base and accelerates their growth without additional capital-intensive investments.
Jason explains the opportunity behind Marketplacer and selling a technology product to clients. The problem they were trying to solve was how to make it easier for people to sell things that they didn’t own.
Despite having a big audience and existing customer base, their clients needed to grow without opening new warehouses or owning inventory.
They needed to ultimately leverage their unfair advantage and market position resulting from an incredible customer base and deep relationship with suppliers to accelerate growth in autopilot mode.
All this would need to be done at a speed that they would never be able to do if they were buying, owning, shipping and sending inventory in its own right. And that’s ultimately the problem Marketplacer solves.
Essentially, the platform enables dropshipping or sending third-party products and opens up all the new categories behind it. Marketplacer makes money by charging a monthly SaaS fee and taking a percentage of the turnover,
Scaling Globally: Securing Major Contracts and Navigating ChallengesMarketplacer’s rise has been nothing short of remarkable. Jason and his team managed to secure major contracts with some of the world’s leading retailers early on, which is highly unusual for a SaaS startup.
“In the same month, we had Tesco, Qantas, and Gap all approach us to help them create marketplaces,” Jason shared. This influx of enterprise clients propelled Marketplacer into a new league, positioning it as a key player in global e-commerce.
However, scaling Marketplacer wasn’t without its challenges. At one point, the team made the bold decision to turn off half of their product offerings, effectively cutting 40% of their revenue.
By then, as Jason explains, they had a full stack technology and could create a marketplace from scratch. They had a marketplace commerce engine and shopping cart.
Jason saw that their enterprise clients would never re-platform their commerce engine, and the whole world was going to a microservice architecture, which needed them to go headless. Turning off half their products was the most modern and cleverest way to complete.
“We realized that to scale, we needed to focus. Competing with Shopify or Salesforce Commerce Cloud wasn’t the path forward,” Jason said. Instead, they focused on going headless—building a modular architecture that would allow integration with existing retail platforms.
This laser-focus approach enabled Marketplacer to become a strategic partner for its clients, offering solutions that seamlessly plugged into their e-commerce engines and dramatically expanded their supply base.
Fundraising: The Toughest Challenge YetDespite the success, Jason is quick to point out that raising capital has been one of the hardest aspects of his journey. “The process of raising capital is tough,” he bluntly stated.
Marketplacer has raised around $120M to date, but Jason emphasizes that it’s a numbers game. “You’re going to talk to many funds, and it’s not always that you don’t have a good idea or a good business—it just might not fit their mandate or timing.”
Storytelling is everything that Jason Wyatt was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here) where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Jason advises entrepreneurs to deeply understand their metrics and find investors who genuinely believe in their vision. He also suggests getting good advisors to help on the way and nail the story in today’s sophisticated capital market, where metrics and performance matter more than ever.
Looking Forward: The Future of MarketplacerAs Jason sees it, manual processes of the past take too long and cost too much. He sees Marketplacer as a platform where businesses can just plug into the world of supply. The platform will tell them what to sell and how much to sell it for and ensure it gets fulfilled.
Marketplacer has the potential to open up a world of unlimited growth on a global basis without the need to hold any inventory or capital behind it. Businesses can ensure their ultimate growth on autopilot globally by leveraging the tool.
In Jason’s opinion, scale comes in many forms and many sizes. They started the business in Australia, but the product is an excellent fit in the United States, North America, and Europe.
When thinking about scaling, Jason’s objective was to target where their enterprise customers were living and get to them in the fastest way possible. They want to empower growth for every e-commerce business on the planet.
Jason talks about how they built strong connections and relationships with e-commerce platform partners, making it easy and fast to turn their e-commerce business into a marketplace. This led to the launch of their Fast Start program, designed to streamline the process even further.
In ConclusionMarketplacer continues to grow, helping retailers worldwide embrace the future of e-commerce. Jason’s journey from surfboards and bicycles to SaaS enterprise solutions is a testament to his adaptability and entrepreneurial spirit.
His story serves as an inspiring example of how recognizing and solving market problems—whether it’s selling bikes or enabling global marketplaces—can lead to transformative business success.
As Jason Wyatt reflects on his career so far, one thing remains clear: his journey is far from over. With Marketplacer positioned as a global leader in marketplace technology, Jason is continuing to write the next chapter in a career built on innovation, focus, and a passion for solving complex problems.
Listen to the full podcast episode to know more, including:
- Despite not being his true passion, Jason’s accounting background provided a crucial foundation for understanding business finances.
- The idea for BikeExchange emerged from recognizing the gap in the bike industry for an easy, convenient marketplace.
- Marketplacer evolved from BikeExchange by leveraging its technology to help businesses grow without owning inventory.
- Jason emphasized the importance of 100% dedication to one venture to maximize its potential.
- Turning off half of Marketplacer’s product offerings allowed them to focus on large enterprise clients and scale effectively.
- Marketplacer helps retailers like Tesco and Gap expand product categories without re-platforming, leveraging their audience and supply base.
- Raising $120 million involved storytelling, understanding investor needs, and navigating a tough capital market.
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Your email address is 100% safe from spam!The post He Raised $120 Million To Build A Marketplace Platform And Dropshipping Solution To Help E-Commerce Companies Scale appeared first on Alejandro Cremades.
Elizabeth Rossiello, founder and CEO of AZA Finance, has been riding the wave of startup life since 2013. Over the past decade, she has steered her company through 16 “crypto winters” and raised over $80M.
Elizabeth’s journey is not just inspiring because of the impressive figures but also because of her resilience, adaptability, and vision in navigating the ever-evolving fintech landscape.
From her roots in Queens, New York, to becoming a leading figure in African fintech, Elizabeth’s story is one of perseverance, self-discovery, and revolutionary impact.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Multicultural Upbringing in QueensElizabeth was born and raised in Queens, New York, one of the most diverse areas in the U.S. “Everyone in my elementary school was from a different country,” she recalls. Growing up in such a multicultural environment profoundly shaped her worldview.
“I was representing my culture to others all the time,” she explains, adding that this experience honed her communication skills and ability to relate to people with different perspectives. Growing up in an immigrant neighborhood transformed Elizabeth into a cultural representative of a kind.
She remembers being an Italian American representative to her friends, talking about her family traditions, background, the food they ate at home, and what set them apart from other kids. This experience made her a little founder, setting the stage for Elizabeth’s future endeavors.
They set the tone for her leadership skills and how her team today communicates, although they come from diverse backgrounds from different corners of the world.
Elizabeth’s neighborhood, though tough, taught her resilience. “If I wanted to get out and see the world, I had to do it myself.” That determination drove her from Queens to a prestigious school in Manhattan and eventually to Europe after completing her undergraduate degree.
Elizabeth recalls that she had no knowledge of her career options but knew that smart people could go places. One of her first internships was with a friend’s mother, a lawyer working in a hospital. This was Elizabeth’s first exposure to policy.
Next, she took a politics class, where her teacher inspired her to intern in Germany since she could speak German. Each experience was like a stepping stone to building her skill sets.
Eventually, Elizabeth went on to get a degree at Columbia University at the School of International Affairs. The prerequisite for studying here was knowing two to three foreign languages.
Here, she started taking classes at the engineering and business schools. Covering her student loans was an added motivation.
From Government to Banking: The Path to MicrofinanceElizabeth’s professional journey began in government, a natural fit given her family’s background in public service. However, she always sought more. “A lot of my career has been taking a step forward with what I knew and then looking around and realizing, ‘Oh, I can go higher.'”
This mindset propelled Elizabeth into the world of banking, where she gained exposure to microfinance. Her time in finance was both rewarding and challenging and proved to be a segue into becoming a founder. She recalls building the right thought processes during her time there.
By 2007, Elizabeth was working in prime brokerage, sales, and trading at Credit Suisse in Zurich. She spoke different languages and was considered a rising star as an analyst, traveling back and forth between New York, London, and Zurich.
Elizabeth excelled at Credit Suisse but found the culture unwelcoming, especially for women. “I hated the way women were treated,” she says. Her discontent led her to explore other avenues, including the then-emerging field of microfinance.
The timing was perfect–Muhammad Yunus had just won the Nobel Peace Prize for his work in microfinance, sparking global interest in the sector. Although Credit Suisse has also created a microfinance division to invest in this new finance class, Elizabeth was ready to transition.
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Discovering Opportunity in AfricaIn a twist of fate, Elizabeth applied for a microfinance job in Manila but was sent to Nairobi, Kenya, instead. This move proved pivotal. “Nairobi was booming, and the financial sector was thriving,” she says, recalling the city’s vibrant energy.
Traveling across the African continent, Elizabeth visited banks and analyzed their technologies, risks, trading, products, and portfolios. She traveled by bus and motorcycle to different locations and would end up on the local microfinance board as a European board member.
Interacting with different people, Elizabeth discovered inefficiencies in how banks were funded—primarily through foreign currencies like the dollar and euro. However, they were lending in local currency. This realization became the seed of her entrepreneurial journey.
Elizabeth recalls how she started mentioning the facts in her research reports and training sessions. She also started picking up side hustle gigs with different organizations doing training in microfinance or giving talks about legislation.
Taking the Leap: Founding AZA FinanceElizabeth didn’t initially see herself as an entrepreneur. “There is no entrepreneur bone,” she reflects. But after losing her job and struggling to make ends meet with consulting gigs, a mentor encouraged her to take the plunge.
The backing of a seed investor who gave Elizabeth $50K to cover her first few months of operations helped her found BitPesa (later rebranded to AZA Finance). It would become the first company in the world to trade African currencies against crypto and the first to trade crypto against mobile money.
Elizabeth had secured an additional $50K from the World Bank by month three. She was attracting attention from notable crypto investors like Barry Silbert of DCG, Peter Smith, the Co-Founder and CEO of Blockchain, Charles Hoskinson, and Nick Carey.
AZA Finance launched a groundbreaking retail model, allowing users to trade Kenyan Shillings for Bitcoin via M-PESA, the mobile money wallet. The Bitcoin was delivered straight into the M-PESA mobile money wallet, allowing traders to buy and sell in seconds.
This innovation garnered international attention, positioning Elizabeth and her company as pioneers in the African fintech space.
Navigating Legal Challenges and Building a LegacySuccess, however, was not without its challenges. Just a year into operations, the Kenyan government and Safaricom, a local telecommunications giant, sued BitPesa for using their platform–even though AZA Finance was paying for the service and using it like everyone else.
Rather than back down, Elizabeth fought back, taking on the largest monopoly in Kenya. “We got trashed in the press,” she recalls, but the experience only strengthened her resolve. “It builds thick skin,” she says, reflecting on the lessons learned during that tumultuous period.
Despite the legal battles, Elizabeth remained focused on her mission. The early blockchain and crypto community’s values-driven ethos resonated deeply with her. “We were like, let’s change the world,” she says.
This passion for innovation and disruption kept Elizabeth going, even in the face of adversity. Having worked in investment banking and the development finance spaces, she was determined to find solutions for the profit-minded, colonial mindset.
Raising Capital and Scaling AZA FinanceElizabeth’s journey as a female founder in fintech, especially in Africa and crypto, came with its own set of challenges. “Only 2% of capital is available to female founders,” she notes, highlighting the uphill battle she faced.
Despite the hurdles, AZA Finance managed to raise over $80M, attracting investors like Pantera Capital, Draper, and Greycroft. However, the fundraising journey was anything but smooth. Elizabeth also realized that building something in Africa would take much longer than in Europe.
Storytelling is everything that Elizabeth Rossiello was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Even so, in 2015, just two years later, AZA was licensed by the FCA as one of the first companies with blockchain in their payments plan. And it got that license with almost no funding. Soon, AZA was growing, earning revenues, and ready to expand to West Africa.
Elizabeth remained steadfast in her vision to create a pan-African payments network, expanding AZA Finance’s operations to West Africa. They got lean, and as revenues grew, they made the leap of leaving Kenya.
Elizabeth recalls how her co-founder went to the UK; she went to Nigeria, but the team stayed in Kenya. The company continued expanding and moving into other markets. However, they didn’t really see venture capitalists interested in building an infrastructure company.
“They were more interested in quick returns than building a long-term infrastructure,” Elizabeth says. As crypto came in and out of favor in different cycles, AZA Finance would either attract crypto funding or be repelled by trad-fi or non-crypto investors.
Dealing with Government Policy ChangesAlthough it was a wild ride up and down, Elizabeth recalls that they were doing well. They had considerable revenues in one market in Nigeria and were profitable.
Then, the Nigerian government decided to shut down all international companies and stop using local currency as a payment mechanism, allowing only dollar payments.
This major setback came in January 2021, and AZA Finance went from millions of dollars of monthly revenue to hundreds of dollars in just one month. A couple of companies also exited the market.
Amidst the chaos, Elizabeth exhibited her hard-won resilience. She and her team took the cash they had, bought a company in South Africa they had been working on buying, and deployed all of their cash to open up new markets.
Rebuilding AZA FinanceAlthough it was a lot of hard work, Elizabeth and her co-founders rebuilt the company from being an almost purely Nigerian company with a bit of Kenyan business to capturing Ghana, Central Africa, West Africa, and South African markets.
By the last six months of the year, AZA Finance regained its ARR, going from almost zero revenue to over $10M in all new markets—this phenomenal turnaround stunned investors who had hesitated to back the new company.
Elizabeth recalls how they struggled with the concept, demonstrating the resilience, know-how, and team they used to build on the African continent–something investors couldn’t understand. AZA Finance did attract funding from the FTX and Development Bank of South Africa.
Fast forward to the present, Elizabeth talks about how AZA is attracting interest in the infrastructure they’ve built from many strategic partners.
Building a Robust CultureAs Elizabeth recounts, life at AZA has always been unpredictable, but the team has learned to embrace the chaos. The company remains true to its core values, regardless of external pressures.
As Elizabeth explains, she knew the fundamentals of the company, its culture, and values and refused to compromise them, even when engaging with different markets and diverse cultures.
For instance, when external partners suggested wiping Slack channels, she stood firm, maintaining that such actions went against their company culture. These decisions reinforced their identity while expanding into new markets.
Despite some setbacks, including the collapse of key partners, the team persevered, taking nearly a year and a half to repair relationships with regulators, advisors, the authorities, and their clients.
Looking Back at the Challenges and the Road AheadElizabeth reflected on her experiences of navigating multiple challenges, including 16 crypto winters and regulatory battles with the government. Surviving these cycles was driven by a larger purpose that attracted investors, customers, and employees alike.
However, beyond equity funding, Elizabeth struggled with securing debt investments for AZA Finance, which was essential for growth post-seed stage. When she first started working in Africa, she saw that several global microfinance institutions were lending in dollars and euros remotely.
These lenders didn’t understand the business models and this problem still stands today. Many lenders available are development or quasi-private lenders with non-commercial metrics, making it difficult for borrowing companies to scale.
AZA Finance pioneered alternative financing methods, often finding themselves at the forefront of innovation in this area. For instance, Elizabeth was among the first companies to take debt from clients and partners.
Her motivation stems from the needs of their clients, which include some of the biggest blue chip companies in the world, 34 of the world’s largest remittance companies, and 10 of the biggest global payment processors, along with large credit card processors.
AZA Finance has an extensive client list featuring giants like Heineken, Procter & Gamble, and Total, underscoring its market presence. Despite challenges like bad press or problematic markets, AZA’s product-market fit keeps them going.
Clients recognize the uniqueness of AZA products, its extensive coverage, and the compliance standards it upholds, driving the team through tough times. It’s not just about culture or personality; it’s about delivering a product that makes clients say, “Thank goodness for you.”
Lessons for Aspiring EntrepreneursOne key lesson Elizabeth emphasizes is the importance of networking—even with those that founders might not naturally gravitate toward. Earlier, she avoided networking with people she didn’t share values with but later realized that connecting with them could open up new opportunities for capital.
Regular updates, coffee meetings, dinners, and networking events became part of the routine. Elizabeth stresses that capital isn’t distributed based on mathematical formulas but through relationships.
Many venture capitalists might struggle to understand frontier technologies or emerging markets like Africa, making it crucial for founders to communicate their vision clearly and in a digestible and non-intimidating way.
Finally, Elizabeth debunked the myth that “if you’re good at what you do, money will find you.” She argues that talent alone isn’t enough. She recounts meeting brilliant individuals in Senegal and Nairobi who, despite their abilities, didn’t have access to elite opportunities like Stanford.
Success often requires navigating networks, securing the right connections, and putting oneself in the right places rather than waiting for opportunities to come knocking.
In ConclusionElizabeth Rossiello’s journey as the founder of AZA Finance demonstrates the power of resilience, adaptability, and a strong sense of purpose. Her story, which is about a multicultural upbringing in Queens and her navigating the complexities of the African fintech landscape, is truly inspiring.
Elizabeth offers valuable lessons to entrepreneurs aiming to make a mark in emerging markets.
Her ability to push through regulatory challenges, scale AZA Finance, and build a pioneering cross-border payments network in Africa shows the importance of innovation and staying true to core values, even in the face of adversity.
Listen to the full podcast episode to know more, including:
- Resilience and adaptability are essential in navigating the volatile startup landscape.
- Early experiences, like growing up in diverse environments, can shape leadership skills.
- Networking is crucial for securing capital, even with those outside your comfort zone.
- The African fintech market offers unique challenges and opportunities for innovation.
- Staying true to core values and company culture strengthens long-term business success.
- Entrepreneurs must communicate their vision, especially in frontier markets.
- Success requires more than talent—it’s about leveraging networks and opportunities.
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Your email address is 100% safe from spam!The post She Raised $80 Million To Build A FinTech Company To Help Accelerate Economic Growth In Africa appeared first on Alejandro Cremades.
In the fast-paced world of entrepreneurship, few journeys are as inspiring as that of Christian Talmage, the founder of Oliver Space and Chief Product Officer of Dispatch Goods. From the rural woods of Maine to his rapid ascent in the startup ecosystem, Christian’s story is about the power of intuition and resilience.
In this exclusive interview, Christian talks about following instincts and dealing with unexpected events. And how to leverage your drive and vision to align impact with business values–both incredible in today’s world.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Growing Up in the Woods of MaineChristian Talmage was born on Long Island but quickly moved to the serene and somewhat isolated surroundings of Maine. Living close to the Sugarloaf Mountain ski resort, his early years were defined by the rustic beauty of the area and the tight-knit community.
Although the school environment may not have been the most challenging, the natural surroundings and the friendships he forged were invaluable. Here, Christian developed his love for ski racing—a passion that would later inform his entrepreneurial mindset.
The competitiveness, the adrenaline rush, and the risk-taking inherent in skiing paralleled the challenges he would face in the business world. Christian learned about putting himself in difficult situations with a high potential for things going wrong and trusting his abilities to deal with them.
“There’s a strong corollary between the risk-taking appetite of skiing and willingness to start companies,” Christian reflects. “You never know what the future holds, and you’re taking an immense risk under the premise that you’ll figure it out.”
The Unexpected Path to ArchitectureWith a natural affinity for math and science and a deep interest in art and design, Christian initially envisioned a career in engineering or architecture. This path seemed a perfect blend of his passions, offering a way to merge technical skill with creative expression.
Christian pursued an education in physics, engineering, and studio art, all while nurturing a dream of becoming an architect. At the time, it seemed like the only viable career path. Further, the schools that had ski programs didn’t have architecture programs.
However, life had different plans. Early in his career, while rapidly advancing in the architecture field, Christian began to feel that the reality of the profession didn’t match his expectations. His initial plan was to acquire some capable degrees and skill sets before going back to engineering.
Despite his quick rise, hands-on experience with large-scale commercial projects, and a keen interest in spatial design and structural systems, Christian was looking for something more.
A Podcast That Changed EverythingDuring his time in architecture, Christian found solace and inspiration in podcasts—specifically, the “Entrepreneurial Thought Leaders” podcast from Stanford.
Listening to stories of successful entrepreneurs like Drew Houston from Dropbox and Ben Horowitz from Andreessen Horowitz, Christian realized his true passion lay in technical problem-solving and building companies, not buildings.
This revelation led him to pivot from architecture to entrepreneurship. He applied to Stanford, where he immersed himself in human-centered design and product design, all while taking business classes that fueled his entrepreneurial fire.
“It completely changed the course of my career,” he recalls.” Christian also reveals how he made decisions along the way guided by intuition, passion, and a focus on the areas where he found the most energy.
“You’ve got to really stick to your guns, know your customer inside and out,” he advises. This strategy has served Christian well over the years.
It has been a great way to ensure he remains engaged with whatever he’s working on at the time. His focus and obsession at a much higher degree help boost his rate of learning.
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From VR to Oliver SpaceStanford was the launchpad Christian needed. After graduation, he jumped into the startup world, gaining firsthand experience with the highs and lows of building a business. His foray into the virtual reality (VR) space eventually led him to co-found Oliver Space.
Christian recalls connecting with River Studios on the investment side and Boom, which became his segue into building the company. Oliver Space is a company born from his experiences with frequent moves and the challenges of furnishing a home.
When Christian and his co-founder, Chan Park, started Oliver Space, there were already a couple of competitive products on the market, mainly in the category of rental furniture at the time.
The sector was quickly gaining traction and the duo had seen folks like Rent-A-Center in the past have very high success with rental models.
The Oliver Space concept aimed to modernize the traditional and often predatory furniture rental model by offering a more contemporary and customer-friendly approach. Christian and Chan saw that the model of buying furniture and keeping it for ten years didn’t quite make sense.
They were confident they were solving a problem with a visceral need. They had a couple of existing templates to work off of, but the challenge was building something 5, 10, or 15x better than what’s already out there.
Christian and Chan focused on holistic design combined with an easy, incredibly convenient user experience. Although the idea was capital intensive, the margins in furniture were really high. The company quickly gained traction, reaching $18M in ARR within just four years.
Christian and Chan’s strategy was to eliminate large promotional sales and instead roll the extra money directly into the quality of their home delivery and returns experience.
With a heavy emphasis on custom, behind-the-scenes technology, their team was able to create significant leverage and lower their operational expenses for what might otherwise have been a very expensive set of activities.
But the path was far from smooth. Fundraising cycles were challenging, and Christian learned the hard way the importance of sticking to one’s vision despite external pressures, particularly from investors. Even so, he and his co-founder successfully raised $56M for the company.
Storytelling is everything that Christian Talmage was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Facing Unforeseen ChallengesJust as Oliver Space was hitting its stride, the COVID-19 pandemic struck, throwing the business into turmoil. What began as a promising Series A fundraising round quickly unraveled as the world reached a standstill.
Oliver Space had a super-talented team, great metrics, and great customer reviews. Regardless, pitch meetings were canceled, supply chains were disrupted, and the company’s future seemed uncertain.
“It was humbling, to say the least,” Christian admits. “You need to fight every single day and constantly reinvent yourself.” Yet, in true entrepreneurial spirit, he and his team persevered. They adapted their operations and marketing strategies and reinvented the company.
Christian and Chan took massive pay cuts and were able to retain their entire team. They also continued building product and worked on new strategies to keep their operations and marketing team functional.
For a time, Christian and Chan paused their operations but eventually realized that the pandemic presented a unique opportunity. They heard Wayfair and other large furniture retailers reporting massive furniture sales.
As people spent more time at home, the demand for furniture soared, leading to a successful rebound for Oliver Space. It was a huge tailwind for the company.
The End of One Chapter and the Start of AnotherChristian and his team noted the rapidly changing market dynamics despite the company’s recovery and subsequent acceleration. There were relatively few buyers for a highly capitalized startup in the retail furniture space.
Furthermore, most potential acquirers already had large distribution centers, thoughtfully designed furnishings, and boasted greater brand recognition.
What large incumbents did not have was a software suite that allowed customers to buy and return furniture goods with free delivery and assembly, all at no additional cost from the comfort of their homes.
To lean into this advantage, the company began shifting focus towards a B2B model, where Oliver Space could provide the backend infrastructure for many of the potential acquirers in question.
As this signaled a material shift in their business model, it began to raise eyebrows with the company’s venture debt provider.
Like most retail-oriented startups, Oliver Space has taken on a large sum of venture debt to finance the purchase of its inventory over the years.
As the tech sector market crash and bank collapses of late 2022 / early 2023 hit lenders hard, debt providers like those Oliver Space was working with began looking for every opportunity to get their cash back.
The model transition Oliver Space was making was just the trigger they needed, and soon, the company’s debt providers were asking for loan repayment in full.
Despite a compelling product experience and excellent metrics, Oliver Space was forced to default and had to close its doors. It was a difficult decision, and Christian describes the day they decided to pull the plug as “incredibly disappointing.” However, as one chapter closed, another opened.
The Next Frontier: Dispatch GoodsChristian’s journey didn’t end with Oliver Space. After taking some time to focus on climate issues—an area close to his and his wife’s hearts—he joined Dispatch Goods, a company founded on the principle that reducing waste in the supply chain is good for business.
Before Christian joined the team, Dispatch Goods had successfully raised $8M. While the details of the company’s latest round will be shared publicly soon, Christian’s excitement for the impact-driven business is palpable.
At Dispatch Goods, Christian continues to follow his instincts, aligning his passion for making a difference with creating business value. “Where’s the energy and passion?” he asks.
For Christian, it’s clear that the answer lies in building companies that not only succeed but also make the world a better place. As he points out, few impact-driven companies have economics that pencils out.
They have major scalability concerns and early research-oriented ideas that haven’t yet been proven in the market. Alternatively, many other business models are only superficially climate-related and hardly impactful. There’s a lot of greenwashing out there.
Christian explains that Dispatch is taking a circular approach in the same way they had applied circularity to Oliver. It was a mechanism for improving margins and better utilizing inventory and products already manufactured.
Dispatch is doing a similar exercise with an industrial focus. They focus on secondary packaging, particularly in the world of the cold chain, where the products are very expensive line items for any perishable goods, D2C (Direct-to-Consumer) brands like meal, grocery, and home health products such as Ozempic and Wegovy.
Challenges of Reusing Expensive Packaging MaterialsThese products have temperature sensitivity and need to be filled with gel packs and insulation to keep them at safe temperatures so they can be delivered to the customer’s doorstep.
The packaging has been optimized for single use, and the boxes, packaging, and all the extra material are trashed after every delivery.
Not only is the packaging an expensive line item, but it also accounts for 10% of the company’s revenue. Christian sees it as a terrible customer experience and frequently connects with the end users of their enterprise customers.
The single most common factor that stands out, more than the sustainability benefit of reusing packaging, is the convenience of returning it. Users don’t want to think about what to do with the goopy chemical gel packs they aren’t comfortable taking apart and throwing away.
Users deal with the waste and guilt components of just using the product and throwing it all away since it’s a lot of material. Most people just don’t even like breaking down boxes. They run out of space in their managed buildings or apartments and recycling bins.
Being able to return all this stuff in a turnkey way, knowing that it’s going to good use and will get used again, is very gratifying for people.
Christian basically hit on three major bullets here–substantial cost savings for enterprise customers, a better customer experience that their consumers love, and, on top of everything, the added green benefit.
By virtue of the business model, the dispatch system will reuse these products 5 to 15 times. Often even more. This process is inherently more sustainable than buying the stuff overseas, putting it on a ship, freighting it from China, and then throwing it away at the end of its cycle.
As Christian explains, it felt like a rare breed of business that actually has compelling economics, high potential for scale, and an exciting climate impact along the way.
Advice for Aspiring EntrepreneursChristian advises entrepreneurs to prepare for the challenges that come with building businesses. When hurdles arise, they cannot quit and start looking for other jobs. The company will become a huge part of their lives, requiring complete dedication.
Christian also stresses the importance of culture and bringing on the right early hires and talent. Culture gets redefined with every new employee, and whether it’s explicit or not, your culture is being defined every day.
Knowing who are the people you really love working with, the people you can throw a million problems at the wall and spend late nights and weekends, just grinding through really difficult scenarios, is crucial.
Entrepreneurs should bring in people they can trust when founding companies because they will help achieve success. This attitude can be a complete game-changer.
ConclusionChristian Talmage’s story is a compelling narrative of resilience, adaptability, and the power of following one’s instincts.
From the snowy slopes of Maine to the forefront of sustainable business, his journey inspires entrepreneurs everywhere—reminding us that success is not just about the destination but the lessons learned along the way.
Listen to the full podcast episode to know more, including:
- Trusting your instincts and following your passions can lead to unexpected yet rewarding career paths.
- Entrepreneurship requires embracing uncertainty and taking calculated risks, much like the adrenaline rush of competitive sports.
- Listening to inspiring voices and learning from industry leaders can ignite entrepreneurial ambitions and reshape career goals.
- Resilience and adaptability are crucial in navigating challenges like the COVID-19 pandemic, which can create obstacles and opportunities.
- Building and scaling a business involves constant learning, perseverance, and the ability to pivot when faced with market shifts.
- Fundraising is a challenging process that requires a strong vision, persistence, and staying focused amidst rejection.
- Aligning impact with business value, especially in sectors like climate, can drive meaningful change while building successful ventures.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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In the ever-evolving world of technology and startups, few stories are as inspiring as that of Ray Chohan, co-founder of Patsnap. This company has raised over $300M in funding and is now on a path to becoming a leader in AI-enabled intelligence platforms.
From a working-class upbringing in London to building a global tech company, Ray’s journey displays resilience, focus, and the power of learning through experience. In this exclusive interview, he talks about team building, team engagement, ideating products, and instituting culture.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Humble Beginning in West LondonRay Chohan was born in West London to parents who had emigrated from the Punjab region of India. His father was a postman, and his mother worked as a seamstress. Growing up in a tight-knit, loving family, Ray was instilled with strong values and a work ethic.
Reflecting on his upbringing, Ray notes, “I realize with age how precious growing up with parents like that was, but also lucky enough to have extended family where you learn really good values and lots of lifelong learning lessons.”
This simple yet rich foundation would prove invaluable as he embarked on his professional journey.
The Early Days: Cold Calling and Embracing RejectionRay’s entry into the workforce was anything but glamorous. He started in media sales at Sterling Publications (now SPG Media) in Paddington. Sterling was one of the largest B2B publishers in Europe and the world at that time.
However, it was also a hardcore sales environment where cold calling was the norm. Ray candidly recalls the difficulty of this role, particularly the sting of rejection. His job description was trying to get a hold of chief executives and selling ad space in magazines and B2B publications.
Ray was tasked with the medical device space and was essentially a young kid trying to learn the industry, personas, and latest paradigms within a space.
“You start to learn how to embrace rejection,” he says. “It’s that mental journey of going home after being punched in the face 50 times… and then coming in the next day with a fresh mind and still keeping that positive attitude.” Most importantly, Ray learned the ability to bounce back.
Though he was eventually fired from this position, the experience was formative. Ray credits his “six-month bootcamp stint” at Sterling with teaching him valuable lessons about commercial framing and resilience that would later help him build Patsnap into a successful company.
Building a Foundation at DatamonitorAfter Sterling, Ray joined Datamonitor in 2004, a market intelligence provider, where he spent eight years honing his skills in sales and commercial strategy. This period was crucial in shaping his career.
Datamonitor was at the beginning of a three to four-year exit plan and amid aggressive expansion when Ray joined, offering him opportunities to rise through the ranks and gain global exposure. He recalls the chief executive as highly talented and mega-aggressive on organic growth.
He was trying to expand the market share, so the company was being aggressive on the sales side and also creating a very compelling, generous environment where if employees were good, they could have potentially life-altering outcomes in a relatively small space of time.
Ray ended up working with a highly motivated and talented team, having loads of fun every day. “It felt like I was at a cool university but getting paid to attend,” Ray says, reflecting on the experience.
The relationships and skills he developed at Datamonitor became the bedrock for his future entrepreneurial endeavors, particularly his role in co-founding Patsnap. Ray recalls wryly that he was learning through osmosis, “sitting on a sales floor, learning and growing.”
The timing was perfect in the company, and Ray had opportunities to rise in the sales organization and get exposure to multiple global markets like life sciences, automotive, and academic. This experience helped Ray build robust self-confidence.
Eventually, Datamonitor was acquired by a large group called Informa. But, by that time, Ray was ready to become an entrepreneur and was looking for opportunities.
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The Genesis of PatsnapThe idea for Patsnap was born out of a chance meeting at a convention, where Ray met Jeffrey Tiong, the CEO & technical founder of Patsnap. At the time, Patsnap was a free public website called Pat Snapperchat that was struggling to be commercialized and churn revenues.
Recognizing the potential for collaboration, Ray and Jeffrey decided to join forces—Ray brought his commercial acumen while Jeffrey provided the technical expertise. Ray also brought in a highly talented colleague from Datamonitor to join them in kickstarting the commercial machine.
From his apartment in London, Ray began to build out the commercial side of Patsnap, leveraging his network and experience from Datamonitor. This effort paid off as Patsnap transitioned to a SaaS model, a strategy that has remained consistent and successful over the years.
Ray successfully transitioned the website into an annualized upfront payment and pure SaaS subscription model. Customers subscribe for a year or sometimes a two- or three-year contract.
“Earlier this year, we passed over $100M in ARR,” Ray proudly shares, highlighting the company’s growth trajectory.
The Challenges of Scaling and Maintaining CultureAs Patsnap grew, so did the challenges of scaling the team and maintaining the company culture. Ray speaks candidly about the difficulties of managing growth, particularly during the pandemic. Initially, he leveraged his network of people at Datamonitor and invited them to work at Patsnap.
Ray successfully brought in people who were ten times better than him, and they did an excellent job. A few had been in the business for up to seven years and were oriented in not just commercial but several different roles also.
Talking about instituting the culture foundation and cutting through the noise, Ray reveals that up until 2019, they had a healthy, relatively simple, purely focused-on, high-performance culture. The company had highly talented people who led by example, which was ideal for creating culture.
Ray also talks about having amazing people on the team in sales management, customer success, and product organization in Europe. They led the company instead of hiring a flashy HR person and doing fancy PPTs about culture. But then, COVID-19 happened.
“Maintaining that performance, maintaining that rig, that pace became really difficult,” he admits, especially in a virtual work environment. Patsnap lost a lot of its original culture at that time because recruiting and retaining basically in a virtual world was a new strategy they had to learn.
The company faced additional hurdles when they brought in a new management team in 2019, a decision Ray now views as a mistake.
“Not continually backing your team that got you there in the first place to the next stage is a painful mistake,” he reflects. This experience taught Ray the importance of staying true to the original team and the values that helped build the company in the first place.
From 2023 onwards, Ray and his co-founders focused on bringing back old values, accountability, the self-starter culture, and responsibility within the team.
Navigating the World of Venture CapitalRaising over $300M in venture capital is no small feat, and Ray’s experience offers valuable insights into the process. Early funding rounds were driven by Patsnap’s exceptional organic growth, strong market fundamentals, and revenue-based investor attraction.
Storytelling is everything that Ray Chohan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Ray talks about displaying excellent momentum, good compound quarter-on-quarter growth, annual growth, and a compelling narrative to back the numbers combined with a fast-growing market. Patsnap sells into the R&D and IP space, which is recession-proof.
However, the pandemic period and the unique challenges of 2021 required a different approach. Despite the obstacles, Patsnap managed to attract top-tier investors, including SoftBank. Ray credits their success to being in the right place at the right time, with the right growth metrics.
“We feel very lucky to have SoftBank on board as one of our lead investors,” he notes.
Looking Ahead: The Future of PatsnapLooking to the future, Ray is focused on Patsnap’s ultimate goal: becoming the leading AI-enabled intelligence platform for R&D and IP teams worldwide.
The company is already making strides in life sciences and material sciences–areas Ray believes will be pivotal in the coming decade since it sells to biotech and pharma. Patsnap also has tremendous intelligence capabilities in sectors like AI-enabled drug discovery and delivery.
“We think this decade will be a spectacular decade when it comes to advanced materials discovery,” Ray says, highlighting the company’s work in enabling technologies like quantum computing and supersonic air travel at the price of a premium economy ticket.
Ray describes the company’s value proposition as horizontal, with customers from automotive to Fast-moving consumer goods (FMCG), aerospace and defense to advanced manufacturing.
Patsnap is the leading AI-enabled intelligence platform, the gold standard for R&D populations, companies, and IP teams in technology, Life Sciences, Automotive, Law firms, Chemical, Engineering, Consumer Goods, and Education companies around the world.
Final Thoughts: The Importance of FocusAs Ray reflects on his journey, one key lesson stands out: the importance of focus. Staying true to your core mission is crucial in a world full of shiny new opportunities.
“Focus, focus, focus, and thinking long-term yields healthier results,” he advises, emphasizing the need to keep things simple and execute well. Ray advises software companies to keep their AI platforms and capabilities simple and adapt to customer requirements.
He also suggests going deeper into that part of machine learning and what it can offer customers rather than jumping to the next big thing. Exploring opportunities to grow revenues extensively and executing them to create maximum value is the key.
Ray Chohan’s story is a powerful reminder that success in entrepreneurship is not just about having a great idea but also about resilience, learning from failure, and staying true to your values.
As Patsnap continues to grow and innovate, Ray’s journey inspires aspiring entrepreneurs everywhere.
Listen to the full podcast episode to know more, including:
- Early career experiences in sales taught Ray the invaluable lesson of embracing rejection as a growth opportunity.
- Building a successful team at Patsnap was rooted in leveraging existing networks of trusted, talented individuals.
- Focusing on core strengths and simple strategies is crucial for sustained growth.
- Patsnap’s success in raising over $300 million was driven by strong organic growth and a compelling market narrative.
- Leading by example was key to fostering a high-performance culture at Patsnap, especially pre-pandemic.
- Ray learned that sticking with the original team can be more effective than hiring new leadership based on conventional advice.
- Patsnap’s future lies in becoming the leading AI-enabled intelligence platform for R&D and patent teams globally.
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Carlos N. Escutia’s entrepreneurial journey is an exciting story of experiences drawn from diverse roles across countries, industries, and business models. It is a fine example of adaptability, resilience, and strategic thinking.
Carlos grew up in a family of entrepreneurs and went on to make his mark in investment banking, co-founding one of Latin America’s largest green banks. In this exclusive interview, he talks about navigating the challenges of building a global tech startup,
Carlos also highlights bootstrapping his company, achieving the ideal product-market fit, raising funding from VCs, building a fully remote team, and adapting to the rapid changes in the market.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Legacy of EntrepreneurshipCarlos was born into a family deeply entrenched in the world of business, with roots in both the United States and Mexico. His father’s entrepreneurial endeavors in the textile industry provided Carlos with a front-row seat to the complexities of building a business and problem-solving
The experience was formative, exposing him to the highs and lows of entrepreneurship from a young age—Carlos’ family-owned manufacturing facilities in Mexico. When the Asian markets entered Latin America and caused prices to plummet, they opted for a strategic pivot.
They transitioned from manufacturing to trading, establishing new relationships in China to stay competitive. This early lesson in adaptability would prove invaluable throughout Carlos’ career.
The Wall Street Years: A Lesson in Complexity and OpportunityAfter earning his MBA from NYU, Carlos stepped into the high-stakes world of investment banking in New York. Working with Fortune 500 companies, he was introduced to the intricate challenges of data security, complex processes, and large-scale problem-solving.
Carlos’ time on Wall Street honed his ability to recognize business success and failure patterns, teaching him that every company, regardless of size, business model, growth stage, and market share, faces its own evolving challenges. That factor also holds for publicly traded companies.
This experience broadened his perspective, showing him the vast opportunities across different markets and industries. Carlos realized that you simply need to be able to figure things out and work with people who have that mindset of problem-solving
Returning to Mexico: The Venture Fund and a Springboard to EntrepreneurshipCarlos’s journey took a significant turn when he returned to Mexico to help launch a corporate venture fund in Mexico City. This role allowed him to merge the financial expertise he had learned from working in an investment bank with his entrepreneurial experience.
Immersed in Mexico’s startup ecosystem, Carlos realized his true passion lay in building something from the ground up. He enjoyed being at the hub of things with a bunch of entrepreneurs looking to solve interesting problems.
This epiphany led Carlos to partner with a few people of Chilean origin to co-found Banverde, one of Latin America’s largest green banks, focused on providing financing solutions for large, renewable energy projects.
Banverde was a direct response to the need for financial infrastructure in the region’s emerging green energy market, particularly for small businesses looking to transition to solar power. Carlos saw that Mexico is unlike countries like the US, where financing and tax credits are readily available.
He recognized the opportunity to make an impact and help in that transition. That’s how Carlos launched the firm, raised some capital, and started providing funding to small businesses to install solar panels and help them lower their energy costs.
This way, the companies could accelerate their transition from fossil fuels to renewable energy.
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The Roller Coaster of CasaOne: Scaling Fast and Pivoting in a PandemicCarlos’s entrepreneurial journey continued with his return to the United States to co-found CasaOne, a furniture rental platform catering to the short-term hospitality industry. The company grew rapidly, raising nearly $70 million in venture capital and serving major clients like Airbnb.
Carlos also served as head of operations for CasaOne and raised capital from Accel, Freestyle Capital, and other well-known investors. Soon, the company was furnishing entire buildings all over the US and scaling quickly.
The objective was to provide a SaaS-like solution for furniture. Instead of customers spending on furniture, particularly for short-term rentals, they could turn it into an operating expense by leasing it from CasaOne with a tech platform.
However, the onset of the COVID-19 pandemic brought the hospitality industry to a standstill, forcing CasaOne and its competitors to pivot or shut down. Since the hospitality industry was its largest customer, the company found revenues dropping and hitting a wall.
The pandemic underscored the vulnerability of fast-scaling startups dependent on a single industry, a hard-learned lesson that would influence Carlos’s approach in future ventures. Another challenge Carlos faced was managing the workforce.
CasaOne had been hiring remote employees outside the Bay Area, San Francisco, and India. He had to work out how to continue operating when the key members were not in office. He also had to figure out how to take care of them and ensure that the company was up and running.
Carlos realized that many companies were doing the same–hiring remote workers from Asia, LatAm, and Europe since it was more cost-effective. The pandemic accelerated growth in remote and distributed work from years to months.
Everyone had to figure out how to work from home, deal with IT complexity, and manage, maintain, and deliver equipment.
GroWrk: A Strategic Pivot and a Sustainable ApproachDrawing from his experiences with CasaOne, Carlos founded GroWrk, an IT lifecycle asset management platform designed for the modern, distributed workforce. It caters to companies of all sizes–from startups to publicly traded companies with thousands of employees globally.
GroWrk helps companies automate everything from IT equipment procurement to delivering these devices and assets to their employees or contractors anywhere in the world in over 150 countries. It serves a growing need as more companies are going global.
GroWrk provides AI-powered 24/7 help and support, logistics solutions, retrieving, delivering, and storing devices, and managing end-of-life. All these services are available at the touch of a button through the GroWrk platform.
Unlike his previous ventures, Carlos took a more conservative approach to scaling GroWrk, focusing on sustainability and capital efficiency. He wanted to build a business that could sustain itself and did not depend on investor money or external capital to make it work.
Raising Funding for GroWrkCarlos’ approach has allowed GroWrk to grow mostly organically, remaining cash-flow positive while serving a rapidly growing global client base. He chose to bootstrap GroWrk rather than pursue aggressive VC funding, a decision shaped by his previous experiences.
This strategy not only reduced the risks associated with over-leveraging but also positioned GroWrk to be more resilient in the face of market fluctuations. The company now has a 100+ team, is globally distributed, and is accelerating rapidly.
Carlos also recognized that the market had shifted radically from when he was trying to raise tens of millions of dollars for CasaOne. Raising capital is much more challenging unless the company is an AI and has a deep tech model.
However, GroWrk has many positive aspects. It has great unit economics and is capital-efficient. Establishing a conversation with a growth equity investor, venture fund, or strategic is easier since they can demonstrate what they’re building, the market size, and expansion potential.
Carlos talks about the risk factor that can be lethal when bootstrapping a company and the need to be super cautious. However, he reveals that GroWrk is not entirely bootstrapped. Although they have raised capital, they haven’t raised big rounds early.
Carlos has raised $250K to $500K tickets just to prove concepts and ensure they have a business that has value. His primary focus from day one has been to make money and spur organic growth.
Storytelling is everything that Carlos N. Escutia was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The GroWrk Business ModelAt GroWrk, Carlos and his team are building a next-generation IT lifecycle asset management platform. Every company is shifting to a cloud solution to automate day-to-day processes as much as possible. They typically run these processes internally, which costs a lot and isn’t efficient.
GroWrk is building an AI-powered platform with the capability to predict what the user’s needs will be in the near future so they can optimize their IT capital expenses and be more efficient in scaling their company.
The platform provides a great onboarding and offboarding experience to any employee or contractor, regardless of where they’re working from. This efficiency is crucial for global companies today, and GrowWrk’s IT-driven solution gets them there.
GroWrk enables companies to have 100% control over every decision they make around their IT infrastructure without any gaps. For that to happen, they need all the data to make informed decisions and guide multi-million dollar investment decisions with the highest confidence.
Every customer GroWrk serves has IT budgets worth tens of millions of dollars. The platform makes a big difference in the trajectory of the user’s growth.
Building a Global, Fully Remote TeamOne of the key differentiators of GroWrk is its entirely remote, globally distributed team. Carlos recognized the cost-effectiveness and talent advantages of hiring outside traditional tech hubs like San Francisco, a trend that the pandemic accelerated.
Hiring teams using the traditional method would cost companies hundreds of thousands of dollars for that same skill level. Organizations are empowered to use hybrid teams since the tools that exist today enable that to happen. GroWrk is part of that ecosystem–providing those tools.
The nature of work has shifted dramatically. Employees demand flexibility, and it makes sense from an economic standpoint for an organization to embrace that as well. It also accounts for the retention standpoint so companies can attract and retain top talent.
Managing a distributed team comes with challenges, particularly in ensuring employees are equipped with the necessary tools and support to be productive.
GroWrk addresses these challenges head-on, providing comprehensive IT asset management solutions that empower companies to scale their remote operations efficiently.
As Carlos sees it, companies must adapt to the changes in the market and be flexible. American companies are downsizing because their costs are significantly high, and they need to restructure them. The solution is to hire in lower-cost economies.
At the same time, to adapt to a new world, workers must have a skill level on par at a global scale to compete with the best of the best at that level, especially white-collar workers in the US. And remote work could be the solution.
Conclusion: Lessons in Adaptability and Strategic GrowthCarlos N. Escutia’s journey is a testament to the power of adaptability, strategic thinking, and the importance of learning from past experiences.
From his early days witnessing his family navigate the shifting tides of the textile industry to his current role as the CEO of GroWrk, Carlos has consistently demonstrated an ability to pivot in response to changing market conditions and business challenges.
His story inspires entrepreneurs everywhere, highlighting the value of resilience, the importance of sustainable growth, and the need always to be ready to seize new opportunities.
Listen to the full podcast episode to know more, including:
- Growing up in a family of entrepreneurs in the textile industry shaped Carlos’ problem-solving mindset and adaptability.
- Carlos’ exposure to U.S. and Mexican markets provided a seamless cultural experience and business understanding.
- Working in investment banking taught Carlos the complexities of large-scale business problems and the importance of pattern recognition.
- Carlos transitioned from investment banking to entrepreneurship, co-founding Banverde, a green bank focused on renewable energy financing in Latin America.
- The COVID-19 pandemic forced Carlos’ company, CasaOne, to pivot dramatically, highlighting the importance of flexibility in business.
- Carlos emphasized the benefits of bootstrapping GroWrk, focusing on sustainable growth and self-sufficiency over rapid VC-driven expansion.
- GroWrk’s mission is to revolutionize IT lifecycle asset management, providing global companies with AI-powered tools for efficient and informed decision-making.
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Your email address is 100% safe from spam!The post He Raised $70 Million For His Furniture as a Service Company And Has Now Bootstrapped An AI-Driven Platform To Streamline IT Asset Management appeared first on Alejandro Cremades.
Richard Schenkel’s story reflects the power of resilience, strong work ethics, and a boundless entrepreneurial spirit. He has been a founder and has now turned into an investor operator. In this exclusive interview, he talks in detail about building, scaling, and financing his companies.
From his early beginnings in West Orange, New Jersey, to building a billion-dollar enterprise, Richard’s journey is a masterclass in business growth, leadership, and the enduring value of culture.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Early Days: A Lesson in Hard WorkGrowing up in a middle-class family in Northern New Jersey, Richard was introduced to work at a very young age. His father owned a luncheonette in Newark, and by the age of eight, Richard was already helping out on weekends. He continued working there until he was 15, along with two siblings.
Reflecting on those early years, he acknowledges its impact on shaping his work ethic. “Back then, there was no choice,” Richard recalls. “You were expected to work, and that experience instilled in me a strong sense of responsibility and commitment.”
This early introduction to the working world not only taught Richard the value of hard work but also sparked the entrepreneurial flame that would later define his career.
By age 10, he was already running his own small business out of his basement, printing and selling business cards and stationery to neighbors. At one point, he also started a dry cleaning business.
“Entrepreneurship is in your blood,” he says. “You either have it or you don’t. It’s about being a risk-taker and having the motivation to be your own boss.”
At 15, Richard left the family business and his dad’s employment to work at a skilled nursing facility in West Orange, New Jersey, called Daughters of Israel.
He recalls meeting with the food service director when he applied for the position and asking to learn everything about the senior living facility.
From Corporate Life to Entrepreneurial SuccessDespite his early entrepreneurial ventures, Richard initially chose a more traditional path, attending the University of Wisconsin to study food service administration. After graduation, he started a corporate career, spending significant time at Marriott Corporation.
Here, Richard gained invaluable experience in systems operations, financial management, and the importance of a robust organizational culture. This training would be helpful when Richard became an executive and entrepreneur and built a company from 0 to ~$1B with 17,000 people.
With corporate experience and a clear understanding of business operations, Richard eventually decided to plunge into entrepreneurship. “I knew I needed to build an organization and be responsible for it,” he says. “It was a huge risk, both financially and personally, but I was ready.”
In Richard’s experience, many entrepreneurs find their companies outgrow them quickly. He’s witnessed many companies at $25M and $20M valuations needing the services of a professional CEO.
However, Richard has the best academic and corporate experience in the world. He had also been striking out independently and learning the best practices of running a company–whether in the healthcare, senior living, business service or hospitality industries.
Lessons Learned While Working at Marriott CorporationWorking at Marriott Corporation was a valuable experience since the family organization is very committed to its business operations despite being a public company. Richard also experienced a sophistication and culture that was second to none.
In his opinion, culture shapes an organization in how it treats people, its values, the core business, and how it takes care of guests. Richard also believes that operational controls and financial management have to be top priorities; without them, an organization cannot be run.
Finally, Richard learned how to look for marketplaces with a huge amount of white space in which to grow. His entrepreneurial mode had already been activated when working there but less as an investor in certain businesses and providing advice.
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Scaling Republic and Experimenting with a Dating AppRichard started out by purchasing Republic, a small company built by a former founder. This company was focused on different operating verticals and wound up being very successful, growing to some extent.
When approached by a larger company, Richard accepted the M&A deal and remembers enjoying his first rodeo on the transaction’s sell side. He recalls reading through legal documents and personally thriving on the education.
Richard next had the idea to create the technology for an online dating app. He anticipated that his app would be very different from some of the options available on the market. However, the app launched in 2000 was ill-timed.
At the time, AOL was prevalent, Facebook had just launched, and Amazon was nothing more than a book company. The overall perception was that technology wouldn’t last, which is the complete opposite today. Launching the app in today’s markets would have attracted a better reception.
Building a Billion-Dollar EnterpriseRichard’s first major entrepreneurial venture was in the onsite food service management industry. He founded Unidine in 2001, a food and dining management services company focused on senior living, corporate dining, and healthcare.
From the outset, Richard emphasized the importance of culture, people, and fresh food—elements that were revolutionary in the senior living sector at the time. Around 24 years ago, only Whole Foods offered organic, fresh food in the market.
Starting with no clients, Unidine quickly grew, securing five clients in its first year, 15 in year two, and up to 150 plus clients in subsequent years.
Despite the challenges, including the aftermath of September 11th, 2001, the company flourished. By 2017, Unidine had grown into a large enterprise with a strong niche in the market, becoming a boutique company, eventually leading to its acquisition by Compass Group, USA.
Explaining Unidine’s business model, Richard reveals they provided food and dining management services using both a management fee and profit/loss approach.
Raising Funding for UnidineSince part of Unidine’s business model was to scale the business to $500M+, Richard knew they would need external capital. The company was already bringing in revenues when it raised funding worth $75M.
Storytelling is everything that Richard Schenkel was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Richard talks about the challenges of scaling the company to this level without oxygen. Like most entrepreneurs, he assumed that sales, general, and administrative costs would decrease as revenues grew–which did not happen. Although revenues did increase, so did their SG&A.
Richard observes the learning curve he got out of the experience. He noted that the inflection point, depending on the industry, is when the revenue exceeds SG&A in terms of percentages. That’s when the company starts profitable growth.
Richard also learned that not all business verticals initially have profitable growth, which is a reality. He advises entrepreneurs to raise funding in different rounds to ensure they retain equity.
They should start with a seed round, friends and family, then in a series A, B, and C because they should focus on driving valuation. Raising money is very tough, and few concepts come to fruition. Entrepreneurs should overestimate their capital needs but do it in phases.
Looking back at the exit, Richard talks about approaching the deal strategically. They had a strong marketplace, both in private equity and in strategic, and he was confident it was the right inflection point and time. In late 2017, Unidine was acquired by Compass in a nine-figure deal.
The Importance of CultureThroughout his journey, Richard has consistently emphasized the importance of culture in building a successful business. “Defining your culture correctly is crucial,” he says.
At Unidine, Richard personally wrote the company’s cultural values and ensured that they were not just words on a page but principles that permeated every aspect of the organization. He analogizes it to a Pledge of Allegiance that doesn’t go away.
For Richard, culture is about creating an environment where employees feel valued and motivated to contribute to the company’s success. This focus on culture was critical in Unidine’s growth and its ability to attract and retain top talent.
A New Chapter: Phoenix3 HoldingsAfter the successful sale of Unidine, Richard continued his entrepreneurial journey, joining Compass Group to help grow the businesses further. Under his leadership, the companies expanded significantly, reaching $1.3B in revenue.
At the time of the acquisition, Unidine had 5,000 to 6,000 employees. However, the companies under his leadership grew to over 15,000 by 2022. Richard explains that it is a distributed employee type of operation and is essentially a restaurant company with 200 or 300 locations.
True to his entrepreneurial nature, Richard wasn’t content to stop there. He eventually left Compass to start Phoenix3 Holdings, a new venture that aims to invest in and grow companies with strong potential.
“Once an entrepreneur, always an entrepreneur,” he says. “I love watching things grow—whether it’s a company or the people within it.” Phoenix3 has around 15 to 18 people working in it.
Phoenix3 Investments and CriteriaThe firm has invested in Infuse Hospitality in Chicago, an onsite food and dining service company focused on the commercial market. In addition, it has backed Fairgrounds Coffee & Tea, which Phoenix3 is helping to grow in the markets it is in.
Richard reveals how Phoenix3 is looking at investments in sectors like senior living, healthcare, business services, distributed service companies, and lifestyle companies where they feel they can make a difference by offering the expertise of operating people and capital.
Phoenix3 also focuses on founders or family-based organizations to help them grow and avoid pitfalls other entrepreneurs go through. Its Assets Under Management (AUM) is around $100M.
Richard outlines their approval criteria, which include revenues worth $10M and above, approaching positive EBITDA, having a plan, and having strong retention in the marketplace. Candidates should be family or founder-based with a robust culture fit–their primary priority.
Richard reveals that the company they have invested in has started its acceleration and has demonstrated a high growth of 30% to 40% annually with the retention of the founder. It has become a boutique company and is the best in class in its industry.
In Richard’s opinion, to achieve this growth, companies should have enough capital to hire the best people who are overqualified to begin the company’s journey.
Conclusion: Lessons from Richard Schenkel’s JourneyRichard Schenkel’s story is a powerful reminder of the importance of resilience, strategic thinking, and the ability to adapt and grow.
From his early days working in his father’s luncheonette to building a billion-dollar enterprise, Richard has consistently demonstrated the qualities that define a successful entrepreneur. His journey also highlights the importance of culture in creating a sustainable business.
For Richard, culture is not just a buzzword; it’s the foundation upon which everything else is built. As he continues to grow Phoenix3 Holdings, there’s no doubt that Richard will carry these lessons forward, inspiring the next generation of entrepreneurs to do the same.
Listen to the full podcast episode to know more, including:
- Richard Schenkel developed a strong work ethic from a young age, working in his father’s luncheonette from the age of eight.
- His entrepreneurial spirit was evident early on, with ventures like selling printed business cards door-to-door as a child.
- His corporate experience at Marriott gave him invaluable lessons in culture, operational control, and financial management, which he later applied to his ventures.
- Schenkel took significant calculated risks in his 30s to transition from corporate roles to entrepreneurship, leading to the founding of multiple successful companies.
- He emphasized the importance of resilience, particularly during the challenging early years of building a business when resources are scarce.
- Schenkel believes defining and permeating a robust organizational culture is crucial to a company’s success.
- Timing and market conditions were key factors in Schenkel’s decision to sell his company, leading to a nine-figure exit and subsequent ventures.
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In a captivating conversation with John Clendening, we delve into his incredible journey from the beaches of Florida to leading multi-billion-dollar companies and venturing into the startup world.
John shares his unique perspectives on leadership, the art of bringing differentiation in segments, and his experiences in corporate giants and agile startups. He also talks about raising $200M for his startup.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early BeginningsJohn was born in Alabama but spent his early years in the warmth of Destin, Florida’s beaches. The simplicity of life, barefoot adventures, and a love for the outdoors characterized his formative years.
However, John’s family’s move to Wisconsin marked the beginning of a journey that would eventually lead him to the heights of corporate America. From a young age, he was captivated by the world of business and the concept of being part of a big company that was growing.
His fascination with brands and the stock market set him apart from his peers. By the time he reached Northwestern University, where he pursued an undergraduate degree and then an MBA at Harvard B School, John had already decided that business was his calling.
He found inspiration in the College of Commerce and Industry at Northwestern, where industry leaders shared insights on influencing people, leadership, and innovation, planting the seeds for his future endeavors. John also took Spanish for a couple of years, which broadened his horizons.
Consulting and Problem-SolvingJohn’s career began in consulting, where he honed his problem-solving skills working in large and smaller corporations. He describes this period as when he learned to approach any business challenge confidently, rapidly gaining a deep understanding of different industries.
John learned the strategy of thinking about big problems, breaking them down into small problems, and then tackling them. This ability to quickly size up businesses, situations, and projects and devise solutions became a cornerstone of his career.
The ability to jump in and think deeply about what was necessary to navigate the learning curve quickly allowed John to transition seamlessly between companies and industries. He built self-confidence and the art of viewing the big picture, which would be helpful down the line.
John’s career as a consultant helped him develop the right toolkit to size up a business in terms of its people, products or services, and economics. He observed how few people knew how the company made money, its consumers’ perspectives, or any new disruptive ideas that may derail it.
John could make a positive impact relatively quickly because he would go to the customers’ side and understand their needs–a valuable marketing approach.
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Consumer Insights at Pepsi and Coca-ColaJohn’s journey took him to the world of consumer packaged goods, where he worked for PepsiCo and Coca-Cola—two of the biggest competitors in the industry. This experience was crucial in sharpening his focus on consumer insights and differentiation.
John learned the importance of understanding unmet consumer needs and digging deep for even the smallest edges in a highly competitive market. This mindset of putting the consumer first became a guiding principle in his later ventures.
John was super sharp at segmentation and realized that comments and concepts can develop a sharp edge and orientation but are lost in financial services. Getting recruited from PepsiCo to work at Coke gave him insights into the rivalry between the two companies and their differences.
The Leap into StartupsIn 1998, John made the bold decision to leave the comfort of large corporations and dive into the unknown world of startups. The potential of the burgeoning e-commerce industry was too strong to resist, and he found himself at the helm of innovative ventures.
Top-tier investors like Benchmark Capital backed these ventures. While these startups presented challenges, including the dot-com bust, they also offered John a crash course in the new economy and an opportunity to build something from the ground up.
John recalls how he had some really great concepts, which he shared with an individual he had worked with at Frito-Lay. This person had recently become the CEO of a new company that was already a couple of rounds into capital raise.
Working at this company taught John what needed to be done to build a sustainable and profitable business. He was also motivated to keep his career vibrant by jumping into what looked like the next wave–eCommerce.
In John’s opinion, the experience boosted his level of understanding in a way that would never have been possible in a traditional company. Looking back, he talks about loving the speed of startups and their concept of time-bound decision-making, unlike big companies.
John enjoyed the high-energy, massively committed people in startups and their level of engagement, which made it easier to lead the environment. By this time, he had built two startups but had been unsuccessful at raising funding for them.
Return to Corporate and the Lessons of Leadership–Working with Charles SchwabOnce the dot-com bust happened, John was ready to return to a bigger platform and re-establish his career. He was also motivated to apply what he had learned in the last four to five years to a bigger platform. Thus, John returned to the corporate world, joining Charles Schwab in 2004.
When John joined Schwab Bank, it had not yet recovered from the dot com bust when trading velocity had just collapsed and showed no signs of improving. His strategy was to use some of the lessons he had learned–a combination of electronic and human-led client experience models.
Schwab Bank had perfected online transacting and was an established brand in financial services. John moved to San Francisco with his family, where the company was headquartered. Six months down the line, Charles Schwab returned to the company.
John credits much of his success to the mentorship of Chuck Schwab, whose bold leadership, emphasis on a positive culture, and visionary thinking left a lasting impact on him. John considers him a true business icon, an amazing leader in that space, and a true innovator.
He relates an instance that is a testament to Charles Schwab’s ingenuity. When deregulation hits commission pricing, everyone raises their prices, which is the typical Wall Street response. However, Chuck would apply the appropriate amount of insights to help people trade.
John was instrumental in transforming the company into a new version–to become an advisory firm. He leveraged its lower cost structure and multi-channel model to steer the company to new heights boldly.
As John recalls, Charles Schwab’s philosophy was to put the client at the center and ensure that the company was consumer-centric. At Schwab Bank, this work ethic is not on a piece of paper or a placard; it’s how the company operates.
Segue to BlucoraAfter his 10-year stint at Schwab Bank, John worked for a while at Blucora and then segued into his next project–Earned Wealth. The way he sees it, turning companies around requires the right amount of discernment to understand why they are fatally flawed and if they are fixable.
John recognizes the power of resilience and the ability to work through difficulty when things seem to get darker just before the business is performing again. He also points to the challenges of raising funding, orienting the team around optimism, and finding a way to win.
Having an optimistic edge is essential in challenging environments and has served John well. He believes in going back to the consumers and aligning the business model with them. That’s the sure-shot way to be accountable and make the business profitable.
The Birth of Earned WealthJohn’s experiences in corporate giants and startups eventually led him to found Earned Wealth–a company focused on providing differentiated wealth-building and protection services for doctors and solving their most pressing needs in their practice and individual lives.
Drawing from his time at Schwab and his early experiences at a large bank, John realized the need for a holistic approach to financial services that considers the entire financial picture, including taxes and investments, to serve the client’s best interests truly.
John saw that, for the bank, a consumer is a set of digits in a flat file that’s associated with their profitability. There’s no sense of segmentation or providing any real value to the customers.
At Blucora, they had been experimenting with a technology that empowers a channel of CPAs to capture tax alpha or tax advantage across the entire life of a consumer. John used this concept to build a segment-driven financial services firm providing bespoke products and services.
Doctors have a unique career trajectory that impacts every aspect of their financial life. Earned Wealth’s vision is to build and leverage deep technology to automate broad advice-giving and optimize it across interconnected decisions involving investing and taxes.
Earned Wealth also assists them with getting the right insurance that links to their assets and advises them on optimizing the sale of their practice. Most physicians and dentists need this service since they have no idea what their practice is worth.
They struggled to recalibrate their entire financial life after that. And that’s where Earned Wealth comes in–to leverage tech to make it reliable, predictable, and scalable.
The Earned Wealth Business ModelThe Earned Wealth revenue model is essentially a percentage of assets model for personal wealth management, much like a large registered investment advisor. The difference is that they have a roadmap that includes taxes, insurance optimization, trusts, wills, and estate planning.
At Earned Wealth, they optimize the client’s balance sheet to demonstrate their loan profile versus opportunities to invest and a lot more. They also do financial statement preparation, retirement planning, and optimizing their financial life with regard to their practice.
Earned Wealth also helps increase the cash flow of that practice so practitioners have more to invest in the markets or alternative investments so that, over time, they can double or triple their money by retirement.
Raising Funding for Earned WealthTo date, the company has raised around $225M. Juxtapose, the creation-oriented investment firm that partnered with John to build the Earned Wealth concept, backed the seed round.
Further rounds were led by Hudson Structured Capital Management and growth equity firms–Summit Partners and Silversmith Capital.
John explains how he was keen on working only with top-tier investors despite the deep scrutiny they did. Earned Wealth has pivoted from venture-backed, having gotten to Series A, into a good-sized growth equity round based on the strength of the unique approach that they are taking.
John specifically approached investors backing financial services and FinTech companies, particularly healthcare care investors. He has taken his time building trust with them and did his due diligence, looking for the ideal alignment around vision, mission, and unique purpose in the world.
Storytelling is everything that John Clendening was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Vision for Earned WealthWorking closely with his team, John has also built an acquisition-driven strategy for the future. He wants to accelerate his vision to be fully comprehensive with the capital to build up the tech and extend reach to thousands of additional doctors.
As John sees it, becoming a doctor involves severe financial stress and the possibility of student debts worth $350K or more. His vision is to ensure that more people make it through med school without opting out of actually getting into clinical care.
Once more, doctors should see medicine as a fantastic profession with the assurance that their finances will be secure. Earned Wealth can transform how they think about their careers, financial lives, and long-term well-being.
ConclusionJohn’s journey is a testament to the power of adaptability, the importance of consumer-centric thinking, and the value of bold leadership.
From his early days in consulting to leading iconic brands and pioneering in the startup world, John Clendening has consistently applied these principles to achieve remarkable success.
Today, with Earned Wealth, he continues to innovate and push the boundaries of what’s possible in the financial services industry.
Listen to the full podcast episode to know more, including:
- John Clendening gained invaluable confidence and problem-solving skills through his diverse consulting experiences, enabling him to adapt to new business environments rapidly.
- His time at Pepsi and Coca-Cola taught him the power of deep consumer understanding and differentiation in competitive markets.
- Transitioning from large corporations to startups allowed John to embrace speed, innovation, and the importance of timely decision-making.
- Working alongside Chuck Schwab reinforced the importance of bold moves, positive culture, and visionary thinking in driving business success.
- His turnaround experiences highlighted the need for resilience, optimism, and a consumer-first approach to revive struggling businesses.
- His banking and financial services experiences inspired the vision for Earned Wealth, emphasizing a holistic, client-centric approach to wealth management.
- John’s career reflects a continuous journey of learning, adapting, and applying diverse experiences to create impactful business solutions.
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Your email address is 100% safe from spam!The post He Helped Scale Schwab Bank And Has Now Raised $225 Million To Build Earned Wealth, A Tech-Driven Financial Services Firm For Doctors appeared first on Alejandro Cremades.
In the world of startups, where every decision can lead to success or failure, the stories of resilience, innovation, and purpose often stand out the most. Mark Swanson, an entrepreneur with a journey spanning several decades, exemplifies these qualities.
From his early days growing up in a family of educators to leading startups through the dot-com bubble and beyond, Mark’s story is a testament to the power of finding purpose and navigating the challenges of building and scaling companies.
In this exclusive interview, Mark talks about his experiences building and scaling companies and fundraising for growth.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Foundations of Purpose: A Childhood of Learning and LeadershipBorn in New York and raised in Tampa Bay, Florida, Mark grew up in a family where education was highly valued. With both parents being teachers, learning was ingrained in him from a young age. This foundation would later prove invaluable as he ventured into entrepreneurship.
Mark’s parents’ emphasis on education and his early experiences in church, sports, and student government shaped his approach to leadership, which would become a cornerstone of his entrepreneurial career.
The Military: A Crucible for Leadership and InnovationMark’s path to entrepreneurship began in an unexpected place: the military. Encouraged by his parents to apply to college, Mark found a solution to the financial barriers by applying to the U.S. Military Academy at West Point, where he received a scholarship and pursued a degree in engineering.
Mark honed his leadership skills in the military. During a ten-year career, he commanded two units as an aviation officer and was later a test pilot. One of those command experiences was unique; rather than joining a unit, he formed the first activating troop of Apache helicopters from scratch.
Mark was assigned pilots and soldiers from around the world and was charged with creating a cohesive organization.
Here, he first tasted the thrill of building something new, shaping a culture, and leading a team from the ground up without inheriting something—skills that would translate seamlessly into his entrepreneurial efforts.
In Mark’s opinion, the whole experience felt more like a startup in the military. They invented manuals, doctrines, and tactics and tried to figure out what worked regarding gunnery and formation flight. They were the first to start that unit, a formative experience in his life.
Mark recalls what his commander said when he was leaving command. The commander not only commended Mark’s work, but he also planted the seed of entrepreneurship by telling him that “you will never have this unique experience again.”
After a short stint as a test pilot, Mark decided to get out of the military and pursue an entrepreneurial career.
The Entrepreneurial Leap: From Military to StartupsLeaving military service in 1992, Mark’s entrepreneurial ambitions took center stage. He polished his business and computer skills at Georgia Tec, learned about Business Plans, 3D Graphics, and the Internet, and soon founded Swan Interactive Media.
The early days of the internet in the ’90s were a wild west of opportunities, and Mark was at the forefront. He had some experience with multimedia projects in school and had done some freelance programming work.
Leveraging these skills, he recruited a few people for the new company. By 1994, Mark had incorporated and was facing several challenges. He had to bootstrap the company with little to invest in equipment, office space, and team building since he did not have the money to pay their salaries.
Things got so tight that when Mark hired the first business development guy, he offered accommodation in his basement, an all-expenses-paid deal, and a stipend of two grand a month.
Raising Funding for Swan Interactive MediaOne of the standout moments in Mark’s early entrepreneurial journey was the fundraising rollercoaster he experienced. In a tale that underscores the unpredictability of startups, Mark found himself pitching to Dr. Robert Krieble, the inventor of super glue, on his yacht in DC.
After months of negotiations, they were able to close his first investment deal. However, two days after signing, Dr. Krieblel tragically passed away, and the funds were never wired.
With payroll looming and funds suddenly in limbo, Mark had to pivot quickly. He connected with a local businessman who recently sold his business and wanted to get into the Internet. This businessman had recently purchased a video production and graphic design company that needed engineers.
Mark approached him seeking an investment or partnership and eventually merged his company as the founding CTO. He, thus, navigated the company through a crisis in the early internet boom.
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Riding the Dot-Com Wave: Success and SetbacksThe late ’90s were a heady time for internet startups, and Mark’s new company, IXL, was no exception. IXL grew rapidly, riding the wave of the dot-com boom. It grew from $17M in the first year to $150M within the next four years, and Mark helped take the company to IPO in the spring of 1999.
At its peak, the company reached a valuation of over $2B+, an example of the explosive growth of the internet during that period. Mark left at the end of ‘99 to found his next company in Silicon Valley.
Mark’s next venture, AppGenesys, was an Application Service Provider, one of the early names of what is now known as the Cloud.
However, as with many startups of the era, the dot-com bubble eventually burst. Despite raising $70M and competing in the rapidly evolving Infrastructure-as-a-Service space (IaaS), the market’s collapse led to significant challenges as customers went out of business and revenues plummeted.
Mark remembers the company competing with Marc Andreessen and Ben Horowitz’s company LoudCloud before the downtrend. The biggest problem they reflected at the board level was that revenues were dropping despite a successful business model, which appealed to startups.
The issue was not that customers were leaving but that they were going out of business. Around 60% to 70% of their customers closed shop within six months and left behind a long trail of unpaid bills and non-responsive voicemails. The failure left a big dent both in his pocketbook as well as his ego.
Finding Resilience and a New Direction–Founding TelovationsAfter the dot-com bust, Mark took a step back from the frenetic pace of startup life. He moved to Florida to care for his mother and spent three years there. During this period, he helped others with their businesses, applying the skills and lessons he had learned.
One such project was helping his brother-in-law build the world’s largest recumbent bike manufacturer from a garage operation. Another was investing in and assisting a neighbor in pivoting his struggling business, leading to a successful sale.
After helping the company navigate regulatory changes, Mark became the chairman and hired a new CEO. Eventually, Halo bought out the company. These experiences reignited Mark’s passion for entrepreneurship.
Mark had noticed how expensive phone systems were during his time at the bike company. He started getting interested in voice-over IP (VoIP). He spent a year working on soft switches and VoIP, figuring out how to plug them into the nation’s phone network. Then, he met someone from the telecom industry.
That’s how Mark ended up founding Telovations, a voice-over-IP company. Unlike his previous ventures, he approached Telovations with a more measured strategy. He spent a year incubating the idea, ensuring that the timing was right and that the market was ready.
Mark also experimented with different technologies, specifically Asterix. This approach paid off, and Telovations quickly gained traction, eventually leading to its acquisition by Bright House Networks seven years after its founding.
Lessons Learned from Building TelovationsIn retrospect, Mark leveraged key lessons he had learned, the most crucial of which were staying ahead of the curve in terms of business opportunities and being patient with market timing. He also learned that entrepreneurs sometimes overestimate market readiness because of their unique perspectives.
However, entrepreneurs often underestimate the size of the impact and opportunity. For instance, Mark had no idea that the Internet and the Cloud would be this big. But he didn’t want to jump the gun and was aware that VoIP was ahead of its time.
Telovations grew to over 100 customers in six months even though they hadn’t built the service yet. They rented the infrastructure and developed their soft switch technology and network. Their second advantage was that they were good at targeting a particular group of customers.
Telovations became the leader in VoIP, connecting multiple offices and healthcare companies, which are very good niches. The business grew by following a more traditional market penetration and niche strategy and then grew from there, getting a beachhead first.
As Mark explains, his nature is to view business as a work of engineering. He looks at machines and thinks about how to design and operate them in the most efficient way possible. The ability to do something abstract with a business and remove it from one’s personality is a powerful skill.
Mark can separate it from his identity since he knows he isn’t the right person for every job in the company. The whole business will likely work better if he can find the right person to operate that machine. He enjoys building companies as an engineer and considers it a rewarding experience.
The Transition to Purpose-Driven LeadershipAfter the acquisition of Telovations, Mark faced a turning point. Having achieved financial success, he began to reflect on what he truly wanted to do with his life. The answer was clear: he wanted to help others succeed.
This realization led Mark to become a startup coach, where he could leverage his vast experience to guide other entrepreneurs through their journeys. His work in this area culminated in his involvement with Vū Technologies, a Virtual Production tech company born out of the pandemic.
When the world shut down in the spring of 2000, Mark remembers discussing PPP with Tim Moore, then CEO of DIamondview, and suggesting turning the company into an R&D unit.
When Tim discovered virtual production technology, he built a prototype stage and raised low-interest funding from the government. He also had an excellent team.
Being very impressed with the fast execution and potential of this technology, Mark joined Tim to help spin out the company in 2021. Mark led the efforts to help plan and fund the business, raising a $17M seed round to get the company off the ground.
Flash forward to today, and Vū has over $30M of cumulative revenues since its founding. The business was highly capital-intensive, so they had to raise another $3M, bringing the total to $20M.
Storytelling is everything that Mark Swanson was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Mark also helped the company navigate the challenges of the pandemic and transition into a new growth phase.
Advice for Aspiring EntrepreneursMark advises aspiring entrepreneurs not to rush headlong into a business and to be aware that a business opportunity may look more viable than it is from the outside. They should have a good business plan and do their homework and scenario analysis.
That’s exactly what they did at Vu Technologies. Mark, along with Tim and the other co-founder, Jon Davila, drew a quarterly roadmap for three years.
They spent the initial three months planning the business and laying it out. The business evolved exactly the way they anticipated every quarter, except for the unexpected surge of AI.
Generative AI arrived about 16 months after Vu started, and they knew it would be existential to their business.
As a result of the meticulous planning, Vu Technologies was able to handle a huge pivot–simply because they knew what was coming. Vu has become the first company to develop a video production system and workflow fully enhanced by AI.
One of the most impressive aspects of this pivot was that it only took a little over three months. Initially, they thought it couldn’t be done. But the team is fabulous and was able to respond and make that happen.
Conclusion: The Power of Purpose in EntrepreneurshipMark Swanson’s story is about resilience, adaptability, and, most importantly, purpose. His journey through the highs and lows of entrepreneurship—from the military to the dot-com boom to finding his purpose in helping others—offers valuable lessons for any entrepreneur.
It underscores the importance of staying true to one’s purpose, even in the face of adversity, and the power of using one’s experiences to impact others positively.
Listen to the full podcast episode to know more, including:
- Entrepreneurship can be born from unexpected experiences, like Mark Swanson’s journey from military leadership to startup culture.
- Being ahead of the curve in technology, as seen with Swanson’s ventures in the early days of the internet and cloud, can be both a blessing and a challenge.
- Resilience and adaptability are crucial in entrepreneurship, especially when facing unexpected setbacks like losing a major investor or surviving the dot-com crash.
- Building a successful startup often requires creativity and resourcefulness, as illustrated by Swanson’s early fundraising and strategic hiring tactics.
- As Swanson did with Telovations in healthcare, targeting a specific niche market can lead to rapid growth and market leadership.
- Transitioning from a technical to a business role can be rewarding, especially when viewing business operations as a form of engineering.
- Helping others succeed can become a fulfilling purpose after years of entrepreneurial success, as Swanson discovered through mentoring and startup coaching.
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Your email address is 100% safe from spam!The post He Helped Build A Company To $2+ Billion Valuation And Is Now Building The World’s First Virtual Studio Network appeared first on Alejandro Cremades.
In the business world, some stories stand out not just for their success but for the bold decisions and risks that paved the way.
Michael Marks, founding partner at Celesta Capital, is one such figure whose journey from Missouri to Silicon Valley is about the spirit of entrepreneurship and the transition from operator to investor. His career, marked by strategic moves and seizing opportunities, offers invaluable lessons for entrepreneurs at every stage.
In this exclusive interview, Michael talks about aspects like fundraising, building and managing teams, and finding the ideal product market fit. He also talks about working out outcomes for companies and the art of reverse engineering.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Humble Beginning: Growing Up in MissouriMichael Marks was born and raised in Missouri, a place he describes as “a good place to be from.” The Midwest, with its tight-knit communities and slower pace of life, was vastly different from the high-energy environment of Silicon Valley, where Michael would eventually make his mark.
However, Michael developed a strong foundation in Missouri that would support his later ventures in the fast-paced tech world.
The Shift from Psychology to BusinessLike many college students, Michael wasn’t initially sure of his career path. He found psychology intriguing but soon realized that it wasn’t the profession he wanted to pursue. Business school became the next step, providing him with broader training and opening up a world of opportunities.
Attending Harvard MBA school made Michael realize he needed to pack his bags and move to Silicon Valley. This decision would set the stage for a career that spanned operating roles and investments.
The Leap to Silicon ValleyMichael’s journey to Silicon Valley wasn’t an obvious one. At 37, with a young family in St. Louis, he had been working in small technology companies, as in most of the Midwest. However, he realized that most of his customers and employees were in Silicon Valley.
Michael recognized that his interests and the opportunities available to him were leading him to Silicon Valley, the epicenter of innovation and technology. Despite the uncertainty and the concerns of friends, Michael and his family headed west.
“It was just an adventure,” Michael reflects. “We can always come back.” But as it turned out, this adventure would be a pivotal chapter in his life.
Entering the Silicon Valley EcosystemUpon arriving in Silicon Valley, Michael quickly found that the environment differed vastly from the Midwest. In Silicon Valley, networking was more than just a buzzword—it was a way of life. Introductions led to new opportunities.
Michael found himself energized by the constant flow of ideas and connections. It wasn’t long before he was consulting for major companies like Flex and Electronic Arts, which eventually led to full-time roles.
The Flex Opportunity: A Pivotal MomentOne of the most significant moments in Michael’s career came with his involvement in Flex, a then-struggling company. Initially brought on as a consultant and later as a board member, Michael had an insider’s view of the company’s challenges and potential.
Michael saw an opportunity when the banks that held Flex’s loans decided to sell the company to recover their funds. As it turned out, Flex had its headquarters in Singapore with operations across Asia, and the bank was in Wisconsin.
“I knew the company, I knew the management team, and I knew it was a fantastic opportunity,” Michael recalls. He quickly resigned from the board to avoid a conflict of interest and raised $8.5M from venture capital firms like Sequoia, Kleiner Perkins, and NEA to buy 55% of Flex.
This move installed him as the CEO and set the stage for a remarkable transformation.
The Transformation of FlexWhen Michael took the helm, Flex was a small company with about $90M in revenue. Michael’s initial idea was to build it up to a couple of hundred million dollars, sell it, and move on.
Through a series of fortunate events, he got the opportunity to stay. Under Michael’s leadership, the company grew exponentially, eventually going public and reaching $25B in revenue by the time he left in 2005.
This transformation was not just about scaling operations; it was about being in the right place at the right time and aggressively driving costs down while expanding services to customers. Michael attributes much of this success to timing and market opportunities.
In the early 1990s, most companies were looking to outsource manufacturing—a trend that Flex was perfectly positioned to capitalize on. “We were at the forefront of a great market opportunity,” Michael says.
But opportunity alone wasn’t enough. It took strategic decisions, a strong management team, and relentless execution to turn Flex into a global powerhouse. By the time Michael left, the company had factories in 26 countries.
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Knowing When to Move On–A Brief Stint at TeslaAfter 13 years as CEO, Michael made the decision to step down. He recognized that fresh ideas were needed to keep the company growing. “Companies’ management gets stale,” Michael notes. “It takes younger people with different views to keep a company growing.”
For Michael, it wasn’t about retirement but rather moving on to new challenges. He had had a great stint as the chief operating officer, and it was time to hand over the reins.
One of those challenges came in the form of Tesla. Michael was introduced to the fledgling company before it had a car on the market. Impressed by the vision, he invested in Tesla and later served as interim CEO at the request of Elon Musk.
Although his time at Tesla was brief, Michael had a significant impact during a critical phase in the company’s development.
Transitioning to the Investment SideAfter leaving Flex, Michael initially planned to become a personal investor. However, he was recruited by KKR, a leading global investment firm, and later co-founded Riverwood Capital. Yet, Michael found his true passion in the venture capital space.
Financial management wasn’t particularly interesting for Michael since he was more of an operator. Venture capital allowed him to work closely with entrepreneurs and focus on operating issues and finding the product-market fit—areas where his experience as an operator could truly add value.
The Birth of Celesta CapitalToday, Michael is a founding partner at Celesta Capital, a firm that stands out in the venture capital world for its focus on deep tech and its unique team of general partners, all of whom have held significant operating roles.
This hands-on experience gives them a distinct advantage in helping companies navigate the challenges of growth. “We’re an unusual group of characters since the general partners have all had operating jobs.” Michael says. “We’re very hands-on with our companies.”
One of Michael’s partners is Nic Brathwaite, the chief technology officer at Flex, and Sriram Viswanathan is another partner. He ran a big operating business at Intel and was instrumental in founding Intel Capital.
The Celesta Investor ModelThe Celesta approach, combined with a focus on smaller deals, sets it apart in a venture landscape increasingly dominated by larger funds that need to enter into really big deals in order to provide strong returns.
Michael points to the misconception that as against hardware, software isn’t capital-intensive, which really is not the case. It’s just a different kind of use of capital focused on product development and R&D. Enterprise software companies also need lots of capital to build and scale their go-to-market activities.
AI emerged on the scene as Celesta was doing semiconductor, storage, and data center activities. Using Artificial intelligence takes so much computing power that the entire hardware system in the world now has to be remade.
For this reason, as Michael noted, the most valuable and top companies worldwide are hardware companies like Nvidia, which designs graphics processing units. Thus, Celesta now has two processor companies, Auradine and Recogni, with the potential to become public companies.
Michael also mentions opportunities and demand, like for Stathera, which makes a timing chip that costs much less and operates at greatly reduced power levels.
Celesta AUMToday, Celesta has assets under management (AUM) worth $1.1B. Michael reveals that they have about 70 active companies after exiting 30.
Celesta has also had a public offering in India and one in the United States in the last 18 months.
Auradine is two years old and already has $100M worth of orders and a pipeline of $200M for next year, which is pretty unusual for a venture investment. Michael stresses the importance of the product market fit.
Storytelling is everything that Michael Marks was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Advice for Aspiring EntrepreneursCompanies should ensure that the products they intend to create have a clear demand and the ability to stand out from the competition. They should also have the right skill sets to make that fit.
In Michael’s opinion, entrepreneurs make three critical mistakes. They overestimate the market size, the market share they can capture, and their costs to get that share. Entrepreneurs can never target the whole market or entire industry; they can only focus on some subset.
Michael advises entrepreneurs to be aware of funding cycles and that, at this time, raising capital is very tough. Distributions are few, and investors are not actively looking for companies to invest in. Aspiring entrepreneurs also tend to overestimate the amount of capital they can raise.
But they should go ahead and get money without worrying about the valuation. Early-stage companies should focus on securing the capital they need however necessary and be very thoughtful about not spending money on things they don’t need.
Running companies cost-efficiently with a low burn rate is crucial from day one for success. Michael often notes how lean companies get when they have to, right before they go out of business.
Exits typically occur when big companies dominating the sector with high sales, advertising, and marketing budgets offer to buy out the new players. Bigger companies generally are not very innovative, and to create innovation, they must buy startups with disruptive ideas.
If entrepreneurs can build a company with a great market opportunity and can demonstrate good growth in that opportunity, a bigger company is most likely going to come along and purchase it.
Vision for the Future of CelestaMichael is proud of the companies at Celesta, some of which have gone public. He mentions Credo and ideaForge in India. The Celesta partners’ objective is to create great jobs, and they are trying to get these companies to take advantage of their knowledge and expertise.
Michael tells founders to be fearless, curious, and open to new ideas. They should listen to the top investors and business leaders of the world and get all the relevant information they need.
Conclusion: Lessons from Michael MarksMichael Marks’ journey from Missouri to Silicon Valley, from operator to investor, is about the power of taking risks, seizing opportunities, and knowing when to move on and explore new opportunities for growth.
His story is one of strategic decisions, bold moves, and a deep understanding of what it takes to build and grow successful companies. For entrepreneurs, the lessons from Michael’s career are clear: be prepared, seize the moment, and always keep the end vision in mind.
Listen to the full podcast to know more, including:
- Always be prepared to seize opportunities, even when they come unexpectedly, as demonstrated by Michael Marks’ acquisition of Flextronics.
- Sometimes, taking risks—like relocating to Silicon Valley without a job—can lead to remarkable career transformations.
- Building and leveraging a strong network is crucial, especially in vibrant ecosystems like Silicon Valley.
- Success often comes from being in the right industry at the right time, as seen with the growth of Flextronics during a manufacturing shift.
- Knowing when to step down and bring in fresh ideas is key to sustaining a company’s growth.
- Transitioning from operations to investment requires a shift in mindset, but staying connected to operational roles can be more fulfilling for those with a hands-on approach.
- Maintaining a focused, smaller venture fund allows for more meaningful involvement with portfolio companies, leading to potentially better outcomes.
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In the fast-paced world of entrepreneurship, stories of transformation are plentiful, but few are as compelling as those of Steve Magami. Born in Tehran and raised in the sunny suburbs of Southern California, Steve’s journey is about determination, adaptability, and the spirit of innovation.
In this exclusive interview, Steve talks about raising more than $500M and scaling a company in an industry where he was an outsider. He also talks about culture, team building, and moving to the other side of the table as an investor.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and the Seeds of an Entrepreneurial SpiritSteve Magami’s story begins in Tehran, but his family’s move to the United States when he was just a year and a half old marked the start of a new chapter. He grew up in Orange County, California, in a household that valued sports, healthy living, and, above all, entrepreneurship.
Steve was imbued with a competitive spirit from a young age. His father was doing his PhD in computer science at USC and later transitioned from a career at IBM to start his own software company. He served as a model of entrepreneurial resilience for young Steve.
“I grew up in a humble area within Orange County with two brothers, playing sports, eating healthy, and living a simple life,” Steve recalls. The simplicity of his upbringing, coupled with the entrepreneurial vibe of his household, shaped Steve’s future ambitions.
His competitive edge was further sharpened through his participation in competitive tennis, which instilled in him a love for winning and a deep understanding of the value of hard work.
A Path Less Traveled: From Biology to BusinessSteve’s academic journey took him to the University of California, Santa Barbara, where he majored in biological sciences. However, the late 1990s was a time of rapid technological advancement, and the allure of the burgeoning internet industry was too strong to resist.
“Graduating in the late 90s, when the internet was taking off, I was fortunate to be drawn into venture capital while still in college,” Steve shares. He was interested in tech, growth, and startups and eager to dip his toe in the waters.
This early exposure to venture capital ignited a passion for business, leading Steve away from a potential career in medicine and into the world of private equity. Working in private equity straight out of college, he quickly ascended the ranks.
Working at Lovell Minnick Partners LLCSteve’s time in private equity gave him invaluable lessons and skills that would prove crucial in his entrepreneurial endeavors. He picked up business strategies on a fast track from brilliant bosses like Jeff Lovell and his colleagues.
Steve learned the art of identifying value and deeply understanding the risk-adjusted potential. He also learned meticulous due diligence, not only in industries and markets but also in market opportunities, products, and services, and differentiating winners from losers.
Steve considers himself blessed to work with a strong team and a supportive environment that helped him navigate the learning curve quickly. He was part of the spinoff of Lovell Minnick Partners LLC, an investment bank, and became a principal at a young age.
During his stint at Lovell Minnick, Steve executed a deal where he helped with structuring the company, which ended up selling at a billion-plus valuation. He gained the experience of taking on a more lead role in scaling a company and selling it for a hefty price.
Steve witnessed the dynamic moments in the market, the heyday of renewable energy, and the rise of valuations. He also saw how the industry progressed after 2008 and the tangible value of building a business with real, sustainable value to provide to the world.
Steve assimilated many lessons about the dangers of market cycles and capital requirements, which he carried with him when building Agrovision.
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The Birth of Agrovision: A Disruptive Force in the Produce IndustryAfter years in private equity, Steve made the leap to the other side of the table, taking on a more active role in deal-making. His most significant venture, Agrovision, was born out of a desire to revolutionize the consumer experience in the produce aisle.
“The largest opportunity I ever saw was with Agrovision,” Steve says. The goal was ambitious: to transform how consumers perceive and purchase superfruits, making them a preferred choice for snacking, not just for health reasons but for sheer enjoyment.
Steve noted that purchasing off-the-shelf blueberries or other fruit was a spotty experience, and customers often experienced dissatisfaction with the products. They simply did not want to go back and buy more. That trend was universal with other products as well.
Agrovision’s approach was innovative, utilizing microclimates worldwide to cultivate unique fruit varieties. By applying advanced technology, Steve and his team created a product that consistently delivered high-quality fruit to consumers, setting a new standard in the industry.
Steve wanted to infuse operational excellence in the business systems and integrate that with creating, sustaining, and controlling quality and putting that quality on the shelf for customers to access. A great example of his ideas is the golden kiwis.
The success of Agrovision wasn’t just about selling fruit—it was about changing consumer behavior and elevating the snacking experience. Steve’s vision extended beyond just selling a product; it was about creating a sustainable business with a global impact.
Overcoming Challenges: Building a Global Business as an OutsiderBuilding a global business as an outsider in an industry traditionally dominated by insiders was no easy feat. Steve faced enormous challenges, from raising over $0.5B in capital to navigating the complexities of global operations.
“Startups are hard enough as they are, but to do that on a global scale in an insider’s industry like agriculture was even more difficult,” Steve reflects. He had to design a particular geographic footprint globally and develop, transmit, and transfer the centers of excellence quickly.
One of the biggest hurdles was attracting and retaining top talent, especially in the diverse geographic locations where Agrovision operated. It took years to build the right team, but Steve’s persistence paid off.
Although the company is more than 10 years old, its exponential growth in the last four years is a testament to the strength of the foundation Steve built during those challenging early years.
He looks back at the challenges of building the platform, flywheel, talent base, and organization-wide DNA and culture. He also had to create the perfect complementary combination of talent from inside and outside, including executives, leaders, and talent on the front lines.
Raising Funding for AgrovisionRaising capital for Agrovision hasn’t been a smooth process. Although Steve had many friends running funds at large investment firms, they were skeptical about his ideas in the initial stages. Only recently have they realized the positively impactful and disruptive business he built.
Investors have always been used to seeing insiders build successful companies within this industry. There are few examples of old-world industries having outsiders come in with their new mindset and create something with a lot of capital.
However, Steve has been fortunate enough to start with some visionary investors, partners, and co-founders and has brought in other visionary investors at each point in the chain. Agrovision is now in a totally different world and has reached a place where it has access to capital.
Storytelling is everything which is something that Steve Magami was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
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Your email address is 100% safe from spam!A Vision for the Future: Transforming the Produce AisleAs Agrovision continues to grow, Steve’s vision for the company remains as bold as ever. He sees a future where the grocery store’s produce aisle is the most exciting part, where consumers, particularly the youth–ages one to fifteen–are eager to explore new, healthier snacking options.
Steve saw the light at the end of the tunnel when he saw the global consumer’s reaction to Agrovision’s products. And the potential impact they would have on the traditional $100B snacking industry.
“When we put our product next to a traditional snack and saw consumers choose our superfruit over unhealthy options, the light went on. We realized the potential impact we could have on global health and consumer behavior.”
In Steve’s opinion, timing is everything. When building a company, being at the right time in history makes a difference, too. Today, consumer consciousness is all about eating healthy and that people care about what they put in their bodies.
Consumers today have greater health awareness, which is certainly leading to increased penetration of Agrovision’s products and their growth and consumption. They also have consumer tailwinds in terms of consumption potential among the rising middle classes.
It’s more than the traditional population demographic vis-a-vis health, but a whole different wave is taking hold today. Some of the hottest beverages and sodas are probiotic sodas. We see the non-alcoholic alcohol industry has taken off.
Consumers are playing in a whole different way with their wallets and the wallet share going towards these healthy products is truly enjoyable and feels limitless.
As Steve notes, they have just scratched the surface. The world’s population is transitioning to healthier consumption and eating, and Agrovision is all about transitioning those consumers to an enjoyable, better-tasting, and gratifying eating experience–super fruit.
That means transforming the consumer experience across the produce aisle. They should be more excited to go into the produce section than any other.
Lessons in Leadership: Advice to His Younger SelfLooking back on his journey, Steve has valuable advice for his younger self and aspiring entrepreneurs. “Be bold, and when you see talent, don’t hesitate. Talent is what it’s all about,” he advises.
Steven credits his success to his partnership with his co-founders, Marc Aron and Kerry Assil, and their investment bankers. He emphasizes the importance of attracting and retaining top talent and the need for courage and perseverance in the face of uncertainty.
As Steve’s story demonstrates, the path from Tehran to transforming an industry is paved with challenges but also with incredible opportunities. His journey is a powerful reminder of the impact that vision, determination, and a willingness to disrupt can have—not just on an industry but the world.
Listen to the full podcast episode to know more, including:
- Steve Magami’s competitive spirit, shaped by his experience in sports, drives his relentless pursuit of excellence in business.
- Growing up in a household with entrepreneurial parents, Steve was influenced early on by the challenges and excitement of entrepreneurship.
- Despite an initial path toward medicine, the allure of venture capital and private equity led Steve to pursue a career in business.
- The success of Agrovision hinged on attracting the right talent and blending industry insiders and innovative outsiders to build a globally scalable business.
- Agrovision’s transformative approach to the fruit industry centered on enhancing the consumer experience, making healthy snacking enjoyable and accessible.
- Overcoming the significant hurdles of raising capital and entering a traditionally insider-driven industry was key to Agrovision’s success.
Steve’s belief in the limitless potential of healthy consumer products fuels his vision to revolutionize the produce aisle globally.
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Growing up in Silicon Valley often feels like living in a paradox. On the surface, it’s a typical suburban environment, but underneath, it’s a hotbed of innovation where world-changing ideas are conceived in garages.
For Bhavin Shah, a serial entrepreneur with a remarkable career, this paradox was his playground. In this exclusive interview, he talks about his experiences meeting Steve Wozniak in sixth grade and going through the motions of starting, financing, scaling, and exiting companies.
Listen to the full podcast episode and review the transcript here,
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life: The Humble Beginnings in Silicon ValleyBhavin’s story begins in India, Jakarta, and finally in Silicon Valley, where he arrived as a three-year-old. He has no recollections of his early years in India or Jakarta, but Silicon Valley left an indelible mark on him.
The Valley in the 1980s was not yet the global epicenter of technology it is today. However, technology was already subtly influencing daily life. Bhavin’s father worked in technology, which seemed normal for the area.
Yet, what many would now consider extraordinary was part of Bhavin’s everyday experiences. One memorable figure from his childhood was a neighbor who seemed somewhat dubious in his mother’s eyes.
Despite warnings to avoid him, Bhavin and his brother occasionally secretly talked to this man. Little did they know, they were speaking with an engineer from Atari, who would gift them EEPROMs with chips that were beta versions of Atari games.
This early exposure to cutting-edge technology, even in such a covert form, was a harbinger of the innovative path Bhavin would later pursue. He remembers getting the bootlegged copies of the games and spending his evenings, weekends, and school nights going to Fry’s Electronics
This was a popular store which had lots of computer hardware and software. Bhavin would build computers like the Pentium 386 and different versions of the 486s that the siblings would assemble.
At the time, he was in the fifth or sixth grade and would have debates at the dinner table about getting AOL, CompuServe, or Prodigy.
Meeting the Legends: A Sixth-Grade Encounter with Steve WozniakIn sixth grade, Bhavin had a life-altering experience that he didn’t fully grasp at the time. His school selected him to have breakfast with a notable entrepreneur, who turned out to be none other than Steve Wozniak, co-founder of Apple.
Bhavin was familiar with Apple, having used the Apple IIe in school, but the significance of this meeting only became clear in hindsight. Silicon Valley was full of such serendipitous encounters.
In another instance, a young Bhavin and his mother were arguing in Palo Alto when Steve Jobs, strolling by, casually remarked, “Moms are always right.” Such interactions were commonplace in the Valley, shaping Bhavin’s outlook on life and entrepreneurship.
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The Seed of Entrepreneurship: Growing Up Amidst PioneersBeing raised in Silicon Valley, where entrepreneurship was as ubiquitous as the air he breathed, Bhavin was surrounded by friends and relatives building what would become household names in the tech world.
For him, entrepreneurship wasn’t a question of if but when. However, Bhavin was discerning about this path. He recognized that while the environment might encourage one to start a business, true success required more than just the desire to be an entrepreneur—it required what he termed an “unfair advantage.”
Bhavin’s education further honed his perspective. After completing his undergraduate studies at UC San Diego during the early days of the dot-com boom, he returned to the Bay Area for graduate school at Stanford.
His time at Stanford was transformative, as it allowed him to explore the intersection of technology and education, a passion sparked by his work with Dr. Sally Ride, the first American woman astronaut in space.
Bhavin’s involvement in a project that enabled students to take pictures of Earth from a camera aboard the space shuttle deepened his interest in using technology to transform education. He worked with Dr. Ride for three and a half years at a time when the Internet was booming.
People were using technology for everything, disrupting retail and every category of business in a way that was never achievable before. And Stanford happened to have a program that combined computer science and education, making it Bhavin’s choice.
In his opinion, students should double major in some field since it will enable them to see the world from different perspectives. That’s how they can find a way to leverage those two perspectives into a unique advantage that they might have.
LeapFrog and Beyond: Navigating the Dot-Com BoomAfter Stanford, Bhavin joined LeapFrog, a then-fledgling toy company with just 70 employees. The company was small when he joined but grew exponentially, eventually going public in 2002.
At LeapFrog, Bhavin gained invaluable experience in different roles, from product management to business development. He worked on scaling the company, focusing on product quality, brand development, and navigating the transition from a private to a public entity.
The company scaled to 1200 employees and went public in 2002 on the NYSE. But despite his success at LeapFrog, Bhavin was not content to rest on his laurels. The entrepreneurial itch remained, leading him to venture into the gaming industry.
The Lessons of Failure: The Educational Gaming CompanyBhavin’s first entrepreneurial endeavor, an educational gaming company, did not achieve the success he had hoped for. However, he views this chapter not as a failure but as a critical learning experience.
The venture taught him about the complexities of building a successful company, the importance of culture, and the challenges of managing a team, connecting with investors, and raising capital. Bhavin learned what he was good at and where he needed improvement.
Most importantly, he realized that even the best ideas might not work out as intended. This venture reinforced the importance of resilience and adaptability in the entrepreneurial journey.
Bhavin recalls how they started the company as an educational gaming company specifically focused on the large format MMORPG. Their target audience was younger kids, but soon, they pivoted to being a developer shop that built games for other brands and licenses.
Finding Success with Refresh: A Strategic ExitUndeterred by his previous experience, Bhavin embarked on his next venture, Refresh, which aimed to create a digital dossier for professionals. The idea was born out of Bhavin’s experience working with world leaders and observing how they prepared for meetings.
He observed how they had a paper dossier that contained notes to get briefed on who they were meeting, when they last met, what they talked about, how to shake their hand, down to every moment that they were going to spend, including what the last the person might ask them about in the last meeting,
Bhavin decided to create a digital version of this paper dossier. This was sometime in 2012 when the world was all about these different social networks and databases connecting to all these different services.
Refresh sought to aggregate information from various social networks and databases, offering users a comprehensive briefing on the people they were meeting. Bhavin recalls that it was an interesting product, and Refresh had a lot of great users on the platform.
The product gained traction, but Bhavin recognized that its success hinged on the cooperation of various data sources, which were becoming increasingly restrictive. When LinkedIn expressed interest in acquiring Refresh, Bhavin saw it as a strategic opportunity.
Although the terms of the acquisition remain undisclosed, Bhavin’s decision to sell was driven by his understanding of the market dynamics and the realization that factors beyond his control might limit Refresh’s long-term success.
The Long Game: Building MoveworksBhavin’s current venture, Moveworks, represents the culmination of his entrepreneurial journey. By the time he founded Moveworks, Bhavin had developed a keen sense of what it takes to build a successful company.
Moveworks, an AI platform that automates IT support, is the product of extensive research and a deep understanding of the enterprise world. Bhavin’s approach to Moveworks reflects his belief in the importance of patience and perseverance in entrepreneurship.
He acknowledges that building something significant takes time—often seven years or more. Moveworks is now eight years in, and Bhavin remains committed to its long-term success.
He emphasizes that while entrepreneurship can be rewarding, it requires unwavering dedication and a willingness to stick with a vision for the long haul. Bhavin had worked in toys, video games, and mobile productivity. While switching industries is fun, he wanted to leave a lasting impact.
To Bhavin, AI was one of the areas that seemed to have a long horizon in which they could operate, and thus, it became the starting point. Talking to CIOs, he realized that much of the work within enterprises was still manual, and AI wasn’t being used much.
Bhavin started to think about transforming the help desk by applying machine learning models with his co-founders from Google and Facebook. They realized that if they could understand language, they could take an employee’s request or a question or issue and solve it successfully.
They could find end-to-end answers by triggering workflows and doing certain actions. Bhavin and his team realized that language was actually the problem and that if they could get good at it, they could do a lot of work for companies that could have been more efficient.
It took three days on average to resolve a typical IT issue, even with the best-in-class workflow tools and systems of record. In an era of instant services like DoorDash and Uber, they needed quick solutions, which was the genesis of Moveworks.
As Bhavin explains, they started the company on Slack in the early days since they recognized that the secular shift of communication tools in the enterprise was also shifting. Communications platforms like Slack and Teams had emerged, as did WhatsApp.
People wanted short forms and were getting work done more prolifically on these platforms than ever. So, Bhavin and his co-founders came up with the idea of a bot/co-pilot tool.
Before starting the company, they met with dozens of CIOs and made sure that the information they had was a universal phenomenon. Today, Moveworks is an enterprise SaaS AI company with an agentic reasoner.
The Moveworks Business ModelEssentially a generative AI copilot, Moveworks spans across the organization and talks to the different systems of record, business systems, and automation tools, allowing employees to search and take action.
It is available to all employees to interoperate with all these different services and functions within their organization.
Moveworks charges clients as a SaaS company in two ways. It has a per-user license model based on the size of the organization. It also has a consumption-based model in which customers can choose based on the number of active users.
Bhavin sees it as an opportunity to keep driving more impact, usage, and capabilities to users. Much of Moveworks’ ability is to take action and update systems and learning techniques. Human annotation teams help measure model performance to fine-tune models, including using ChatGPT.
Bhavin explains that Moveworks is no longer limited by a particular domain or set of use cases, as with older AI systems they built. Now, they can go quite broad and wide.
They have invested substantially in R&D to build a truly agentic system in which people can leverage the platform to have a real conversation and talk across many different systems.
It is just as fluid as ChatGPT but with a real deep understanding of permissions, rules, and logic that are required to act and securely perform the tasks on behalf of the individual.
Raising Funding for MoveworksBhavin Shah has always viewed building a company as a long-term journey. For him, it’s not just about creating something that can be sold within a few years but rather about envisioning a business that could still be thriving 20 or 30 years down the road.
This perspective has shaped Bhavin’s approach to building Moveworks, particularly when it comes to choosing investors. He has successfully raised $315M.
Storytelling is everything that Bhavin Shah was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!“The cap table becomes quite important when you think about who you let in and who you take money from,” Bhavin explained. “While there are many sources of capital these days, it’s crucial to have an awareness of who these individuals are, what they stand for, and whether you share the same philosophy.”
Bhavin’s careful selection of investors has been key to Moveworks’ success. Starting with Lightspeed, whose deep understanding of enterprise software helped lay the foundation, Moveworks later brought in Bain Capital Ventures, Kleiner Perkins, and Iconic, among others.
These investors are not just financial backers but trusted advisors, providing invaluable guidance and introductions. Notably, Enrique Salem, a former CEO of a public company, has offered insights crucial to the company’s growth.
Taking time to build these relationships is essential, according to Bhavin. “Investors always tell me they can move fast, but I don’t want to rush into a relationship that I can’t get out of. I want a relationship I can truly trust, and for that, it takes time.”
Bhavin’s Vision for the FutureFor Bhavin, vision alone isn’t enough—the execution separates the winners from the losers. At Moveworks, one of their operating principles is the “execution quotient,” a focus on acting decisively even when the full picture isn’t clear.
This principle has driven the company’s expansion from a platform focused on support functions to one that serves departments across entire enterprises, from HR to finance to marketing.
Moveworks is now becoming an essential discovery engine and an independent employee experience hub, enabling employees to navigate various systems and processes efficiently.
The company’s Gen AI super app is designed to be unbiased, integrating seamlessly with multiple systems of record. As Bhavin noted, “We have become more of a Gen AI super app that people can go to and access lots of different systems.”
Reflecting on his career, Bhavin wishes he had entered the enterprise SaaS space earlier, recognizing the satisfaction of solving complex puzzles and the clarity of what it takes to succeed.
Now, he sees a new generation of entirely AI-based enterprise app companies on the horizon, with Moveworks positioned at the forefront of this wave.
Advice for Aspiring EntrepreneursFor aspiring entrepreneurs, Bhavin’s journey offers valuable lessons–success is not just about having a great idea but about understanding the market, building a solid foundation, and being prepared to adapt when things don’t go as planned.
Most importantly, it’s about playing the long game, staying committed to your vision, and being willing to learn at every step.
Bhavin Shah’s story is one of fate, where chance encounters with legendary figures like Steve Wozniak and Steve Jobs shaped his worldview.
But it is also a story of deliberate choices—pursuing opportunities aligned with his passions, leveraging his unique advantages, and maintaining a long-term perspective on success.
Listen to the full podcast episode to know more, including:
- Building a long-lasting company requires carefully selecting investors who share your vision and philosophy.
- Execution, not just vision, is crucial for differentiating successful companies from the rest.
- Bhavin Shah emphasizes the importance of taking time to build trustworthy, long-term relationships with investors.
- Moveworks has evolved from a support-focused platform to an independent Gen AI super app that integrates with multiple enterprise systems.
- The “execution quotient” is a core principle at Moveworks, focusing on decisive action even with incomplete information.
- Bhavin values the structured problem-solving nature of the enterprise SaaS space, contrasting it with the unpredictability of consumer markets.
- Moveworks aims to be at the forefront of the next generation of AI-based enterprise app companies.
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Rob Bearden’s journey is one of innovation, leadership, and relentless pursuit of growth. From his early days at Oracle to his most recent venture, Sema4.ai, Rob has been at the forefront of technological transformation across multiple industries.
In this exclusive interview, Rob dives into his experiences, the lessons he learned when building and scaling his companies, and the vision that drives his latest endeavor.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Days in Atlanta: A Foundation for SuccessGrowing up in Atlanta gave Rob a grounding experience that shaped his career trajectory. Witnessing the rise of tech in the Southeast, coupled with the flourishing of the Atlanta Braves, Rob saw the possibilities of transformation early on.
His career began in the data and hardware world, but his time at Oracle set the stage for his future successes. Rob remembers watching the whole ERP and application world explode in the Fortune 500 companies headquartered in the Southeast.
He ended up working with companies headquartered on the West Coast also and commuting back and forth almost every week. Eventually, Rob’s career came full circle–founding, building, and scaling a company back in his hometown of Atlanta, Georgia.
Climbing the Corporate Ladder at OracleRob’s tenure at Oracle was nothing short of remarkable. Joining the company in his second job after school, he witnessed firsthand the power of operational excellence before it crossed the billion-dollar revenue mark.
Under the leadership of Ray Lane and Jeff Henley, Oracle was a masterclass in constructing and executing business processes with precision and focus on detail.
Rob’s role evolved from an individual contributor and regional manager to a VP, giving him a comprehensive understanding of scaling a business through meticulous strategy and execution.
“Oracle taught us how to wire between strategy and execution through surgical processes across every line of business,” Rob reflects. This foundation became a recurring theme in his subsequent ventures, where operational discipline was vital to scaling and success.
Rob considers himself fortunate to have been a part of the early days of Oracle and to have watched it double every year for the eight years while he was there. He witnessed the transformation of tech happen from on-prem to moving to the ERP and next generation of applications.
Rob also observed how businesses were transforming their model with technology–generally and specifically with Oracle ERP and applications.
Transitioning from Corporate to Entrepreneurial RolesRob’s career took a significant turn as he transitioned from corporate roles to co-founding and leading several companies. His experiences at i2 Technologies, where he helped take the company public, as COO at JBoss, which had a $650M exit, and as president at SpringSource were pivotal.
At i2, he was part of a team that built a $52B market cap company, a 20% operating margin, and a model of scale and efficiency, pioneering the automation of supply chains. This experience taught him the importance of positioning and productization in tech.
Rob learned valuable lessons from Sanjiv Sidhu that he would carry into his future ventures. He learned how to establish the correct and accurate positioning into the app consumption model, the best practice use cases and value props, and how to accurately position those value props within the use cases that fit by industry–a very surgical process.
At JBoss, Rob faced a new challenge: monetizing open-source technology. “In the world of JBoss, it was all free, and we had to figure out where the value proposition was,” he recalls. This was entirely unlike Oracle and i12, which had perpetual license-driven models.
At JBoss, Rob and his team had to figure out how to create value in an open-source model that they could monetize and scale through the consumption model. The whole process took a few cycles to scale revenue.
Rob recalls how the experience was very transformational since they had to make open source enterprise-viable and do it in a way that can be consumed at scale for mission-critical applications.
The enterprise would pay at scale for it almost in parity with its proprietary competitors and build a scalable business model around that. Rob and his team moved it to a subscription model to monetize versus the perpetual license model.
The success of JBoss, sold to Red Hat for $650M in 2005, demonstrated Rob’s ability to adapt and innovate in different business models. He considers it the early days of product-led growth models.
RedHat had done a phenomenal job making the Linux operating model work at scale for enterprise applications, making the whole ecosystem work around it, and monetizing at scale.
As president of SpringSource, Rob scaled and sold the company for $650M to VMWare.
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The Birth of Hortonworks: Big Data at ScaleFollowing the success of SpringSource, Rob turned his attention to the burgeoning field of big data. The rise of cloud computing and the explosion of data presented a new opportunity.
As Rob noted, enterprises understood the value of capturing all the data about the transactions and devices. The real challenge was to bring the disparate data under management at the total cost of ownership.
By accomplishing this, they could create very transformational, high-value business models to do things in the current business models that they couldn’t do before. Enterprises could create more visibility for their customers and have more velocity with their supply chains.
In this way, enterprises can build better product designs and accelerate the product build and delivery cycles–regardless of tech, hard goods, or consumer goods. This was applicable in B2B and B2C models.
The challenge was the lack of a platform to bring the data under management with a TCO that could be leveraged to next-generation platforms and business models–something that Yahoo was doing with Apache Hadoop.
Yahoo leveraged Hadoop as the platform to manage its content across all its properties and leverage that content into a clickstream revenue model that manifested in advertising. But, the common denominator was data at scale.
Hadoop became the new operating platform built in an open-source community that could compile data at scale with a high velocity of capture and refresh. Rob saw the opportunity to bring the core of Hadoop into a commercial company along with the brain trust–a core team of 22.
Partnering with Yahoo, Rob co-founded Hortonworks, bringing together the team of 22 engineers to commercialize Hadoop, an open-source platform for managing vast amounts of data.
Hortonworks quickly became a crucial player in the big data space, ultimately merging with Cloudera. The combined company managed a third of the world’s data on the Hadoop platform, generated nearly $1B in annual revenue, about $960M of ARR, and yielded high profits.
“It was incredibly transformational in how enterprises could transform their operating and business models to serve their customers better,” Rob explains. Enterprises could transform their operating and business models better to serve their products, customers, and supply chains.
This opened up many new opportunities across the board for how data, use cases, and value were constructed, leveraging data to do it.
A Spectacular Exit and a New BeginningThe merger of Hortonworks and Cloudera was a significant milestone in Rob’s career. The transaction, valued at $5.3B, marked his entry into the “three comma club.”
Reflecting on the deal, Rob emphasizes the importance of operational discipline and value creation at scale, both for customers and investors. Rob stayed on the board for a time and commends the management team for its efficient integration, rationalizing the roadmap. Later, he served as CEO.
Eventually, the legacy company caught the attention of a private equity firm, which recognized the opportunity of a long-tail horizon. The company would continue to serve a very strategic customer base and is an invaluable asset around data, continuing to build and capture value for customers.
The firm saw that it will continue to scale–in terms of revenue, operating margins, and free cash flow. True to expectations, the company has been innovating for its customer base and continues with its operating model execution.
However, true to the adage “once an entrepreneur, always an entrepreneur,” Rob was not content to rest on his laurels. His latest venture, Sema4.ai, is poised to revolutionize how enterprises leverage AI for business transformation.
Sema4.ai: Leveraging AI for Enterprise TransformationSema4.ai is the culmination of Rob’s decades of experience in technology and entrepreneurship. Recognizing the transformative potential of AI, Rob and his team are focused on building intelligent agents that enable enterprises to accelerate business model innovation.
By combining Sema4’s vision with the automation capabilities of Robocorp, Rob aims to redefine how AI agents are built, deployed, and managed. Sema4 is all about leveraging AI in an enterprise-viable way to accelerate business model transformation and achieve new levels of efficiency and innovation.
AI can drive efficiency in products and customers through supply chains and thus achieve new revenue creation and efficiency in operating margins and models. AI can also help transform business models through product innovation, supply chain efficiency, and better customer service.
“We feel like there is a time to market element that’s important,” Rob says. “There’s an opportunity to be definitional in how generative AI applications are built, deployed, and managed through intelligent agents.”
As Rob explains, they were fortunate to accelerate and execute that vision with world-class talent and experienced operators.
They brought Sema4.ai in its early form factor together with Robocorp to finance the combined entity, allowing them to accelerate the architectural decisions and work that Robocorp had done in the automation layer.
Combining with Robocorp saved Rob and his team a couple of years of building and going to market. Having Antti Karjalainen, the CEO and founder of Robocorp, as a partner was a great asset. Rob talks about how they were able to leverage the great work in the tech platform and customer base.
Next, they applied the intelligent agent infrastructure with the Robocorp planning, scheduling, automations, and control plane capabilities. That’s how they accelerated the use cases existing Robocorp customers could accomplish, opening their aperture up much faster.
With the enabling technology of LLMs and generative AI with intelligent agents, the transformation model has demonstrated quick-to-value realization and the ability to gain traction much faster, which is very exciting.
Raising Capital: The Power of Long-Term RelationshipsGiven Rob’s track record, raising capital for Sema4.ai was a natural progression. His long-standing relationship with Benchmark and Peter Fenton, who had backed his previous ventures, was crucial in securing funding.
This partnership, built on trust and mutual respect, has guided Sema4.ai on its path to success. Rob talks about how he convinced them that AI, at an enterprise level, will manifest itself in terms of intelligent agents. He also brought in Navin Chaddha at Mayfield as an investor.
By aligning the gravitational pull between Navin Chaddha at Mayfield, Peter Fenton at Benchmark, Antti Karjalainen at Robocorp, and Sema4, Rob raised $30.5M for the company. Post-acquisition of Robocorp, they have been very efficient with capital.
Storytelling is everything which is something that Rob Bearden was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Rob and his team are focused on targeted use cases within the enterprise. They have successfully hired the right cohort of co-dev and design partners at the right enterprise scale who are meticulously and surgically focused on solving deliberate problems with AI agents.
Rob’s Vision for the World and AIRob anticipates production at scale, driving a lot of efficiency and accuracy in their AI application model by the end of this year. From there on, the company should scale quickly. As he sees it, enterprises have transformed how they work, infusing more efficiency and accuracy in their workers.
They can realize opportunities at scale using LLMs, generative AI, intelligent agents, and the proper infrastructure to enable it. Rob foresees a world in the near future where every knowledge worker has an intelligent agent that’s up-leveling their work’s volume, capacity, efficiency, and accuracy.
The higher efficiency will be reflected in the operating margin, and AI will transform the velocity and the kinds of applications and businesses and, ultimately, the business models they can realize.
As Rob reveals, customers wanted to bring data under management so they could make data-driven decisions. They would use that data to make decisions on how they would better innovate a product or better serve a customer and get more efficiency in logistics or supply chain.
These enterprise customers now understand the best-in-class outcomes, the best-in-class KPIs, or what auditors want, need, and require them to get over. They know the standard of work that has to happen to get a particular job function or process done.
They want to transition from making data-driven decisions to taking action on the work autonomously from end to end using intelligent agents. Humans can use AI to go through the reasoning process and be exception managers versus manual execution agents.
In retrospect, Rob talks about understanding the importance of using case-specific outcomes when creating solutions for the customer. He stresses use cases customized for the customer by line of business, persona, and specific operating and business models.
Conclusion: A Legacy of InnovationRob Bearden’s journey from Oracle to Sema4.ai is a testament to his ability to adapt, innovate, and scale businesses across different industries and business models.
His story is not just about building companies but about creating lasting value through technology. As Sema4.ai continues to grow, Rob’s legacy of innovation will surely inspire the next generation of entrepreneurs.
Listen to the full podcast episode to know more, including:
- Rob emphasized the importance of resilience and adaptability in navigating the fast-paced tech industry.
- He highlighted the necessity of having a clear strategic vision to guide company growth and direction.
- Rob stressed the importance of building a strong, cohesive team that shares the company’s mission and values.
- He discussed the significance of timing when it comes to market entry and scaling operations.
- Rob pointed out that flawless execution is crucial for the success of any venture, no matter how innovative the idea.
- He advocated maintaining a customer-centric approach, ensuring that products and services meet market needs consistently.
- Rob shared insights on the value of learning from failures and using them as stepping stones to future success.
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Your email address is 100% safe from spam!The post He Built Billion-Dollar Companies And Has Now Raised $30 Million To Co-Create A Platform That Leverages AI Agents To Transform How People Work appeared first on Alejandro Cremades.
Arjun Pillai’s journey from a small village in Kerala, India, to becoming a successful serial entrepreneur in Silicon Valley is nothing short of remarkable.
With a deep passion for problem-solving and an unyielding entrepreneurial spirit, Arjun has built and sold multiple companies, navigating the challenges of bootstrapping, fundraising, and acquisitions along the way.
His story is a testament to the power of resilience, adaptability, and the belief in building something truly valuable.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life: A Humble Beginning in KeralaArjun Pillai was born and raised in a small village in Kerala, a region known for its lush landscapes and agricultural roots. Growing up in a middle-class Indian family, Arjun’s childhood was filled with happy memories, cricket games, and a solid yet unremarkable academic record.
Like many Indian families, his parents encouraged him to pursue a stable career in engineering. Attending a technical school during his 8th to 10th grades, Arjun was introduced to electronics, computer science, and electrical engineering, igniting a passion for engineering.
He remembers being excited about physics and electronics. With his older brother as a role model, who had also become an engineer, Arjun set his sights on a career in this field. He started by going to college nearby to get his degree.
The First Foray into Entrepreneurship: A Rollercoaster RideAt just 23, Arjun took his first step into the world of entrepreneurship after a short stint at Infosys. Armed with little more than youthful enthusiasm and a desire to create something of his own, he and three of his college friends founded their first company, Profoundis, in 2012.
However, the road to success was far from smooth. Over two years, they built four different products, all of which failed. Despite these setbacks, Arjun and his team remained undeterred, treating each failure as a learning experience.
“We were young and stupid,” Arjun recalls. “We didn’t know what we were getting into, but we didn’t see it as failure. It was just ‘next one, next one.'” The foursome bootstrapped the company by taking and outsourcing projects and then using the money to build a project.
As Arjun remarks wryly, the concept of investors was unheard of at the time. He simply got by on his small salary and living out of a men’s hostel.
Developing the First Successful Product at ProfoundisThe co-founders’ perseverance paid off when their fifth product, a sales intelligence tool, finally gained traction. This tool, developed before the likes of Clearbit and Zoominfo, became their first real success. However, the launch of this product was as accidental as it was serendipitous.
One evening, the team noticed an unexpected spike in traffic to their website. Unbeknownst to them, their unconventional pricing strategy—a slider allowing users to choose their price between $2 and $30—had caught the attention of Dave Ambrose, a Silicon Valley investor, who tweeted about it.
Rand Hoover, co-creator of Product Hunt, noticed this tweet and subsequently featured their product on the platform. Within 36 hours, they had onboarded 2,000 users and garnered significant media coverage, propelling their company to new heights.
Arjun remembers manually onboarding users using chat. Of these, around 800 were PR people and writers. They wrote about the product in CNET, GigaWomb, LifeHacker, and LifeHacker Russia. As a result, they were up from 800 to 4,000 users over the next two to three weeks.
Seeing the organic pill, the co-founders realized they were onto something here.
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The Challenges of Fundraising: Lessons LearnedDespite their product’s success, fundraising proved to be a daunting task for Arjun. He made several rookie mistakes during his first fundraising round, starting at an inopportune time and failing to secure firm commitments from investors.
After 65 rejections, he finally secured a $380K investment, but not without significant challenges along the way. Arjun remembers not making his investors sign a SAFE or convertible note. As a result, they only had interested people but no commits or actual investors.
Arjun’s experiences taught him valuable lessons about the fundraising process. He emphasizes the importance of understanding the investor’s mindset, securing commitments on paper, and synchronizing conversations with potential investors to create a competitive environment.
Arjun also learned the importance of asking the right questions about their product’s rationale, theses, and their thoughts about the ownership percentage. These lessons would prove invaluable in his future projects.
Profoundis started out with four people and scaled to 39 people when it became profitable. This time, Arjun got a fully committed pre-series term sheet for the company from FullContact, an existing strategic partner buying data from Profoundis.
The First Exit: A Milestone for KeralaIn 2016, after four and a half years of growth, FullContact acquired Arjun’s first company. This acquisition was not only a milestone for Arjun but also for the startup ecosystem in Kerala, as it marked the first product exit in the state’s history–which indicated its nascent ecosystem.
At the time, FullContact had raised around $30M and was about to close its seed round for about $25M, which in 2016 was a lot of money. The company was also doubling its revenue almost annually and was confident that the acquisition would generate much value.
Although the financial details remain undisclosed, the acquisition was life-changing for Arjun and his co-founders and served as a significant moment for the local entrepreneurial community.
After his exit, Arjun spent nine months consulting with tech companies, learning everything he could about the sales process.
The Birth of Insent.ai: A New ChapterAfter a brief stint in consulting, Arjun was ready to dive back into entrepreneurship. His next venture, Insent.ai, was born out of his realization that real-time B2B conversations were becoming increasingly important.
Insent.ai aimed to create an account-based buyer-centric conversational experience for B2B companies, allowing potential customers to access information quickly and easily.
The product allowed buyers to eliminate the need to fill out a form and then wait five days for the information they needed. At the time, Arjun remembers there was Drift.com, a chatbot-oriented conversational platform, and Qualified.com.
The three companies developed an account-based marketing advanced B2B chat application sometime at the end of 2018. It was a B2B SaaS model with platform pricing for the underlying conversational platform, which included the integrations, setting up of the process, onboarding, and all of that.
Insent.ai offered a per-seat pricing with 10 seats baked into the basic platform fee. Users needing more seats could pay for them. Insent.ai was a SaaS model but without any pro services.
This time, fundraising was much smoother. Having built a successful track record with his previous company, Arjun found that investors were more willing to back him. He secured initial funding from previous investors and additional support from Techstars, raising a total of $2.7M.
The Second Exit: A Strategic Acquisition by ZoomInfoThe acquisition of Insent.ai by ZoomInfo in 2021 was another significant milestone in Arjun’s entrepreneurial journey. Unlike his first exit, which came as a surprise, this time, Arjun had built strong relationships within the industry, including with ZoomInfo’s CEO, Henry Schuck.
A simple email from Arjun to Henry, sharing relevant industry news, led to a conversation that eventually resulted in the acquisition.
Advice for Aspiring EntrepreneursReflecting on his experiences, Arjun offers valuable advice to fellow entrepreneurs: “Don’t build a company to exit. Build a strong business as if you want to build for the long term and the best deals will come to you—whether from investors or acquirers.”
Arjun suggests getting the right support on the legal, tax, and other aspects when going through the process of fundraising and acquisitions. Professional advice can help them avoid paying substantial taxes.
Arjun also observed that once a company is sold, founders have a difficult time internalizing the fact that the company is not theirs anymore. They must break the emotional and mental attachment to the company and start looking at things objectively.
Regarding building companies, Arjun advises founders to learn customer-market validation and validate their products meticulously and thoroughly. He also recommends taking feedback from everyone they meet, particularly those smarter than them.
Building DocketArjun remained with Zoom.info for a while and then went on to build Docket. The concept of Docket emerged from Arjun’s belief that AI is the biggest paradigm shift and presents a huge opportunity. He identified a problem statement that resonated with him and wanted to solve it.
Docket is a SaaS product with platform-based pricing. Users can choose from a platform price or per-seat price. In Arjun’s opinion, AI will eventually enable the pricing to become more outcome-based.
Talking about the fundraising journey, Arjun reveals how he approached his previous investors. Four days after incorporation, Docket had around $3M in soft commits. Among the many entities that invested were Ashu Garg and Jaya Gupta at Foundation Capital.
The total round was $5.3M in which investors like Founder’s co-op in Seattle, Henry Shaq, a CEO, Jeff Lunsford, CEO of Telium, Anu Parathwaj, and Viral Bajaria, CTO of 6Sense, participated. Next, Arjun found a few pilots and design partners and started building and delivering the product.
Arjun also leveraged his long-term relationship with Rajiv Batra, Navin Chaddha, and Patrick Salyer at Mayfield to raise another $15M, which Foundation also joined.
Storytelling is everything that Arjun Pillai was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!As he reveals, Docket is now an AI sales engineer in organizations where it assists existing sales engineers and account executors to a point where the go-to-market efficiency in those companies is enhanced.
Docket joins calls, answers questions, takes demos and serves as a full teammate in the B2B companies to ensure that they operate at super high efficiency. The goal is to create a vertically fully integrated AI sales engineer.
Conclusion: Building for the Long TermArjun Pillai’s story is one of resilience, learning, and growth. From his humble beginnings in Kerala to becoming a successful serial entrepreneur in Silicon Valley, Arjun has shown that success will follow with the right mindset and a relentless focus on building value.
His journey inspires aspiring entrepreneurs everywhere, reminding them that the path to success is rarely straightforward but always worth the effort.
Listen to the full podcast episode to know more, including:
- Arjun Pillai’s entrepreneurial journey began at 23, with multiple failed products leading to eventual success.
- Arjun’s first venture thrived on a lean budget, with a $200 monthly salary in India sustaining his early efforts.
- Arjun’s first successful product launch happened by chance, demonstrating the power of organic growth and unexpected opportunities.
- Arjun learned the hard way that securing investor commitments requires written agreements and strategic timing.
- Knowing how investors think can significantly improve your fundraising process.
- Arjun advises entrepreneurs to prioritize long-term business growth over planning for an exit.
- Both of Arjun’s successful company exits were driven by organic interest rather than a deliberate process.
SUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The post He Sold A Company To Zoom.info And Has Now Raised $20M To Built An AI Sales Engineer To Maximize Go-To-Market Efficiency appeared first on Alejandro Cremades.
Raising funding for edtech startups could be easier than most other sectors. Edtech combines two of the most dynamic and rapidly growing fields–education and technology. As knowledge expands, so does technology, software, and applications to make it available to learners.
If you’re developing an edtech product, your focus should be identifying the problem and building an MVP, Minimum Viable Product. Once you can demonstrate that you have what it takes to become the next big thing, attracting investors is more streamlined.
The most interesting factor is that several government grants and loans are available to founders who conceptualize disruptive edtech ideas. Here’s a quick look at what you need to know. Let’s start with the basics of what exactly is edtech and the scope of this sector.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding the EdTech SpaceEdtech is a vertical that is still in its nascent stage and refers to teaching techniques driven by a blend of hardware and software. Whether learning in classrooms under the supervision of trained teachers or self-study by students, edtech aims to enhance learning.
The end goal is to create a customized approach for students to understand and retain their courses’ curriculum more effectively. Edtech includes practical tools and applications that allow students to learn at a pace according to their comfort and capabilities.
Using educational technology eases the burden on educators and adds a more personalized feel to the coursework. On an individual level, edtech can infuse interactive features, Q&As, quizzes, and flashcards to simplify materials for learning.
Within the classroom, teachers can use whiteboards, interactive projection screens, and online learning via Massive Online Open Online Courses (MOOCs). Edtech has brought valuable innovations into the education sphere so that learning is no longer restricted to on-site classes.
Students from any corner of the world can access recorded lectures, regardless of their time zones or competency levels. Understandably, edtech started to scale rapidly during the COVID, and consumers continue to depend on applications and tools for better learning. For example:
- Learning management applications to design and make available coursework in forms like PDFs and recorded videos delivered by expert teachers. You’ll also consider tools for delivering materials and gradebooks to assess grades and deliver feedback.
- Platforms that offer high-grade content for better student engagement with topics like STEM, science, and programming. Adding an element of fun makes learning easier.
- Using techniques like augmented reality and virtual reality to make learning interactive and hands-on.
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Future Prospects of the Edtech SectorEntrepreneurs looking to learn more about raising funding for edtech startups should know that this sector has incredible prospects. Statistics indicate that it is expected to grow at a CAGR of 14.3% from 2024 to 2034. Translated into figures, it shows a growth of $108B in 2024 to $411B in 2034.
Experts point to the rapidly increasing demand for online learning applications, AI-driven apps, and gamification that are spurring growth. Several government initiatives are underway to support new and disruptive startups that can change how knowledge is made more accessible.
The industry is experiencing major shifts in how learning is obtained, compiled, and readied for students. As digitization is taking over education and students rely more on virtual classes to learn, the potential for growth also increases. And these growth prospects are attracting investor attention.
The COVID pandemic triggered immense growth, and funding in edtech startups spiked by 22% in Q1 of 2020. This trend continues, and in the next three years, by 2027, the edtech market worldwide will hit the $319B mark.
Founders developing an MVP to address a problem should accelerate R&A at this time and build a market presence. Your startup could join the ranks of the 36 global edtech unicorns that have a total valuation of over $100B in 2022. Companies like Coursera, Duolingo, and Udemy have gone public.
Raising Funding for Edtech Startups – Your First StepsIf you want to raise funding for your edtech startup, the first step is identifying a problem and ideating solutions. You’ll do the necessary research to understand the specific gap you want to fill and then build an MVP. Test in on actual customers to gauge their feedback and make tweaks accordingly.
When scouting around for ideas, look to two specific categories of potential consumers. Firstly, you’ll approach educators, teachers, and educational organizations to understand their needs. Search for the challenges they’re facing when creating the coursework and imparting it to the students.
Alternatively, you can approach learners to understand their hurdles when accessing the programs they’re particularly interested in. You’ll also identify parents as the target market. They should be convinced of the merits of your product/solution so they can purchase it for their kids.
Most important is the implementation and execution. The MVP you create should come with practical ways to integrate it with the existing learning institutions and platforms. Pay careful attention to the costs because supplemental learning will have to be payable while school learning is free.
Remember to compile all the relevant data because you will need it when putting together a pitch deck for investors. The data will demonstrate that your MVP has what it takes to spike your buyers’ interest.
Once you cover these steps, you will be ready with some of the most critical slides of the deck.
These will include the problem, solution, targeted customer base, data to indicate traction, estimated pricing, and MVP. With these slides in place, you can put together the business plan, the cover, and the ask.
Don’t overlook the competition and any ideas that could already be floating around the market. You’ll have to talk about what makes you unique.
List of Potential Investors to ApproachNow that the pitch deck is ready, you can start compiling the list of potential investors to approach. Remember that your pitch is not cut and dried but dynamic and flexible. This means that you’ll tweak and customize it depending on the type of investors you’re approaching.
Narrow down your list of by researching the kind of sectors they actively support. You’ll go through the companies they are currently backing to understand what they’re looking for. Also, check the geographical location where they operate and whether they support startups in specific stages.
Since your startup is in its early stages, you’ll approach government organizations, foundations, and, perhaps, family offices. Several philanthropic entities and angel investors may be interested in backing an entrepreneur trying to make a difference in education. Here’s how to start.
Government Grants, Funds, and FoundationsThe U.S. Department of Education Funds has a selection of programs designed to provide funding for edtech startups. For instance:
- Discretionary Grant Funding Opportunities
- CARES Act Funding to support Remote Learning
- Department Funds to Support Connectivity (Has a total of 12 funds)
- Funds under Titles I through IV of the ESEA, as amended by the ESSA, and the Individuals with Disabilities Education Act (IDEA)
- USDA Distance Learning and Telemedicine Grants
- FCC E-Rate Program
Also, check out the Foundation directory for information you can use about the different programs available to aspiring founders.
Programs in the edtech space include the Kellogs Foundation, Siegel Family Endowment, Jacobs Foundation, Gates Foundation, and Spencer Foundation.
Since you’re developing edtech solutions and applications, consider approaching a university or reputable institution with your ideas. They might be interested in collaborating with an upcoming startup by buying a stake and getting first access to products.
This strategy will ensure you get a ready customer base to test your products. You’ll improve on them with the feedback you get from users in real-time while using the organization’s resources. The brand recognition you get because of the partnership with a renowned institution is an added positive.
Before applying for a particular grant or program, make sure to read up on their requirements and approval criteria. Select the right programs and design your pitch accordingly.
Even as you’re researching grants and foundations, you should start looking for other sources of capital. Not sure how to do that? Check out this video I have created in which I explain how to build a target list of investors for your startup.
Raising the Seed RoundAs your expert fundraising professional will advise you, the best time to raise capital is before you need it. Even as you’re applying for government and university grants and foundation programs, you’ll reach out to friends, family, colleagues, and other informal sources for money.
Also, leverage your personal savings and credit card and get a line of credit to build the MVP. Once you obtain the grant, you can move on to hiring expert teams to develop the product further. Since this is a tech-driven application, you’ll want to work on fine-tuning it before it reaches customers.
Before you’re ready to market the product and invest in advertising, that’s the time to start raising funding for edtech startups. Approaching incubators and accelerators is also a great move since many programs are geared toward supporting technological advancements.
Look for options where you have a high chance of success. For instance:
- Y Combinator
- Berkeley SkyDeck
- Forum Ventures
- ASU Venture Devils
- Expert Dojo
- BoomStartup
- Imagine K12
Partnering with these organizations has multiple advantages. By the time you pass through the program, your startup will be ready to take off. You will have some amount of funding, an MVP, and, most importantly, access to a broad network of investors.
The connections you build during your stint with the accelerator or incubator will ensure success in future funding rounds. If you hope to enter into collaborations to scale the company, you’ll likely meet them during the program.
Angel Investors for Raising Funding for Edtech StartupsApproaching angel investors for early-stage startup funding for edtech companies is another smart move. Angels are high-net-worth individuals who are veteran founders and executives interested in supporting upcoming entrepreneurs. They are always on the lookout for interesting projects to back.
Other than capital, you can rely on them for industry-specific expertise and access to their network of investors and angels. Their guidance can prove invaluable for getting your startup off the ground.
Here’s a quick look at some of the top angel investors that support education technology.
- Deborah Quazzo
- Jason Calacanis
- Walter Winchell
- John Katzman
- Kevin Hartz
- Jason Palmer
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Venture CapitalistsAs your company continues to scale, you’re going to need further capital to expand operations. You’ll also need expert guidance to ensure that the company structure is capable of sustaining rapid growth. Venture capital could be the way to get you there.
You may also need assistance with hiring talent, purchasing equipment, and upgrading the company’s premises. VCs typically require a board seat along with equity as part of their investment structure. This means that they will have a say in the company’s day-to-day operations.
Startups benefit from their guidance since the VCs are primarily interested in rich profits when they are ready to exit. Or when the company goes to IPO. Here’s a quick look at the top VCs in the edtech space you can approach.
- Owl Ventures
- Reach Capital
- NewSchools Venture Fund
- GSV Ventures
- Kapor Capital
- Bonsal Capital
Private Equity FirmsPrivate equity firms typically invest in mature companies, and their objective is to earn high returns before exiting. Their holding period ranges from 10 to 12 years, and they are a good source of capital for later-stage startups.
You may have to spend time researching for private equity firms that specialize in the edtech space. That’s because they typically support startups in particular sectors. Since PE firms aim to earn maximum returns, they assist with cost-cutting and restructuring techniques.
You can rely on their representatives to fill positions if there are any gaps in your startup’s skill sets. Here’s a quick overview of the top private equity firms you can approach:
- Alpine Investors
- Kaizenvest
- Zubr Capital
- Gaja Capital
- General Catalysts
- 3B Ventures
The Takeaway!Entrepreneurs looking to build a new company in the edtech sector will find ample opportunities. The combination of education and technology is in high demand if you can come up with innovative products. Capital is also readily available if you can demonstrate a marketable great MVP.
Even if you’re not ready with an MVP, applying to accelerators and incubators can get you there. When you’re ready to scale the company, you’ll approach investors who can assist you with capital and expertise. So, get ready to dive in with the disruptive ideas you have.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Building The Future Of Education: Raising Funding For EdTech Startups appeared first on Alejandro Cremades.
Dealmakers must understand the critical role of strategy in M&A transactions. Designing the optimum deal structure can ultimately influence its success. M&As may have different objectives, such as capturing a bigger market share or gaining an edge over the competition.
Expansion and growth can also be the end goals for entering into the deal. To ensure success, you’ll put together a detailed structure and approach that acts as a roadmap.
This deal structure will guide dealmakers through the negotiation and execution process, culminating in successful integration.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding What is an M&A StrategyAn M&A strategy is the agreement and framework both parties to the deal agree upon beforehand. These frameworks include the entire scope of terms, conditions, and other contingencies for the deal.
They also clearly define the objectives behind the deal to ensure that both parties achieve their goals. Most importantly, both–the buyer and seller–should benefit from the transaction with adequate value creation.
The deal structure takes into account the changing dynamics of the industry’s ecosystem to prepare a game plan. This plan is crucial for managing any unexpected risks and contingencies.
A well-designed approach also ensures smooth transitioning for effective integration. It also sets up relevant benchmarks that help measure and evaluate the transaction’s success.
Why Structure is Crucial for Strategy in M&AAny strategy is never ironclad and specific to a particular industry, geographical location, or culture. An effective M&A strategy is always dynamic, versatile, and customized to achieve the dealmakers’ objectives. An optimum framework adapts to specific conditions to overtake the competition.
It also includes the right structure to grab available opportunities and help the legacy company scale quickly. Other targeted outcomes include maximizing operational efficiency and diversifying into new markets and product lines. Lowering costs and eliminating duplicated tasks are also part of the plan.
The right deal structure can guide dealmakers when they negotiate and make decisions about the company’s future. It also helps them transform their decisions into practical action while ensuring that the two companies integrate seamlessly.
M&A strategies also include failsafe measures, such as anticipating possible risks and devising strategies to overcome them. This roadmap is crucial to avoiding disagreements and conflicts between deal participants.
Another hazard that can be avoided is missing out on opportunities because of unclear expectations. A well-structured deal ultimately lays the cornerstone for a mutually beneficial collaboration that quickly adapts to the changing industry landscape.
Raising Funding for the DealStructuring the deal also becomes imperative if the acquirer must raise funding from third parties to execute the deal. In that case, they may have to reach out to potential investors and pitch the acquisition to get their support.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Aligning Strategy in M&A with Dynamic Industry TrendsIndustries and business sectors are never stagnant but consistently adapt and change to provide a better product portfolio to customers. Several conditions can bring about changes, such as political and regulatory updates, innovative technology, and macroeconomic conditions.
Of course, the competition heating up and customers’ altering buying behavior are major concerns. To stay on top of dynamic industry trends, dealmakers must create an M&A strategy that accounts for the dynamism. They can do this by conducting extensive research and analysis.
Your analysis will center around the future risks and opportunities that may arise as trends change. For instance, disruptive technology and policies a new government may introduce post-election.
The M&A strategy you devise should prepare the surviving company to capitalize on these opportunities. It should also minimize potential risks and ensure that the upcoming collaboration aligns with its projected strategic objectives.
Core Components in an Effective M&A StrategyRelying on the expertise of a professional M&A advisor is always a smart move. They will help you structure the M&A deal to include all the crucial components for a successful partnership. Here are some of the core components to include in the M&A strategy:
Achieving a Strategic FitWhen determining the optimum strategy in M&A, achieving a strategic fit should be foremost on your list of priorities. Dealmakers must understand the strategic goals each participant hopes to achieve from the collaboration and how to make them happen.
These objectives can be short-term or long-term and should ensure optimum synergies and value creation. For instance, adding new products to the legacy company’s portfolio and expanding markets to cross-country or cross-border locations.
A great strategic fit should also involve growing the customer base, lowering customer acquisition costs, and enhancing technological capabilities. Any benefits resulting from gaining a competitive edge and contributing to the company’s rapid growth indicate a strategic fit.
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Analyzing Financial AspectsWorking out the financial aspects of the collaboration is crucial to its success. Both participants must assess the financial implications of the acquisition, starting with accurately valuing the company. Next, they must work out ways to raise funding to complete the deal and estimate the returns.
Before entering into the deal, the acquirer must analyze the target company’s financials and obtain the relevant data. For instance, cash reserves, cash flow statements, profits and revenues, debt, accounts receivables, and accounts payable.
Once the analysis is complete, you’ll determine how to achieve financial synergies by lowering costs, improving pricing, and increasing sales.
Conducting Meticulous Due DiligenceDue diligence plays a critical role in strategy in M&A, and both–the buyer and seller–must conduct it before the transaction proceeds. This aspect is crucial for identifying any issues and discrepancies in the two companies’ operations.
Due diligence is expensive and requires extensive time and resources. However, it is advisable to make this investment because it ensures that the transaction proceeds smoothly. Both parties in the deal investigate legal, financial, operational, and HR aspects.
If the companies own IP and other IA, securing their ownership and usage titles is crucial. Due diligence helps uncover any potential risks and liabilities that can derail the M&A deal. Or result in issues later that hamper successful integration.
The results of due diligence can impact the target company’s valuation, positively or negatively, so it is essential to complete it beforehand.
Structuring the M&A TransactionM&A advisors on both sides of the table must devise an optimum deal structure that makes sense to both parties. This aspect concerns how the target company’s value is paid out. It can take the form of a stock purchase, asset acquisition, or merger.
In the case of an asset acquisition, the seller can choose to liquidate only some of the company’s assets. In that case, they may also transfer the liability associated with the assets. Of course, this deal only applies to transferable assets and not to non-transferable assets.
In the case of a stock purchase, the buyer purchases some or all of the seller’s stock. As a result, the buyer also acquires the company’s assets and liabilities, including tangible and intangible assets. For instance, IP, patents, trademarks, logos, taglines, and more.
A third option is a merger in which a new company is established that combines assets and liabilities. The participating companies cease to exist entirely. Working out the optimum deal structure is crucial because the transaction will have tax implications for both parties.
Your M&A advisors will help you design the right structure in M&A to minimize payable taxes. You will also need their assistance to comply with all the relevant laws, regulations, and industry-relevant rules. For instance, anti-trust and securities laws.
Obtaining approvals and clearances from the relevant federal, state, and local regulatory authorities is an important part of the process.
Working on the Cultural FitEnsuring a cultural fit is the first step in effective integration. Regardless of whether the participating companies operate within the same vertical or offer similar products and services, culture is an entirely different aspect.
You’ll work on the presumption that employees will have distinct ways of working and interacting. Understand that the workforce is the most dynamic resource that can ensure the merger’s success. This is why your strategy in M&A should have a practical approach to aligning the culture.
Have an experienced HR team in place to answer questions and evaluate resumes, positions, and salary structures. Eliminating duplicated roles and streamlining the workforce are essential to an M&A deal. It’s usually part of the process of achieving cost synergies and cost efficiency.
At the end of the day, you may have to institute a new company culture. An updated vision and mission statement may be needed to guide the surviving company’s workforce in the direction it will take moving forward.
The value of top-notch skill sets cannot be stressed enough, and you should know how to project this valuable asset. Whether you’re creating a pitch deck to impress investors for funding or potential acquirers for a strategic sale, know how to position the team slide. Check out this video where I have explained how to do that.
Executing the Final IntegrationThe final integration is the most critical aspect of strategy in M&A since most deals fall through at this stage. When structuring the integration process, dealmakers must work out the expected timeline for execution.
They must also determine the personnel responsible for each stage and communication guidelines. Relaying instructions on schedule and delivering all the pertinent information to the workforce is absolutely critical. Transparency and open and clear communication lines are key to success.
For that to happen, you must have a well-designed structure in place and proceed accordingly. In addition to keeping the workforce in the loop, you’ll also communicate with other stakeholders, such as investors and customers.
Don’t overlook shareholders, vendors, and any other entities crucial for the surviving company to continue operations efficiently. Reassuring them is important and this is why many sellers stay on as consultants until the integration is complete. And the legacy company is back on track.
If a temporary consultancy is part of the deal, you’ll include a fair and equitable compensation package. If the acquired company will continue to operate as an independent subsidiary, include the terms and conditions.
Final Execution of the M&A TransactionNow that due diligence is complete and the integration plan has been instituted, you are ready for the final M&A execution. You’ll now continue per the integration plan to coordinate efforts with the many stakeholders to continue operations.
You’ll integrate the incoming technology and assets and leverage them to ramp up production. You’ll also use PR and media to announce the successful merger and reach out to more customers. This will raise your market share and enhance sales.
You’ll also contact supply chains to connect with vendors and consolidate sources for consistent inventory deliveries. Your focus at this time is on achieving cost efficiency, targeted synergies, and other strategic value from the deal.
Any other approaches necessary to stabilize the company for future growth and profitability should be the strategy in M&A.
Evaluating M&A Success and Making AdjustmentsEven as you’re working out the deal structure, don’t forget to include a final assessment once the merger is complete. You must institute a process for evaluating the company’s strengths and weaknesses as it moves forward. Keep a close watch on the key performance indicators (KPI).
Gather, analyze, and leverage accurate data to zero in on the aspects where the company is falling behind. You’ll work with your advisors to shore up the deficits and implement the essential changes. Aside from numbers, also rely on valuable feedback from customers and other stakeholders.
Don’t overlook assessing how the company’s culture and workforce are performing. You’ll also conduct in-house anonymous surveys and interviews to determine whether the teams have adapted well to the new culture and mission statement.
Use the responses to make the necessary tweaks in the company’s structure for better employee satisfaction. That’s how you’ll ensure minimum attrition and loss of core talent crucial for the company’s success. If needed, also institute team building exercises and training programs.
Improve product performance and customer service to enhance profits and returns for your shareholders and investors ultimately.
Strategy in M&A is Vital for SuccessM&A transactions are complex and require careful planning and execution. You can’t afford to overlook any of the different aspects since every one of them is crucial for the deal’s success. Make sure to include each of the above components when structuring the deal.
The best way to do that is to retain the services of an expert M&A advisor. Rely on the professionals to design the optimum process for the perfect path forward.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Unlocking Value And Growth: The Critical Role Of Strategy In M&A appeared first on Alejandro Cremades.
Lawrence Lin Murata’s journey from Brazil to Silicon Valley is nothing short of extraordinary. Born and raised in São Paulo, he ventured into the tech world without prior experience, eventually leading a successful startup.
This blog post delves into his inspiring story, covering his multicultural upbringing, the challenges of breaking into tech, his experiences at Stanford, and the founding of his company, Slope.
In an exclusive interview, Lawrence talks about finding the ideal product-market fit, instituting a robust company culture, and fundraising.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Multicultural BeginningLawrence’s story begins in São Paulo, a city known for its rich cultural diversity. With a Taiwanese mother and a Japanese father, his upbringing was a blend of different traditions and values.
This multicultural background gave him a unique perspective on life and business, shaping his approach to problem-solving and innovation.
Despite growing up far from Silicon Valley, Lawrence was determined to impact the world significantly, even if the tech industry seemed like a distant reality at the time. While in school, his goal was always to become a business owner like his parents.
The Path to StanfordThe idea of studying in the U.S. seemed like a far-fetched dream until Lawrence’s English teacher introduced him to the possibility. Inspired by his teacher’s belief in him, Lawrence became obsessed with the idea of attending a prestigious U.S. college.
Thus, he started researching how ACT/SATs and the application processes worked. His hard work paid off when he was accepted into Stanford, a decision that would profoundly influence his career. At Stanford, Lawrence was struck by how closely academia and industry were intertwined.
Many of the teachers had either been a part of the industry or continued to be in the industry while also teaching at college. Lawrence’s computer science studies, focusing on AI, were hands-on and application-driven, allowing him to intern at leading companies like Apple.
These experiences broadened his horizons and solidified his interest in using technology for social good.
Inspiration from InequalityGrowing up in Brazil, Lawrence was acutely aware of the stark inequalities that existed in his country. This experience fueled his passion for social impact, leading him to start “CS + Social Good” at Stanford. He wanted to leverage his background in computer science and AI to do good.
This initiative was Stanford’s first official organization combining technology with social impact, offering students the chance to work on projects with nonprofits that could make a real difference in the world. The program also hosts speakers talking about different tech applications for social impact.
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From Academia to Entrepreneurship – Founding Newton TechnologiesAfter graduating, Lawrence co-founded his first company, Newton Technologies, focused on self-driving cars. This venture was inspired by his desire to address one of the top 10 human-made causes of death: traffic accidents.
Although this first foray into entrepreneurship was challenging, it provided invaluable lessons that Lawrence would carry forward into his next venture. After a few years of scaling Newton, he chose to exit to Nauto but continued working in the company.
Fortunately for Lawrence, the CEO, Stefan Heck, and Ruslan Belkin, the CTO, he was given complete autonomy to run the AI platforms and data science. That’s how he learned how to run teams in a later-stage company.
Lawrence looks back at his stint working at Nauto under Stefan, whom he considers a remarkable individual. Not only did he get the autonomy to prioritize things, but he also got to work on all the other aspects of the business, including technical, design, and sales calls.
People reported to Lawrence and followed what he did when he founded Newton. But at Nauto, he also managed collaborations, pursued stakeholders, and resolved disagreements. These were the real-world experiences he gained while working at Nauto.
The Birth of SlopeAfter leaving Nauto, Lawrence spent some time living in Ottawa, where he connected with his now co-founder and long-time friend, Alice Deng, who had also studied at Berkeley and Stanford. The duo explored some ideas and wanted to build something with an impact.
Lawrence remembered his growing years in Brazil when his parents experienced pain points when running their wholesale business for more than three decades. During COVID, he witnessed firsthand the challenges of digitizing the business.
As Lawrence sees it, business owners are also consumers since they use Amazon and its products. They are also involved in the consumer’s eCommerce and payments aspects but must navigate a stack of paperwork when dealing with B2B payments.
Lawrence saw a significant gap in the market for a consumer-grade payment experience in the B2B space, which led to the creation of Slope. As he explained, Slope is a B2B2B model, where the first B is a B2B merchant. At Slope, they work with enterprise wholesalers who sell to other businesses.
Essentially, Slope brings their offline payments online. Since the merchants are doing things manually and offline, Lawrence and his team help them digitize the process. The last B is the business buyer, which can be an SME or a large business that’s paying using the Slope platform.
The business model is to charge a fee in the transaction volume. Lawrence reveals how he has successfully raised money from tier-one investors and some of the most influential people in the world of startups and tech.
Fundraising and Building a NetworkLawrence’s journey from Brazil to Silicon Valley also involved building an impressive network of investors and advisors. His relationship with influential figures like Sam Altman, whom he met at Stanford, played a crucial role in Slope’s success.
Sam taught a class called CS183B, which was about starting a startup. He brought many later-stage YC founders into every class to teach about different aspects of starting and running a startup. This exposure opened Lawrence’s eyes to many possibilities and also helped build networks.
Lawrence and his co-founder Alice leveraged these connections to raise $77M in equity and debt. At the time, Alice was already in YC, and with the help of their partner Brad, they got into YC. They iterated into a product that got traction, and by leveraging YC, they could get more investors.
Storytelling is everything Lawrence Lin Murata was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here) where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Lawrence reveals how they send monthly updates and are transparent about the good and bad, which has helped build trust with the investors. Thus, they have been able to partner with operators like the founders of DoorDash, Dropbox, Unity, Opendoor, and other great companies.
As Lawrence explains, they needed equity and debt because, as a FinTech and part of B2B payments, they realized that 80% of global trade has some type of financing, whether it’s suppliers, invoice factoring, or other traditional ways to get financing for B2B purchases.
Lawrence realized that many financing options are available for B2C, which is all the more crucial for SMEs. Cashflow is the life and blood of businesses. They have warehouses because they amplify the cap capacity, so Slope doesn’t have to deploy its own capital.
Thus, Slope has warehouses with JP Morgan, Seasons Banks, and Trini Capital.
Culture and Team Building at SlopeOne of the key elements of Slope’s success has been its strong company culture. Lawrence and Alice have been extremely selective in their hiring, building a team of 25 highly capable and hands-on individuals.
They have a rigorous interviewing process and focus on keeping the team super lean and nimble. Lawrence gives examples like Ashish Jain, their CFO, an executive at SoFi and Deutsche Bank, and Una, an executive at Wells Fargo in Robinhood.
These professionals would take customer calls, do customer support, and take on even the most trivial tasks. Slope didn’t have a sales team until recently, which meant that the small team took care of all the tasks.
At Slope, the objective was for people to pick up new things and learn fast, which Lawrence calls the “slope of the curve.” They prioritize transparency, with everyone on the team having access to real-time financial metrics and a clear understanding of the company’s goals.
This culture of openness, combined with a focus on results and collaboration, has allowed Slope to punch above its weight, securing major customers and achieving significant traction early on.
They are very results-driven and anti-politics, but they also believe in team activities to bond and have fun.
Vision for the FutureLooking ahead, Lawrence’s vision for Slope is to digitize the B2B economy, enabling businesses to access a wide range of digital services and financial products. He believes that creating a digital B2B data layer will be crucial in helping businesses grow and thrive in the modern economy.
Slope will help businesses gain easier access to bank accounts that they would otherwise not be approved for in traditional processes. They can also access different types of finance products, AR automation, and other things to help them run the business.
As Slope continued to scale and gain traction, Lawrence admits that, at times, Alice and he felt the pressure of having a lean team coupled with higher demand.
However, they are committed to excellence and delivering only the best service to their merchant clients, so much so that they are not averse to turning down new customers if they can’t handle them.
In Lawrence’s opinion, iteration is extremely important, as is experimentation and listening to your customers. Getting something live out there is also really important. He also wryly recalls how their first business idea, one of the 100 plus they had, was an Airbnb for office space.
Lawrence and Alice have been able to build a remarkable network that includes some of the biggest names in Silicon Valley. They have never been averse to asking for help or concerned about getting no as an answer.
ConclusionLawrence Lin Murata’s journey from São Paulo to Silicon Valley is a testament to the power of determination, innovation, and a strong support network.
His story inspires aspiring entrepreneurs everywhere. It demonstrates that remarkable things are possible with the right mindset and a commitment to social impact, no matter where you start.
Listen to the full podcast episode to know more, including:
- Multicultural roots shaped Lawrence’s unique approach to problem-solving and innovation.
- Stanford provided Lawrence with hands-on experience that bridged the gap between academia and industry.
- Social impact has been a driving force in Lawrence’s entrepreneurial journey.
- Lawrence’s first company taught him invaluable lessons despite its challenges.
- The idea for Slope was born from Lawrence’s experience digitizing his parents’ wholesale business.
- Strong relationships with influential figures helped secure significant funding for Slope.
- A culture of transparency and collaboration has been key to Slope’s early success.
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Your email address is 100% safe from spam!The post He Raised $77 Million To Provide Businesses With Easy Access To Capital And Favorable Point-Of-Purchase Terms appeared first on Alejandro Cremades.
Leadership in the fast-paced world of cybersecurity requires more than just technical expertise. It demands resilience, a strong vision, and the ability to inspire a team towards a common goal. Amitai Ratzon, the CEO of Pentera, embodies these qualities.
With a background that spans military service, a passion for basketball, and a successful career in sales, Amitai has cultivated a leadership style that is as dynamic as it is effective. His focus is on establishing a company culture that enables it to survive and thrive.
This post delves into the experiences and principles that have shaped Amitai’s journey and how they have influenced his leadership at Pentera.
Success is often viewed with rose-tinted glasses, but the journey to building and sustaining a successful venture is challenging, drawing on resilience, requiring sacrifice, and ultimately humility.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Years in JerusalemAmitai looks back at his early years in Jerusalem, Israel. Born in 1976, he had a classic 80s and 90s childhood. The oldest of four brothers, he grew up playing and following basketball, a passion he cherishes until today.
Even as a child, Amitai was totally committed to excellence and was a perfectionist student who wanted to earn perfect scores on his tests. Amitai was recruited into combat army service from Jerusalem and is very proud of his days as an officer in the IDF.
After completing his time in the army, Amitai set out to travel the world. That’s when he encountered a very interesting opportunity to be a salesman at a New York company that sold Yellow Pages advertisements to businesses across the tri-state area.
Amitai quickly rose to manage a team of 20 employees but decided that there was more to experience in his mid-20s. After working for a while, he returned to Israel to complete his studies, earning his law degree, and later, an Executive MBA degree.
He then went on to work in the sales departments of several High Tech companies, including SuperDerivatives (NASDAQ: ICE) and Earnix, his first VP of Sales position, before transitioning to entrepreneurship and joining Dr. Arik Liberzon, CTO & Co-Founder at Pentera.
Inspiration from Michael Jordan – Words to Live ByWhen speaking about leadership, Amitai’s inspiration stems from his love of Michael Jordan and The Last Dance documentary, which is not just about sport but also about leadership.
Playing basketball, which is an intensely competitive sport, helped shape the way Ratzon approaches his leadership position.
Michael Jordan has always been Amitai’s childhood icon and he lives by Jordan’s famous quote, “I don’t compete against others, I compete against myself yesterday.” Amitai constantly measures his progress against what he was achieving yesterday.
After years of dominating the sport, journalists would ask Jordan, why doesn’t he just take it easy and relax a bit? Jordan’s answer really left an impression on Amitai.
Jordan’s motivation to play hard for the young kid who purchased a ticket, regardless of past achievements, showcased the type of drive Amitai believed in.
Following this narrative, Ratzon feels responsible for the employees in this company, especially the newcomers who haven’t been a part of the legacy up until now. As their CEO, he feels the need to lead by example and make them feel like they are part of the journey.
He wants to inspire both the experienced Penterians and the new joiners so they continue to follow him, Pentera’s mission, and understand what the company represents.
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Drawing on Perseverance to Counter the SetbacksThe four years he spent as an officer in the armed forces were instrumental in shaping the man he is today, especially when it comes to discipline. Ratzon remembers being part of the elite paratroopers Unit at the IDF and learning hard work, perseverance, & resilience.
His army experiences fostered a different perspective and helped instill in him the perseverance that he needed in his journey to become a successful business leader, drawing on it when dealing with investors, bad quarters, bad hires, work stress, or any type of business setback.
Ratzon also learned important lessons about leadership and not taking things for granted. Amitai stresses that he has never tried to lead people through seniority, but rather by setting an example.
“If you need to force someone to do something because you are more senior than they are, then, your leadership style has failed.”
Still, today, as the CEO at Pentera, he manages a very experienced leadership team, many of whom are older than him and have far more experience in their specific domains. “You don’t earn their respect and trust simply by having the title of CEO; it needs to be more than that.”
Amitai stresses that he has worked to gain their support and trust, striving to work the hardest, securing their buy-in through leadership by example.
Learning the Different Roles to Become a Successful CEOIsrael is a great supplier to the world of cybersecurity companies, and the CEO profile within the cybersecurity ecosystem tends to be fairly homogeneous. Only 2% to 3% of CEOs in this space in Israel have similar backgrounds to Amitai’s combat background.
Instead, most cybersecurity CEOs in the Israeli ecosystem matriculate from a select group of intelligence or technology units. “They bring a cybersecurity background to the CEO position; they are technologists who transition to become CEOs leading a business.”
In Amitai’s opinion, there’s a lot more to being the CEO of a company than coming up with a great technological idea and building a product.
He considers the skill set needed to build the first product and reach the 10-customer milestone to be very different from what it takes to continuously manage a larger, more established company.
Having both skill sets is rare and only a select group of gifted individuals have managed the transition from product development to CEO well.
For Amitai, as a two-time former VP of sales with vast go-to-market experience, stepping into the CEO position was a natural step.
He had previous experience dealing with board members and the responsibility to look after the company’s numbers which he believes translate very well in the CEO role.
Most Israeli startups are founded by technologists who eventually transition to become CEO as the company grows; their skill sets are more naturally based on the technological development side, and they have a limited background in business development to draw from.
While Amitai previously worked alongside CTOs, Heads of Marketing, and Heads of Finance, often as a sales leader, they never reported to him. Stepping into the role of CEO and having all the functions beneath him, Ratzon took the opportunity to learn everything he could.
He had to be very humble as he learned about running functions that he previously knew very little about. Amitai says he learned a lot about R&D, how engineers think, and what motivates and inspires them.
He gained firsthand experience in what it means to lead marketing from the top, a shift from his previous role where he worked in parallel with the marketing department.
He also immersed himself in the G&A functions, finance, and legal, absorbing as much knowledge as possible and taking the opportunity to ask as many questions as possible along the way.
Meeting His Co-Founders and Taking Pentera Out of Stealth ModeFollowing his successful tenure as a VP of Sales, Amitai ultimately met with the people who would become his partners at Pentera.
He was introduced to Dr. Arik Liberzon, Pentera’s co-founder and CTO, in 2017 by Arik’s Co-founder, Arik Faingold, as well as the company’s early investors, AWZ Ventures. Amitai holds deep respect for Arik Liberzon, who he claims had the rare insight to take on the position of CTO and not CEO.
Arik understood from the beginning that his passion was the technology and product vision; combining Arik’s expertise in technology and product development with Amitai’s strong Go-to-Market expertise has resulted in a highly effective partnership that has allowed both partners as well as the company to thrive.
Amitai acknowledges that in the technical space of cybersecurity, his success relies on having a strong partner like Arik to manage the technical and product vision, while he manages the business.
“Arik was definitely the perfect partner as he is the technological visionary, but was also humble enough to allow someone else to become the CEO of his idea. Not every founder is able to give that up.”
The Building Blocks for Success at PenteraAs with any venture, the journey started with a vision and a dream. “Everyone thinks that their product can be the next biggest thing out of the Israeli cyber market. You have to believe that strongly to get anywhere.” Once we had the vision, we started recruiting the team.
Everyone started recruiting the best people they’d worked with in the past. Arik quickly brought in Ran Tamir, as the Chief Product Officer, and Alex Spivakovsky, as the VP of research.
Amitai brought in Aviv Cohen as CMO and Sivan Harel as the first salesperson on the ground to run big parts of Europe, after working together with both at a previous company. Harel has grown with the company and is now the VP of sales in EMEA.
As Amitai explains, they hired who they could trust and these people brought in more people until they built a cluster team of 30 to 40 members, most of whom are still with the company today as VPs.
Together, they became the core team of Pentera and their camaraderie, determination, and conviction have taken it where it is today. The company has been built for success and recently surpassed 1,000 global customers.
Rounds of Funding at PenteraPentera is very famous in the VC world as a company that didn’t miss a quarter for 24 straight quarters; an impressive achievement for an early-stage, privately held company.
Amitai, Arik, and the core team have taken Pentera through a few funding rounds and have raised more than $120M (with more deals between shareholders that happened in parallel). But while raising money can be a great experience, Amitai advises caution.
Storytelling is everything that Amitai Ratzon was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
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Your email address is 100% safe from spam!“One tip I would give to aspiring entrepreneurs is to be extremely cautious about the investors you partner with.
When you’re in the process of raising money, people will shower you with compliments to get into your world. Some may even give you offers and these may be very tempting. Taking the money too fast can become an issue if you bring the wrong people into the family.”
The leadership team at Pentera is very happy with all of their investor choices, but speaking to other CEOs, Amitai has heard some challenging stories.
Eventually, investors become a part of the core cluster group, that’s something to be aware of since people have different motives and agendas.
What usually doesn’t change is the DNA of the human beings you are working with that sit on your board. Pay attention to the personas that are sitting on your board. Are they placing partners or GPs on your board, or someone more junior?
This can indicate the level of conviction that they hold in your company as an investment.
Challenging the ParadigmAmitai challenges two misconceptions prevalent in the entrepreneurial world. The first is that you need to have a certain background to succeed in the cybersecurity market, as a founder/CEO.
“Most VCs looking at the cybersecurity landscape in Israel tend to invest in founders from specific army units, who are within a certain age range. That has been the template, but the reality is that many of those companies don’t make it beyond Round A.”
Pentera was built with a different DNA, having a very experienced C-Suite who knew how to succeed and did not meet in the army at the age of 18, but rather spent lots of time at B2B Hi-Tech companies, amassing a ton of experience and exposure.
The second concept that Amitai challenges is how many VCs view the market. In his experience, many of the VCs consider the US to be “the world”, and “the rest is the rest.”
While Ratzon acknowledges the strength of the US market, he hasn’t allowed it to become the singular focus of Pentera. As Amitai sees it, the US is the single biggest market and probably represents the biggest kind of gift to any founder that wants to become a global company.
However, with that said they should also be open to attractive territories like the UK, Germany, Spain, France, Italy, and others.
While it might be too much for most start ups to target this many regions from the beginning, as you transition to become a bigger company between Round A and Round B, you should start diversifying your regions.
In Amitai’s experience being completely dependent on the US, its buying dynamics, and economy alone is not advisable. Today, Pentera has a presence in 18 countries and over 1,000 customers from 64 countries. Pentera is very much an international business.
Amitai’s Future Vision for PenteraAmitai’s ultimate vision will likely materialize in four to six years because it takes time for companies like Pentera to become mainstream and the brand everyone recognizes.
Amitai wants Pentera to be a ubiquitous brand that stands for quality like having the Intel or Pentium sticker on your laptop.
Amitai envisions a world where Pentera is used by 3,000 to 4,000 customers worldwide and is present in every big bank, healthcare, government institution, or manufacturing company. Ratzon wants to see most Fortune 500 companies being in a position where they are protected by Pentera.
Like seeing the Pentium or Intel stickers on almost all laptops, Amitai envisions a Pentera “virtual sticker” that will be equally prolific, representing cybersecurity excellence and serving as a deterrent to hackers who understand the security resilience that entails.
Lessons for Aspiring EntrepreneursThe first piece of advice is to be “all-in” and the second piece of advice is to make sure that you have the support to back you up in difficult times.
While the younger generations are putting greater emphasis on work-life balance, and there is value in that, there are no shortcuts. To succeed as leaders of the company and for the venture to succeed, you will have to invest and make large sacrifices of your time to attain the peaks.
If your attitude is “this is just a job” that’s great, but then, don’t start a business with high expectations for success.
Pentera achieved a $1B valuation in 2021, but that was the result of many people making the company their number one priority in life.
“I would love to say that my wife and children always came first, but there were many situations where they came second and you need to have a very supportive home to do that.
”You can be as talented as anyone, but if your family and support system don’t give you the backing, then, it’s very difficult.
There will be times when you go through a frustrating business trip, a frustrating investor dynamic, or when something doesn’t go well with your co-founders. At that time, you will need someone there who believes in you, irrespective of how quarter A or quarter B turned out.
As a CEO you rarely get that unconditional support. People meet with you all the time in the business, but it’s always because they want or need something from you. You need someone from the outside who believes in you and sticks with you through good and bad, without an “agenda.”
“My wife, Dafna, has been this person for me since always and as much as she’s my number one fan, I’m hers as well.”
ConclusionAmitai Ratzon’s journey from the basketball court to the battlefield, and ultimately to the boardroom, has shaped him into a leader who is both resilient and empathetic.
His experiences have taught him the value of culture, the importance of teamwork, and the necessity of being adaptable in the face of challenges. At Pentera, these lessons have translated into a thriving company that is well-positioned to tackle the evolving challenges of cybersecurity.
Listen to the full podcast episode to know more, including:
- Leadership is about more than making decisions; it’s about building a cohesive team and earning the respect of those you lead by example
- There are no shortcuts. Leadership requires significant sacrifices, but these challenges build resilience and empathy.
- A strong, positive culture is the backbone of a successful organization.
- Have a strong support system to back you through good and bad
- Lessons from basketball or any competitive sports, like teamwork and perseverance, are crucial for effective leadership.
- Military experience teaches discipline, strategic thinking, and calmness under pressure—vital traits for a CEO.
- A customer-centric approach, honed in sales, is essential for driving business success as a CEO.
- Resilience in the face of adversity is key to thriving in the fast-paced cybersecurity industry.
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In the fast-paced world of startups, few founders successfully navigate the tumultuous transition from building a company to becoming a venture capitalist. Robert Grazioli is one such individual.
Robert moved from founding and scaling Density—a company valued at $1.1B—to now investing in the next generation of entrepreneurs through his venture firm, Bread. His story is one of trial, error, and resilience, and provides valuable insights to founders and investors alike.
In this exclusive interview, Robert discusses his experiences raising $200M for Density, evaluating companies as an investor, and investing in products. He also reveals his hard-won lessons in structuring teams—engineering and product development—and how to think about go-to-market strategies.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Journey Rooted in Technology and CuriosityBorn in Brooklyn and spending part of his childhood in Italy due to his father’s role as a bank’s CTO, Robert was surrounded by technology from an early age. This exposure sparked his curiosity and laid the groundwork for his future endeavors in which technology played an integral part.
After returning to the United States and attending high school in Virginia, Robert’s entrepreneurial journey truly began at Syracuse University. As part of a networking major, he learned how to configure routers and switches.
Robert met his future co-founders and started his first company during his junior year—a venture that, while not immediately successful, provided crucial learning experiences. He recalls how they went through a lot of trial and error, testing, and figuring things out.
Robert and his co-founders were driven by a willingness to experiment. They often said “yes” to new ideas, even when conventional advice might have been to focus more narrowly.
This approach led to the creation of Density, a company that started as an agency and evolved into a pioneering hardware and software business focused on counting people in spaces using sensors.
Their business model was simple–rolling profits back into the company for R&D and launching new products in the market.
The Birth of Density: From Experimentation to EnterpriseDensity’s origin story is one of persistence in the face of repeated failures. After multiple unsuccessful product launches, including a hotel maintenance app and a to-do list application, the team hit upon the idea of counting people in a space using WiFi routers.
Robert remembers counting MAC addresses and entering and winning a competition at Jason Calacanis’ launch conference.
This concept resonated with investors and the market, leading to a successful pitch and access to venture capital. That’s when they decided to shut down their agency and focus entirely on Density.
However, building Density was far from easy. The team had to navigate the complexities of blending hardware and software, a challenge that many startups fail to overcome. Initially, Density aimed to operate on a hardware-as-a-service model.
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The Challenges of Scaling a Hardware-Software BusinessSince Robert and his co-founders were building sensors to count people in rooms, they thought about leasing out the sensors and having customers pay for the software.
However, they quickly learned that their enterprise customers preferred to purchase hardware as part of their CapEx budgets. This necessitated a pivot to selling hardware and software separately, which introduced new challenges in margin optimization and operational efficiency.
Robert and his cofounders focused on the software product and overlooked the operations involved in building hardware. They had to deal with fixed costs that kept accruing, making the business capital-intensive upfront.
Despite these hurdles, Robert and his team managed to build a successful business by embracing a trial-and-error mindset. They focused on getting their product into the market, even if it meant extending the life of prototypes to gather critical feedback.
This iterative approach allowed them to refine their product and avoid costly mistakes that could have derailed the company. As Robert learned, hardware was challenging to build and test, and they had to make sure the product worked before taking it to the market.
Navigating the Emerging Concept of IoT-Based ProductsRobert and his team had to do a lot of software development side-by-side. This was around 2013 when the IoT was making waves, and there was a big emergence of IoT-based products. As Robert noted, several companies faltered because they had great ideas but didn’t really know how to execute them.
At Density, Robert and his co-founders started developing the infrastructure by hiring engineers and product developers. Although they invested in amazing talent, the hires were used to operating at a scale unlike Density, a small niche enterprise space.
Instead, Density needed more holistic system engineers and product-minded people who could focus on building the simplest possible thing without over-engineering a hardware product.
Density needed more off-the-shelf options rather than constantly going custom with the hardware selection. As a result, their production and go-to-market product were delayed by several months.
So, Robert began testing their hardware in real-world environments, allowing them to uncover critical insights about how their product would function in enterprise settings.
This hands-on approach helped Density avoid the pitfalls that had claimed many of their IoT peers, who failed to execute on their ideas due to a lack of patience and planning.
The Reality of Raising $200M and Hitting a $1.1B ValuationLooking back, Robert credits their co-founder, the present CEO of Density, as the architect of their pitch. As he reveals, Andrew Farah is an amazing and intuitive storyteller and was fantastic at creating a compelling narrative around how obvious the problem was.
Raising over $200M and achieving a $1.1B valuation is a dream for many founders, but for Robert, it came with its own set of challenges. The pressure to live up to such a high valuation was immense, especially when it was raised at the peak of a market bubble.
Storytelling is everything that Andrew Farah and Robert Grazioli were able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!The COVID downturn that followed forced the company to adopt a more survival-oriented mindset, focusing on making the most of its resources and extending its runway as far as possible. Density got into big-name businesses, landed early deals, and built solid relationships with its clients.
This shift in strategy underscored the importance of having experienced voices in the room—people who had seen market cycles before and could guide the company through turbulent times.
For Robert, this experience was a stark reminder that raising large sums of money is not the ultimate goal; building a sustainable, profitable business is. At the same time,
Density was lucky to have great investors who were not risk-averse and helped with a bridge round that carried it through COVID.
As Robert opines, the amount of capital raised doesn’t matter because, at some point, founders want to stop raising capital and focus on building a highly profitable business. He warns entrepreneurs to keep their expenses in check and refrain from unnecessary spending.
Stepping Away and Moving to the Investor SideAfter eight years of leading Density, Robert found himself at a crossroads. Despite the company’s success, he felt a growing sense of unease, as if something was missing.
This led Robert to step away from Density and begin consulting with early-stage founders, helping them navigate the challenges he had once faced with optimizing business models and operations.
Robert’s experience as a founder, designer, and front-end developer made him uniquely qualified to assist these young companies, particularly in areas like design and product development.
However, consulting alone was not enough. Robert wanted to be more deeply involved in their success, which led him to venture into investing.
Thus, he co-founded Bread, a venture firm with a unique investment thesis centered on what they call “boring magic”—the unassuming yet foundational products and services that keep society running smoothly.
These are the products that most people overlook but are critical to the functioning of our world, much like the bridge bearings that support the weight of traffic without anyone noticing.
Bread’s Approach to Investing: Getting in the TrenchesRobert’s experience as a founder deeply informs Bread’s approach to investing. The firm prides itself on being hands-on with its portfolio companies, offering more than just capital.
Bread’s partners, all former founders, are willing to roll up their sleeves and get to work alongside the entrepreneurs they back.
This might involve anything from redesigning a company’s brand to helping them build a better product demo or even sitting in on interviews to ensure top-tier talent is brought on board.
For Robert, adding value as an investor means being actively involved in the success of the companies they invest in.
It’s not just about making introductions or offering high-level advice; it’s about being in the code, helping to solve problems, and ensuring that the businesses they back are set up for long-term success.
Bread has five partners who are well-versed in different business areas. Robert is more focused on the product, the founder’s general go-to-market strategy, and the product’s future. Then, there are deeply technical partners who are really interested in foundational engineering practices.
The team also has a lawyer by education, who has been a chief of staff and helped run HR teams. Robert explains that they are super holistic with their evaluation and brutally honest about the areas where people need help.
They also evaluate products while focusing on the tactical nature of how they work.
Robert talks about getting in the room with entrepreneurs, brainstorming ideas, and understanding their perspective of the problem and their team dynamics. At Bread, they are also open to pivots in case their initial evaluations are wrong.
Rather than focusing on the pitches, Robert believes in zeroing in on the positives of the idea like a good core user base, an interesting problem, a team dedicated to solving the problem, or a team that loves the founders. Aspects like these can be differentiating factors that attract investor interest.
As Robert advises, close to 90% of VCs don’t really add value to the company. But at Bread, the five partners offer holistic solutions to redefine the entrepreneur’s ideas and dip into their experience, knowledge base, and network of customers and investors to help them succeed.
Looking to the Future: A World with Less Hype and More SubstanceAs Robert reflects on his journey from founder to investor, he envisions a startup ecosystem with less hype and more substance—a world where entrepreneurs focus on solving real, fundamental problems rather than chasing the next big thing.
Bread’s investment philosophy is a testament to this belief, emphasizing the importance of building products that, while perhaps not glamorous, are essential to the fabric of our society.
In his own words, Robert’s advice to his younger self would be to maintain patience and ambition in equal measure. Building something meaningful takes time, often much longer than expected, but the journey is worth it if you stay committed to your vision.
Listen to the full podcast episode to know more, including:
- Trial and error is vital in the entrepreneurial journey, leading to unexpected successes.
- Blending software and hardware in a startup requires a deep understanding of both models and careful planning.
- Building the right team involves hiring adaptable talent that can thrive in a startup environment.
- Raising capital brings both opportunities and significant pressures, especially with high valuations.
- Founders must balance ambition with patience to navigate the long, challenging road of building a successful business.
- A successful investor adds value by being hands-on, helping to shape and execute a startup’s vision.
- Focusing on solving foundational, often overlooked problems (“boring magic”) can lead to impactful, sustainable businesses.
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In the ever-evolving landscape of tech startups, few stories are as compelling as Rick Nucci’s journey from founding Boomi to launching Guru. A serial entrepreneur with a track record of success, Rick’s career is a masterclass in leveraging market opportunities and navigating the complexities of scaling a business.
In a recent interview, Rick shared the intricacies of his entrepreneurial path, offering valuable insights into his experiences, challenges, and the future of technology. He talks about selling Boomi to Dell for $4B, building Guru, and raising funding for it.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Humble Beginning in PennsylvaniaRick Nucci’s story begins in the picturesque Amish country of Lancaster, Pennsylvania. Growing up in this serene setting, Rick was surrounded by entrepreneurial influences from both his parents. His father managed a small business, while his mother ran a retail store in a mall.
This early exposure to the highs and lows of entrepreneurship normalized Rick’s concept of starting a business, making it seem like a natural path for him to follow.
From College to Tech: The Birth of BoomiRick’s journey into technology started at Penn State University, where he initially pursued a major in business logistics. However, a burgeoning interest in technology led him to work for a logistics software company after graduation.
Rick, along with two colleagues, identified a significant market gap: the cumbersome and primitive nature of software integration. In 2000, at just 24 years old, Rick co-founded Boomi, a startup that aimed to simplify software integration.
At the time, this field was fraught with challenges due to the reliance on manual coding and outdated technology. Rick remembers how integration in enterprise companies of all sizes would take forever since people would have to connect data between these different systems in an automated way.
However, the lack of integration meant that the systems would not work together. Customers could not deploy software and go live, and projects would be delayed. Rick and his co-founders came up with a solution to address this pain point.
Boomi’s initial offering was an on-premise software sold with a perpetual license with maintenance, which, while effective, faced stiff competition from established players like Microsoft’s BizTalk.
By the time Rick and his co-founders released Boomi 1.0, they realized that hundreds of similar companies were building different versions of the product. Standing out became very challenging, and they were up against companies that had raised $30M, $40M, and $50M in venture capital.
Boomi, on the other hand, had only raised $1M in angel investment. Around that time, Rick and his teammates also noted the beginnings of cloud and SaaS back in 2006.
They were early adopters of Salesforce.com and NetSuite and realized that SaaS was going to change on-premise software, which was drastically ineffective and absurdly expensive.
When people had some things running on-premises and in the cloud, connecting different clouds needed integration.
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The Cloud Revolution and Boomi 2.0That’s when Rick and his co-founders decided to create a brand new product that assumes that the future is true. They called it iPaaS or Integration Platform as a Service and launched it in 2007. Next, they partnered with other SaaS companies.
Since Boomi was a trendsetter and ahead of its time, it had the ability to be a category creator and re-inventor of what used to be called enterprise application integration. The on-premise days got reinvented as an integration platform as a service,
Despite being early to market, the company managed to carve out a niche by partnering with other SaaS providers, which facilitated their growth and market presence. By 2010, Boomi’s success caught Dell’s attention, leading to its acquisition.
Dell’s Acquisition and Boomi’s GrowthThe acquisition by Dell was a significant milestone for Boomi. Dell’s interest in expanding its software portfolio led to a competitive bidding process, with Dell ultimately winning the acquisition. Rick remembers how both competitors manifested organically because of partnerships with both of them.
The process, though stressful, was managed smoothly, thanks to Dell’s experienced acquisition team.
Dell assigned Dave Johnson to the task, and he ran the entire process, from due diligence to acquisition, promising what they were going to do post-acquisition, following through on those promises, and setting up Boomi for success.
Rick and his co-founders gracefully transitioned out of the company, ensuring Boomi’s continued success. Under Dell’s ownership, Boomi thrived, eventually being sold to private equity for $4B in 2021.
This remarkable outcome validated the strategic decisions made during Rick’s tenure and positioned Boomi as a leader in the integration space. He remembers how Dell allowed Boomi to run untouched and how they had a very autonomous structure.
Dell was interested in funding the business and fueling its growth but wanted Rick to run it while protecting its culture. When Rick did leave, it was over a six-month period since he didn’t want to make a dramatic exit that could negatively impact Boomi.
Rick lined up his successor, Chris McNabb, and had him take over. Rick reveals how Boomi is continuing to innovate in the space and leaning into AI. The company is running as an independent entity and has huge opportunities ahead.
The Genesis of GuruAfter leaving Boomi, Rick turned his attention to a new challenge: addressing the inefficiencies in knowledge sharing within organizations. The idea for Guru emerged from Rick’s frustration with traditional intranet systems and wikis, which failed to meet the needs of modern businesses.
Guru was founded with the goal of creating a more efficient way for employees to access and share knowledge. The product’s focus is on making information retrieval intuitive and effective, using AI to enhance the user experience.
Whatever questions employees have like–how do I position against a competitor or how does this new product feature work to internal process and procedure around HR or IT, they should be able to access the information quickly.
In addition, the information would have to be accurate and easy to understand. Rick tried using several products, but in his opinion, the software categories had just failed. Although some nuggets of usable data were still available, Rick could see that there had to be a better way.
This vision was inspired by Rick’s observation of the limitations of existing knowledge management solutions and the energetic discussions he witnessed at a Gartner conference.
He was inspired by questions floating around the room about why these systems weren’t doing what they were supposed to be doing and when they were going to work in the cloud. Rick remembers being fascinated by the Gartner analysts trying to answer product subject matter-related issues.
By the time he left the room, he was ready to start Guru which he did with Mitch Stewart, his co-founder and CTO.
Guru’s Business Model and GrowthAs Rick explains, Guru operates on a straightforward seat-based subscription model, simplifying pricing for businesses. The entire company purchases the product so employees can use it.
The company may also deploy Guru to partners, BPOs, or folks where knowledge sharing is really critical.
This approach has proven effective, and Guru has successfully raised significant funding worth $70M from reputable venture capital firms. Investors like Firstmark Capital, Thrive, Accel, and Emergence Capital have supported Guru’s growth, reflecting confidence in Rick’s vision and execution.
Storytelling is everything, and Rick Nucci was able to master it. The key is being able to capture the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!The evolution from Boomi to Guru highlights the changing landscape of tech entrepreneurship.
Geographic limitations that once hindered fundraising and growth are now less significant, as evidenced by Guru’s success despite being based in Philadelphia, which wasn’t considered a viable tech hub in 2007-2008.
Rick talks about being fortunate in partnering with investors who have been with him since the global financial crisis of 2008. And then again in 2022-2023 when there were pauses in spending software. However, the experience of fundraising at Guru was quite different because they had a great outcome at Boomi.
As Rick points out, the decision to raise venture capital had always been about being able to subsidize growth. They saw something working, the first sign of product-market fit, and revenue started to grow.
Guru has never had a high burn rate, so when it was time for the Series A funding round, Rick and his co-founder were confident they would put the money to good use and really double down on those personas they were closing and bringing in.
The Future: AI and Emotional ResilienceLooking ahead, Rick envisions a future where AI transforms knowledge management. Guru aims to leverage generative AI and large language models to make information retrieval even more seamless, shifting the focus from mundane tasks to meaningful work.
Rick views AI as a search and research partner that enables employees to do their work. There should be nothing going on at the company that they cannot instantly access and find. He believes that LLMs will allow us to drastically transform how that problem is solved.
Rick foresees a future where Guru can deliver that answer you need, that insight you need, and get you into the work that you’re actually trying to get done.
Advice to Aspiring FoundersRick advises founders to invest in self-awareness, personal coaching, CBT, or cognitive behavioral therapy. However, any playbook, any founder advice, anything about product market fit, and anything about MVP is not as crucial as emotional durability that can be learned and gained.
Rick emphasizes the importance of emotional intelligence (EQ) and mental well-being, which are crucial for navigating the challenges of starting and scaling a business. His personal experiences underscore the value of maintaining a steady and resilient mindset in the face of adversity.
Starting a business is immensely gratifying but also immensely stressful and frustrating. EQ is on the top of his list of priorities since it percolates down to the team from the leadership level. Resilience ensures that the team tackles every challenge head-on with a steady hand.
Listen to the full podcast episode to know more, including:
- Emotional durability and EQ are crucial for navigating the highs and lows of entrepreneurship.
- Identifying and acting on significant market shifts, like the move from on-premise to cloud software, can be a game-changer.
- Personal pain points and experiences can fuel innovative solutions and drive new ventures.
- Strong relationships with investors and partners can greatly influence the success and stability of a startup.
- Shifting from traditional business models to modern ones, such as SaaS, can provide a competitive edge.
- Building a steady and resilient team with high emotional intelligence is essential for overcoming challenges.
- Focus on solving real, pressing problems and ensure your solutions offer significant value to stand out in crowded markets.
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The post He Sold A Company To Dell And Has Now Raised $70 Million To Make Relevant Internal Information Available To Enterprise Teams appeared first on Alejandro Cremades.
In the ever-evolving landscape of entrepreneurship, few have experienced the full spectrum of highs and lows like Zvi Schreiber. His journey from software engineer to successful serial founder offers invaluable insights into the trials and triumphs of building and scaling companies.
In this exclusive interview, Zvi talks about his experiences selling a company to IBM, taking another company public, and fundraising. He has had a series of successful acquisitions and fire sales.
Zvi is now digitizing a massive, outdated, but crucial industry to bring it into the 21st century. His company, Freightos, is like Booking.com or Expedia but for international freight.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From Software Engineer to Serial EntrepreneurBorn in London, educated in Cambridge, and now splitting time between Jerusalem and Barcelona, Zvi embodies the quintessential modern entrepreneur. His story begins with a strong technical foundation.
He pursued a PhD in computer science while working as a software engineer, setting the stage for his entrepreneurial ventures. His first major foray into the startup world came during the dot-com bubble of the late 1990s.
Zvi’s company, Tradeum, operated in the B2B space even before the term “B2B” was coined, and he was at the heart of the tech frenzy in the Bay Area. “Back in 1999 and early 2000, the internet was new, and stock valuations were soaring uncontrollably. Tradeum was part of that wild ride,” Zvi recalls.
At the time, stocks went completely berserk. Startups were valued at tens of billions of dollars even though they weren’t earning any profit. and barely had any revenue.
Zvi sold Tradeum to VerticalNet, a company with a staggering $10B valuation at the time. However, the market crash shortly thereafter led to a dramatic drop in share value, a sobering lesson in the volatility of tech valuations.
Learning from the Dot-Com CrashThe bubble burst taught Zvi a critical lesson: if something seems too good to be true, it probably is. “The things that don’t look real aren’t real,” he reflects. This insight guided him through the tumultuous times that followed, including the early 2000s downturn.
As Zvi learned, if a startup isn’t doing particularly well and has an evaluation that doesn’t make sense, it probably won’t last. He went into the deal with his eyes open and knew that although they were selling the company for half a billion dollars, the paper was overhyped.
When things get overhyped, a correction is bound to follow. In the bubble, everyone was spending money on IT like there was no tomorrow, so companies were really investing. After the bubble burst, Zvi founded a startup called Unicorn. That was before Unicorn meant a billion-dollar startup.
Unicorn, which provided data management solutions for banks and insurance companies, faced challenges due to the conservative IT spending that followed the bubble burst of 2000. Despite significant deals with major enterprises like MetLife and Bank of America, Zvi’s team faced a tough market.
The acquisition by IBM, while successful, highlighted the contrasting dynamics of dealing with large enterprises and navigating a more risk-averse industry.
Buying from IBM was the conservative thing to do in those days, so customers who were reluctant to buy the Unicorn product from a startup were more comfortable buying it from IBM.
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A Roller Coaster Ride with GhostZvi’s next venture, Ghost, an acronym for global hosted operating system, aimed to capitalize on emerging web technologies by offering cloud storage solutions. However, being ahead of its time proved detrimental. “We were too early to market,” Zvi admits.
Their product was very similar to Dropbox and Box.net. However, the technology infrastructure of the time couldn’t support the cloud services that Ghost aimed to provide, leading to its eventual firesale. This experience underscored the importance of market timing in the startup world.
“Being too early can kill you just as much, if not more, than being too late,” Zvi notes. While companies like Google thrived despite entering a crowded market late, being too early often means facing a market that isn’t ready for your innovation.
Zvi stresses honesty and explicitly warning his investors that they risk losing their money, which is why he maintains a great relationship with them. Two years later, Ghost might have been a huge success and worth billions of dollars.
The internet was not very fast at the time. When users bought a broadband connection, the typical ‘broadband” home connection speed was just 256 kilobits per second, a quarter of one megabit, compared to today’s 100 megabits and 500 megabits.
Embracing the Hardware WorldAfter Ghost, Zvi shifted gears to work in the hardware industry with Lightech, where he learned the intricacies of managing inventory and supply chains. His role as CEO, although not a founder’s role, allowed him to leverage his experience and eventually sell the company to GE Lighting in 2011.
Zvi recalls being involved in the company for a long time. His dad was an investor, and Zvi had been an active director on the board of directors. He was also involved in the original investment and felt some of the same ownership that you feel when you’re the founder.
The Birth of FreightosZvi talks about how he was adept at the ideation process, having built a couple of companies successfully. He understood what it took to take a company from point A to point C. During his time at Lightech, Zvi identified a significant gap in the international freight industry.
They handled international shipping and manufactured electronic power supplies for LED lights, which was great because the market for LED lights was growing fast.
Like most electronics, the company manufactures in the south of China and ships by ocean and air from the Shenzhen area to the US and Europe, where its customers are located.
Despite the immense scale and importance of global shipping, the industry remained outdated and opaque. When Zvi started to search, he couldn’t find a single website that offered information about options to book shipping a container or air cargo, complete with the pricing.
There were no websites where customers wanting to book shipping could check all the prices. They would have to call freight forwarder companies, which is a huge industry.
Considering that 90% of the products sold in America and Europe are imported, international shipping is a huge part of the world economy.
However, connecting with 100,000 freight forwarding companies was very challenging because they could only be contacted by phone. Next, customers would have to wait for two to three days for a price quote. Also, invoices did not match the price quote because of the hidden fees.
Recognizing this, Zvi founded Freightos, envisioning it as a digital transformation for freight akin to what Booking.com and Expedia did for travel. “Freightos is like Booking.com or Expedia for international freight,” Zvi explains. “We’re digitizing a massive, outdated industry.”
His platform aims to make international shipping transparent and automated, much like passenger travel has become.
Freightos Business ModelsAs Zvi explains, Freightos has two business models. It is primarily a platform or a marketplace that matches buyers and sellers of freight services, so part of its platform revenue is transactional. Since it is a public company, it reports platform and solutions revenues separately.
The majority of Freightos’ revenue is from subscription-based solutions. These include primarily SaaS and software-as-a-service subscriptions, as well as data subscriptions.
The platform sells some of the best data in the world, like the FBX index, which measures the current price of shipping a container, or FAX, which measures the current price of shipping kilograms by air.
That data and related data are published on Freightos Terminal, so essentially, it is a transactional platform that also offers solutions split into SaaS and data subscriptions.
The Road to Going PublicRaising funds for Freightos presented its own set of challenges. Despite being a seasoned entrepreneur, Zvi found that investors were initially hesitant to back logistics and supply chain innovations.
“VCs didn’t see supply chains as an interesting area initially,” he reveals. But relationships and a track record helped us secure funding.” Zvi successfully raised a total of $200M for the company from venture capitalists FedEx and SGX, the Singapore Stock Exchange.
Freightos went public via a SPAC in January of the previous year, raising $80M from long-term investors. While the stock hasn’t performed as hoped, Zvi views the IPO primarily as a means to raise capital rather than an exit strategy, and as such, it was successful.
As Zvi explains, he and his investors haven’t sold any shares. His focus remains on executing the vision of transforming global shipping. Freightos was at the end of the whole wave of SPACs and was one of the last SPACs to get out.
Choosing the Right InvestorsZvi emphasizes the importance of aligning with investors who understand and support the long-term nature of the business. “Choose investors who are in it for the long haul,” he advises. “You need investors who are patient and aligned with the type of business you’re building.”
While value-added investors with connections and insights are beneficial, that consideration is secondary to having supportive partners.
As Zvi explains, they were building a business that modernized and digitalized a very large, very conservative industry. It was always clear that it was going to take time.
Zvi has been fortunate to attract investors who do not press him to help them exit and who are still supporting him in making the right long-term decisions.
Storytelling is everything that Zvi Schreiber was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Looking AheadThe vision for Freightos is clear: to make global shipping as transparent, automated, and efficient as passenger travel.
Significant progress has already been made, particularly in air cargo, which represented billions of dollars worth of goods that were transported by air cargo that was booked fully digitally last year. Zvi is optimistic about the future.
“We’re starting to see digital transformation in shipping. It’s improving world trade, which is crucial for employment, lifestyle, and even world peace,” he asserts. Freightos brings the same experience for the shipping of goods, similar to passenger travel, where things are very transparent and very online.
As Zvi sees it, even though there are some horrible exceptions, it’s still true that as countries open their borders and trade with each other, it contributes to world peace.
Zvi advises young entrepreneurs to surround themselves with smart, engaged, loyal people. He also stresses the importance of treating investors as part of the extended team. He would suggest finding good investors that align with their vision and time scale.
Zvi says, “Luck plays an important part. So, enjoy the ride and celebrate the wins and don’t beat yourself up about the losses.”
In ConclusionZvi Schreiber’s journey through the highs and lows of entrepreneurship offers a compelling narrative of resilience and vision. From navigating the dot-com bubble to pioneering digital solutions in international freight, Zvi’s experiences highlight the critical lessons of timing, investor alignment, and the importance of seeing opportunities where others might not.
As Freightos continues to innovate and expand, Zvi’s story serves as an inspiring testament to the power of entrepreneurial perseverance and strategic foresight.
Listen to the full podcast episode to know more, including:
- Overhyped valuations can lead to dramatic crashes, so approach deals with a critical eye.
- Being too early to market can be as detrimental as being too late, as infrastructure and consumer readiness are crucial.
- Opt for investors who share your business’s long-term vision and are supportive of the timeline for success.
- Digitizing traditional industries, like freight forwarding, can transform outdated practices and create new efficiencies.
- Successes and failures alike offer valuable lessons that contribute to future ventures.
- Building and maintaining a loyal, skilled team is essential for long-term success.
- While immediate results are important, the aim is to have a lasting impact and improve the global landscape, such as by enhancing world trade.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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Your email address is 100% safe from spam!The post He Sold A Company to IBM And Has Now Raised $200 Million To Build A Freight Shipping Marketplace And Platform appeared first on Alejandro Cremades.
In the evolving world of entrepreneurship, few stories are as compelling as that of Stephen Bailey, a former lawyer who transitioned from the courtroom to the startup ecosystem. His journey is a testament to the power of leadership, reinvention, and adaptability.
Born and raised in New Orleans, Stephen’s path from a lawyer to a successful entrepreneur offers valuable insights for aspiring founders and seasoned professionals alike. In this exclusive interview, Stephen talks about navigating COVID and the pivots in the business model his company, ExecOnline, went through.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From Law to Leadership: A Background in BriefStephen Bailey’s roots are firmly planted in the vibrant city of New Orleans, where his parents, both esteemed doctors, hoped their son would follow a medical career. However, Stephen charted a different course.
After excelling in debate during high school and college, he pursued law at Emory University and Yale Law School. His legal career began at WilmerHale, a prestigious firm known for its rigorous legal practice.
Despite his strong start, Bailey found himself yearning for something different. The intense environment of the legal world and a pivotal moment of self-reflection led him to reconsider his career trajectory.
Conversations with mentors and classmates exposed him to the dynamic field of entrepreneurship—a stark contrast to the structured world of law.
In retrospect, Stephen observes that Yale was just a really inspiring place with a great network of people who were doing really exciting and interesting things, both inside and outside of the law.
The first startup he joined was founded by a law school classmate and funded by another law school classmate, which points to the value of the connections he made. At Yale, Stephen also developed an understanding of how to think in a structured and rigorous way about complex problems.
These skills, combined with the debating he did in high school and college, taught Stephen to see both sides of an issue and understand how to make difficult decisions between competing options.
When working at WilmerHale in the Venture Capital and Private Equity Group, he gained a working knowledge of the legal side of deal-making. This knowledge would later come in handy when he built ExecOnline and raised more than $100M over several funding rounds.
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The Shift from Lawyer to EntrepreneurStephen’s transition from law to entrepreneurship was not instantaneous but a gradual evolution. As he recalls, when he went to law school, he had no conception of a potential career in entrepreneurship. His plan was to join the WilmerHale law firm and work as an appellate litigator.
Stephen spent a summer as an associate at a law firm after his first year of law school, which is common among law students. While the experience was interesting, he realized he wanted to do more.
Initially, Stephen joined Frontier Strategy Group, a startup, where he began as a product head. Frontier is an Information Services Company that sells a subscription that helps organizations benchmark and improve their performance in international and emerging markets.
This role allowed Stephen to grow with the company, eventually leading him to the position of CEO. His journey from a small team to leading the organization taught him invaluable lessons about growth, adaptability, and leadership.
Stephen had the benefit of growing with the business as opposed to stepping into a business that was already large and established. He remembers making mistakes and learning from them since he was constantly pushed out of his comfort zone.
The real turning point came when Stephen decided to start his own company. This decision was influenced by a mix of his experiences at Frontier Strategy Group and a growing desire to build something from scratch.
Inspired by his mentor, David Sylvester, Stephen started on his entrepreneurial journey, which led to the creation of ExecOnline. This platform is designed to revolutionize leadership development by making high-quality executive education accessible online.
ExecOnline: Democratizing Leadership DevelopmentExecOnline was born from Stephen’s observation of a gap in leadership development. Traditional programs were often in-person and available only to a select few. The vast majority of folks were not really being invested in from a leadership development perspective by their companies.
Stephen envisioned a platform that could offer world-class leadership training online, partnering with top business schools like Berkeley, Columbia, MIT, and Wharton. This model not only democratized access to high-quality education but also addressed the evolving needs of leaders in a hybrid world.
ExecOnline’s business model involves collaborating with prestigious educational institutions to deliver non-degree certificate programs to corporate clients. The platform hosts and sells specific offerings to companies, which then buy the programs it offers on behalf of leaders within their organizations.
This approach ensures that leaders at all levels have access to top-tier training without the constraints of geographical limitations. ExecOnline works with hundreds of companies, developing tens of thousands of leaders every year.
Since then, the platform has expanded its offerings to include proprietary programs and coaching capabilities, positioning itself as a comprehensive solution for leadership development needs from frontline managers up to the most senior leaders in the organization.
Navigating the Funding LandscapeRaising capital is crucial to scaling a startup, and Stephen’s experience is a valuable lesson in understanding the funding lifecycle. He has successfully raised over $110M for ExecOnline, navigating various stages from seed funding to Series E rounds.
Storytelling is everything, and Steven Bailey was able to master it. The key is being able to capture the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here): where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Each stage of funding comes with distinct expectations and challenges. For seed funding, the focus is primarily on the founder and the vision rather than the specifics of the business model. As Stephen opines, this is both the most exciting time for the business and also the hardest capital to raise.
He views it as the classic chicken-and-egg situation. The first problem founders must solve is getting money to build something great, but to get that money, they must first sell someone on the vision to build it.
Investors are well aware that the business can change and pivot to adapt to evolving markets, so their focus is on the person navigating the changes. By the time a company reaches Series B and C, investors expect to see evidence of product-market fit and strong financial metrics.
Steophen’s legal background has been instrumental in understanding the complexities of deal-making and maintaining a clean capital structure, which is crucial for future rounds. He points out that the core mistake young entrepreneurs make is to go with the same pitch for subsequent rounds.
Instead, pitches should outline information like the model economics, retention rates, lifetime value of your customer, and LTV to CAC. These things start to create a long-term view of how the business’s economics is likely to trend.
Investors focus on growth rates, profitability, and, in the later stages, exit paths via an acquisition or IPO. The returns they can hope to get are also a top priority. Accordingly, Stephen has been able to tailor their message at critical moments, given the expectations of particular investors.
Key Legal Insights for FoundersStephen’s legal training has provided him with a unique perspective on fundraising and deal-making. Here are three key legal insights for founders based on his experience:
Valuation vs. TermsFounders should be cautious about overindexing on headline valuation. While headline valuation is important, the terms of the deal, such as liquidation preferences and rights, can significantly impact the true value of the investment.
Founders should negotiate favorable terms to protect their economic interests and future funding opportunities. For instance, if investors have a heavy liquidity preference for a $200M pre-money valuation, the high value is meaningless.
Capital Stack CleanlinessThe complexity of a company’s capital stack can affect future funding rounds. Founders should aim to keep their capital structure as clean as possible to facilitate smoother negotiations with new investors.
If investors enter a messy capital stack, they will want certain rights and preferences, which just makes it more complex and results in attempts to snowball round to round.
Maintaining ControlFounders should think proactively about ways to retain control over their business. Implementing mechanisms like super-voting rights early on can help preserve control as the company grows and raises additional capital, even if the founders don’t have a majority.
Ensuring 10x voting rights for common shares in the incorporation documents is always advisable. Most seed investors don’t care about that because they’re essentially investing in the founder and not in the business.
Once voting rights are secure, if the business is doing well and things continue to progress, most investors aren’t going to eliminate voting rights to finalize the deal.
Vision for the Future Business LandscapeStephen foresees a future business landscape with much higher leadership mobility in organizations.
People who enter organizations should feel like they have a real path to leadership, regardless of their background, whether they went to an elite school, whether they’re in the right networks, whether they’re male or female, what their race is, and all the different axes of diversity.
People should have the opportunity to advance in organizations because high-quality leadership development is available to them at scale, a benefit that every leader comes to expect and has access to. This evolution is the opposite of what leadership development has been traditionally.
Traditionally, only a handful of people are selected because they’re seen as high potential. Then, 95% of people who aren’t categorized that way have to fend for themselves.
This creates self-fulfilling prophecies that they aren’t good for companies because they tend to have thinner leadership benches than they need in a world of significant change. It obviously has a huge impact on the careers of really talented folk.
With a little support, these professionals could advance and accelerate to increasingly higher levels of leadership. However, they are often trapped and hit glass ceilings because they don’t have access to the development they need to push their careers forward.
Leadership in a Post-COVID WorldThe COVID-19 pandemic has accelerated changes in leadership and organizational dynamics.
Leaders now face the challenge of adapting to hybrid work environments and making agile decisions in a rapidly changing world–changes that arise from conditions like COVID-19, global wars, and economic uncertainty.
ExecOnline’s focus on providing leadership development resources online has proven essential in this new landscape. The COVID highlighted that success is increasingly determined by the ability to learn fast in the pace of change.
Stephen has also noted the need for leaders to be able to communicate and align through different hybrid environments than they’re used to in the past. Formerly, leaders could do everything in person since they had their teams around them and could run international businesses.
Although leaders did work virtually, most had the luxury of being co-located with the teams they managed. However, the world is now a hybrid where teams are virtual and in-person, which necessitates different communication approaches.
Leaders must figure out how to lead a team that’s co-located rather than a team that’s brought together all over the world, making communication the key piece.
Stephen also stresses the importance of the ability to make complex strategic decisions effectively, particularly when so many shifts have been occurring in the world. His vision for a learning economy underscores the importance of continuous learning and adaptability.
In Stephen’s opinion. a decade of progress occurred in that one to two year period with COVID. This has resulted in taking the market from an in-person leadership development market to what is now primarily an online and hybrid leadership development market.
The Art of EntrepreneurshipReflecting on his journey, Stephen likens entrepreneurship to whitewater rafting—knowing the destination but navigating through unpredictable currents. His experiences highlight the importance of having a clear vision while remaining agile and open to change.
Stephen’s story is an inspiring example of how skills from one field can translate into success in another.
His transition from law to entrepreneurship, coupled with his insights into leadership and funding, offers valuable lessons for anyone looking to make a significant career shift or lead a startup to success.
Listen to the full podcast episode to know more, including:
- Shifting from law to entrepreneurship can leverage skills like structured thinking and rigorous problem-solving.
- Early-stage investors bet on the founder’s potential and adaptability, not just the idea.
- Headline valuations matter, but investor rights and preferences can significantly affect your true value.
- Keeping investment rounds simple and transparent facilitates smoother future funding.
- Implementing founder-friendly provisions, like super-voting rights early on, helps retain control in later funding rounds.
- The pace of change demands continuous learning and adaptation in leadership capabilities, accelerated by recent global events.
- Successful entrepreneurship combines a clear vision with the agility to navigate unexpected challenges.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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The post He Raised Over $110 Million To Create An Online Platform To Train A Diverse Pool Of Future-Ready Leaders appeared first on Alejandro Cremades.
In the dynamic world of tech entrepreneurship and venture capital, few stories capture the essence of resilience, innovation, and determination quite like that of Zal Bilimoria. From his humble beginnings in Indiana to his pivotal roles at tech giants and eventually carving his path as a solo venture capitalist, Zal’s journey is as inspiring as it is instructive.
In this exclusive interview, he talks about his experiences working at Netflix, Microsoft, Google, and LinkedIn and becoming a partner at Andreessen Horowitz. Eventually, Zal started Refactor Capital, which has an AUM of $225M.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Beginnings and Entrepreneurial SpiritBorn and raised in Northwest Indiana, one hour from Chicago, to immigrant parents from India, Zal’s childhood was steeped in technology and entrepreneurship. His father’s background as a metallurgical engineer at a steel company provided a stable backdrop.
The family’s side computer business ignited Zal’s passion for technology from a tender age. Building and selling computers from their basement, servicing doctor’s offices, local libraries, and the entire school system in their area,
Zal was immersed in hardware, software, and coding—a foundation that would shape his future career.
Zal’s father’s entrepreneurial spirit had a huge impact on him. He recalls how his father started three companies, two of which were small storefronts. After his “retirement,” he started two more, bringing the total up to five.
From Corporate Employee to Product VisionaryZal’s academic journey led him to the Wharton School at the University of Pennsylvania, where he was driven by his aspirations to follow in his father’s entrepreneurial footsteps.
However, his path diverged from traditional entrepreneurial ventures initially when internships in banking and consulting left him dissatisfied.
Fortune smiled upon him when Microsoft recruited him as a product manager, launching a decade-long career that included pivotal roles at Google, Netflix, and LinkedIn.
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Product Management and Innovation at Tech GiantsAt each company—Microsoft, Google, and Netflix—Zal honed his skills in product management, a role he describes as akin to being a “mini CEO” within the product development ecosystem. PMs help sort of steer the ship and set the strategy, prioritization, and execution for a particular product.
As Zal explains, product managers are responsible for working with engineers, designers, and both internal and external parties, like the sales team, user research groups, and marketing teams.
Their objective is to build and launch new products and iterate upon them to improve efficiency and core metrics.
Zal also recalls working at Google and YouTube, where his role was relatively balanced with that of engineers. He got to see how different organizations thought about product development and execution and their specific strategies for launching successful products.
Zal’s tenure at Netflix, in particular, was marked by the successful overhaul of their iPad app—a project that significantly boosted user engagement and retention, highlighting his knack for combining technical expertise with commercial acumen.
Back in 2011, Netflix was only available in the US, so Zal and his team did a focus group in Mexico, where they showed users three very different iterations of mockups of what the iPad app could look like. That’s how they picked the most mobile-responsive version.
Users could flick through the various rows and the titles and get an immersive experience. As the PM, Zal’s job was to ensure retention and streaming hours so customers would continue to pay the $10 monthly subscription.
Building Sniply
Zal reveals how he spent 2007 to 2010 at Google surrounded by entities like Kevin Systrom from Instagram, Dan Siroker and Pete Kooman from Optimizely, and Ben Silberman from Pinterest. Building his company, Sniply seemed like the obvious next step.
Zal brought in his friend from Microsoft and his lead engineer from YouTube to rebuild the Google RSS reader, which had been shut down. Around that time, Twitter was gaining traction, and Zal and his co-founders thought of using Twitter as a distribution engine to get news out there in snippets.
They called it Sniply because the objective was to distribute snippets of news to an audience that didn’t read long-form articles. Sniply would snip certain quotes and content within a piece of an article or a piece of content. so that people can actually see what’s going on in those write-ups.
Getting distribution was extremely challenging since Twitter was already using the concept. The platform was built to allow users to write 140 words, create their own snippets, and post them. Zal and his co-founders were able to build a mobile-friendly version and even had a $2M funding offer.
However, recognizing the hurdles as unsurmountable, they turned down the offer and shut down the company to return to their corporate jobs.
Transition to Venture Capital at a16zZal’s transition to venture capital was catalyzed by an unexpected cold email from Andreessen Horowitz, a testament to his reputation as a seasoned product manager and founder.
After joining a16z’s investment team, Zal realized that they had been recruiting top professionals, most of whom had a product management background.
a16z was growing quickly and, at the time, had around 50 people. Today, the team is 500-strong. Zal quickly delved into startup evaluations and investments, leveraging his deep understanding of product development and market dynamics.
Lessons from a16z and BeyondAt a16z, Zal learned firsthand the intricacies of venture capital, from conducting rigorous due diligence to nurturing relationships with founders. They would spend mornings listening to founder pitches and then work out which proposals to accept after lunch.
Zal remembers marathon days because the investment team was just going through teams, technologies, ideas, and markets. At the same time, it was intellectually stimulating, and during those years, Zal realized he wanted to be an investor for the rest of his career.
The firm’s structured approach, including unique practices like Net Promoter Scores for founders, shaped Zal’s philosophy on investing and founder relationships. All founders who pitched a16z, regardless of whether they received investment from the firm or not, would receive an email from them.
The email had just one question–How likely are you to recommend a16z based on your interaction with Zal one to 10? The investment team was scored, and all their numbers were published internally.
Zal recalls how they had to make sure that the founders really liked their meetings with the partners, even though they passed on most founders. However, the fact remains that Andreessen Horowitz has successfully built an infrastructure and attained the top position in the VC world.
These companies are now at the same tier that Sequoia Capital and Kleiner Perkins were for decades before they were even in the picture. When Zal joined them, it was one monolithic, $1.5B-dollar fund, supporting seed to growth in niches like crypto, health care, SaaS, and consumer.
The entire team managed all the different sectors and stages, from seed to growth round series D, etc. At a time when funds did not have operating teams, a16z had an executive talent team, technical talent team, marketing team, corporate development team, and market development team.
Zal talks about how a16z had an EBC, the Executive Briefing Center, where Fortune 500 companies would come into its offices and want to meet five or ten different startups during a day.
Essentially, it was a matchmaking service for enterprises and startups to come together so that the startups had an opportunity to sell their products to these Fortune 500 companies. That still has been one of the firm’s most significant assets.
Unlike Sequoia, Benchmark, and other VCs, a16z had this entire operating apparatus that could help companies succeed.
The Journey as a Solo Capitalist–Starting Refactor CapitalAs Zal explains, the average tenure at the firm for an investment partner is a few years. a16z is open to assisting people in starting their own investor firms.
After a successful stint at a16z, Zal embarked on a solo venture capitalist journey, founding his firm focused on the intersection of biology, healthcare, and technology.
Zal connected with an old friend, David Lee, from SV Angel, and started a $50M fund to support startups.
He wanted to create a concentrated portfolio of 20 to 25 companies in every fund and put all his effort into making those companies successful. He was also able to successfully fundraise a total of four funds within a short time.
Storytelling is everything that Zal Bilimoria was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!With over $225M AUM across multiple funds, Zal’s approach emphasizes deep engagement with early-stage founders. It eschews the traditional large team structure in favor of a more personal, hands-on approach.
Although Zal had the option to hire a management team, he also realized that it would involve raising a larger fund to cover the salaries and fees. In turn, it would become harder to create fund returners and get a multiple from that.
Zal explains that his current fund size is $50M after launching his firm eight and a half years ago. He has invested via four funds in over 100 companies now. As with the new trend of solo capitalists, there is no need for extensive infrastructure and significant upfront costs.
Zal believes that barring a few exceptions, the smaller the fund, the faster you can carry it to profits. He prefers to spend time at the seed stage instead of Series A and Series B investments.
He likes to be involved in the initial stage of a couple of founders and a couple of employees getting a product off the ground and making their first sales.
If Zal invests in the Series A and Series B rounds, it will be from his reserve checks. He focuses on startups that attract customers, talent, and investors. Having met thousands of founders over the last 10 years, he can make that decision and make that leap on his own.
Zal prefers to rely on his gut instead of getting overburdened with technical and market diligence. However, he does make sure that the product has a chance to be real and scalable. He also ensures that the founder is not misreporting a particular metric or opportunity.
Navigating Market Shifts and Future TrendsReflecting on market dynamics post-COVID-19, Zal discusses the challenges and opportunities in venture capital, noting the shift in fundraising and investment strategies amidst economic uncertainties.
As Zal noted, 2022 and most of 2023 saw a lot of downward pressure, and funds weren’t feeling as flush and as liquid as in 2021 when Jerome Powell was flooding the market with QE, quantitative easing capital.
QE created obviously not only inflation but also a lot of jobs and opportunities post-COVID.
At the time, people were looking for liquidity from any source they could, including public investment or public stock. Private companies and VC-funded companies suffered a setback but have started to recover in the last six months.
Vision for the FutureZal foresees a focus on areas like biotech, climate tech, anything deep tech, and IP-centric. When evaluating startups, he makes sure the founders understand their company’s commercialization and distribution models.
Zal is excited to work with smart entrepreneurs fresh out of university or spun out from other companies. If they find a really new and novel way to leverage an old technology in a new and different application, they’ll get support from Refactor.
Conclusion: A Visionary in Tech and VCZal Bilimoria’s journey from a small-town entrepreneur to a respected solo capitalist mirrors the rapid evolution of the tech industry itself. His story is a testament to the power of perseverance, innovation, and strategic vision in navigating the complex and competitive world of technology and venture capital.
Listen to the full podcast episode to know more, including:
- Zal’s upbringing in Indiana, immersed in his father’s multiple ventures, laid the foundation for his entrepreneurial journey from a young age.
- His tenure at tech giants like Microsoft, Google, and Netflix provided deep insights into product management, influencing his approach as an investor.
- Leading the redesign of Netflix’s iPad app underscored the impact of user-centric design and metrics-driven decision-making in product development.
- Transitioning from Netflix to becoming a partner at Andreessen Horowitz highlighted his pivot into venture capital, where his product background became invaluable.
- Zal’s approach at a16z emphasized treating founders with respect and professionalism, which is evident in their Net Promoter Score system for interactions.
- Embracing the solo capitalist model allowed Zal to focus on early-stage investments, leveraging his expertise in identifying visionary founders and nurturing startups.
- Reflecting on recent market shifts, Zal highlighted challenges in fundraising post-COVID, emphasizing the importance of adaptability in venture capital.
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Arturo Elizondo, a founder with a remarkable story, has built a transformative company that addresses a critical global issue. Growing up on the Texas-Mexico border, he witnessed stark income disparities and developed a deep awareness of the broader world.
This early exposure shaped Arturo’s perspective and fueled his drive to impact society significantly. His journey from Harvard to founding a groundbreaking food technology company is a testament to his dedication and vision.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and AwarenessArturo grew up as one of six kids in a Mexican-American household on both sides of the Texas-Mexico border. Like all Texans, the family had a barbecue every Sunday and two extra breakfasts every morning.
At the time, he never really thought about where the food came from. That would come later.
Arturo’s unique upbringing exposed him to the highest income disparity between any two countries in the world, fostering a keen awareness of socio-economic inequalities.
Arturo has vivid memories of crossing the border with his father and seeing children his age selling gum on the streets without shoes.
These experiences instilled in him a sense of responsibility to improve the lives of those less fortunate. He wanted to improve the lot of others who weren’t as lucky and didn’t win the lottery of life.
Education and Initial Career AspirationsDriven by a desire to create large-scale impact, Arturo pursued a degree in government at Harvard University, envisioning a future in public service. He believed that by changing laws, he could positively affect millions of lives.
Arturo’s dream was to work at the UN or become a senator or a congressman. And change laws to help as many people and as many beings as possible. However, his exposure to the realities of the food system during his time at Harvard began to shift his focus.
A factory farming video he saw at 16 profoundly impacted him, revealing the harsh realities of animal protein production.
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Realization and Shift in FocusThe video depicted workers in a factory farm treating animals inhumanely, leading Arturo to question the ethics and sustainability of the current food system. As he delved deeper into research, he discovered alarming statistics about the environmental and health impacts of animal agriculture.
Looking at the statistics, Arturo found that over a million animals are slaughtered every single hour, just in the US, to feed less than 5% of the world population. He also saw that animal protein is produced at scale today since it is the most efficient way of feeding people.
The detrimental effects of animal protein production, from deforestation to freshwater pollution, were staggering. This newfound knowledge ignited Arturo’s passion for finding a solution. He started to see the problem from many angles, not only the government’s.
He also did a bunch of internships, for example, in banking. That’s when he decided he was ready to take action. He wanted to do scale, achieve impact for that scale, and do good for the world.
He kept doing research and interned at the U.S. Department of Agriculture. He also went to the United Nations and researched global food security.
Alarming Information About the Food SystemThe more Arturo learned about the food system, the more it blew his mind. He came across one crazy statistic after another, realizing that he had no idea that animal agriculture and animal protein production are the number one cause of deforestation on Earth and the number one cause of extinction on the planet.
Arturo continued to find alarming facts. Three out of every four emerging infectious diseases, like COVID and SARS, are zoonotic. They’re traced back to animals in relation to the natural world.
The number one animal protein production is the number one cause of freshwater pollution because of the waste runoff from these factory farms. Our diet is very rich in animal protein and fat.
However, animal fat and animal processed meat are the level one carcinogen right up there with asbestos and cigarettes as reported by the World Health Organization.
Arturo also discovered antibiotic resistance, 70% of the antibiotics in the world today are fed to animals, not to humans. The more he learned, the more shocked he became and more angry.
Arturo started to think about why no one was talking about this and that more people should be focusing on this issue. When studying global food security, he came across different technologies and realized that there are ways to solve the problem.
Although Arturo could go vegan or vegetarian, the problem was huge in terms of scale and utterly neglected. He realized that there was no better way for him to spend his time on Earth than to tackle this problem.
The Leap to San FranciscoArturo graduated from Harvard in 2014 and went to DC. He interned for Justice Sotomayor at the Supreme Court, where his initial objective was to stay in the government.
He wanted to find solutions to the food problem but realized that he didn’t have any expertise in biotechnology or food technology. Nor did he have any real skills.
Then, Arturo faced a pivotal moment in his career. He received a job offer to join the Obama administration as a political appointee but was advised by a mentor from Credit Suisse to follow his passion for food technology instead.
Overcoming his fear of the unknown, Arturo decided to give himself six months to explore opportunities in San Francisco. He was well aware of his lack of experience with startups and venture capital.
With no job or place to stay, Arturo networked tirelessly, emailing and grabbing coffee with impact investors, thinking that if he joined venture capital, he could do something to learn about the space and build his skill sets for a startup.
Arturo remembers meeting another guy who wanted to start a food tech company and attending a food tech conference that would change his life.
Founding The EVERY CompanyAt the conference, Arturo met Dave Anchel, a molecular biologist with a vision to create animal proteins without animals using biotechnology. This idea aligned perfectly with Arturo’s mission to revolutionize the food system.
Together, they developed a business plan and founded a company with the core idea of using fermentation technology, commonly employed in pharmaceuticals, to produce animal proteins for food.
The goal was to offer a sustainable and efficient alternative to traditional animal protein production. That was the genesis of The EVERY Company. Arturo and Dave wanted to democratize access to this technology and optimize it so that they could make other kinds of animal proteins at scale and cost levels.
Then, they could start selling to the world’s biggest food companies, which use billions of dollars worth of animal proteins as ingredients.
Building and Scaling the BusinessThe company started with $50K in cash and three months of lab space through the IndieBio biotech accelerator program. Their business model involved producing animal proteins using yeast fermentation and selling them to major food companies.
This approach promised a more sustainable and consistent supply of animal proteins, addressing significant pain points in the food industry. Over eight years, the company raised over $240M in capital, focusing on developing core technology and securing regulatory approvals.
Storytelling is everything that Arturo Elizondo was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Arturo and Dave simply replaced animals using much more efficient protein factories and animals like microorganisms. That’s how they could really make a difference in decarbonizing our food system and also working with the world’s biggest food companies to make them more sustainable.
They achieved significant milestones, such as getting their products featured in prestigious establishments like 11 Madison Park and receiving positive reviews from influential food critics like Florence Fabricant of the New York Times.
These successes validated their vision and demonstrated the viability of their technology.
Overcoming Challenges and Maintaining VisionArturo points to the many challenges they faced when accessing funding for the company. They spent the initial six years developing the core technology. Further, they didn’t have the same metrics that software companies have and were much more capital-intensive before seeing revenues.
Investors were confused because The EVERY Company was not a software or pharma company, but something in between. This factor made it challenging to sell their vision. Arturo and Dave had to explain in detail the problem, the scope of the opportunity, and how it could work.
They also had to find ways to de-risk the technology and make a lot of technological progress to get yeast to make animal protein more efficiently than the animal. Next, they had to sell to big food companies and share their ideas with them.
Fortunately, many big food companies are trying to get rid of those ingredients because the pain points are too high. Arturo and Dave were able to prove themselves and get regulatory approvals for their products.
Arturo acknowledges the personal growth he underwent as a leader. He started the company at 22 and evolved alongside it. The journey was marked by continuous learning and small but significant victories that reinforced his conviction.
Despite the challenges, Arturo’s unwavering belief in the technology and its potential impact kept him and his team motivated. Even though it’s been a tough road, he is proud of their achievements. Their products have been approved by the FDA and are appreciated by winemakers and restaurants.
Arturo is confident that they have the technology and that it can scale and work. All that remains is having enough time, capital, and resources to take the company to domination.
Vision for the FutureArturo envisions a world where factory farms are replaced by sustainable protein production methods using biotechnology. His goal is to create a food system where people can enjoy their food without ethical or environmental concerns. He also wants to make protein from breweries instead of factory farms.
By democratizing access to fermentation technology, Arturo aims to decarbonize the food system and make it more sustainable.
He sees a future world where factory farms are not used to make food and where we don’t have to stack animals on top of each other and have them suffer.
ConclusionArturo Elizondo’s journey from the Texas-Mexico border to founding a pioneering biotech company is a testament to his dedication to making a positive impact. His story highlights the importance of addressing critical global issues through innovation and technology.
As his company continues to grow and scale, Arturo’s vision of a more sustainable and ethical food system moves closer to reality, offering hope for a better future.
Listen to the full podcast episode to know more, including:
- Arturo Elizondo grew up on both sides of the Texas-Mexico border, instilling in him an awareness of global disparities and a passion for making a positive impact.
- Witnessing factory farming cruelty at 16 sparked Arturo’s interest in transforming the food system to reduce reliance on animal proteins.
- Despite initial ambitions in government, Arturo shifted focus to food tech after realizing its potential for large-scale impact on global food security.
- Arturo’s journey to San Francisco was driven by a desire to tackle food production issues despite his initial lack of experience in startups and biotechnology.
- Arturo co-founded The EVERY Company, leveraging biotechnology to produce animal proteins without animals, securing over $240 million in funding.
- The company’s mission is to create sustainable, animal-free proteins for the food industry, reducing environmental impact and improving food security.
- Arturo’s perseverance and growth as a leader are fueled by his belief in technology and its potential to revolutionize the food system.
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Your email address is 100% safe from spam!The post He Raised $240 Million To Develop Biotechnology To Produce Animal Protein Sustainably appeared first on Alejandro Cremades.
Qin En Looi is an inspiring founder turned investor with a remarkable journey, full of unexpected turns, and packed with insights on transitioning from founding a successful startup to becoming a venture capitalist.
In this conversation, we delved into Qin En’s early life, the founding and growth of his company, Glints, and his transition to venture capital, shedding light on the realities and challenges of each phase.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life in SingaporeQin En was born and raised in Singapore, a place he fondly remembers as fostering a rigorous academic environment. Growing up with “tiger parents,” both educators, instilled in him the importance of academics.
His father, a university professor, and his mother, a middle school Mandarin teacher, emphasized the need for academic excellence. This upbringing shaped the first 18 years of his life, leading him to pursue opportunities beyond the borders of Singapore.
The Leap to Stanford and Military ServiceSingapore’s meritocratic scholarship program enabled Qin En to attend Stanford University. However, before he could embark on this academic journey, he had to complete two years of mandatory military service.
During this time, the seeds of entrepreneurship were sown. Along with two friends, Qin En started what began as a side project and eventually blossomed into Glints, a Series D company that has raised more than US$80M.
Founding GlintsGlints began out of a sense of frustration during military service. Qin En and his friends sought mental challenges, leading them to startup internships.
Realizing a broader need, they began connecting fellow peers with startups, thus creating a platform that served both small startups and eager young interns.
Interestingly, the name Glints is a mashup of “global internships,” reflecting its origins. At the time, Qin En and his friends had full-ride scholarships and were ready to go to top colleges in the US such as Stanford, UC Berkeley, and Wharton.
Despite initial intentions to keep it as a project, a serendipitous meeting with an angel investor provided the funding needed to turn Glints into a full-fledged business. The first challenge? Incorporating the company—something Qin En and his co-founders had no prior experience with.
Growth and Business Model EvolutionGlints’ business model went through several pivots. Initially focused on product-led growth and self-serve SaaS, they discovered this approach didn’t resonate well in the Southeast Asian market.
The hypothesis – which turned out false – was that an employer would pick up a credit card, key in their information, and start paying a few hundred bucks a month for Glints’ products.
Glints’ biggest challenge was distributing the product. As Qin En opines, the product-led business model was better suited for more mature Western markets like the US and Europe, where SaaS is a lot more common.
He realized they needed a more sell-in approach to build distribution, sales, and marketing channels actively. The breakthrough came when they shifted to a service model, filling job vacancies for companies and charging a contingency fee.
This model proved more effective, reflecting the market’s preference for hands-on services over self-serve platforms. It also became the primary revenue source. Today, Glints is one of the largest recruitment platforms in Southeast Asia and has offices all across the region.
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The Challenges of FundraisingFundraising for Glints was an arduous journey. Qin En described it as a series of false starts, cold emails, and endless pitches. Despite the initial narrative-driven investment, focusing on the founders’ stories and background, convincing investors remained challenging.
Not only were Qin En and his co-founders early in the ecosystem, but they were also among the first in Southeast Asia to raise venture capital at such a young age.
However, persistence paid off as they eventually secured investors who believed in their vision and helped refine their pitch and business strategy. Qin En remembers how their investor coached them on pitch decks, data rooms, and financial forecasts.
As Qin En explains, recruitment may not be a 100x-overnight business, but it is one of the things that companies need on an ongoing basis. They tend to expand their hiring needs in bull markets, so volumes increase.
Even during downturns, people need to find opportunities. That’s what makes the business resilient against macroeconomic conditions.
Turning Points and Lessons LearnedA significant turning point for Glints was expanding into Indonesia, Southeast Asia’s largest economy. Qin En and his co-founders had started out in Singapore, but they quickly realized that it was a small, saturated market.
The move to the largest economy in Southeast Asia, with 230 million people, unlocked substantial growth potential and solidified its market position. However, not all moments were triumphant.
Internal disagreements among co-founders about the company’s direction led Qin En to step down. Though painful, this experience taught him invaluable lessons about collaboration and leadership. In retrospect, Qin En concedes that he could have been less individualistic and more collaborative and open.
In his opinion, co-founder arrangements, structures, and their relationship with one another are crucial. When presented with the opportunity to raise funding, entrepreneurs tend to grab the offer.
However, it is more important for them to get to know their co-founders and ensure they have the right chemistry. That’s a factor Qin En takes into consideration now that he is on the opposite side of the table as an investor.
Transition to Venture CapitalAfter leaving Glints, Qin En joined BCG Digital Ventures, working with Fortune 500 companies and gaining experience in the corporate world. BCG Digital Ventures was a great place for him to leverage his founder experience and apply it in a corporate setting.
At that point, the bull market was in its 2019 to 2021 uptrend, and plenty of corporations were hungry to build ventures. Going from the zero-to-one process was an interesting experience.
A connection unexpectedly presented the opportunity to transition to venture capital. Skeptical at first, Qin En was pleasantly surprised by Saison Capital, a Japanese corporate venture capital fund’s agility and founder focus.
Qin En recalls being hesitant at first because of the misconceptions formed during his days at Glints. CVCs are generally known to be slow and bureaucratic and forge partnerships with the parent company before the startup is ready.
One of the first questions he asked at his interviews was whether it took six months to write a $100K check. Delays like these mean that being non-competitive as an early stage investor to entrepreneurs, a lesson Qin En had learned well during his time as a founder.
Eventually, however, he was convinced that the fund would be a great platform for him to come back into the ecosystem and support and partner with founders, especially at the pre-seed and seed stages.
Investing with Saison CapitalAt Saison Capital, Qin En also set up a Web3 and digital assets early-stage venture fund, diving deep into the world of decentralized finance (DeFi), NFTs, and real-world assets (RWA). He aims to be the investor he never had, offering not just capital but mentorship and support.
As Qin En explains, Saison Capital’s parent company is Credit Saison, the second largest credit card company in Japan. Around 10 years ago, the company expanded into emerging markets like India, Southeast Asia, and, most recently, Latin America on the debt and equity front.
On the equity front, this fund was established in 2019 to make early-stage and seed investments.
Storytelling is everything that Qin En Looi was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Insights on the Venture Capital LandscapeQin En shared insightful observations about the venture capital landscape. He noted a common misalignment between large fund managers and actual performance, challenging the notion that bigger funds always yield better returns.
Qin En’s experience reviewing hundreds of funds worldwide revealed that brand and size do not necessarily correlate with success. Saison Capital is unique because it makes both direct investments and fund-of-fund investments.
To date, they have reviewed more than 300 funds, Web2 and Web3, worldwide. Saison Capital has invested in 15 funds globally and has a couple more in the pipeline. At the same time, getting returns is challenging.
For fund managers who raise outsized funds, especially in Southeast Asia, it is challenging to deliver returns to limited partners. As Qin En explains, a fund raising more than $500M in Southeast Asia will probably need at least eight or ten unicorns to return that fund.
Smaller fund managers instead are motivated to optimize for exits in order to earn carry, and interests are aligned with LPs.
Advice for Aspiring EntrepreneursFor aspiring entrepreneurs, Qin En emphasizes the importance of carefully choosing co-founders and ensuring a strong, collaborative relationship before taking on funding. He compares the co-founder relationship to a marriage, underscoring the need for mutual understanding and alignment.
Qin En also opines that one of the myths is that a great product should sell for itself. The first lesson for any founder to learn is to be able to sell their product. He recalls making the effort to learn cold calling in spite of the fear of rejection. Conclusion
Qin En Looi’s journey from a young entrepreneur in Singapore to a seasoned investor offers a wealth of lessons for anyone navigating the startup and venture capital worlds. His story underscores the importance of resilience, adaptability, and the value of supportive partnerships.
As he continues to support the next generation of founders, Qin En remains a testament to the power of perseverance and the impact of thoughtful mentorship.
Listen to the full podcast episode to know more, including:
- Qin En Looi, born and raised in Singapore, began his journey under strict academic expectations.
- At 18, he co-founded Glints during his military service, transforming it into a leading recruitment platform in Southeast Asia.
- Glints’ initial success was driven by its ability to connect startups with young, eager interns during Singapore’s nascent startup scene.
- A pivotal moment for Glints was shifting from self-serve SaaS to a service-based recruitment model, significantly boosting revenue.
- Despite early struggles with fundraising, mentorship from strategic investors helped shape Glints’ growth and narrative.
- Qin En Looi transitioned to Boston Consulting Group to build ventures for large corporations before moving into venture capital.
- As an investor with Saison Capital, he leverages his entrepreneurial experiences to support and guide early-stage startups, particularly in emerging markets.
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Your email address is 100% safe from spam!The post He Co-Founded One Of Southeast Asia’s Largest Recruitment Platforms And Now Co-Leads A $150 Million AUM Fund To Support Startups appeared first on Alejandro Cremades.
Looking to identify and acquire a viable business? Finding the right option that is sure to bring you returns is a time-consuming and challenging task. When you start to search around, you’ll come across any number of options. But not all of them are viable.
Expert M&A advisors suggest a different approach. Instead of scouting around the market looking for suitable businesses to acquire, you’ll put together a checklist of must-have fundamentals. The next step would be to identify options that fit your criteria.
Stepping into the market with a well-planned tactical approach will raise your chances of success. For instance, the company’s life could be a good indicator. As a rule, close to 20% of startups fold within the first year. Another 45% won’t make it beyond their fifth year.
At least 65% will close their doors within 10 years. And, an astonishing 75% will go under in the first 15 years. You can safely assume that the longer the company has been running successfully, the higher its chances of survival.
Of course, age isn’t the only benchmark you’ll use when searching for the right company to purchase. Read ahead to understand how to navigate the process.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks How to Identify and Acquire a Viable Business? Outline Your GoalsBefore searching for companies to acquire, you’ll outline the objectives behind the call. What are your end goals?
- Is your decision driven by a preference to run and scale an established business instead of building one from the ground up? Do you want to build on a proven concept?
- Do you intend to stabilize a distressed business and sell it for a profit?
- Are you looking to build a passive income stream by investing in a profitable company?
- Do you expect to invest more money into scaling the company?
- What is your expected timeline for holding the investment before liquidating it?
- Do you have the necessary skill sets or any industry-specific expertise? Or, do you intend to retain consultants to help you run the company?
- Do you intend to play an active role in managing the company? Or, will the seller stay on as a managing consultant?
- Is your targeted acquisition within the same industry or are you looking at vertical or horizontal options?
Having established your mission, you can move on to the next steps. For instance, seasoned founders who have built and exited companies may have extensive knowledge and expertise within a particular vertical.
In that case, it would make sense to select a company from the pool of options within that vertical.
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Estimate the Funding You’ll NeedYour objectives and goals often go hand-in-hand with the acquisition budget. Many entrepreneurs are ready to sink the money they earned from a successful exit into a new venture. Others have running companies but want to diversify and expand. If this is you, finance should be next on your to-do list.
Work out how much personal funding you’ll invest and the financing you’ll raise from partners and external investors. Once you have an estimated budget in mind, you’ll retain the services of an expert M&A advisor. This professional can help you to identify and acquire a viable business.
They will also assist you through the entire acquisition process, drawing up the necessary paperwork, and other legal nuances. Your budget will also determine the type of business you intend to acquire.
- eCommerce business
- Competing brand
- Operating within local, statewide, or global markets
- Manufacturing unit
- Consultancy service
- Retail trading outlets or chain
- Distribution and logistics network
- Franchise or independent company
Building a New Company Or Purchasing an Existing Company–The Better OptionPurchasing an established company does come with its advantages. You can conduct the necessary due diligence to test its viability. For instance, examining the financials, its customer base, churn rate, sales, revenues, profits, brand value, market share, and market presence.
You’ll also screen its product portfolio, supply chains, inventory, suppliers and vendors, and network of distributors. A fully operational company that is generating revenues and profits ensures minimal risk for buyers.
However, you can also expect to pay premium prices for it. Your focus should be on discovering why the seller is ready for an exit. Scouring macroeconomic conditions for downtrends is a smart move. Be ready to navigate the pitfalls and challenges that the company will bring.
At this point, you should also assess the target’s prospects. Are the products innovative and saleable? Or are they likely to become redundant within the near future? Is the company’s core concept disruptive and unique or is competition for the niche products high?
You’ll also prep for the integration process and achieving synergies, particularly if you intend to merge it with your company. All of these tasks will require pre-purchase investment since you’ll retain a team of experts to evaluate the candidate. And, do the due diligence. Work the costs into your budget.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Research Business Marketplaces Within Your Targeted SphereBy now you’ll have a fair overview of your mission from the acquisition, budget, and type of business to purchase. Start looking for potential opportunities by searching online listings on business-for-sale websites. Target industry-specific and business brokerage websites as a starting point.
But, if your objective is strategic alliances, search satellite industries to achieve operational and cost synergies. Most online business listings cover a broad range of businesses from different industries, niches, models, and locations. You can also look for small startups to mid-sized companies.
Expect to invest time and sweat equity before you build a list of potential businesses to acquire.
Leverage Your Network for AssistanceAs a seasoned entrepreneur, you probably have an extensive network of contacts within the industry where you work. You can also leverage your M&A advisor’s network to identify and acquire a viable business. These professionals connect with other advisors and colleagues and can help.
They are also in contact with entities looking to make a profitable exit and can provide you with the necessary database and resources. Many business owners looking to retire or pursue a fresh concept are willing to delegate their companies to capable hands.
You can connect with these entities at networking events or by reaching out to personal connections. Make your intentions to acquire a company known, and you might just connect with a seller confident of your capabilities. Or, you may gain leads that you can tap for a viable investment.
Personal relationships help build trust and rapport between dealmakers leading to successful M&A mergers and transactions.
Screen Potential Opportunities CarefullyPutting together the list of potential opportunities is just the initial stage. The real hard work starts when you must assess them for suitability.
Compile a Team of ProfessionalsTo conduct due diligence, you’ll put together a team of experienced professionals headed by your M&A advisor. You’ll need accountants to evaluate the target company’s financials and look for hidden pitfalls. Typically, financials going back at least three years are under scrutiny.
You’ll also need an expert attorney specializing in mergers and acquisitions who can draft the deeds and agreements. The lawyer will work with your M&A advisor and assist at the negotiating table. Their job is to ensure that the buyer’s interests are taken care of.
Keep in mind that drafting legal documents like merger agreements, asset purchase agreements, shareholder agreements, and other paperwork needs precision. You’ll want to ensure compliance with local, state, and federal regulations.
You’ll also need legal assistance to ensure compliance with anti-trust laws and ESG regulations. Not identifying any critical issues can lead to serious consequences after the acquisition. Your attorneys will also make sure that the different purchase clauses prevent future disputes and lawsuits.
An accredited financial advisor is another must-have on your team. You’ll need their assistance to examine every aspect of the target’s financials for discrepancies with, say, tax obligations and reporting. Also, understand its cap table, accounts receivables, accounts payables, P&L statements, and balance sheet.
Examining employee compensation packages should be high on your list of priorities. You’ll look into the option pools, benefits, wages, retirement, pension plans, and other payment structures.
If you’re purchasing a cross-border company, you’ll also pay attention to local labor laws that may legally impede the transaction. Aside from helping you to identify and acquire a business, the team will assess for potential synergies, profitability, and integration.
You’ll need their assistance to ensure that the target company aligns with your business goals. And, is a good fit for your business model.
Run a Meticulous Due Diligence ProcessPurchasing a business is a significant endeavor that requires a substantial investment of finance and resources. Rushing through the process invariably leads to overlooking pitfalls that can later result in losses or an unsuccessful acquisition.
Understandably, evaluating multiple candidates before you pick a suitable partner is expensive and challenging. But, it’s preferable to make this investment before signing on the dotted line and closing the deal.
Ask questions like:* Why has the business come up for sale and what is the owner’s objective for the exit? What are the chances of the deal falling through before closing? * How long has the company been operational? * Are its products and services in demand? What’s the customer churn rate like? What are the customer acquisition costs? * Who are the C-Suite executives, board members, and core team members? What do their LinkedIn profiles look like? * Does the purchase price make sense? Can your budget cover the integration costs? * Will you need to hire new skill sets and talent? Do you have the budget for it? * Does the company have a robust brand value and market presence? Can you track its success record? * What do social media sites have to say about the product portfolio? * Have there been complaints against the target from employees, customers, or third parties? * Has the target been involved in lawsuits or ESG complaints? * What is the target’s culture like? What is the probability of successful cultural synergies? * What are tangible and intangible assets the target owns? Do they add value to your company? * What is the target’s primary source of revenue? Is it sustainable? * Is the company scalable? Or has it reached its peak?
Not sure how to navigate the due diligence process? Know that the process is similar whether you’re pitching to investors for funding, selling, or buying a company. Check out this video in which I have explained how it’s done.
Reach Out to the OwnerNow that you’ve completed the due diligence, you’re ready to send an offer to the seller. Up until this point, the information and data you gathered have come from external sources. However, if the owner expresses interest, they may be open to providing in-depth information about their company.
Before you can access their internal data, you’ll sign a bilateral confidentiality and non-disclosure agreement. This step secures the seller’s interests and the company’s secrets in case the deal falls through. Sellers typically prefer to not announce a potential sale until the deal closes.
With the assistance of your M&A advisor and other team members, you’ll work out details like:
- Timeline for completing the sale
- How the transition will progress
- How the transfer of assets and stock will occur and their structure
- Managing human resources, severance checks, and cultural integration
- Transferring IP ownership
- Handling inventory
- Outstanding legal and tax issues the new owner must deal with
- Assets that the new owner can use as collateral to raise funding for the purchase
- Consideration for the sale such as a combination of cash and non-cash value.
This information is only an overview and the actual purchase process is intricate and involves several nuances. Rely on your advisors to assist you through the acquisition,
Before We Sign Off!If you intend to identify and acquire a viable business, expect the process to be time-consuming. You’ll invest not only time and sweat equity but also resources and money. Due diligence is not exactly cheap and you will need to hire expert teams to guide you.
Making this investment is preferable so you are thorough with the assessment and make informed decisions. Taking your time will ensure that you avoid potential pitfalls and get rich returns from your investment.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post From Search To Success: How To Identify And Acquire A Viable Business appeared first on Alejandro Cremades.
Leveraging a business auction could be the best exit strategy that gets you top dollar value. Auctions have different dynamics from conventional sales, but they’ll ensure that you don’t walk away leaving money on the table.
Before we dive into why business auctions are a great option, understand that this strategy is suitable for mid-market companies. Market categorization is reliant on a company’s annual revenues. If it earns $5M and $50M, the company falls in the lower middle market bracket.
Companies earning $50M to $500M per year are in the midsection. Larger corporations earning from $500M to $1B and above are in the upper tier. Depending on the company’s revenues, you’ll target the appropriate category of buyers.
Also, know that a business auction works best for premier companies that are unique. For instance, boasting of a disruptive product portfolio, exceptional IP, or a top-notch skill set. Prospective buyers may want to purchase the company to access the IP or as an acquihire to take on the team.
The biggest factor that works in your favor is that the buyer is well aware of multiple contenders for the company. This factor alone can push up the prices and entice buyers to offer higher pricing.
But that’s not all. Business auctions or competitive auctions for companies have several other benefits. Let’s take a look at what they are.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks 1. Competitive Bidding is an Advantage for the Seller–Better Bargaining PowerMultiple bidders in the business auction ensure competition. When buyers know that the seller can choose from the best prices made available, they are likely to offer higher value. In a one-on-one sale, negotiations are bilateral and restricted to the two dealmakers at the table.
Your M&A advisor or investment banker will conduct a detailed survey of the market to create a buyer list. This tactical approach builds a competitive environment that maximizes your bargaining power. Typically, the number of bidders and the entities bidding for the company is confidential information.
This factor encourages them to offer a higher price than in a direct buyer-seller negotiation. The FOMO factor works well in business auctions particularly if the company has exceptional features that will bring value to the buyer.
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- Buyer Perception Adds Value to the CompanyThe company’s value is not just an aggregate of its tangible assets, financial statements, inventory, and product portfolio. Its market value is also about intangible assets such as customer loyalty, IP, goodwill, brand value, market presence, and more.
Business auctions unlock yet another asset–buyer perception or the value buyers are willing to pay based on their perceptions. Prospective buyers may base their perceptions on the potential profits and growth the company can generate in the future.
During the auction, different buyers may perceive the company as a strategic fit for collaboration and may place bids accordingly. For instance, a company subscribing to your brand’s software may be willing to pay a higher price to acquire the software.
On the other hand, another buyer may want to take over the team generating the software IP. And the potential returns they can earn. Yet another buyer may own a software company and want to purchase the company. Their objective could be a strategic collaboration to capture a bigger market share.
All three buyers have different market perceptions according to their objectives from the acquisition. The pricing structure they offer will depend on the value they hope to gain from the integration. From the seller’s perspective, you’ll choose the highest bid or one with terms that match your needs.
Ultimately, differing perceptions enhance the company’s value even further since each buyer is open to offering a higher price.
- Sellers Control the Bidding Process–Retain ConfidentialityBusiness auctions put the founders in the driving seat. You’ll structure the entire auction and work out the information you want to share with buyers. The initial outreach need not reveal in-depth details other than what buyers absolutely need to know.
One of the biggest downsides of a conventional sale is the risk of revealing company secrets to competitors. Typically, buyers operate within your industry and are looking at strategic alliances within the supply or distribution chain.
Giving up proprietary information lets buyers have the upper hand. You can avoid this situation by engaging in an auction instead. Further, you can select buyers who are actually interested and give out information only to them.
Whatever disclosures you provide are carefully controlled and delivered at different stages of the auction process. Using a virtual data room adds an extra layer of protection and secures the data making it available to a targeted group of people.
Keep in mind that in fundraising or selling your company, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!4. Business Auctions Close Within a Fixed TimelineMost importantly, you’ll structure the auction according to the timeline that works well for you. Having completed the outreach program, your M&A advisor will set a deadline for receiving bids and assessing them. Since buyers know that the seller has multiple bids, they are anxious to send offers.
Auctions also have strict milestones that dealmakers must adhere to. In conventional M&A deals, buyers may take their time evaluating the acquisition before putting forward an offer. The sense of urgency is missing. A business auction pushes buyers to place bids before competitors snap up a great deal.
Business auctions also have set deadlines for completing the due diligence investigation. This process can sometimes take months to complete since, understandably, buyers want to be thorough about the discovery process.
But, the pressure to close the deal eliminates unnecessary delays in making an offer. Buyers stand to lose not only a viable deal but also the money and resources they spend on the due diligence.
- Sellers Can Create the Definitive AgreementBusiness auctions allow the founder to create the first draft of the definitive agreement. By presenting the sale terms and conditions, you’re better positioned to get a favorable deal. This advantage allows you to negotiate the payment terms, such as cash and non-cash considerations.
These can include stock, percentage of future revenues or profits, royalties, contingency payments, or rights on intellectual property. You can also bargain for a combination of cash and non-cash payments.
- A Business Auction Raises the Chances of a Successful SaleWith the advice of your M&A advisor, you’ll carefully structure every step and milestone of the auction. This plan demonstrates clarity and precision in the proceedings which ensures a successful closing. In conventional sales, it is not unusual for negotiations to reach the LOI stage and then fall through.
When such situations arise, sellers end up wasting time, particularly when they’re anxious to close the deal. With auctions, you won’t need to negotiate the letter of intent stage. Instead, you can skip this step and move on to drafting closing documents.
Typically, only serious buyers are likely to enter into the bidding process. The Confidential Information Memorandum (CIM) ensures that only interested parties stay in the race.
- Auctions Add Validation to the CompanySince the company has multiple buyers, that factor adds market validation to the viability of the acquisition. You can expect to receive more realistic offers based on the company’s market value validated by external channels.
Buyers are more confident about bidding for a company since they know that others have evaluated it and consider it a great buy.
Pitfalls to Watch ForAlthough a business auction is an excellent approach to inviting bids and selling for the highest value, it has downsides. Understanding them will help you plan workarounds to navigate them. Here’s how:
Your Company and Business VerticalRunning an auction is not suitable for all business and vertical types. For instance, if your company’s structure is complex or you operate within a specific niche market. Further, smaller industries where there are a limited number of bidders are not a good fit for auction sales.
In that case, you’ll opt for conventional sales processes where your M&A advisor screens the market for a buyer. Going in for the traditional M&A deal is a better option.
Regardless of the channels you use to exit, you should know how to value your company. Check out this video in which I have explained in detail how it’s done.
Costs and PreparationAuction processes are complex and need careful structuring, which is why you’ll incur high costs for organizing them. You’ll also retain a team of professionals to run the procedure which may also increase in complexity according to the company’s structure.
This team will comprise an expert M&A advisor, lawyers, and accountants who will help you draft the initial information memorandum. Next, you’ll assess the bids before narrowing down a list of buyers.
These entities will enter into a confidentiality agreement after which they receive the process letter and the information memorandum. The process letter reveals the milestones of the process including timings, procedures, and the next steps.
Bidders must then submit a non-binding indicative bid which you’ll assess. Only then can the next round of bidding start where buyers receive additional information so they can start the due diligence process.
These steps need time and resources which you’ll invest before the deal closes. Including these costs in the final price could drive up the final deal value you’ll expect. Your objective will also be to cover the initial auction expenses.
You’ll also factor in the fees payable to the professionals you retain. Their charges will be higher than the costs for a conventional M&A, particularly for legal consultants. You’ll need their services for drafting the legal documentation according to relevant regulations.
Keep in mind that the standard documents you prepare for the business auction may not be suitable for all buyers. If that happens, you’ll create customized paperwork that could drive up the final prepping costs.
Regulatory ComplianceWhen assessing the auction bids, you’ll ensure that the transaction will not violate any competition or anti-trust concerns. For that, your legal team must evaluate the market share the buyer will command post-acquisition.
You’ll also want to research any other approvals you need from local, state, and federal authorities to proceed with the transaction. Also, check for any third-party liens or consent requirements that can delay or derail the purchase. And other regulatory compliance the deal must adhere to.
Effects on Employee Morale and Stakeholder ConfidenceInformation about the company’s impending sale can have a detrimental effect on employee morale. You also risk losing customers’ and stakeholders’ confidence if information about the auction is opened to the market. Factors like these can bring down the company’s pricing.
You also risk the company’s reputation and brand value if the business auction is unsuccessful. Particularly, when you attempt to sell the company again in the future. Chances are that finding buyers or getting a good price becomes more challenging.
To get around this problem, make sure to restrict information about the sale to a selected group of people. Once the transaction is closed, assign the task of managing the workforce to an expert HR team.
Also, organize the sale announcement through official press releases carefully highlighting the benefits of the collaboration for customers and other stakeholders.
Selecting the Wrong BidderA business auction need not necessarily work to your advantage. For starters, the element of FOMO may prompt bids from buyers even if they are not a good fit. You may end up selecting the highest bid even if it is not viable. Or, in the best interests of the company.
Although revealing limited information protects the seller and the company’s secrets, the buyer’s binding offer may prevent an informed decision. Consider revealing all the relevant details under a Non-Disclosure Agreement to ensure the success of the company sale.
The Takeaway!A business auction is a great solution when you’re looking to sell your company for the highest price. The process ensures that you have complete control over the proceedings when it comes to selecting the best bids.
You’ll control the information you give out and ensure that the sale concludes within a pre-determined timeline.
At the same time, you’ll watch out for the potential pitfalls and look for workarounds to the problems. Ultimately, your goal should be to sell the company to the best buyer who can ensure its continued success. Aim for seamless integration and strategic collaboration.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post 7 Reasons A Business Auction Could Be Your Best Exit Strategy appeared first on Alejandro Cremades.
More and more entrepreneurs are relying on auction strategies to sell their companies at peak values. Auctioning the company means inviting multiple competitive bids and then selecting the option that brings the most value.
Having an experienced M&A advisor on board is always advisable to navigate the process. These professionals can guide you through the steps so you can get top dollar for the company. And, the most favorable terms and conditions.
The biggest defining advantage of running an auction is to leverage the FOMO concept. Competing buyers vying for the company invariably push its price up getting you the maximum worth possible. You’ll choose from different auction strategies according to the types of buyers you wish to approach.
Read ahead for detailed information about how to organize and execute the auction process. You’ll base your decisions on three factors–gaining the maximum value, completing the transaction quickly, and maintaining confidentiality of the proceedings.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Let’s Cover Some BasicsFor starters, know that auction strategies are best used for mid-market businesses. The middle market represents a significant section or 40% GDP of the US economy and employs close to 25% of the workforce. Typically, revenue is the key differentiating factor when categorizing companies.
Although there is no universally accepted revenue benchmark, you can use these figures to get a rough estimate. Companies in the lower middle market earn approximately between $5M and $50M in annual revenues. The middle market category earns yearly revenues worth $50M and $500M.
The upper middle market is defined by revenues ranging from $500m to $1B. Companies earning over $1B in yearly revenues are typically large multinational corporations. Understanding this categorization is crucial since there are different buyer demographics for each market level.
Companies that demonstrate the potential to grow to a higher level can command higher premiums. For instance, investment bankers tend to specialize mainly in mid-market-sized companies. Small businesses earning an annual revenue of less than $20M typically don’t use auction strategies.
On the other hand, public companies often come up for an auction sale. Your M&A advisor will recommend the best approaches for selling your company. They will also walk you through the different steps to prep the company for a sale. Here’s a quick look at the three main types.
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Auction Strategies – Broad AuctionDuring a broad auction, the company is made available to a broad range of buyers, targeting 100 or more entities. These auctions take the longest time to execute and may involve multiple rounds of bidding before closing.
Leveraging this strategy will get you the highest price for the company since competition is high and you’ll have multiple bids. But you also run the maximum risk of confidentiality breaches. Auction strategies like these are suitable for well-established brands that can generate buyer interest.
However, the entire auction process is time-consuming and involves added costs to cover prepping and marketing. Your advisors will vet each potential bid carefully before selecting the one that is appropriate for your needs.
Expect to put together an entire team of experienced professionals comprising an M&A advisor, and legal and financial consultants. You’ll also need to prepare the entire documentation in advance.
Upsides* You’ll raise your chances of getting the highest price possible for the company thanks to the number of competing bids. * The auction is open to all kinds of buyers and invites bids from hidden acquirers. Such buyers may not openly express interest in the company but leverage agents to purchase it. * Board auctions are an accurate way to test the company’s viability and market valuation.
Downsides* Maintaining confidentiality about the sale is challenging since information is open to all buyers to get maximum bids. Information about a potential sale can shake customer and stakeholder confidence. You risk losing business and credibility because of negative perceptions. * You may have to invest a large amount of money and resources to prep the company and run the auction process. Screening multiple buyers and bids will also require time and money and navigating the bidding process is complex and confusing. * Serious buyers may choose to stay away from the bidding wars and the complications that go with them. * If the auction is not successful, it could hurt the company’s reputation. Attempting an exit in the future may result in lower returns.
Targeted Auction StrategiesTargeted auctions typically invite bids from a limited pool of acquirers of around 10 to 20 entities. Auction strategies like these have one-step and two-step variations. They are more beneficial since sellers can maintain confidentiality while ensuring higher valuations for the company.
Although this auction category is also a time-consuming process, it is also one of the commonly-used processes. Your M&A advisor will use tactical approaches to generate the optimum market tension to invite serious buyers.
At the same time, you’ll maintain a robust negotiating position amidst a pre-vetted group of acquirers. Targeted auctions successfully stimulate the market to attract buyer interest and attention.
Upsides* Approaching only a limited number of pre-vetted buyers drives up market value. * You can compare the different bids and acquisition structures which may include cash and non-cash components. * Since only 10 or fewer buyers are invited to place bids, the sale process is more streamlined. * You’re better positioned to negotiate for favorable terms and conditions and the auction can follow a controlled and structured timeline. Sellers can create the first draft of the Definitive Agreement. * Revealing information and choosing buyers who can access the information is your prerogative.
Downsides:* Approaching a limited pool of buyers also means missing hidden and serious contenders. * Not all buyers may be interested in participating in a bidding war.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Limited Auction Strategies or Negotiated SalesThis auction strategy involves approaching one to three interested buyers and allows you to maintain maximum confidentiality. Since you’ll approach only interested parties, the probability of the deal going through and closing successfully is high.
The entire auction sale process is typically less expensive, streamlines, and closes quickly. You can expect unsolicited offers from serious buyers and entities working through investment bankers. Usually, these buyers have already valued and pre-vetted your company before sending an offer.
Limited auction strategies are closed-door transactions which means that information about the sale remains confidential. Business continues as usual until the time the actual integration has to occur.
Upsides* Limited auctions typically connect you with serious buyers looking to build a relationship. You can expect to achieve financial, cost, and operational synergies with full cooperation during integration. The chances of a successful M&A are much higher. * You’re in a better position to negotiate for optimum pricing and get favorable acquisition terms and conditions. You get to draft the Definitive Agreement. * Since these auction strategies involve a limited number of buyers, you have the option to decline the offers. If needed, you can restart the bidding process without losing the company’s reputation. * You can structure the timeline according to your convenience and speed it up as needed. * As the buyer, you can choose the amount of information you want to disclose and who to reveal it to.
Downsides* Inviting bids from a limited number of buyers lowers the possibility of getting competitive offers. Chances are that you won’t get the optimum value for the company. * Buyers usually know that you have only a few offers which gives you lesser negotiating power. Expect the potential buyer to conduct aggressive due diligence in an attempt to drive down the prices.
Whether you’re running an auction or raising funding, knowing how to value your company is crucial. Check out this video in which I have explained how to do that. You’ll find it helpful.
How Variations in Targeted Auction Strategies WorkOne-step VariationSince the one-step variation is essentially a targeted auction, your M&A advisor will likely approach only interested buyers. These entities could be private equity firms or acquirers operating within your industry looking for horizontal or vertical synergies. Here’s how the auction proceeds.
- Your M&A advisor scouts the market for serious buyers and approaches them for their interest.
- Buyers receive a confidential information memorandum and if necessary, a non-disclosure agreement to sign.
- Potential acquirers usually review the documentation within a limited time interval.
- Interested parties can place an offer by submitting a Letter of Intent. However, they are aware that multiple bidders have received offers. Your objective here is to get the maximum number of offers to compare and vet for the best valuation and pricing.
- On receiving the offers, you’ll review them under the guidance of legal professionals and negotiate for higher prices. You’ll also discuss the terms and acquisition structure.
- At this point, you’ll select a suitable acquirer and proceed to the due diligence phase.
- Once the due diligence is complete, further negotiations can take place before drafting the final purchase and sale agreement.
In these types of auction strategies, M&A advisors inform buyers that this is a regular sales transaction. Letting them know that this is not an auction and the offer is available only to a limited group of selected buyers is crucial.
Although the company is a valuable purchase, it may not necessarily be a premier acquisition or have exceptional features. You may not be able to incite a bidding war or competing bids. The risk of buyers leaving the table rather than engaging in a competition to purchase the company is high.
During one-step auction strategies, your M&A advisor will attempt to close the deal within a definite timeline. However, since targeting strategic acquirers is challenging, they may take the time to make an offer.
Two-Step VariationTwo-step auction strategies are better suitable for premier acquisitions that have exceptional value. For instance, they may have highly-coveted IP or a top-notch team or product portfolio.
For this reason, when the company comes up for sale in the market, buyers are anxious to close to deal quickly. Two-step targeted auctions are more formal and proceed within a fixed timeframe.
Buyers are willing to follow the formal process in an attempt to execute the sale in these auction strategies. Here’s what happens:
- Your M&A advisor scouts the market and puts together a pre-vetter list of potential acquirers.
- Next, they organize an outreach strategy to contact buyers.
- Buyers receive the criteria and timeline within which the deal will be executed.
- Acquirers are aware that this is a premier acquisition and the number of interested parties will be higher.
- Interested buyers must provide an “expression of interest” in writing that denotes their expected company valuation and acquisition structure. They can base their decision on the information offered in the confidential information memorandum.
- After assessing the “expression of interest” documents and their terms, you’ll select the top contenders from the pool of buyers. These prospects then move to the second step.
- At this point, buyers receive detailed information about the company and participate in management presentations.
- Once acquirers have had the time to reconsider, they send in a formal offer and a purchase agreement. You’ll examine the terms, conditions, and pricing before choosing the best bid.
To Round Off!Having made the decision to sell your company, engaging the services of professional M&A advisors is crucial. Serious buyers always prefer to negotiate with experts who know how the sale proceeds. Entrepreneurs may be good at what they do but executing a sale is a whole different ball game.
Managing the intricacies of auction strategies is best left to the experts. You’ll also raise the chances of a successful sale since the professionals know the market and how to conduct outreach. They are well-versed in identifying the right buyers and will connect you with them.
Having a well-known face at the table also adds credibility to your company and you’ll attract serious buyers. Competent representation has multiple advantages. You’ll leverage their connections to reach out to a wider selection of dedicated buyers. You’ll ultimately get the best deal suited for your goals.
Most importantly, you’ll ensure that the deal closes within a specific timeline and you walk away with money in the bank. And, with terms and conditions that ensure the transaction was a success.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Caroline Winnett’s story is nothing short of extraordinary—a journey that weaves through disciplines as diverse as music and neuroscience, culminating in a successful career as a serial entrepreneur and now, a prominent figure in the venture capital community.
In this exclusive interview, Caroline talks about the lessons she learned from being a professional violinist and her experiences with coaching several founders. She also talks about how fundraising trends have been evolving through COVID and recent times.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Early Years: From Berkeley to Brown and BeyondCaroline Winnett’s roots lie deep in Berkeley, a city known for its culture of questioning norms and fostering innovation. Growing up in this environment left an indelible mark on Caroline, instilling in her a spirit of curiosity and a drive to challenge conventional thinking from a young age.
Her journey took her to Brown University, where her initial path was set toward a conventional career. However, her passion for music, cultivated since the age of six with the violin, took center stage during her college years.
What started as a hobby evolved into a serious pursuit, leading Caroline to a detour into the world of professional music. She recalls joining a conservatory intending to spend a year but ended up graduating from there since she loved it.
This phase, she recalls, taught her invaluable lessons in discipline which she learned when becoming a professional violinist—lessons that would prove instrumental in her entrepreneurial journey later on.
From Music to Entrepreneurship: The Birth of NeuroFocusAfter dedicating herself to music professionally, Caroline Winnett pivoted towards her long-standing interest in business. Armed with a newfound discipline from her musical career, she pursued an MBA at Berkeley, despite having no prior business experience.
As Caroline explains, she comes from a family of entrepreneurs, including her father and grandfather. She had always known that she would do something in starting companies or would work with young ventures.
After graduating from the MBA program, Caroline worked for a very small company doing recycling plans, which was fascinating and interesting.
This leap of faith by Berkeley would later come full circle as Caroline dedicated herself to nurturing new entrepreneurs in the same community that once took a chance on her.
During her entrepreneurial journey, Caroline co-founded NeuroFocus, a groundbreaking venture that utilized EEG headsets to measure brainwaves for marketing insights and branding. The venture quickly scaled and went from zero to acquisition and revenues of $0 to $25M within five years.
Its phenomenal success captured the attention of industry giants like Nielsen, which eventually acquired NeuroFocus. This achievement underscored Caroline’s ability to innovate and execute on a global stage, catapulting her into the realms of venture capital.
Caroline describes her journey as similar to most entrepreneurs which involved investing their entire life savings, time, energy, hopes, and dreams into the company. They worked hard and with a little luck, it paid off.
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The NeuroFocus Business ModelIf you look below the surface, NeuroFocus is a lot more than EEG headsets measuring brainwaves. Essentially, the device was replacing traditional copy testing where brands would test ads. Caroline and her team started by testing ads, messages, and actual products one by one.
They ran projects where they tested how the brain reacted to Cheetos for Frito-Lay, which was fascinating when Frito-Lay won an award.
Eventually, Caroline and her team ended up running onsite neural labs for large clients like Unilever, Coca-Cola, and Frito-Lay. They could pick from a menu of the ads and products they wanted to test with messaging.
NeuroFocus was a turnkey neuroscience consumer research operation. as opposed to just doing one-off tests one by one. That’s what led to its growth, financial success, and eventual acquisition by Nielsen.
Caroline looks back to the time when they realized they would need a neuroscientist and approached Dr. Robert T. Knight at UC Berkeley. Dr. Knight ended up becoming the chief science advisor and co-founder of NeuroFocus.
Talking about her entrepreneurship experiences with building companies with her husband, Caroline attributes their success to having a strong relationship. They contributed different skills to the partnership and trusted each other 100%.
Caroline also reveals how Nielsen was NeuroFocus’ only investor that joined their series A round. Nielsen’s CEO joined the board as a value-adding advisor and eventually acquired the company.
After NeuroFocus, Caroline co-founded another company called BoardVantage which was acquired by NASDAQ.
Lessons Learned and Giving Back: The Berkeley SkyDeck EraAfter raising her family, Caroline was ready for the next phase of her life. She was keenly interested in starting her incubator since she loved the idea of working with lots of startups. Having gotten a taste of being an advisor and investor, Caroline started looking around for partners.
At the time, Berkeley’s SkyDeck was a small operation and Caroline met with Rich Lyons, the dean of the Berkeley MBA program.
She pitched the idea of starting a second Berkeley SkyDeck location. Incidentally, Berkeley was looking for a new executive director and Caroline was offered the position.
Caroline Winnett’s transition into venture capital was marked by her role at Berkeley SkyDeck—a startup accelerator deeply rooted in the ethos of UC Berkeley. Under her stewardship, the program has flourished, becoming a global beacon for aspiring entrepreneurs.
The accelerator’s success is not just measured in terms of startups nurtured but also in the contributions it makes to Berkeley’s educational goals through a dedicated venture fund. Caroline looks back at the time when she first came to SkyDeck around 10 years ago.
The biggest challenge she faced with helping startups was funding which was not available at Berkeley since it was a public institution. To get around the problem, Caroline found a fund that today has around $85M AUM and invests in the companies that the startup accelerator tracks.
Storytelling is everything which is something that Caroline Winnett was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
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Your email address is 100% safe from spam!They have a legal agreement document signed by the university, and a fund manager according to which the fund manager will donate half the carry back to Berkeley. In this way, they have a unique public-private partnership.
SkyDeck receives lots of funding to support education, and that ignites the nearly 600,000 living Berkeley alums. Caroline talks about how they leverage alumni support to mentor startups and thus benefit Berkeley financially.
Essentially, they have successfully built a community of partners that are interested in supporting education while helping startups succeed.
The Funding Landscape TodayAs Caroline opines, although investors are on the lookout for the next big hot startup using generative AI and disruptive ideas, they are also cautious with their capital.
A lot of factors come into play including geopolitical factors, high interest rates, and the fact that new venture funds are having more trouble fundraising.
Similar to the SkyDeck objective, investors focus on companies that are addressing a specific pain point. They invest in founders who understand that pain point and can build something useful as opposed to investing in random innovations.
Investors now only support companies that can build very sophisticated products and understand the problem they’re solving, or the opportunity they are creating. On their part, founders now possess some of the traits and pattern recognition of a successful mindset.
Insights and AdviceReflecting on her journey, Caroline Winnett emphasizes the importance of discipline, resilience, and a willingness to learn from others.
Her advice to aspiring entrepreneurs is clear: tap into available resources, seek mentorship, and maintain a humble yet determined mindset while learning from their mistakes.
As Caroline reveals, at SkyDeck, the objective is to create an amazing experience for founders and help them move very fast. The program has had some successful exits and some big returns have come to the fund. The general partner has donated half of that to the campus.
UC Berkeley is well-resourced for education, research, innovation, and all those things that it wants to do as a campus. However, Berkeley is not one of those universities with a massive endowment of billions of dollars and has to work hard to stay operational.
Berkeley has to support itself since the state only provides 12% of the funding. The rest of the money needed has to be fundraised.
However, since the tuition is capped, the school can bring in students who cannot afford a big tuition. Caroline’s vision is to find the next Tesla, Apple, and Google and to help support education.
The FutureAs Caroline continues to shape the landscape of venture capital at Berkeley SkyDeck, her story remains a testament to the power of interdisciplinary thinking, perseverance, and community support.
Her journey from violinist to venture capitalist exemplifies how diverse experiences can converge to drive innovation and change.
Listen to the full podcast episode to know more, including:
- The rigorous discipline learned as a professional violinist translated directly into the daily grind required to build and scale a startup.
- Coming from a family of entrepreneurs instilled a natural inclination towards founding and scaling companies.
- Transitioning from a successful career in music to entrepreneurship required courage and a willingness to take risks.
- NeuroFocus revolutionized marketing research by applying neuroscience to understand consumer behavior.
- Co-founding with her husband at NeuroFocus showcased the importance of trust and complementary skills in startup success.
- At Berkeley SkyDeck, Winnett combines her passion for startups with a mission to support Berkeley’s public education initiatives.
- Today’s fundraising environment demands a balance of caution and strategic investment, focusing on solving specific pain points with well-understood solutions.
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Working out employee benefits strategies in M&A deals during the negotiation stages is crucial for successful integration. Close to 70% to 90% of M&A transactions result in failure because of various reasons. Issues with employee retention and dissatisfaction are some of the typical causes.
As expert M&A advisors reveal, whether in fundraising or M&A deals, the team slide has significant weightage. When you want to attract investors or potential collaborators, demonstrating top-notch skill sets and talent can make or break deals.
Post-merger, you absolutely don’t want to deal with employee turnover and attrition. This is why, most high-value deals always have HR teams to help employees navigate the transition and ensure smooth integration. That’s how they ensure the transaction proceeds smoothly, whether cross-border or cross-country mergers.
Employee compensation and benefits packages are always a prioritized concern for workers and the management. Successful integration is also reliant on how well dealmakers can align packages to ensure maximum employee satisfaction.
Legal and regulatory compliance is also a concern as is ensuring equitable and fair treatment to workers of both companies. A balanced compensation structure helps institute an integrated culture and operational practices so the legacy company continues functioning efficiently.
Read ahead on how to achieve this balance in employee benefits strategies in M&A deals.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Equitable Treatment Needs Meticulous PlanningCompanies transitioning through an M&A transaction must understand that any discrepancies in treating employee compensations can influence integration. This is why, you must align the salary structures against the surviving company’s goals and culture.
Without meticulous planning, you risk conflicts and dissatisfaction. The first step in the right direction is to ensure open communication lines and have representatives from both companies at the table.
For instance, Company A may have a compensation structure based on performance and KPIs. However, Company B may award salaries based on the employee’s time in the company. To ensure harmony, the new reward system will have to create a balance between the two.
The acquirer must evaluate the target company’s benefits packages and salary policies while also understanding potential liabilities. For instance, the target’s existing retirement and pension plans and health and dental benefits plans made available to workers.
Any option pools the seller may have given to the workers need to be transitioned into the buyer’s company. Alternatively, the acquirer may have to transform the stock options into collateral benefits. Then again, merges often involve eliminating duplicated and redundant positions.
If that happens, dealmakers must work out the severance packages and ensure compliance with regulations. Some of the main applicable laws include the Internal Revenue Code (IRC), Employee Retirement Income Security Act (ERISA), and Affordable Care Act (ACA).
Employee Benefits Strategies in M&A Deals – Start by Mapping Out the Existing PlansAligning existing plans in both companies is an intricate process, so start by listing the compensation, benefits, and incentives. Compile information about both companies paying special attention to any unique perks that they provide. For instance, paid time off, PTO, paid vacations, and sick days.
If any company permits work-from-home days and awards pensions to the spouses of deceased workers, be sure to include that. Your HR team will check for the rules that apply to both companies to ensure compliance. Also, add the primary benefits that federal employment laws mandate:
- Title VII of the Civil Rights Act
- The Immigration Reform and Control Act
- The Americans with Disabilities Act
- The Equal Pay Act
- The Fair Labor Standards Act
- The Family and Medical Leave Act (“FMLA”)
- The Pregnancy Discrimination Act
- The National Labor Relations Act (“NLRA”)
- The Occupational Safety and Health Act
- Executive Order 11246.
- Statutory benefits as outlined by the US Bureau of Labor
Conduct a Comparative AnalysisWhen conducting a thorough analysis, you could place compensation packages side-by-side while also evaluating other criteria. You’ll account for each employee category’s qualifications, the scope of the tasks they do for the company and other eligibility.
At times, employers may also factor in the time the employee has spent in the company. For instance, the founding teams who have been instrumental in getting the company off the ground. Awarding them special compensation is a reasonable practice.
You’ll also identify any plans that are now redundant or inapplicable because of the company’s shift to other operation practices. Checking for packages the company can no longer afford is also crucial.
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Devise Customized Compensation PackagesOnce the analysis is complete, you’ll work out a new format that is implemented across the board. And, that includes the top tiers of the management and C-Suite executives. At this time, you’ll create unified packages that are best suited for the company’s different levels and arms.
A customized approach will ensure that the workforce continues to function in coordination and that incoming employees assimilate well. Don’t overlook the possibility of leveraging tools and applications to help with the task.
Retaining the services of well-experienced HR teams will help in the decision-making process. You’ll free up time and bandwidth to focus on the other nuances of the post-M&A integration.
Health Insurance Benefits for EmployeesNavigating employee benefits strategies in M&A deals doesn’t involve many pitfalls when you’re working out PTO policies and vacations. But health benefits are a whole different ball game since it will also include calculating paid sick days.
When creating the framework for health insurance benefits, you’ll scout around for economical plans that offer maximum coverage. You’ll evaluate the features and perks of different insurance providers before settling for the one that aligns best with the company’s goals.
Most importantly, the features should effectively offer quality care to your employees. Be mindful of the regulations under the Federal Insurance Contributions Act (FICA). This tax law mandates that both employers and employees must contribute to Social Security and Medicare programs.
Accordingly, you’ll factor in the payouts the company must make for the acquired company. You’ll also calculate the contributions employees must make and work out the entire salary deduction process. Per the law, you’ll withhold Medicare tax at 1.45% of gross salaries payable to employees.
Further, if the employee’s salary structure is more than $200,000, you’ll deduct an additional 0.9% of the salary more than the threshold amount. In short, deductions will depend on the employee’s filing status.
Reorganizing Health Insurance Benefits for UniformityChances are that the targeted company’s existing structures are entirely distinct from your own. In that case, you’ll make tactical decisions to find a common ground to align the two. These decisions will cover a range of issues such as the optimum health plans, coverage criteria, and contributions.
For instance, your company has a higher percentage of employees closer to retirement since it is a more established brand. Accordingly, your health plan coverage will reflect coverage for age-related chronic conditions and have a more conventional approach.
However, if the targeted company has a younger age demographic, their deductibles are worked out according to their lower salaries. Given that the incoming workforce demographic and its needs are different from your company, the entire healthcare framework will need to be reworked.
Remember that storytelling is everything in fundraising, mergers, or acquisitions. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Continuation of Health Coverage (COBRA)The Consolidated Omnibus Budget Reconciliation Act (COBRA) is designed to provide continued health benefits to workers and their families. You’ll consider this law in case you intend to lay off some of the workforce post-merger.
The law requires you to inform the employees and coverage providers in advance so they can apply for an extension. Let’s assume the targeted company has sponsored group health plans for 20 or more employees.
If you lay off some of them, the workers can avail of the opportunity to get a temporary extension of health coverage. This temporary extension provides coverage until the time the workers can find new jobs. This rule also applies to employees whose work hours have been cut during the transition.
Even if you are integrating employees from the target company into your own, you’ll ensure that their benefits continue uninterrupted. Also, ensure compliance with the relevant laws and regulations.
When discussing the merger’s terms and conditions, dealmakers should also work out the timelines for making premium payments. The seller and buyer should be clear about who is responsible for covering costs during the transition period.
If the company is providing health coverage to retired employees as part of their retirement plans, that detail should also be worked out. Dealmakers should also stay on top of making deductions toward retirement plans and making timely contributions.
Here again, they must work out how to remit payments all through the transition period so there are no lapses. Managing these issues needs thorough planning so that there are no disruptions and health coverage is maintained.
Retirement Planning and Stock Option Pools for EmployeesAs mentioned in the foregoing sections, the law mandates that employers and employees must contribute toward the Social Security Fund. As the acquirer, you must work out how to handle the retirement plans and any option pools employees have.
You’ll have the option to combine retirement plans and option pools into the legacy company. Or, you can maintain ongoing plans as is, and continue with the contributions and deductions. Canceling the plans and option pools is an option but then, you may have to compensate with collateral benefits.
Freezing the retirement plans is also an option by which no further payments need to be made. Whatever the path you choose, expect regulatory compliance checks.
At the same time, know that the law allows for retirement plans to continue under the existing terms for a grace period. Any anti-discriminatory regulations are waived for this period. Keep these factors in mind when planning employee benefits strategies in M&A deals.
Managing Option PoolsYou may also have to change the company’s capital structure to allow for option pools. Both the buyer and seller must ensure that vesting schedules are compatible and perhaps, revise the criteria for exercising them.
For instance, you’ll account for the hire dates of the target company’s employees since that will influence the vesting dates. Also, factor in the employee’s performance and stock options given by way of rewards per KPIs. You may have to review and analyze how the options will work post-merger.
Investors and potential acquirers understand the importance of a great team and the value it brings to the company. When determining the salary structure for the team, understand what investors look for in founding teams. This information will help you work out the skill sets you absolutely need in the company and how to make sure you retain them. Check out this video in which I have explained how to do that.
Collateral Benefits ExplainedEmployment laws have provisions for collateral benefits that employers can offer to employees as part of their severance packages. You can leverage this provision if you’re breaching the seller’s employment contacts with their employees by way of the merger.
Collateral benefits are also called compensating advantage problems or collateral benefit problems. You can offer this added compensation to employees if they haven’t received reasonable notice about their employment termination.
As the acquirer, you’ll also provide this benefit in lieu of any other benefits the employee was entitled to receive.
These additional benefits may include payment for surrendering securities, a lump sum cash advance, or a salary raise. The seller may have committed to these payouts as a reward for their services before the M&A transaction.
Consider Profit-Sharing Programs to Reward EmployeesRestructuring compensation and salary packages and employee benefits strategies in M&A deals is a time-consuming process. In the interim period, you’ll need to institute measures to maintain employee morale and engagement.
A good strategy is to go with profit-sharing programs that reward workers based on their performance in the company. Maintain uniform rewards across the board to infuse a sense of camaraderie and achievement.
Your objective is to project the advantages of the mergers and how everyone gains from coordinated and efficient teamwork. This is possibly the best incentive to keep workers focused on common goals.
Giving out these incentives is straightforward and does not involve complex planning and calculation but keeps recipients motivated. That’s how you’ll ensure the workforce’s buy-in and merger’s success.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Beyond The Fine Print: Employee Benefits Strategies In M&A Deals appeared first on Alejandro Cremades.
In the world of financial crime compliance, few names resonate as profoundly as Tom Scampion’s. Born in Warwickshire, UK, Tom’s career journey has been anything but ordinary.
From his early days in the corporate world to leading his own venture, Tom’s story is a testament to the power of data, the importance of collaboration, and the relentless pursuit of innovation. In this exclusive interview, Tom talks about onboarding his first customer, dealing with the competition, and engaging regulators.
He also reveals how he built partnerships with FMIs and got them excited about the journey they had embarked on.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From Warwickshire to Oxford: The Foundations of a CareerTom’s early years in Warwickshire were, as he fondly recalls, filled with the charm of the English countryside. “It’s all chocolate boxes and cookies and cream,” he muses, highlighting the idyllic environment that shaped his upbringing.
This quaint backdrop set the stage for Tom’s academic journey, which took a significant turn when he enrolled at Oxford University. There, he pursued the rigorous and intellectually demanding course of Politics, Philosophy, and Economics (PPE).
“I was a political nerd, obsessed with how we get governed,” Tom shares. This fascination with politics, combined with the analytical rigor of economics and the ethical considerations of philosophy, provided Tom with a well-rounded foundation that would prove invaluable in his future entrepreneurship journey.
Diving into Data and AnalyticsTom’s entry into the corporate world was marked by a deep dive into data and analytics. “When it comes down to decision-making, the ability to make good decisions based on limited information was a challenge for everyone,” he explains.
In the 90s and early 2000s, the explosion of data generation posed both opportunities and challenges. Tom was at the forefront of this wave, keen to transform raw, unstructured data into actionable insights. He could foresee that data would drive commerce, politics, and all sorts of spheres.
Working at DeloitteTom started to think about how he could make data useful and place it at everyone’s fingertips. His tenure at Deloitte, where he served as the Global Head of Analytics, was particularly transformative. “The beauty of working for a firm like Deloitte is the biggest problems were there to be solved,” Tom notes.
Regardless of their clients’ size and scope and the challenges they struggled with, Tom and his team were able to take them on.
Leading a team of bright minds, he tackled some of the most complex challenges facing global corporations, leveraging advanced analytics to drive decision-making and innovation.
Tom spent 15 years at Deloitte and recalls them as being the most motivational of his life. When he started out, it wasn’t even called analytics, but more commonly called database marketing or management information. It would be a while before analytics became a business tool.
Unlike today’s times when Tom has CVs coming across his deck of people who know Python and different forms of SQL and query languages, companies had a small team that would find answers to the questions they asked.
Today, data and analytics have taken center stage with data being the driving force that runs businesses. As Tom recalls, back in the day, financial crime compliance was more policy-driven, unlike financial crime compliance which is all about analytics today.
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The Entrepreneurial Leap: Founding GSSDespite a fulfilling corporate career, the idea of entrepreneurship was enticing. “I think lots of us are frustrated entrepreneurs. We’ve always wanted to do something, drive our own business,” Tom reflects. But finding the right opportunity and the one thing that feels right is more challenging.
The pivotal moment came when several banks approached him with a pressing problem: the fragmented and duplicative nature of financial crime compliance efforts. They needed a unified platform to streamline these processes, and they saw Tom as the ideal person to build it.
Tom was well aware that becoming an advisor was very different from his corporate roles. He would be responsible for the outcomes. It would be his business, decisions, team, and colleagues making the difference.
But the opportunity that came up was something he was passionate about. And the solution in the space was really ripe for being deployed.
The GSS Business ModelThus, GSS (Global Screening Services) was born. GSS offers a SaaS-based, cloud-native transaction screening service aimed at ensuring compliance with global sanctions. “We make money by creating a transaction fee-driven screening service,” Tom explains.
As Tom reveals, GSS caters to fundamentally everyone who is regulated by any institution around the world or any regulator around the world who has an obligation to pay attention to the laws that prohibit doing business with sanctioned entities.
These entities could be individuals, businesses, or countries. They must screen their traffic and transactions and make sure they’re doing so at a level that is acceptable. But also in a way that does not create unnecessary friction or cost to the business.
The model is compelling: charge a fee for each transaction, with costs decreasing as transaction volumes increase. This approach not only reduces costs for banks but also enhances the quality and efficiency of compliance efforts.
Tom looks back fondly at the first customer they onboarded. He recalls how they had to prove their product in a proof of concept environment and how it was different from in an offline world to actually being operationally live.
Building the GSS Network of ExpertsThe moment of truth came when the product finally transcended the testing phase and went live. However, Tom and his team had all their experience baked into the product which seemed to get stronger and stronger and had several benefits that all the other platform users appreciated.
The turning point came when their competitors came together as one to collaborate. As Tom reveals, the “nicest thing about our world is that every customer wants everyone else in their industry to adopt.” His customers were happy to share their experiences which became a great sales asset.
GSS effectively reached out to a network of customers, their competitors, the banks in their region, their correspondent banks, and their correspondent networks. Tom talks about the ability to have competitors collaborate because it’s in their interests, which has been something great.
He regards GSS as a standards-based organization that can benefit everyone because everyone contributes and benefits. They have a virtual circle that has had 3,000 one-to-one meetings over three years.
At each of the meetings, experts give their know-how since they know it’s in everyone’s interests to create less friction, higher quality, and less cost when it comes to delivering the important part of compliance.
Engaging and Connecting RegulatorsEngaging with regulators early on was another strategic move that paid off. “We went early with the regulators, particularly in North America,” Tom explains.
He recalls reaching out to a couple of big departments in the US Treasury, the Office of Foreign Asset Control (OFAC), and TFFC that look after financial crime compliance.
This was possibly the best decision Tom and his team made. Regulator engagement is important because they’re a stakeholder and want financial crime compliance to work. By seeking input and addressing concerns upfront, GSS built strong relationships with key regulatory bodies.
This proactive engagement ensured that GSS’s solutions met regulatory standards and gained the trust of both regulators and clients. That’s how the public and private sectors collaborated in the public-private partnership.
Having regulators as a stakeholder here was an important strategic call because Tom wanted GSS to work in a regulated space.
They wanted the governments, financial services regulators, and privacy regulators to know exactly what GSS was doing and to feel great about it. Engagement and connections with banks and regulators are an important part of GSS.
Raising Capital for GSSFundraising in a heavily regulated space is no small feat. GSS has successfully raised about $90 million, including a significant Series A round. The key, according to Tom, was choosing the right partners.
Storytelling is everything which is something that Tom Scampion was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!As Tom explains, “Everybody likes the concept of a utility in the compliance space, using a SaaS model. It ticks a lot of boxes for different regulators and different investors.” Strategic investors, particularly banks that became both investors and customers, played a crucial role.
“Choosing strategic investors has been an important part of this,” Tom notes. These investors not only provided capital but also brought invaluable industry expertise and validation. These entities understand the challenges, opportunities, and the potential.
One of GSS’ principal regulator investors is Randy Quiles, who formerly worked for the US government in the Federal Reserve as the first head of supervision.
Vision for the FutureLooking ahead, Tom envisions GSS becoming the industry standard for compliance solutions. “In a GSS world, we are the standard,” he asserts. The initial focus on sanctions compliance is just the beginning.
As Tom explains, GSS is a purpose-driven business, passionate about changing the world and providing services to the 5,000 banks that need them.
His objective is to create the best capability that everyone can benefit from by eliminating duplicated tasks at an industry level in a closely interconnected world.
Future expansions may include areas like fraud prevention and ESG reporting, where industry-wide collaboration can drive significant improvements. Tom’s journey from corporate stalwart to entrepreneurial trailblazer offers valuable lessons in focus and strategic execution.
Advice for Budding Entrepreneurs“You need to walk before you run,” he advises, emphasizing the importance of building a solid foundation before scaling up. Tom advises upcoming founders to focus on converting their ideas into neat terms and making sure everything is 100% complete before moving on to the next step.
Entrepreneurs don’t need to build a massive edifice in the first 12 months or the infrastructure. Their objective should be to convert customers and prove a service. They should build the experience of running a business and take it from there.
In ConclusionIn an era where data is king and compliance is paramount, Tom Scampion’s GSS stands as a beacon of innovation, collaboration, and excellence. His story is a powerful reminder that with the right vision and unwavering commitment, it’s possible to transform industries and create lasting impact.
Listen to the full podcast episode to know more, including:
- Tom Scampion’s academic foundation in PPE from Oxford University shaped his analytical and ethical approach to decision-making.
- His corporate career at Deloitte emphasized the transformative power of data and analytics in solving complex global problems.
- GSS, Tom’s entrepreneurial venture, offers a SaaS-based transaction screening service for financial crime compliance.
- The collaborative model of GSS reduces costs for banks while enhancing compliance efficiency.
- Early engagement with regulators ensured that GSS’s solutions met industry standards and gained trust.
- Strategic investors, particularly banks, provided crucial capital and industry expertise for GSS’s growth.
- Tom envisions GSS becoming the industry standard for compliance solutions, with potential expansions into fraud prevention and ESG reporting.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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Achieving financial synergies after an M&A transaction is one of the driving forces for dealmakers. The strategic partnership helps enhance efficiencies and improve the legacy company’s financial performance. That’s how they can hope to create value.
Post-merger, you’ll restructure the new company’s capital and operations which can lead to several benefits. These benefits result in lowering costs, efficient use of available funding and resources, and improved research and development.
You can also build a broader product portfolio to attract customers and raise sales and revenues. Read ahead to understand in detail how financial synergies work in M&A deals.
Financial Synergies DefinedFinancial synergies in M&A are the positive financial outcomes that result when two companies enter a strategic merger. Pooling their resources and combining operations helps them achieve higher financial efficiency and enhanced performance than when they worked separately.
Mergers designed for financial benefits seek to grow shareholder wealth, raise share prices, and offer higher dividends. The surviving company grabs a strategic position within the market by gaining an edge over the competition and building resilience. It improves its chances of long-term success.
For example: Company A and Company B were valued at $250M and $200M, respectively at the time of the merger. If the surviving company has a valuation of $500M after the merger, that indicates a synergy of $50M.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Financial Synergies After an M&A Transaction – Core AdvantagesFinancial synergies are distinct from cost synergies and operational synergies that companies may achieve. When we talk about financial benefits, they are solely about how the merger enhances the legacy company’s financial standing. Here’s how that can happen:
Enhancing Debt CapacityOnce the merger is complete, the surviving company is likely to have stable cash flows, revenues, and profits. As a result, you’re in a better bargaining position to connect with lenders and investors for debt. You can also negotiate for cheaper interest rates, unlike smaller startups that must pay more.
Now that you have a bigger cap table and assets, you can apply for bank loans and offer collateral. Other channels of funding also become available such as revenue and debt funding.
You can leverage steady revenues to raise capital and pay it back out of the company’s earnings. Demonstrating adequate liquidity to apply for loans is another plus point.
Let’s try an example. Company A and Company B are small to mid-sized companies. Company B needs to raise funding and approaches a bank for a loan. However, the bank requires higher interest rates and terms and conditions that won’t work well for a fledgling company.
Company B merges with Company A to create a bigger business with a more robust financial profile and assets. Their surviving company has a stronger capital structure, consistent cash flows, and profits. It can now demonstrate creditworthiness and ability to meet its obligations.
Not only can the company now negotiate for more favorable interest rates and terms. But it also has a broader selection of investors to approach for funding and get it for reduced borrowing costs. Since the company is bigger, it evokes confidence from investors and lenders in on-time repayments.
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Higher CreditworthinessA larger company with a bigger scale of operations can leverage better relationships with vendors and suppliers. You can place bulk orders to source inventory, spare parts, components, and other inputs and get them for cheaper rates.
Negotiating for better payment terms and credit periods is also an advantage because you can free up liquidity. Diverting this liquidity toward expansion and other strategic initiatives assures success.
Tax BenefitsAlthough mergers result in tax implications, you can use the collaboration to lower applicable taxes. For instance, merging with a company running in losses allows you to lower your tax liability.
The legacy company can lower its tax burden by leveraging the Net Operating Losses (NOL) clause to offset taxable income. Taking over old and redundant assets gives your company depreciation credit. Any tax refunds the target company has accrued will now form a part of your company’s capital.
You may be able to take advantage of tax incentives and exemptions by restructuring operations. Also, work with qualified CPAs to integrate tax-saving financing and operational strategies. Entering into cross-border M&A deals to move operations to tax-efficient locations is also a possibility.
Higher RevenuesWhen competing companies merge, they can jointly cater to a larger customer base. Revenues are likely to grow quickly when the competitors no longer need to engage in price wars to attract clients. You can also ramp up R&D since you have the resources and can provide better product features.
Growing your product portfolio is another option and mergers typically build brand value thanks to customer confidence and loyalty. The brand can build a better market presence for consistent current and future revenues.
Lower Capital CostsM&A transactions help companies get lower equity and diversify their portfolio. For instance, a publicly traded company purchases a private company operating in a different vertical. Or, when a larger corporation absorbs a startup. Equity costs can be lower for the merged company.
Leveraging advantages like a broader customer base, lower competition, higher revenues, and cash flows helps get a higher market share. Although factors like the particular industry and its size and scope also come into play here, accessing equity is easier.
Lower Operational CostsLower costs improve the company’s overall financial standing. Pooling resources, removing repetitive and redundant processes, and economies of scale are crucial financial synergies after an M&A transaction. You can also lower labor costs by terminating unnecessary positions.
Managing other overhead, production, marketing and advertising, and administrative costs efficiently helps increase the available liquidity. You can put the working capital to better use by diverting it toward growth opportunities. Streamlining account receivables is another advantage.
Higher Risk DiversificationCompanies enter into different kinds of mergers such as horizontal, vertical, cross-border, or any others. Combining operations in different verticals, supply chains, geographical locations, and product portfolios allows them to diversify their risks.
The new company can capture a bigger customer base by offering better products and services and thus ensure profitability. The higher the diversity, the more assured the returns are likely to be.
This factor ensures that your company is more resilient to macroeconomic and industry-specific risks and regulatory and political changes.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Downsides of Financial SynergiesAlthough financial synergies after an M&A transaction are the core objectives, sometimes, synergies can work in the reverse. Dealmakers should be prepared for the possibility of negative synergies. Or, when the new company’s valuation is lower than the combined valuation of the individual businesses.
Despite extensive due diligence, the acquirer may find that they have to invest significant capital to restructure the acquisition. For instance, hiring a new management team, paying off its outstanding dues, or dealing with unexpected tax liabilities.
Chances are that the IP you acquired is redundant by the time the merger closes or that it has liens. Several factors can take away from the financial synergies you anticipated. A good way to work around this risk is to include representations and warranties in the merger agreement.
Then again, buyers are sometimes willing to overlook potential downsides and pay a premium for the acquisition. That can happen when they anticipate other synergies that compensate for the potential losses.
How to Calculate the Financial Synergies After an M&A TransactionCompany CPAs may use different methods to calculate whether the merger has achieved financial synergies. They collect data based on the income statements such as the total value of the surviving company’s expenses against revenues. This data reflects on the total profits the company earned.
Evaluating the balance sheet shows debt capacity and a positive cash flow in the cash flow statement reflects positive synergies. Here’s a quick overview of the best strategies to use:
Net Present Value (NPV)Synergy = NPV (Net Present Value) + P (premium)
The Net Present Value is typically considered an aggressive method for evaluating synergies. This method takes into account variables since as the estimated growth in revenues and cost synergies from the deal.
It also factors in discounted rates based on the risk, and the period for estimating cash flows. A positive NPV indicates that the merger is successful.
Acquisition PremiumThe acquisition premium is the price the buyer pays over and above the target company’s calculated market value. The premium compensates the seller for the future profits and revenues the surviving company will likely generate. Or, the positive synergy value achieved from the merger.
The higher the premium the buyer pays, the higher is their expectations of positive synergies. However, higher premiums also indicate that the buyer is taking on more risk in case the synergies fall short. On average, premiums range between 20% and 50% of the deal value.
Synergy MultipleThe synergy method uses a common benchmark multiple for estimating the merger’s success. In most cases, the synergy multiple can range from 4x to 12x of the cost savings or growth in revenues.
Of course, relying on a single method is never advisable. This is why CPAs use a combination of methods for a more accurate estimate
Knowing how to value your company is essential to understand the synergies achieved after the merger. If the overall company value improves and is higher than the combined value of the deal participants, the merger is successful.
Some Great Examples of Mergers and AcquisitionsVodafone Acquires MannesmannVodafone’s acquisition of Mannesmann is known to be historically the biggest M&A deal ever which occurred in 1999. Adjusted for inflation, that deal would be worth $393B in 2024.
This deal positioned Vodafone, the UK’s biggest mobile operator, as the world’s largest company in the telecommunications space. Mannesmann was a German-owned industrial conglomerate company and the deal triggered a series of mega M&A transactions in the vertical.
In 2013, Vodafone went on to acquire Verizon for an estimated $173B in today’s value. When the deal closed, it was reportedly the third largest in history and gave Vodafone complete control over its wireless arm.
Facebook Acquires InstagramFacebook’s acquisition of Instagram in 2012 for an incredible $1B is an excellent example of financial synergies. Reportedly, the social media giant paid in a combination of cash and stock. However, reports suggest that Instagram will continue to operate as an independent entity.
At the time of the deal, Instagram boasted 30 million users and the highest number of downloads on iPhones. The company had just released a version for Android users also and was Facebook’s answer to rival SnapChat. By 2018, Instagram had acquired more than one billion users.
In 2023, the photo-sharing social media site was valued at an astonishing $47.4B.
AOL Merges with Time Warner CableThis transaction is an excellent example of how macroeconomic conditions can influence the deal’s success. The deal between Time Warner Cable and AOL concluded in 2000, but the subsequent dot-com crash two months later was a huge setback.
The M&A transaction was valued at $325B by today’s standards but fell apart nine years later. Time Warner is known to have entered into another deal with AT&T for $108B, adjusted for inflation. The deal closed in 2018 but attracted flak from anti-trust authorities.
Walt Disney Company Acquires 21st Century FoxWalt Disney acquired 21st Century Fox in 2017 in a $83.7B deal, adjusted for inflation. This deal is one of the most successful transactions in history. And enabled Disney to expand its foothold in the global entertainment industry. It has also added content diversity to its streaming product portfolio.
Disney now has a broader entertainment selection and direct-to-customer (D2C) streaming services. But the biggest advantage is combining top franchises like Dead Pool and the X-Men under one brand.
To Wrap Up!Achieving financial synergies after an M&A transaction is, undoubtedly, the core objective of any deal. Dealmakers conducting due diligence are likely to estimate the value they can generate in terms of financial benefits.
These benefits can come from operational savings, higher debt capacity, and the ability to generate more equity capital. Whatever your strategies, if the financial synergies create wealth for the owners and stakeholders, that’s a win.
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Paying careful attention to the hidden tax pitfalls in M&A deals is crucial. Such transactions typically involve an exchange of equity and other assets. And these transfers attract tax obligations that dealmakers must pay. You’ll also focus on the accurate valuation of the assets you’re exchanging.
Valuation techniques in financial due diligence are not just vital for negotiating the company’s pricing. But also to calculate the applicable sales and income taxes aside from the federal, state, and local taxes. You’ll also scrutinize any unpaid tax liabilities that the target company has accrued in the past.
These tax liabilities along with any fines and penalties may transfer to you, the acquiring entity. The hidden tax pitfalls can affect the transaction’s viability and potentially derail the M&A deal. Factoring in the taxes should be a part of the valuation process and final company pricing.
Aside from assessing the current tax considerations, don’t forget to factor in additional liabilities from previous collaborations. The target company may have entered into partnership, merger, or acquisition deals in the past. In that case, you’ll examine the tax implications of those deals also.
Read ahead for an overview of the typically hidden tax pitfalls in M&A deals and navigating them.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Employee BenefitsAcquiring a company also involves taking over its workforce and the salary and benefits packages. These packages come with tax liabilities that you’ll have to pay. For instance:
Taxes on Employee BenefitsCompanies typically have various benefits plans for their employees such as healthcare, dental, retirement contributions, and pension plans. These packages are unique to every organization and integrating the incoming workforce’s benefits can be complicated.
The Federal Insurance Contribution Act (FICA) tax regulations determine which employee benefits are taxable and non-taxable. As part of due diligence, you’ll understand how the target company designed its compensation structure. And if it has any outstanding taxes.
This step is essential when aligning the packages with your company’s existing structure since it may require detailed planning. Early termination fees or restructuring the deductibility of contributions may attract unexpected taxes.
Stock Option PoolsStartups typically offer employees stock options with vesting periods as part of their compensation packages. Accordingly, employees have the option to purchase stock during a fixed interval. The company may also have deferred compensation plans.
These benefits may attract tax obligations when employees exercise their vesting rights. Or when they sell the stock. Your team should examine the contracts and their structure.
As the new owner, you are now responsible for paying applicable taxes. Integrating the options into your existing company structure may also attract tax dues.
Restructuring the WorkforceIntegrating the workforce post-merger typically involves restructuring and eliminating redundant and duplicated positions. Working out severance packages and canceling employee stock options may have tax implications. You’ll also want to factor severance costs into the deal pricing.
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State and Local Taxes (SALT)Cross-country mergers and acquisitions must account for the taxes and rules prevalent in the two companies’ jurisdictions. Some of the hidden tax pitfalls in M&A deals include property taxes, sales and use taxes, and payroll taxes. You’ll also factor in income and franchise taxes.
These SALT liabilities can influence the ultimate costs of the company’s sale. Dealmakers on both sides of the table must identify unpaid taxes, tax incentives, and credits that transfer to the buyer. These tax liabilities may apply not only to the current financial year but also to the past and future.
You must structure the purchase agreement with a balance of stock and assets exchange for tax efficiency. An accredited CPA can help devise strategies to minimize payable taxes.
Cross-Border M&A TaxesTax obligations in cross-border M&A deals can be complex since the transaction must comply with diverse tax regimes. Since deals can take several months to close, buyers and sellers should be ready for the possibility of changes. Like, in tax regulations, government policies, and regimes.
International M&A transactions may involve transferring stock and assets and pricing them accurately is challenging especially in different currencies. Any errors in pricing these assets, goods, and services can have tax implications in different jurisdictions.
In some deals, the acquirer may choose to maintain the target company as a subsidiary. However, this process involves working out details like foreign tax credits the buyer can claim for the taxes the subsidiary has paid. Claiming these credits requires careful planning and documentation.
You’ll also plan for the possibility of selling the subsidiary at a future date. That includes withholding taxes on dividends and capital gains that you’ll calculate and plan for. The process will depend on the current tax regime and sale terms and conditions.
Valuing Intellectual Property (IP) and Intangible Assets (IA)Valuing IP and IA for the M&A deal or calculating applicable taxes is a complex process involving several variables. Arriving at a fair market value is highly subjective and reliant on factors like market demand, uniqueness, and revenue potential,
Entities wanting to purchase or subscribe to the IP will have varying criteria for arriving at reasonable pricing. Then again, issues like economic conditions, the competitive advantage buyers get from the IP, and its life cycle also matter.
The potential period for which the asset will remain viable before it becomes obsolete because of newer technology is also a factor. IP and IA owners may also want to reassess their value year over year for accounting and taxation purposes.
Intangible assets like goodwill, customer trust, and brand value are difficult to quantify. Tax authorities may not agree with the value perceptions dealmakers present resulting in higher tax liabilities and adjustments.
Intangible assets have amortization periods of 15 years from the taxation perception, though this period may be different in GAAP. Transferring the assets and the prices at which the transfers take place involves calculating and remitting taxes.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Sales Tax ConsiderationsSome transactions may involve asset sales where the buyer purchases the target company’s assets. Dealmakers should be aware of the hidden tax pitfalls in M&A deals when transferring ownership. That’s because selling buildings, real estate, inventory, vehicles, and equipment attracts sales tax.
The amount of tax depends on factors such as where the asset is located and its purpose and usage. Whether or not, the asset buyer paid the applicable taxes when purchasing the asset will also count. If the asset is exempted from sales tax, its owners should have the proper documentation to prove it.
Sales tax and how assets are treated for taxation purposes vary significantly according to the state. Dealmakers should prepare for the tax authorities to scrutinize the exemption and other documents to check for liabilities.
As part of the financial due diligence, it is crucial to check for casual or isolated sales. The criteria for claiming de facto exemption varies from state to state and incorrectly presuming a tax relief attracts penalties.
Since these penalties will transfer to the acquirer in the transaction, you’ll examine purchase deeds carefully.
Carbon Footprint and Tax ExemptionNewer regulations centering around environmental protection have tax penalties for companies that are not compliant. These regulations depend on the state and location where the company operates. The OECD (Organization for Economic Co-operation and Development) defines environmental taxes.
Before purchasing a company, you’ll examine its operating status to check if it has paid its taxes. Make sure to examine compliance not just for the current, but also past and consecutive years. On the other hand, companies that are compliant can avail of tax credits and incentives.
Local, state, and federal government rules provide incentives to generate higher revenues and promote environmentally conscious businesses. If your target company qualifies for these tax breaks, you’ll check for solutions to maintain that credit.
Acquirers often allow their target companies to continue functioning as before and only take on the financial decisions. Accordingly, you’ll work out if the tax credits apply to the buyer company also and how to align the balance sheets.
Ensure that the target company will maintain its compliance credits after the acquisition. Any errors and discrepancies could attract hefty penalties that you’ll want to avoid. On the other hand, if the acquired company has a significant carbon footprint, you’ll work out how to roll back the issues.
The investment you’ll make toward turning the company around can factor into the pricing you pay for it. Also, examine any liabilities the company may have accrued in the years preceding the sale.
Identifying any potential tax liabilities is only one aspect of the due diligence in fundraising and M&As. Check out this video I have created in which I explain how to navigate the due diligence.
Acquiring a Specific DivisionIf you’re purchasing only a particular division of a corporation, look for the hidden tax pitfalls in M&A deals. You’ll acquire only the specific assets that the division owns, which is why it is crucial you scrutinize applicable taxes.
Pay special attention to the sales taxes and other dues, preferably by retaining the services of an accredited accountant. Your due diligence should focus on the division’s tax obligations and the future steps you’ll take for compliance.
For instance, you may have to apply to register the acquisition, set up its taxation systems, and file future returns. Organizing these requirements before the deal is closed is advisable. You risk incurring tax liabilities, interest, and penalties if they transfer to you after the deal closes.
Alternatively, you can negotiate with the seller for a transition services agreement (TSA). According to this agreement, the seller is liable for preparing and filing tax returns for a pre-determined interval. This time may extend to even after the deal closes.
You can include information about the TSA in covenants in the merger agreement so the seller is liable for reporting. This process absolves you from being responsible for the interim period until the deal closes and the assets are transferred.
How to Identify and Manage Hidden Tax Pitfalls in M&A DealsUnexpected tax obligations arising after the M&A deal closes are real possibilities. You’ll undertake the necessary due diligence and other practices to identify the pitfalls and mitigate them. Here’s what you can do:
- Retain the services of an expert team to help you navigate the M&A transaction. The team of professionals includes an M&A advisor, an accredited CPA, a qualified attorney, and lawyers well-versed in M&A taxes. Ensure you have experts on international and national laws, valuation, and transfer pricing at the negotiation table. They should also advise you on the complexities of the deal.
- Include Voluntary Disclosure Agreements (VDA) in the merger agreement to secure your interests. The VDA indemnifies you for any tax penalties that the local, state, and federal tax departments may levy.
- Typically, the VDA specifies a look-back period which ranges from three to five years. Conduct detailed due diligence on the target company’s financial and taxation process to detect any hidden tax discrepancies and liabilities. These dues may transfer to you, the buyer post-merger. Also review tax returns, employee benefit plans, and transfer pricing,
- Leverage the expertise of your tax consultants to structure the M&A deal for maximum tax efficiency. Use best accounting practices to incur the minimum dues.
- Taxation regulations evolve from time to time. Before negotiating the M&A transaction, take the time to research updated laws and work out the deal accordingly.
- Plan the post-merger carefully vis-a-vis taxation systems and accounting techniques. Work out in advance how to align balance sheets and other financial statements and the potential tax dues you’ll incur.
- Use any of the tax modeling tools now available to help you explore different models. You can simulate different structures to assess liabilities and choose the right approach.
Wrapping Up!Tax due diligence is a crucial aspect of the whole discovery process and acquirers should be aware of tax implications. Any liabilities and penalties will likely transfer to the buyer in the transaction. Hidden tax pitfalls in M&A deals can ultimately derail the transaction.
Don’t overlook the historical reporting liabilities the target company may have accrued. Also, examine any dues pending from past M&A transactions the seller may have entered into. Ensure complete compliance for the success of the collaboration.
Note: The information in this article is only designed to give you an overview of the applicable taxes and is not comprehensive. We suggest relying on the advice and expertise of qualified professionals to guide you.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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When working out the different aspects of the collaboration, don’t overlook the tax implications of your M&A deal. Mergers and acquisitions have strategic benefits and successfully add value to the legacy company. However, buyers and sellers should also understand their tax obligations.
Working with an expert M&A advisor is advisable since the professional will guide you on the various aspects. You’ll also have an attorney, CPA, and tax consultant on board for regulatory compliance and understanding the applicable taxes.
M&As typically involve significant federal and state tax liabilities. When structuring the transaction, you’ll work out how to model the deal after analyzing the tax dues. To put it simply, merger and acquisition deals can be taxable or non-taxable.
This categorization relies on how the dealmakers handle the stock and assets of both companies and how payments are made. Read ahead to understand in detail the tax implications of your M&A deal.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Merger Categories for Tax ConsiderationsWhen two companies enter into a strategic merger, they must pay taxes on the gains from the assets they acquire. These assets can be in the form of capital, stock, and other fixed assets pooled during the merger. Taxable mergers according to IRC §1001 can be standard and triangle.
- In a standard merger, the acquirer absorbs the purchased company into their own company. The legacy company continues offering products and services that the two companies provided before the merger.
- A triangle merger is a collaboration between two smaller companies. In this case, one company is the subsidiary of a parent company which assumes the tax liability and financial responsibility.
How Mergers Qualify as ReorganizationsA third form of mergers is a reorganization and does not attract any tax liability under IRC § 368. However, for the deal to be tax-exempt, it must comply with stringent criteria that the IRS lays down. These criteria include several statutory and common law requirements for the dealmakers.
- When one corporation acquires the assets and stock of another corporation
- When one corporation splits and creates two or more independent entities
- The corporation restructures its capital composition internally.
How Tax Exemptions WorkEssentially, merging corporations needn’t pay taxes under reorganization if they swap their assets and equity and create a new company.
The transaction can also be considered non-taxable if the acquirer pays for the purchase with stock or equity. If no cash or debt changes hands, the deal is tax-free.
However, the transaction must comply with certain conditions:
- The acquirer pays at least 50% of the targeted company’s value in stock from their own company. This strategy is called continuity of ownership interest.
- The targeted company distributes the stock and securities from the deal to its shareholders.
- The targeted company continues operations just as before the merger. Or, the acquirer uses a significant portion of the targeted company’s assets to run its own business. The buyer must maintain ownership of the assets for at least two years after the deal is complete. This strategy is called continuity of business enterprise.
- The acquirer assumes any outstanding liabilities of the targeted company. Since cash is not a part of the transaction, tax is not payable.
- Dealmakers must execute the transaction as a standalone M&A deal. It cannot be a part of a series of transactions that would otherwise attract a tax liability.
- The acquirer issues stock to the targeted company in exchange for its property.
If the seller receives property other than stock and equity from the sale, this consideration is called “boot.” The boot attracts tax dues. But if the seller distributes some portion of the boot to their shareholders, the distributed portion is not taxable.
Remember that the IRS comes down hard on M&As conducted for the sole purpose of avoiding tax obligations. The agency uses the step-transaction doctrine to determine if the transactions have been made to avoid taxes. If that happens, the IRS denies the tax-free status.
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- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
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Tax Implications of Your M&A Deal – Assets or Stock ConsiderationConsideration Paid in StockWhen negotiating the terms of the sale, sellers can enter into a stock sale or an asset sale. If the acquirer purchases stock, they are essentially buying the seller’s ownership stake in their company. This strategy attracts less tax under the 2018 Tax Cuts and Jobs Act (TCJA).
The TCJA has set a 21% corporate federal income tax rate for purchasing stock in a C Corporation. As a rule, C Corporations generate more after-tax income since they pay lower taxes. Any corporate assets that appreciate in value will attract lower taxes if the acquirer sells them at a later date.
Sellers may prefer to get stock in the acquirer’s company because they can get the company’s full sale price. They can also avoid any possible liabilities after the sale.
Most importantly, any gains on the stock are long-term capital gains and will attract a lower tax rate than short-term capital gains. As a result, the seller can avoid paying high taxes.
Consideration Paid in AssetsAt times, acquirers prefer to purchase only the assets of the targeted company to avoid taking on unknown liabilities. Purchasing the ownership stake in a company could come with business-related liabilities that transfer with the sale.
Purchasing fixed assets has another advantage. The acquirer can take advantage of the stepped-up basis rule and lower their tax liability. According to this rule, the buyer is liable to pay taxes on the assets’ market value at the time of the purchase. And not at the value the seller purchased them.
This provision allows them to leverage deductions based on depreciation and value the assets at a lower price. Then again, if the buyer purchases receivables and inventory as part of the deal, they can sell the assets. Or, the receivables convert into cash.
As a result, the buyer can claim lower gains and have a lower tax liability. Rules under the TCJA have expanded the depreciation deductions within the first year, making asset purchases a better deal. Particularly from the tax liability perspective.
However, if the buyer purchases stock, they cannot use the stepped-up basis rule and pay lower taxes. Unless they make a Section 338 election under the Internal Revenue Code (IRC). This rule allows the corporate buyer to execute a “qualified stock purchase” of another corporation.
In that case, the buyer can treat the acquisition as an asset purchase. And not a stock acquisition to claim a lower tax liability. Since several conditions and criteria apply to such purchases, it’s advisable to check with a qualified CPA.
Make sure to understand the tax implications of your M&A deal before moving forward.
Balancing the Purchase Price Against Tax ConsiderationsInvariably, dealmakers in an M&A transaction may have conflicts of interest when allocating the price against stock and assets. Tax implications play an important role since both parties will want to minimize their tax liabilities.
For instance, buyers will want to allocate a lesser portion of the purchase price toward assets like real estate. Properties carrying mortgage will need the buyer to make payments through the amortization period. Intangible assets and equipment will need depreciation calculations.
Moreover, any land that the company owns will attract capital gains as it appreciates over time. From the seller’s perspective, allocating a larger portion of the purchase price to these assets results in lower tax liabilities.
When both parties want to lower their respective tax obligations, they’ll have to work out a middle ground. Typically, a higher purchase price may compensate for the tax considerations.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Timing the Merger Completion for Tax LiabilitiesMerger and acquisition deals can take a few months to several years to close and this can influence tax liabilities. Over the last decade, the average closing time has increased by 30%. However, this interval varies according to several different factors.
The size of the deal is a significant variable and larger deals valued at over $250B can take 279 days on average.
Mid-sized deals valued between $500M and $5B extend to an average of 279 days. Cross-border and cross-country deals typically involve regulatory compliance in different jurisdictions.
The higher the deal value, the more meticulous is the due diligence and exchange of technology and assets. When deals take over a year and extend across multiple assessment years, calculating taxes during the straddle period becomes complicated.
The straddle period is the interval from the time when the companies file the articles of the merger. And ends with the final deal closing. As a result, dealmakers must negotiate which parties will assume the tax liability since both companies will continue conducting business.
Both parties must also determine the exact date when the acquired company’s tax year will end. Or when it ceases to exist as an independent entity from the taxation perspective. Handling tax refunds and post-closing tax audits is also an issue if the pre-closing tax periods come under scrutiny.
This can happen if the target company has been underreporting its income and revenue. Or has accrued taxes that are unpaid at the time of the transaction.
Pre-Closing Tax Liabilities IssuesEven though the acquired company ceases to exist as an independent entity, the seller is subject to audit assessments. These assessments and pre-closing liabilities can extend for up to four years after the merger’s final closing date.
For this reason, the buyer may conduct thorough due diligence to examine the targeted company’s financials. The objective is to examine its pre-closing tax status and uncover any discrepancies and liabilities. These issues can have serious tax implications for the buyer.
This is why, both parties negotiate the terms of the purchase and sale agreement to include various tax provisions. These terms shift the burden of the pre-closing tax liabilities to the seller.
The agreement will also include provisions for tax covenants, tax representations and warranties, and tax indemnity and survival clauses. Working out these issues at the onset helps you understand the tax implications of your M&A deal. And, eliminate any disagreements that can derail the deal.
Additional Tax Concerns to Be Aware OfSeveral other issues can arise when calculating the tax liabilities both parties must assume.
Calculating the transfer pricing for goods and services can become a problem. When the parties in an M&A deal transfer such assets between the two companies, they may set prices. However, since the entities are now related, calculating the appropriate pricing can become a challenge.
The IRS will likely meticulously examine the pricing to ensure that it is reasonable and there are no tax liabilities. If that happens, both parties may attract tax audits and penalties.
Since M&A deals take extended periods for completion, there’s the possibility of changes in the tax laws. Changing governments and regulations can significantly influence the final taxes both parties must pay. They may also have to renegotiate the purchase and sale agreement for tax compliance.
Tax calculation methods can vary between the parties to the M&A deal. If they use entirely distinct methods, several accounting challenges can arise leading to unexpected tax liabilities. Aligning the financials for both companies and adjusting for tax compliance can be a complicated process.
Retaining the services of expert credential CPAs is always advisable to stay on top of the dues.
The Takeaway!Taxation laws and compliance issues can be complicated, particularly in the case of mergers and acquisition deals. Transferring assets, stock, IP, receivables, real estate, and inventory and calculating the tax implications is a highly complex exercise.
Even as you negotiate the terms and conditions, be aware of the tax implications of your M&A deal. Have an expert CPA at the table to direct you on the taxes the deal will incur and the parties liable for payment. Don’t overlook the financials from previous years and scrutinize them for discrepancies.
Non-compliance can result in significant penalties and fines and possibly, even audits that you want to avoid.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Daniel Nathrath has had an exciting entrepreneurship journey building and exiting companies. He went on to build Ada Health, a revolutionary clinically-driven AI application that provides patients with in-depth health information.
In this exclusive interview, Daniel discusses drawing inspiration from Alejandro Cremades’ book, The Art of Startup Fundraising. He also talks about Alejandro’s expertise that helped him raise funding worth $200M for Ada Health.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Childhood in Germany and Early InfluencesDaniel Nathrath’s journey began in a small town in Germany, surrounded by a family of doctors. His father was an ophthalmologist, which gave Daniel an early exposure to the healthcare industry.
Despite this, he wasn’t initially inclined to follow in his father’s footsteps due to the demanding nature of the profession, which involved long hours in a dark room.
Unsure of his path, Daniel chose to study law in Germany and then in the United States, thanks to a Fulbright scholarship that took him to Houston, Texas. Daniel also took the bar exam in New York.
During this time, in the mid-90s, he discovered the internet, a revelation that would shape Daniel’s future career. Initially, he simply enjoyed being able to stay on top of what was going on in German football or soccer.
The Dot-Com Boom and Lycos EuropeSoon after, Daniel returned to Germany and despite getting a few offers to join international law firms, he opted to join Lycos Europe, a leading internet company at the time.
Lycos was a joint venture between Lycos US and Bertelsmann and was one of the earliest search engines and portals competing with Yahoo. Joining Lycos in 1999, Daniel played a pivotal role during its IPO and subsequent rapid growth.
The company acquired about 50 companies across Europe and went from 40 employees to 1,500 in a very short period. This period was marked by numerous acquisitions and integration challenges, providing Daniel with a crash course in the highs and lows of a fast-growing tech company.
Lycos USA’s founder, Bob Davis, led Lycos to the fastest IPO ever on the NASDAQ. Initially, Daniel had joined Lycos Europe as a lawyer but transitioned quickly to a higher position, taking on a more business-focused role in the company.
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Lessons in Integration and GrowthAs Chief of Staff to the CEO and later overseeing post-merger integration, Daniel witnessed firsthand the chaos that often accompanies rapid expansion.
The motto Speed is Life, inspired by a book the founder of Lycos wrote, underscored the company’s approach, often at the expense of thorough due diligence.
Despite the eventual decline of Lycos due to competition from more focused companies like Google, Daniel gained invaluable experience. As he recalls, almost all the companies they acquired were run by very young and often, first-time founders.
The challenges of integrating diverse companies, especially in different countries with varying tech platforms and cultures, taught him crucial lessons about scalability and the importance of careful planning. He basically experienced the whole life cycle of a company in fast-forward.
One year later, Lycos had to go through restructuring and went back down to 600 to 700 people. The company went through a lot of acquisitions and fast growth but also made many mistakes along the way.
However, many of the former Lycos team members went on to become extremely successful founders, building companies like King.com (the maker of “Candy Crush”) and dating platforms. One of them also became the President of Europe of DoubleClick.
Transition to Business and ConsultingDaniel’s next step was to deepen his business acumen. Coming from a medical family with little financial literacy, he pursued an MBA at the University of Chicago’s global executive program. His objective was to develop an understanding of what entrepreneurship means.
This experience spanned Barcelona, Chicago, and Singapore, enriching his understanding of global business practices. Post-MBA, Daniel joined the Boston Consulting Group (BCG) to gain exposure to various industries.
He made it clear from the outset that his tenure at BCG was a stepping stone to launching his own venture. This period allowed him to explore banking, insurance, and other sectors, but his passion for tech and entrepreneurship remained strong.
Founding and Selling a StartupThe entrepreneurial itch led Daniel to co-found a startup in the skill gaming sector, a venture born from casual conversations with MBA classmates over beers in Barcelona.
At the time, Daniel and his friends were studying for a Master of Business Administration and intended to go back to corporate jobs like consulting, investment banking, or similar spheres.
Despite being bootstrapped, the startup became profitable quickly, but Daniel soon realized it lacked the purpose he sought.
The company was sold, providing a modest financial return but more importantly, a deeper understanding of startup dynamics. This experience reinforced his desire to create something with a more significant impact.
Combining Passion and Purpose with viagogoDaniel’s next role brought together his passion for football, soccer, and tech, all recurring themes. He joined viagogo, a secondary ticketing platform, as the German country manager, overseeing its partnership with Bayern Munich.
Working closely with the founder, who had previously founded StubHub, Daniel gained insights into effective fundraising and commercial strategy.
After three and a half years, he yearned for a venture with greater purpose, leading him to take a sabbatical and travel the world, a move that would set the stage for his next big project.
Ada Health: Revolutionizing HealthcareUpon returning from his travels, Daniel was approached by former Lycos colleagues about a groundbreaking idea in healthcare.
They introduced him to Martin Hirsch, a scientist with a mission to eradicate misdiagnosis, and Claire, a doctor who would become Ada Health’s Chief Medical Officer and Daniel’s wife.
Talking about the dynamics of the founders’ relationships, Daniel reveals that they had a separation of responsibilities.
Claire is a trained doctor from the UK, a pediatrician, and a geneticist and has worked in the National Health Service in England for 10 years. She is the medical brain of Ada Health.
Daniel handles the business aspect, including fundraising, getting revenues, and other challenging tasks. Together, they co-founded Ada Health, aiming to create a decision support system for doctors. Initially, the challenge was immense.
Around 10 years ago, convincing doctors accustomed to pen-and-paper methods to adopt new technology was a hard proposition, particularly in Germany, where there are lots of concerns about using technology.
Pioneering Patient-Centric Healthcare SolutionsAda Health pivoted to focus on patients, recognizing the potential to empower individuals with accurate health information. Daniel and Claire knew that 7% of Google searches are health-related and one in five of these searches consists directly of a symptom.
At the time, the online company WebMD had a primary feature called a symptom checker, but it wasn’t very accurate. Daniel and his co-founders were confident that the application they had built was multiple times more accurate.
However, they had to figure out a way to make it easily accessible and usable for patients. That’s how they developed a chatbot, launched in 2016-2017, which became one of the first in the medical space. Essentially, Ada Health launched one of the first chatbots in the medical space.
The Ada Health Business ModelDespite initial uncertainties about the business model, Ada Health found success through partnerships with health systems, insurers, pharmaceutical companies, telehealth companies, and the government.
The app, available for free, has been downloaded by over 14 million people and processes millions of health queries globally. Ada Health has more than 35 million cases in the system and every three seconds, someone somewhere in the world enters a new case in Ada in 12 different languages.
Daniel and his co-founders settled on two main business models. One is working with health systems, governments, and payers to provide a kind of a digital front door, a triage tool at the beginning of the patient journey. That’s where Ada Health integrates the software into its partner’s environment.
For instance, Ada works with Jefferson Health, a large health system in the US. Jefferson integrated Ada’s technology where people can start their journey with Ada before they see a doctor. They can figure out if they need to see a doctor and which doctor would be the best to help them.
Ada is integrated with the electronic health record system and lets users go straight into the appointment booking. It redirects a significant percentage of people towards self-care, where that’s appropriate, so people with a cold shouldn’t go to the emergency room.
Ada also helps prepare for the doctor visit. It automates part of the doctor’s job by taking the patient’s history, saving the doctor several minutes per appointment because part of the documentation effort is already done.
The business model is a SaaS model where the partner organization pays Ada an annual license fee. These types of contracts are typically multi-year contracts and both sides invest efforts in setting up the integration.
It’s working exceptionally well and has a very high satisfaction for Ada’s partners, including the largest health system in Portugal, one of the largest health insurers in Switzerland, the most innovative health system in the US, and a province in Canada.
A Second Business ModelThe second business model is working with life sciences companies to match the patient to the most appropriate underlying condition. Ada helps pre-assess the patient and then directly connect to a healthcare professional who can then prescribe treatment.
Essentially, it’s about creating awareness for the patient and can be lifesaving ensuring they get the right treatment. This process works in the commercial interest of the pharma companies. It also helps find patients for clinical trials.
As Daniel explains, Ada is like a doctor in your pocket and is very good at finding the undiagnosed population. It serves the interests of life sciences companies and individual patients needing care.
Navigating the Fundraising LandscapeThe fundraising journey for Ada Health was atypical. The first five years were funded by high-net-worth individuals mostly from Germany, who believed in the mission. Daniel explains how he has always believed in the doctor-led, science-led, and responsible approach.
He is a big fan of the lean startup approach, building an MVP, generating revenues, and iterating from there. Since the Ada product could have a massive positive or negative impact on users’ health, he exercised complete caution with the MVP.
A Private Video Call with the Author of The Art of Startup FundraisingInstitutional funding began in 2017, coinciding with Daniel’s engagement with thought leaders and resources, including Alejandro Cremades’ The Art of Startup Fundraising. Daniel remembers Alejandro’s private Facebook group in 2016 and the small community of entrepreneurs.
A private video call with Alejandro where he imparted some of his wisdom on fundraising was very helpful for Daniel. The insights he gleaned were different from what Daniel had been doing and were inspirational. And, they provided valuable direction for his fundraising journey.
Ada Health has raised approximately $200M and turned profitable last year, a testament to the team’s dedication and strategic vision.
Storytelling is everything which is something that Daniel Hathrath was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!A Vision for Global Health EquityLooking ahead, Daniel envisions a world where everyone has access to accurate, personalized health information at their fingertips, regardless of their geographic or economic circumstances.
Ada Health aims to integrate data from various sources, including wearables and genomic information, to provide proactive and preventative healthcare solutions.
By doing so, Daniel hopes to address health issues early, reducing the burden on healthcare systems and improving outcomes for individuals worldwide.
Ada already has a reach of 50 million people today. His target is to reach more than a billion people in a few years from now. Currently, billions of people cannot afford or access a doctor but have internet access.
Daniel iterates that Ada is not about replacing doctors but supporting doctors and people who don’t have access to doctors. He would like to see a world where healthcare is more equitable. Ada should not only look at the symptoms but eventually integrate data from all relevant sources.
The app should gather data and address the problem, identifying it as a $100 problem which is not yet a $100,000 problem. Getting an early diagnosis can save lives. Ada saves the patient’s medical history and applies probability modifiers to detect the problem based on the symptoms.
When combined with direct-to-consumer lab tests, technology can help patients understand and manage their health more efficiently.
In ConclusionDaniel Nathrath’s journey from a small town in Germany to leading a transformative health tech company underscores the power of passion, resilience, and vision in creating lasting impact.
His story is a testament to the potential of technology to revolutionize healthcare and improve lives on a global scale.
Listen to the full podcast episode to know more, including:
- Daniel Nathrath’s early exposure to healthcare and his legal studies in Germany and the US set the stage for his diverse career.
- During the dot-com boom, Daniel played a key role in Lycos Europe’s rapid growth and IPO, gaining valuable tech industry experience.
- His time at Lycos taught him crucial lessons about scalability, integration, and the importance of careful planning in fast-growing companies.
- An MBA from the University of Chicago and a stint at Boston Consulting Group deepened Daniel’s business acumen and prepared him for entrepreneurship.
- Daniel’s first startup in the skill gaming sector was a profitable venture, reinforcing his understanding of startup dynamics despite its lack of personal fulfillment.
- At viagogo,, Daniel combined his passions for tech and football, gaining insights into effective fundraising and commercial strategies.
- Co-founding Ada Health, Daniel aims to revolutionize healthcare by providing accurate, patient-centric health information, raising $200M and achieving profitability.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $200 Million To Support Better Health Outcomes With Intelligent Technology appeared first on Alejandro Cremades.
Before making the final decision, you’ll carefully weigh the pros and cons of selling your business. Entrepreneurs have personal and professional objectives when building a business. Most intend to scale it for an IPO with the possibility of an exit low on their list of priorities.
Whatever may be your reasons for selling the company, timing the exit and prepping it carefully is crucial. That’s how you can expect to value the business accurately and get the optimum price for it. Retaining the services of expert M&A advisors and other professionals is always advisable.
But before scouting around for buyers are preparing the materials for listing the company, reconsider your options. Are you absolutely certain this is the right strategic move? Are there any other channels you can explore? Would you prefer to liquidate the company or execute a trade sale?
Opting for a trade sale has an advantage since the acquirer is likely working within your sphere. They may want to purchase your company as a strategic move to achieve cost, financial, or revenue synergies. Or, they may want to acquire it for its IP, patents, or business secrets.
Acquihires to onboard the skill sets and talent could also be an objective. You can rest assured that the company will continue running as part of a larger corporation. Read ahead to understand in detail the upsides and downsides of selling.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Upsides of Selling Your CompanyYou’ll take advantage of favorable macroeconomic and market trends.Taking advantage of an uptick in market trends and favorable macroeconomic conditions is an upside of an exit. As long as the business is operating well, generating rich profits and revenues, and has a robust customer base. You can expect to get offers from several buyers looking for collaborations.
Typically, if larger corporations are bidding for the company, know that selling it is an advantage. It’s an indication that your products and brand are attracting attention from the big players in the market. Exiting at this time is advantageous since you can get competitive and premium prices for it.
Founders can dictate terms and conditions that work best for them. Keep in mind, that when larger brands offer to purchase a smaller startup, they see potential and a possible competitor. Grab the offer while you can and rake in the profits.
If the buyer sees strategic value in acquiring the company with low risks, they may be open to offering you a considerable lump sum payment. Partnerships with acquirers looking for strategic synergies will be beneficial for your company in more ways than one.
Access to better distribution channels, advanced technologies, and skill sets are only some of them.
The financial benefits are enticing.Entrepreneurs starting a new company invariably since their savings into it in the initial stages. You may have also run up huge credit card bills or lines of credit when bootstrapping. Raising money from friends and family is also a strategic move to get the company up and running.
When weighing the pros and cons of selling your business, prioritize your ability to pay off the debts. Even if you’ve paid yourself in equity for the money you invested, the company is a separate legal entity.
Pay off the outstanding dues using the returns from exiting. That is; if you haven’t cleared them out of the profits the business earned.
Yet another option is to reinvest the profits into other companies or projects that can earn you higher returns. That’s a great approach to diversifying your asset portfolio. If you’ve been facing financial difficulties on a personal front, using the returns from the sale can help resolve them.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
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You’ll invest time and resources into a new project.It’s not unusual for founders to want to exit a project so they can divert their money, time, and other resources into a new project. Serial entrepreneurs use this strategy to build and scale companies, and then exit them to start new ventures.
You can use the opportunity to explore new business ideas and possibly new industries.
You’ll have a better work-life balance.Even if you aren’t ready to retire, exiting the company is a good way to take some time off. You can also use it as a sabbatical between projects to spend time with the family, travel, and unwind. Even if you’re not interested in stepping away permanently, consider staying on as a consultant.
The company will continue to benefit from your supervision and direction, making the transition easier. At times, the terms of the M&A deal require the founder to stay on and possibly draw a stipend for their time in the company,
You’ll ensure its stability as it integrates with the new partners. Ensuring cultural integration between the workforce and other synergies can be crucial for the merger’s success. Your team will also benefit from your guidance and the possibility of employee attrition and turnover will be minimized.
Meanwhile, you can spend time learning new skills and engaging in activities for personal growth and development. Also, grab the opportunity to mentor budding entrepreneurs or build firms for investing in new startups.
You can leverage your expertise and experience to nurture the business community.
You’ll exit a struggling business.Founders may ideate an interesting business concept on which to build a company. But, it may not necessarily be a success for several different reasons. For instance, lack of funding, a weak concept, the founder’s inability to scale it, or a lack of skill sets.
In that case, it’s advisable to sell the distressed business and allow competent buyers to take it over and turn it around. The new owners can nurture the dying business with funding, know-how, skills, and operational strategies.
A sale can prevent shareholders and stakeholders from losing their investment and income source, also You’ll transfer the burden of risk on the buyers, particularly, if you’ve been dealing with regulatory or legal challenges. Or, if the market conditions are changing.
But, if that is the case, expect to get a lower price for the company. The buyers will want to offset the risks they’ll take on by offering reduced pricing.
On the flip side, some companies become super successful and are ready to go to IPO. But, for that to happen, they need a competent board of directors and trained executives. Handing over the reins to better-qualified people who can take the company forward is in its best interests.
You’ll save jobs.Selling a struggling company in a trade sale will ensure that the employees keep their jobs. You can always negotiate the terms and conditions to ensure that the workforce remains in the company. Particularly, if you’re exiting in anticipation of an economic downturn.
A strategic acquisition will ensure that the company is resilient and sustainable through the volatility and the workforce has opportunities.
Keep in mind that in fundraising, mergers, or acquisitions, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Downsides of Selling Your BusinessWhen considering the pros and cons of selling your business, pay special attention to the downsides. You’ll understand the risks and work out strategies to deal with them.
Control will shift to the new owners.Founders building a business have a vision, mission statement, and direction in which they want to take the company. Exiting the company will mean giving up control over an organization they have worked hard to build. And, this can be very challenging.
The new owners may want to merge the company with their own and institute a mission and culture distinct from your own. Exiting founders may not have much say in how the company is run so be prepared for this situation. You’ll prepare mentally and emotionally to let go of your “baby.”
Prepping the company for an exit takes time.You may have to prepare the company for sale by making some basic upgrades to entice buyers. For instance, cleaning up the financials, preparing three years’ worth of statements, and clearing tax dues. Liquidating non-essential assets and improving operational efficiency are also crucial.
When buyers assess the company, their due diligence focuses on the downsides and reasons to offer you a lower price. You may have to invest in repairs and maintenance, shoring up the company’s cybersecurity, and upgrading systems and software.
Be prepared to incur the costs of selling your business that can add up quickly. Also, factor in the listing and marketing costs to present the company in the industry marketplace. These activities may take not only investment but also time and effort.
Factor in the delays from the time you start looking for buyers until the sale is executed and you receive the final check. You’ll enter into negotiations, complete the due diligence, and execute the final signing and paperwork. All of these procedures are time-consuming.
Founders should retain the services of an expert M&A advisor to help them execute the sale. This approach ensures that they can continue running the company efficiently. They can also focus on prepping the company and let the experts deal with the nuances of the transaction.
The terms and conditions may not be favorable.Depending on market conditions and the company’s viability, you may have to accept a lower price. The buyer may also request terms and conditions like signing a non-compete agreement. This clause may prevent you from starting a new company within the same niche, vertical, or location.
The acquirer may also mandate that you remain with the company and continue running it for a fixed time. Or, that you can only provide consultancy services and not build a new business for a fixed time. The founder may also have to accept extended warranties and indemnities.
These clauses in the sale agreement are designed to secure the buyer from the possibility of future liabilities. Make sure to include terms that limit the extent of the liability you can face.
You’ll lose the future profits the company generates.If the company is growing quickly and demonstrates the potential for earning substantial profits, you’ll negotiate for a higher price. However, that also means that you’ll lose out on the chance to earn those returns. In other words, you’ll place future earnings into the hands of the buyer.
Ineffectual integration leads to an unsuccessful merger.The risk of improper integration is the biggest reason why mergers fail. The possibility of lowered employee morale, uncertainty, and attrition among the top talent is very real. If the workforce is unable to coordinate their work practices, that can spell disaster for the legacy company.
Employees getting fired to eliminate overlapping and redundant departments is commonplace in mergers. If your workforce has been with you since the company was built, you’ll ensure that their future is secure post-merger.
Work out strategies and practices to provide support and alternative jobs to navigate the transition. Also, prepare them to deal with a different management style, company culture, and workplace practices.
Knowing how to value your company is an essential step when you’re considering a sale. Check out this video where I have explained in detail how to calculate the exact worth of the business.
Undervaluation and underpricing are a real possibility.When considering the pros and cons of selling your business, you’ll also focus on the right time for an exit. Selling during an economic downturn or if the company is struggling will, invariably, result in a lower valuation. You might have to accept a lower price.
This is why, experts advise you never to sell during downtrends. On the flip side, cutting your losses and exiting could be a better strategic move. Resolve this issue by talking about projected numbers and the company’s future potential for growth and profitability.
Further, before planning a sale, you’ll gather in-depth information about the market conditions and the company’s market value. Being well-informed will position you better to negotiate for the true value.
Don’t undersell the business, but consider other options like a management buyout, IPO, or liquidation, as a worst-case scenario.
The Takeaway – What Are Your Options?Weighing the pros and cons of selling your business involves making tough decisions. Every company has unique circumstances and as the founder, you’ll trust your gut. Consider and reconsider your options carefully and rely on the recommendations experts provide you with when accepting the final offer.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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The post Pros And Cons Of Selling Your Business: A Comprehensive Analysis appeared first on Alejandro Cremades.
Among the many strategic decisions you’ll make, don’t overlook the costs of selling your business. Whatever your reasons and timing for the sale may be, always factor in the expenses you’ll incur. Be ready to add this cost to the company’s final price.
Founders selling their company need assistance from a team of expert professionals who can ensure you get the best price. You’ll also need advisors to guide you through the legal, accounting, financial, and other regulatory aspects. Hiring people with the best skills will streamline the process.
For starters, you’ll conduct a detailed valuation of the company, which requires the assistance of an expert M&A advisor. Use their expertise to assess the financial and non-financial aspects that add value to the company. You’ll also factor in the sweat equity you invested in building the business.
Preparing the company for sale, dealing with due diligence, and marketing involve expenditures. You should also anticipate some closing costs. Read ahead for detailed information about the costs of selling your business. Knowing what to expect can help avoid unpleasant surprises.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Pre-Listing Procedures ExpenseBefore exiting the company, you’ll ensure its stability and that it can continue to operate without the founder’s supervision. Buyers and investors are likely to assess the company’s team and its ability to run operations after the founder’s exit.
The team should be well-trained and competent to handle management and administrative tasks. If needed, you’ll promote them to executive positions and offer competitive compensation packages. Depending on the company’s needs, you’ll hire external executives as board members.
Next, you’ll examine the premises, manufacturing units, and other processes to identify areas of improvement. Invest in new technology, automation, AI capabilities, software, and machinery to enhance production capacity and operating efficiency.
This is a good time to upgrade any processes you’ve been putting off until now. For instance, human resources and payroll systems, point-of-sale POS systems, inventory management tools, and more. Also, beef up IT cybersecurity protocols like firewalls and breach protection.
You’ll conduct all the necessary repairs and maintenance tasks to have the facility running in top shape. If needed, invest in R&D to expand the product portfolio. You’ll also enter into strategic contracts that lower logistics costs for selling products and sourcing inventory.
Many companies have proprietary secrets, Intellectual Property, Intangible Assets, and patents that form their core assets. As part of the sale prepping, you’ll make sure that the ownership titles are secure. Confirm that the employees who created the IP have signed over their rights without any liens.
These steps, along with other operational improvements, will maximize the company’s valuation. Also, prepare three years’ worth of financial statements that investors and buyers will ask to see. All these activities could cost thousands of dollars, but you’ll recover them with a higher valuation.
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Costs for Listing and Marketing the CompanyHaving prepped and readied your company for sale, you’ll scout around for appropriate marketing channels to present it. You’ll compile sales materials and other resources to advertise the business and attract potential acquirers.
Creating listings on relevant public platforms and online websites within your business vertical may involve substantial investment. However, investing this money is crucial to get the company in front of buyers and advertise its best features.
You’ll collaborate with the M&A advisor or finance broker to craft a compelling advertising strategy. Publishing the campaign on business-for-sale marketplaces and ensuring visibility can also involve expenses. Founders self-listing their companies can expect to pay a fee ranging from $500 to $1,000.
This fee applies to a six-month engagement; you’ll renew if the company isn’t sold during that period. Add this fee to the end costs of selling your business.
Crafting the Selling MemorandumHaving listed the business, you can expect multiple inquiries from interested buyers who’ll need detailed information about the company. But before you share business secrets, details about the IP, and other confidential data, you’ll institute some measure of security.
To secure the company, you’ll craft the selling memorandum with the assistance of the business broker. This document is, in essence, a brochure that sellers send to prospective buyers containing data about the business. Along with highlights, it may also present an overview of its financials.
Founders can prevent information about the sale from reaching the market by getting the buyers to sign an NDA. Once this NDA is signed, you can share the selling memorandum. You’ll assign the task of crafting a compelling memorandum to a professional.
This professional is proficient in presenting the company’s most value-enhancing aspects. That’s how they promote the best features and invite the highest buds. The broker’s job description also includes ensuring the NDA is signed and executed to ensure complete confidentiality before divulging details.
Founders with prior experience valuing and selling the company can craft the memorandum themselves. The process may include creating memos and printing out the relevant documents.
For added security, consider adding the documents to a virtual data room and restricting access only to specific entities.
However, you’ll pay a fee if you intend to have professionals handle the task. This amount can range from $500 to $3,000, but the final change depends on the complexity of the memorandum.
The number of pages that need to be prepared can also determine the costs of selling your business.
Business Valuation CostsBusiness owners can deploy different strategies to evaluate their company to raise funding or enter into M&A. An effective strategy is to run a comparative analysis of similar businesses that have been sold within the industry.
You can generate a price range and use that figure as a benchmark for valuing the company. This strategy works well for companies that have yet to start generating revenues or don’t have robust financial statements.
Arriving at a pricing multiple is easily done and costs around $20 to $100. Several online tools are available that you can use to calculate this figure.
However, if the company is well established with complex operations and extensive financials, it’s advisable to bring in professionals. Retain the services of expert agents who can handle the valuation and arrive at accurate figures. Typically, the costs include the brokerage fee.
Depending on the company’s size and scope, owners may have to hire a business appraiser. This professional studies the operational and financial metrics in detail before arriving at a number you’ll quote prospective buyers. The business appraiser’s fee varies according to the project but usually starts at $5,000.
Keep in mind that storytelling is everything in fundraising, mergers, or acquisitions. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Legal and Due Diligence ExpensesWhen estimating the costs of selling your business, you’ll include the costs incurred for conducting due diligence. While buyers do their own research into the business, as the seller, you’ll also do an independent analysis.
Due diligence will help you uncover any hidden details that can bring down the price of the company. At this time, you can resolve potential issues that can prove to be dealbreakers. The team you hire for the due diligence will include legal professionals, M&A advisors, brokers, and accountants.
You’ll retain additional experts depending on the type of business and industry where you work. For instance, you operate within the IT sphere and gather customer information for running operations. You’ll need cyber experts to assess the systems and ensure the PII hasn’t been compromised.
The entire team coordinates its efforts to examine the legal connotations of the business operations to ensure regulatory compliance. They’ll also review contracts to identify possible liabilities so you can resolve them.
Once the sale is finalized, legal experts will draft the sales documents and relevant agreements. Attorneys will examine the contracts to ensure that the ownership transfer progresses without any issues.
The costs of selling your business should account for the fees you’ll pay to the team. For instance, attorneys may charge you on an hourly basis or by project. You can safely anticipate that these fees can range from $2,500 to $5,000 but can also vary.
You might have to pay a higher amount if the deal is more complex and requires additional work. A good rule of thumb is to assume 1% to 2% of the transaction’s value in legal fees.
Closing CostsExpect to incur several other transactional and miscellaneous expenses during the sale process. For instance, any unpaid business and property taxes and filing fees to the relevant state government for transferring the ownership. Depending on the payment terms and conditions, you’ll pay escrow fees.
Sellers should also factor in unexpected minor costs such as preparing documents, courier charges for dispatching documents and traveling.
In case of an M&A deal across state lines or a cross-border transaction, you or team members may have to travel to complete due diligence, and accommodation and other incidental expenses may be added.
Then again, you may have to hire a CPA to compile accurate financial statements dating back at least three years. You’ll pay anywhere from $1,000 to $5,000 for income statements, profit and loss statements, and balance sheets. They’ll also review your taxes and ensure payments are compliant.
Although the small expenses may seem minor at the onset, they can quickly add up to huge bills. It is always advisable to plan for them when estimating the costs of selling your business.
The best time to start prepping your company for a sale is when you start building it. And, that’s one of the proven habits of successful entrepreneurs. If you need to know more, check out this video I have crated.
Business Broker or M&A Advisor FeeThe size, scope, and location of your company will determine the type of professionals you’ll retain for the sale. Business brokers work on a regional or local scale and are concerned with executing the sale quickly. Typical transaction values are less than $2M.
However, if you’re engaging in a cross-border sale or a national-level company, you’ll need expert M&A advisors. Many advisors charge you an upfront cost for covering all the costs associated with the transaction. These costs may include business valuation, market analysis, and marketing materials.
When engaging the services of professionals, it’s advisable to check their costs beforehand. Their fee ranges from 1% to 5% of the transaction’s value. Several factors can determine the final charges, such as complexity, level of negotiations, relationship with clients, and specific verticals.
Essentially, you’re paying for their exceptional skill sets, industry-specific knowledge, database, and extensive experience handling such transactions. They’ll ensure that you get the best price possible for the company and that the transaction progresses smoothly.
Navigating any possible challenges is quickly done thanks to their connections in the market.
Additional CostsBefore we start to tally the final costs of selling your business, account for these additional fees. Do keep in mind that the complexity and scope of the transaction always determine the charges.
- While we’ve talked about attorney fees in the ongoing sections, these expenses can be higher. For instance, you intend to separate real estate and other fixed assets from the company. In that case, the attorney must draw up the necessary ownership papers. But, if you intend to sell them with the business, you’ll need an estimate of their pricing and separate documents.
- The assignment fee is applicable if you’ve leased property from a third party. When selling the company, you must request the landlord to assign the lease to the company buyer. You’ll also pay a transfer fee to the government and attorneys to renegotiate the lease. And prepare the lease agreement in favor of the company buyer.
- If you pay off open mortgages, credit lines, and commercial real property loans as part of the company sale, the prepayment or termination penalty applies.
Accurately estimating the costs of selling your business is not possible because every company is unique. Several variables come into play, so it is always advisable to factor in additional costs when calculating the company’s price.
Adding these charges to your asking price will ensure they don’t reduce your profits when you receive the final check. Always rely on the assistance of an expert M&A advisor to guide you through the deal.
You may also find interesting our free library of business templates. There, you will find every single template you need when building and scaling your business, completely for free. See it here.
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Understanding how to navigate M&A during election season is crucial for dealmakers, M&A advisors, and other entities. This in-depth expertise and knowledge is particularly relevant in 2024, a notable year in which more than 64 counties are going to poll in their national elections.
Changes in the administration will result in drastic policy changes. If you’re considering cross-border deals, understanding how the policies impact regulations, taxes, HR, and other aspects becomes crucial. Aligning the aspects with efficient integration is essential to ensure the transaction’s success.
Countries participating in this most significant democratic activity will likely demonstrate new trends and operating strategies. These trends will reflect across the board in social, economic, and political spheres, ultimately impacting how people do business.
The US economy has the most significant impact on global financial markets. High interest rates, high inflation, and other challenges transfer to other countries. The ongoing geopolitical conflicts, such as the Russia-Ukraine and Israel-Palestine wars, also impact M&A deals.
Stable political conditions and policies improve overall business sentiment, and more dealmakers are willing to finalize transactions. They leverage strategic deals to scale companies and enhance profits and revenues. Fundraising activity ramps up, with investors more confident about earning returns.
Historical data shows macroeconomic trends like uptrends, recovery, and downtrends impact M&A deals. However, the number of transactions and company valuations may also dip right before the presidential elections.
Understandably, dealmakers prefer to wait for the election results to develop an understanding of the future business landscape. They can plan business strategies accordingly.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks M&A During Election Season – Let’s Check Out Some StatisticsLooking back at historical trends since 1996, the number of deals and their values are typically 8% to 10% lower. These dips are noticeable during the presidential election years. The impact is more significant on the lower end of the middle market.
Deals and transactions are put on hold because of the overall uncertainty about the congressional makeup after the elections. The election results and the regime coming into power will likely institute changes in policies and regulations. Dealmakers anticipate disruptions in the economic sphere.
Since 2022, M&A deal volumes in the middle market have been low due to several factors. These may include geopolitical conflicts, high interest rates, and buyers and sellers disagreeing on the expected deal valuations.
Substantial Reserves of Unused Capital is Available in 2024Deal activity dropped even further in 2023, but not because of the lack of dry powder available with VCs. In fact, private equity funding reserves were close to $3T and stabilized in mid-2023. Strategic dealmakers and buyers had adequate cash on their balance sheets, ready for investment.
Stable interest rates in mid-2023 contributed to reserves reaching an all-time high. By 2024, investors were looking for viable projects to back. Further, private equity firms were incentivized to liquidate their portfolio assets and deliver returns to their stakeholders.
Regardless of the high interest rates, the economy remained strong, with mid-market companies demonstrating steady growth. Other challenges, like the higher costs of accessing capital, hiring and retaining employees, and purchasing insurance, did not hamper growth.
As a result, the year 2024 is reversing the trend. Statistics show a 36% increase in the global deal values in Q1, which is 51% to 53% higher than during the same period in Q1 2023.
Further, the time needed for advisors and dealmakers to complete due diligence has also decreased. They take an average of 10 days less than around the same time in 2023. This could be because dealmakers are anxious to complete transactions quickly before the elections start off.
However, closer to the election dates, M&A deal volumes may taper off. Acquirers and sellers become more risk-averse and are willing to put deals on hold until after the elections. Valuations, interest rates, and funding for the deals are reliant on the new policies. Delaying deals is advisable.
Because of the favorable market conditions, experts anticipate that the “wait-and-see” approach will be only temporary. M&A during election season is slow but will ramp up quickly in the two quarters following the elections. Disruptions in deal volumes are likely to be temporary.
What Happens Post ElectionsOnce the elections are over and the new government comes into power, M&A activity resumes. Dealmakers can resume regular business now that they are aware of the latest economic, foreign, and taxation policies. They can make decisions aligned with the new rules to ensure profits and growth.
Although this should be the obvious way business progresses, historical statistics indicate otherwise. M&A deal value in the US has dropped in the interval between the election date and the year’s end. This phenomenon has been noted across the previous seven election periods.
Only two instances have occurred where the values of M&A deals after the elections exceeded those during the campaigning months. In other words, there are no clear precedents on which to base assumptions about what can happen after elections.
On the one hand, substantial dry powder reserves with private equity firms left over from 2023 may encourage more deals. Investors and acquires are anxious to identify new investment opportunities that can deliver profits.
Deals should increase as more buyers and sellers align their valuation expectations. On the other hand, geopolitical instability and government policies designed to secure domestic markets could prompt changes in strategic decisions.
Dealmakers may choose to lower their risk exposure and opt out of cross-border transactions. Their focus could shift to deals across states or cross-country to take advantage of incentives. Support may also move to more stable verticals where volatility is low.
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How Government Spending Boosts M&A During Election SeasonThe “electoral theory of spending” says that government spending ramps up during the presidential election year. This happens because the newly elected officials are dedicated to backing the projects their candidates and/or parties support.
Government spending also increases before the elections since officials are uncertain about the results. They may want to support ongoing projects to ensure their continued success even after the elections. As a rule, government spending increases during and up to one year after the elections.
This spending boosts M&A during election season and afterward, particularly in verticals such as engineering, technology, cybersecurity, and space. Developing infrastructure, life sciences, and research facilities are other industries and services that the federal government backs.
Projected Federal Reserve Rates and PoliciesProjections and estimations of Federal Reserve interest rates post-election can spur increased M&A deal volumes. As dealmakers, private equity firms, and venture capitalists expect interest rates to drop, global deal volumes have risen.
Statistics show an increase in the number of M&A deals by 22.5% by early March 2024. Compared to the first week of March 2023, deal volumes surged by 55% and were valued at over $601B.
Also, the number of M&A deals valued at more than $10B increased by 300%. Buyers and sellers expect inflation to drop, corporate profits to rise, and the stock exchange to be robust.
Fiscal policies are also less stringent in countries outside the US during their election years. This relaxation in regulations impacts cross-border transactions and benefits dealmakers looking to make acquisitions there.
Keep in mind that storytelling is everything in fundraising. For a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!What’s Different About 2024 ElectionsUnlike elections in the preceding years, there’s likely less apprehension about the economic policies and landscape of 2024. That’s because both candidates are well-known and have completed terms.
The corporate world is familiar with their policies and doesn’t expect any radical changes in the legislature. However, specific policy changes may prompt investors to exit their holdings and sellers to exit their companies.
Taxation PoliciesThe Biden administration intends to implement several reforms to reduce unemployment and create jobs. However, taxation policies are a different matter. The priority is to scale back the enormous tax breaks big corporations received in 2017.
Although the new tax percentage hikes of 21% from 15% are still lower than before 2017, they will impact businesses’ bottom lines. The administration will also crack down on tax evasion practices and reform the international tax system.
High-net-worth individuals and families may also have to pay a higher corporate tax rate of 39.6%. This tax rate is applicable if they earn more than $1M annually. Corporate executives and members of the management receiving high compensation packages must also pay higher taxes.
Corporations may feel the impact of the Inflation Reduction Act, a tax on corporate stock buybacks. This act lowers the tax advantages of buybacks over dividends and prompts companies to invest in their growth and productivity.
The act raises the tax on stock buybacks from 1% to 4%, which discourages companies from transferring tax-preferred profits to foreign shareholders. Another factor is that the tax cuts instituted by the Trump administration are due to expire in 2025.
Experts also estimate that his projected policies may raise unemployment and inflation. These anticipated changes may spur M&A during election season, as people take advantage of the lower tax rates and want to complete deals before the taxation system changes next year.
To enter into an M&A deal, you will need funding. If you need more information about how to pitch startup investors in the US, check out this video I have created.
Other Contributing FactorsAs dealmakers and advisors prepare for the election results, experts estimate that the M&A market could be stronger than ever. Several factors, such as the possibility of lower Federal Reserve tax rates and substantial capital reserves, continue to promote growth and profitability.
Financial and strategic dealmakers are ready to deploy capital into the market, and their concern is more about macroeconomic conditions. Their focus is also on the individual company’s metrics and performance and the overall industry’s conditions.
Due diligence strongly centers around financial and operational numbers that indicate the company’s viability, scalability, and long-term profitability. Companies that demonstrate potential for long-term growth with recurring revenues have a better chance of attracting investor interest.
Overall, regardless of which administration will dictate policies, experts expect the policies designed to curb inflation rates. They also expect regulations to boost the national economy with a focus on promoting productivity on the home ground. Lowering unemployment is also a priority,
All of these factors are certain to improve the business environment. This anticipation has spurred M&A during election season.
In ConclusionThe year 2024 is a historical year with the world poised for radical changes in economic polices. Since economies in the 21st century are going global, policies and regulations are likely to impact trade and business activities.
M&A activity in the US is correlated to the world however, thanks to the overall market optimism. Deals and transactions have had a promising start in 2024. Also, familiarity with both parties in the US elections has reassured dealmakers that policies may not change drastically.
Players in the M&A market are keeping a close watch on the frequent updates about the presidential elections in 2024. The business landscape cannot stay immune from the policies that the incoming administration may institute.
However, market sentiment is strong, and dealmakers are more focused on industry-specific trends. They are also likely to conduct extensive due diligence when assessing potential candidates for acquisitions or funding.
The ultimate objective is to acquire companies that demonstrate a strong potential for long-growth forecasts and robust financials. Other essentials of a typical pitch deck, such as the team, customer base, product-market fit, and business plan, are crucial.
These factors will continue to influence M&A during election season. Another incentive is the availability of capital reserves that investors are willing to offer. Policy changes could be a defining factor that tests the company’s resilience and ability to adapt to changing political conditions.
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In the bustling world of tech startups, stories of perseverance, innovation, and global impact abound. Today, we dive into the inspiring journey of Rob Gonzalez, co-founder of Salsify, a trailblazing enterprise software company revolutionizing product experience management.
From humble beginnings to scaling heights in the tech industry, Rob’s story is one of resilience, vision, and relentless pursuit of excellence. In this exclusive interview, Rob talks about his experiences with building Salsify, which has raised over $450M and has a workforce of over 500 employees.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Beginnings: From Refugee Origins to Tech EnthusiastRob’s roots trace back to a poignant chapter in Cuban-American history. His father, a Cuban refugee, and his mother, a native of New England, met under serendipitous circumstances at the Financial Management Leadership Program at GE Capital.
Their journey epitomizes the American dream — starting from scratch in a new country and building a prosperous life through hard work and determination in Connecticut. “Life growing up was fantastic,” Rob recalls. “My parents, a mixed marriage, exemplified resilience and grit, values that shaped my outlook profoundly.”
Rob’s grandfather’s escape from Cuba during Castro’s regime left an indelible mark. “It’s the largest child refugee migration in the Western hemisphere,” Rob explains. “Many children were separated from their parents indefinitely.”
These early experiences instilled in Rob a deep appreciation for the opportunities America offers and a drive to make a meaningful impact. Despite a tough childhood, Rob’s father grew up to become the chief risk officer for GE Capital EMEA.
By the end of his career, he was working in the senior executive band of GE Capital, the biggest financial institution at the time. Stories like these instilled in Rob values of resilience and commitment to working hard.
During his growing years, Rob’s family moved around and even stayed in London for a while. They relocated to the US when Rob was in the seventh grade, which involved a period of adjustment.
Passion Ignited: From Early Tech Enthusiast to IBM EngineerIn the UK, Rob was part of the advanced math program and spent time on the Apple system in school, doing math and playing games. After moving to the US, he convinced his dad to get an IBM PC. That was his gateway to programming, a skill he honed through self-study and sheer passion.
Rob took programming lessons over the summer and learned anything about computers that he could get his hands on. He scoured Barnes & Noble for magazines and books to expand his knowledge.
This passion led Rob to Williams College, where he pursued Computer Science and Mathematics. He embarked on a career at IBM, initially as a software engineer, after graduation. Much of his job description was around the research aspect.
Rob remembers how he could see that the proofs of concept and other things they created at IBM would never see the light of day. His desire to see tangible impact and user engagement prompted a pivotal career shift.
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Transition to Product Management at EndecaThe stars aligned when Rob and co-founders Jeremy Redburn and Jason Purcell saw an opportunity. At the time, Jeremy was working at Endeca, and Jason was taking over the product management organization.
Jason offered Rob a job as a product manager, which was unlike his experience at IBM in the research group. At Endeca, they hired people based on pure intellectual bandwidth, and if they passed the IQ test, they could get a job there.
This strategy led to them hiring an absolutely brilliant set of people. Rob successfully passed the IQ test even though he didn’t know what product management was. He went on to product marketing, eventually to sales engineering, and then sales marketing.
Entrepreneurship: The Birth of SalsifyThe entrepreneurial spirit was always alive in Rob. “In the ’90s, startups fascinated me,” Rob recalls. “I always wanted to start a company but didn’t know where to begin.”
Back in the early 2000s, starting a company involved a lot of investment since the concept of cloud computing had not yet been developed.
Rob would have had to purchase all the hardware needed to start a software tech company. And then. Oracle purchased Endeca for $1.1B in 2011. Cloud computing also arrived, and since Jeremy and Jason were transitioning out of Endeca, they were ready to start a new company.
Salsify was born out of the growing need for brands to effectively manage and optimize product content across multiple channels. “We envisioned Salsify as a platform that empowers brands to excel in e-commerce,” Rob explains.
Salsify is an enterprise SaaS company charging annual and an increasingly multi-year license fee for the usage of the software. Essentially, Rob and his co-founders have created the category of product experience management.
Salsify is a product that manages all content and data related to products and then syndicates those products into the market. Their customers are brands like L’Oreal, Coca-Cola, and other major corporations that market their products to different retailers. But also sell them directly.
They have D2C commerce sites powered by eCommerce tools like Shopify, Salesforce, or Commerce Cloud, and they also have product detail pages on Amazon, Walmart, Target, Kroger, and other stores. The big brands need to set up, maintain, and optimize content pages on all these sites.
That’s where Salsify comes in–by letting them manage their content internally and get it to retailers like Walmart and Kroger. The goal is to optimize product visibility and conversion rates across major retailers. In short, it is a world of retail search engine optimization.
Overcoming Challenges: From Struggle to BreakthroughThe early years of Salsify were grueling. “The first two years were a grind,” Rob admits. “E-commerce wasn’t a priority for many brands back then.”
The person managing Amazon for a top 100 CPG company was just some junior person in a basement somewhere that rolled into the sales organization, and nobody really paid attention to what they were doing.
Further, companies did not have the budget to spend on software. Even so, Rob and his co-founders raised a $8M series A funding round in 2013 despite not having much market traction. They did have full faith in their founding team and in the direction of the market.
However, a pivotal moment in 2014 transformed their trajectory. Rob conceded that if they had tried to build Salsify at any other time, it would never have worked.
Major retailers like Walmart and Macy’s began mandating improved product content from suppliers, propelling Salsify into prominence. They demanded that manufacturers and brands provide images for the product detail page, a product title, and some description that they can use for e-commerce,
“The market conditions shifted overnight,” Rob recalls. “We went from struggling to meet targets to rapid growth.”
Raising Funding for SalsifySalsify also went on to raise $450M in funding. Rob explains that since their days at Endeca, they had always had robust relationships with venture capitalists. As a result, Rob and his co-founders had multiple competing term sheets.
Investors were confident that it was going to be a big market and was going to support an IPO-scale business. The series A round worked well and was co-led by Michael Skok and David Skok, who had invested in Demand, Acquia, and HubSpot, among others.
Rob, Jason, and Jeremy were doing well in Boston, which has a dynamic tech industry. For their series B round, Rob and Jason went to the West Coast with the objective of approaching investors for money and having a Silicon Valley member on their board.
Despite their best efforts, they were unsuccessful primarily because of the lack of a network component. Ultimately, the B round was led by Mike Terrell from Venrock, and it worked out extremely well.
However, the experience taught them important lessons about networking and approaching familiar entities who knew their value proposition.
Storytelling is everything that Rob Gonzalez was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key.
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Scaling New Heights: Vision for the FutureToday, Salsify stands as a leader in product experience management, with a global footprint and over 500 employees. Rob asserts that Salsify’s aim is to be the global system of record for product data, empowering manufacturers and retailers alike.
Rob envisions a future where Salsify’s platform seamlessly integrates with every major manufacturer and retailer worldwide.
The goal is to facilitate seamless product data exchange across the supply chain. This network-centric approach is crucial for enhancing product visibility and consumer engagement.
Conclusion: A Legacy of Innovation and ImpactRob Gonzalez’s journey from a Cuban-American refugee family to co-founding Salsify showcases the resilience and ingenuity synonymous with the tech industry’s best. His story underscores the transformative power of entrepreneurship and the limitless possibilities of the American dream.
As Salsify continues to innovate and expand its global footprint, Rob remains committed to driving positive change in the e-commerce landscape. His vision and determination inspire aspiring entrepreneurs and industry leaders alike to pursue their dreams relentlessly.
In a world where technology shapes the future, Rob Gonzalez and Salsify stand as an example of the transformative impact of vision, perseverance, and unwavering commitment to excellence.
Listen to the full podcast episode to know more, including:
- Rob’s family history, escaping Cuba and rebuilding in the US, exemplifies resilience and the pursuit of the American Dream.
- Moving from engineering at IBM to product management at Endeca marked Rob’s shift towards impactful, customer-focused roles.
- Inspired by market shifts in e-commerce, Salsify aimed to revolutionize product experience management for global brands.
- Initial struggles in Salsify’s first years underscored the difficulty of selling e-commerce solutions pre-market recognition.
- Salsify’s breakthrough came with retailer mandates in 2014, compelling suppliers to enhance their e-commerce capabilities.
- Successful capital raises were built on early relationships with investors and understanding market trends over time.
- Looking forward, Rob envisions Salsify as a global standard for product information management and distribution across major retailers.
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In a recent podcast episode, we delved into the world of non-dilutive capital and entrepreneurial ventures with Keith Harrington, a seasoned investor and co-founder of Novel Capital.
Keith’s journey from a suburban Kansas City upbringing to becoming a key player in the venture capital world is nothing short of inspiring. This blog post captures the highlights and lessons from his remarkable career.
Kevin also talks about the meltdown of Silicon Valley Bank and how they successfully helped people raise more than $100M in equity and debt. Listen to him reveal his experiences with deploying capital for startups as an investor before transitioning to the other side of the table.
Listen to the full podcast episode and review the transcript here,
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Humble Beginnings in Kansas CityKeith Harrington’s roots are deeply embedded in Kansas City, a place he fondly recalls despite its fluctuating sports fortunes. Growing up in a typical suburban setting, Keith’s childhood was unremarkable in many ways, yet it laid the foundation for his entrepreneurial spirit.
His early memories include the Kansas City Royals winning the World Series in 1985, an event that, while significant, didn’t foresee the impact he would later have on the city’s entrepreneurial ecosystem.
The Detour from Medicine to EntrepreneurshipKeith initially harbored dreams of becoming a doctor, enrolling at the University of Kansas with high hopes. However, a challenging chemistry class soon redirected his path.
After experimenting with various majors, including Political Science and Psychology, he found himself immersed in the burgeoning world of startups, starting with a local ISP in the 90s. This early exposure to the dynamics of small, ambitious companies ignited his passion for entrepreneurship.
Keith was introduced to the idea of a very small company trying to grow and punch above its weight. He learned a lot about early-stage companies and building a customer base.
Lessons from the Dot-Com BubbleKeith’s next significant experience came at Birch Telecom, a startup that saw meteoric growth during the dot-com boom. The company raised a ton of money from blue-chip investors around the country from 1998 through 2000.
However, the subsequent bust and a Chapter 11 bankruptcy filing were humbling experiences. Keith watched as the stock options he and his teammates were counting on went from millions to zero in a very short time.
The date April 24th of 2000 left a lasting impression on his psyche. At that point, the company was gearing up to go public.
Despite the turmoil, Keith gained invaluable insights into corporate development, M&A, and the realities of startup life. His hands-on involvement in these transformative projects, often without formal qualifications, honed his skills and solidified his commitment to the entrepreneurial journey.
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Transition to Venture CapitalThe transition to venture capital came unexpectedly. After completing his degree in finance, Keith joined a state-funded life sciences fund guided by a former mentor. Despite his initial lack of expertise in life sciences, Keith thrived by focusing on the people behind the ideas.
He went from working in the technology and engineering group to eventually doing corporate development, helping with M&A, and assisting with the integration of a couple of companies. These were transformative projects and very inspiring.
Keith quickly learned that the success of early-stage investments hinged more on the team’s capabilities and persistence than on the idea itself. He got exposure to different kinds of board members, investors, private equity people, and VCs and enjoyed the opportunity to interact with them.
At that time, Keith had no idea what venture capital is. But he remembers being captivated by the concept and by the thought processes of the people he talked to.
Life Sciences Investing at KBASometime in 2009, a guy with whom Keith had worked at Birch Telecom contacted him to tell him that he had taken a role leading investments for a state-funded life sciences fund. He offered Keith the opportunity to join him in the project.
Keith remembers his initial misgivings since he didn’t know much about life sciences or early-stage investing. However, his friend believed in his ability to figure out what he didn’t know much about.
Keith continued working there for six years, made a bunch of interesting investments, and learned a lot about early-stage companies. His job was to support early-stage companies with investment. He also learned some important lessons during his stint.
Keith candidly admits that the first lesson he learned was that he shouldn’t have been advising entrepreneurs since he had no idea what he was talking about. The second thing he learned was that the quality of the idea is critical in early-stage investing.
However, even more important is the people who are going to be implementing the plan. The focus should be on the team and their capability to execute, iterate, and keep going. And their persistence to actually achieve success.
Betting on the jockey rather than the horse is how VCs think. Keith had to learn to think that way because when he first started working in early-stage investing, he would think a lot about spreadsheets and models.
However, he quickly realized that nothing ever worked the way that the spreadsheet or the model said it would. But, aligning with the founder or a team of founders who had grit, capability, and persistence and were able to execute that’s when interesting things would happen. Essentially, it’s all about the team.
Transitioning Out of Venture CapitalHis stint at KBA came with valuable insights that Keith carried with him. After listening to entrepreneurs talk about their ideas, business dynamics, and metrics, he needed to align them against the narrow approval criteria he had. He spent a lot of time turning down capital requests.
For instance, entrepreneurs would have a million dollars in revenue with a growth rate of 30% year-over-year and some amount of profitability. But they would still not be venture-backable. Around 40% to 50% of startups had a real business and a shot at building something meaningful.
That’s when Keith started to explore the idea of coming up with a capital solution other than venture capital. He researched how to fund more entrepreneurs more broadly with some kind of tool that’s going to actually help them grow. Solutions other than factoring or working capital finance.
Keith mentions that he is a Kauffman Fellow, and when working in venture, he was invited to a seminar, a design session day at their headquarters in Kansas City, to talk about funding small companies.
Learning About the Concept of MicrofinanceThe conversation was about microfinance and the idea of unlocking a trillion dollars of capital for early-stage companies and entrepreneurs who don’t typically see equity capital. At this meeting, Keith met a couple of people who would change the course of his trajectory.
He met a guy at a firm called CIM who funds other funders. The firm provides capital to lenders and other kinds of capital providers for entrepreneurs. Their goal is to create more capital in the ecosystem and new, generally non-dilutive forms.
Keith also met a couple of entrepreneurs who had taken on a form of financing called revenue-based financing. Initially, he didn’t know much about how it worked but he quickly caught on the concept and was excited about it.
On leaving the meeting, Keith was determined to build a revenue-based financing firm. He went out in Kansas City, and over the next 60 to 75 days, he had two or three meetings a day with investors, entrepreneurs, lawyers, accountants, and anybody who would talk to him.
At the end of the day, Keith was convinced he wanted to raise a revenue-based financing fund and fund a bunch of entrepreneurs.
Founding Novel CapitalKeith’s journey eventually led to the founding of Novel Capital, a fintech company providing non-dilutive capital to B2B software companies.
Partnering with Carlos Antiqueira, who had faced his own challenges raising capital for his ed-tech business, Keith developed a model that leverages company data to determine appropriate loan sizes.
Carlos had ended up selling his business to VISTA equity partners, but it took him about seven years to find an equity partner who would write a check that was meaningful enough for him to really help him grow.
Over coffee with Carlos, Keith knew he could have provided him with a revenue-based financing loan, which would pay back maybe 1.5x or 1.75x or whatever over three or four years.
Eventually, they ended up starting Novel Capital in 2021, which has since raised significant debt and equity, demonstrating robust growth and solid execution.
Keith and Carlos take company data and use it to underwrite a business and determine the size of a loan that is useful and appropriate for the companies that approach Novel.
The Novel Capital Business ModelThe Novel business model is to lend funding and build new tools for entrepreneurs. Keith and Carlos are leveraging their insights and turning them around for the CEOs that they lend money to. That’s how they help them make better capital decisions.
The premise is that getting a loan and equity is not always the right answer. Novel’s goal is to be a one-stop shop for insights and capital. To date, the company has raised more than $120M in debt to deploy to the entrepreneurs that they fund.
In addition, Keith and Carlos have raised a little over $15M in equity for the company itself to support growth, new initiatives, and software development. Keith explains that the fundraising journey is similar to any entrepreneur’s journey.
Storytelling is everything that Keith Harrington was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!The duo has a pretty great network in fundraising circles and knows a lot of ECs. They have been able to show solid execution since the beginning, solid growth on the loan side, and also solid product development.
Keith and Carlos are releasing a new product or feature every couple of months. And that’s what got the VCs that invested in Novel’s latest round super excited. They see that it has strong credit standards, a strong portfolio, innovative software, and a business where the revenue flywheel is running.
In short, Novel is growing quickly, and now is the right time to take on growth capital and really run with it. Keith admits that at the onset, neither of them knew much about debt capital, and learning about it was one of the hardest things he had to do professionally.
Keith and Carlos had to learn how to be credit guys out on the fundraising tour and how to talk the credit language. He remembers noting down questions investors asked him on Evernote and telling them he would get back to them with answers later.
However, the duo learned a lot through the process, which helped them become better lenders and a better steward of the capital that they have been able to raise.
Navigating Challenges and CrisesThe collapse of Silicon Valley Bank (SVB) in recent years was a significant event that Keith vividly recalls. While Novel Capital had minimal direct exposure, the crisis highlighted the importance of having reliable, non-dilutive funding sources.
Keith and his team acted swiftly to help their portfolio companies navigate the turmoil, reinforcing the value of Novel Capital’s offerings. They were able to do some cash movement and cash protection quickly.
Novel also engaged with the companies in its portfolio that were struggling and helped them navigate the crisis. It helped companies survive the upheavals, come out the other side, and thrive. This period saw a surge in demand for their services as entrepreneurs sought stable and trustworthy capital solutions.
Novel Capital has a strong track record and an excellent reputation in the market. Keith and Carlos spent a lot of time making sure that they were always doing right by the entrepreneurs that they served.
As a result, they have seen a significant uptick in demand and a substantial uptick in originations. And that’s been sustained over the last 15 months.
Building a One-Stop Capital ResourceKeith’s vision for Novel Capital extends beyond providing loans. He aims to create a comprehensive resource for entrepreneurs, offering insights and advice on making informed capital decisions.
By helping founders understand the nuances of different funding sources, Keith hopes to prevent the kind of detrimental mistakes that can derail promising startups. He aims to help entrepreneurs answer their fundamental capital questions like:
- What kind of capital do I need?
- When do I need it?
- How should it be structured?
- Who should I get it from?
- What should the terms be?
- Who’s a good person to take it from?
- Who’s not a good person to take it from?
- How do I stack this stuff up?
- How do I make it work for my business while building value?
The information is complicated, and without a great network or a whole bunch of mentors who can help them think this through, entrepreneurs are in trouble. It’s easy to make bad decisions that can kill the company.
As Keith explains, giving entrepreneurs a single spot, a single source of insights, advice for capital, and a place where they can actually get capital at the same time is absolutely critical. It can be game-changing for a company. This is why they are building the tools that can provide that data.
It helps them work out what kind of capital they should raise according to the purpose and why they need it. For instance, working capital financing or invoice financing.
Advice for Aspiring EntrepreneursReflecting on his journey, Keith emphasizes the importance of action over perfection. His advice to aspiring entrepreneurs is simple yet profound: “Just go. You’ll figure it out.”
He acknowledges that overthinking can paralyze progress and that real learning comes from navigating challenges in real time.
Keith Harrington’s story is a testament to resilience, adaptability, and the power of seizing opportunities. His experiences offer valuable lessons for entrepreneurs and investors alike, underscoring the importance of perseverance and the right partnerships in achieving success.
Novel Capital continues to be a beacon for startups seeking non-dilutive funding, driven by Keith’s unwavering commitment to supporting the next generation of entrepreneurs.
Listen to the full podcast episode to know more, including:
- Keith Harrington transitioned from aspiring to be a doctor to a successful entrepreneur and investor after discovering his passion for startups in college.
- Early experiences with startups during the dot-com bubble taught Keith valuable lessons about growth, crisis management, and corporate development.
- Keith’s venture capital career began by focusing on the strengths of entrepreneurial teams rather than just the ideas they pitched.
- Founding Novel Capital, Keith created a unique model for providing non-dilutive funding to B2B software companies based on their data.
- The SVB collapse underscored the importance of stable, non-dilutive funding sources for startups, leading to increased demand for Novel Capital’s services.
- Keith aims to make Novel Capital a comprehensive resource for entrepreneurs, helping them make informed decisions about various funding options.
- Keith’s core advice to entrepreneurs is to take action and learn through experience, emphasizing that perfection is less important than progress.
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From humble beginnings in Sunnyvale to leading a groundbreaking AI company, Varun Mohan’s journey is a testament to resilience, innovation, and a relentless pursuit of impactful solutions.
In this interview, Varun shares his story, insights on the evolution of technology, and the strategic pivots that led him from autonomous vehicles to the creation of Codeium, an AI code acceleration tool transforming the software development landscape.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Beginnings and a Passion for MathVarun Mohan was born to Indian immigrant parents in Sunnyvale, California. Growing up in the Bay Area, he developed a keen interest in mathematics, participating in math and computing Olympiads throughout his school years.
This competitive spirit and love for problem-solving were foundational in shaping his career. Varun notes wryly that his teammates at Codeium competed against each other in middle and high school.
His time at MIT was pivotal, forming connections that would later prove crucial in his entrepreneurial journey.
“I was drawn to the objectivity of math. You can’t BS your way through it,” Varun recalls. In seventh grade, he competed in the USAML, which selects the top 250 kids in the nation. He participated in a contest that ran over two days with four and a half hours for each.
Varun solved six problems and scored one out of 42, which was the median score. The challenge of solving complex problems, even if it meant not solving them at all, was incredibly appealing. In Varun’s mind, the experience of solving hard problems gave him a level of courage.
From Autonomous Vehicles to AI PioneeringVarun remembers how he wanted to work toward where the future of robotics and autonomy would ultimately end up going. After graduating from MIT, he joined Nuro, an autonomous vehicle company, as one of the first 15 engineers and ended up being a manager of a team.
Varun’s role involved managing large-scale deep learning infrastructure, but he yearned to build a product that had an immediate, scalable impact. “My dream wasn’t just to manage people; it was to build a product used at a massive scale,” Varun explains.
The slow timelines in the autonomous vehicle industry prompted him to seek a venture where he could make a tangible difference sooner. Despite their success, they realized that the advent of transformer models and generative AI presented new opportunities.
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Building Codeium, a GPU Virtualization CompanyVarun and his co-founder Douglas Chen, whom he had known since middle school, decided to venture into building a GPU virtualization company. They built software to make GPU applications run significantly more efficiently.
You could take applications that would previously run on GPUs and run them on computers and regular CPUs. They would transparently offload the computations to remote machines. That’s how they could optimize some workloads by 5x to 10x.
This was a huge improvement, especially in 2021, when GPU supply was under shortage. During COVID, Varun worked with his team of 8 people, and they made between $2M and $3M in revenues.
At its peak, Varun and his team were managing upwards of 10,000 GPUs for a handful of companies, which actually accounted for 20% of GCP Google Cloud Platform’s GPU inference capacity in multiple data centers.
“In mid-2022, we saw the rise of transformers in generative models and realized that everyone would soon be running this type of model architecture,” Varun notes. “We decided to pivot and build what is now Codeium.”
This was before the era of ChatGPT and Varun wanted to usher in a brand new set of applications to allow everyone to “run transformers.”
The Evolution of CodeiumAt that time, Varun had no clue about how to scale the company and boost revenues. Nor did they ever hire a sales rep, which Varun realizes was a huge advantage that allowed them to pivot.
Soon, they were earning more revenue than most companies that raised more money than they did in the 0% interest rate environment of 2021. However, Varun realized that he didn’t want to compare with other ML infra or ML ops companies but wanted the company to realize its maximum potential.
Varun had big dreams for Codeium and wanted it to make billions of dollars in revenue each year. They could either die a slow but certain death, die with a non-trivial chance, or succeed for a massive reward. Or die significantly faster.
By the time Varun was ready to make drastic changes in the company, they had already raised around $20M from investors.
It was now time to communicate with them and ensure they were up to date with the new developments. Thankfully, they did not oppose Varun’s decision to move forward in the new direction.
Codeium Today and the Path ForwardCodeium started as a GPU virtualization company but transformed into an AI code acceleration tool as Varun and his team recognized the potential of generative AI.
They built a tool that significantly enhances developer productivity, processing over 100 billion tokens of code daily, which is over 10 billion lines of code, serving more than 600,000 developers worldwide.
This is a significant leap forward from the less than one thousand users they had at the beginning of 2023. Codeium is now one of the top five largest Intervia apps in the world.
Varun reveals how they train their own models and run them at a massive scale in-house. That’s where one of their biggest advantages lies.
Codeium’s impact is evident as over 700 enterprises, including 34 to 500, utilize their product internally.
What Makes Codeium So SuccessfulAs Varun explains, there are two main reasons why enterprises want to use the product. Firstly, Codeium supports all the places where their developers are: on every ID and in every single language that the users can write.
It provides self-hosting capabilities when necessary, which is a benefit since a lot of companies don’t want to send their code outside of the company.
And because Codeium trains its own models, they can deploy it entirely within their own environment so the code never leaks. This is crucial for some of the largest companies since code is their most critical IP.
The second advantage is that Codeium works on every source code management tool. The big competitor in this space is a product called GitHub Copilot, which is owned by Microsoft. And it’s a massive product.
However, Codeium is compatible with GitHub, GitLab, Bitbucket, and many different source code management tools. Varin gives them a personalized experience, which means that, at Codeium, they actually tailor-make the suggestions to the private code that lives inside the company.
Varun found that a lot of companies noticed that their new developers were onboarded onto codebases in four to six weeks instead of four to six months now. That’s because the Codeium system deeply understands the software that exists inside the company.
Companies have also noticed that over 45% of all software that is getting committed is generated by Codeium. The company supports various IDEs languages and provides self-hosting capabilities, ensuring code never leaves the company’s environment.
Fundraising and Strategic PivotsRaising capital for Codeium was a strategic endeavor. Despite initial revenue success, Varun realized the need for a larger vision to attract substantial investment. Codeium raised $93M to date, with strategic investors like Kleiner Perkins, a highly reputed venture capital firm.
“By the time we raised our Series B, we had barely spent our seed round,” Varun shares. “We built a product that scaled massively before seeking additional funds. This approach ensured we had a compelling story for investors.”
Varun emphasizes the importance of being good stewards of capital and making data-driven decisions. “We never spend millions unless we see a clear ROI. Our goal is to operate in a way where we could be cashflow positive if necessary.”
Varun believes in building and scaling their product and ensuring that it has a massive number of users and a lot of large enterprises start to use the product. Companies like Dell, which currently has 40,000 developers, are starting to use the product.
As Varun reveals, fundraising has been fairly easy for Codeium because it has been getting preempted by folks who were particularly interested in the company’s progress and its proof points.
Storytelling is everything that Varun Mohan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Varun’s Vision for CodeiumVarun reveals that Codeium provides 10x more leverage to developers, who can generate code 10x faster, deploy code 10x faster, or debug, test, review, and navigate code 10x faster.
He envisions a time when Nvidia wants to do something very challenging, like building the X100, which is their newest chip. If that chip takes 12 months. Varin would want the time it takes for that chip to get built to go down from 12 months to one month with Codeium.
As Varun opines, we underestimate what is possible over a long time horizon but overestimate what is possible over a short time horizon. He believes we will still be developers writing code inside applications in the next couple of years.
But the amount of work it takes for them to write boilerplate applications, to do tasks like migrations, to do tasks like refactors, is going to go down tremendously.
Varun quotes a principle in computer science called Anda’s Law, which says that if you take many steps of a process and make one step faster, there’s a limit to how much that makes everything faster.
For instance, in a world where 100 units of time and 30 units of time are spent writing software, If all we do is make the 30 units of time writing software 10 times faster, we only reduce the total amount of time spent from 100 to 73.
The game changer is how you reduce the remaining 70 units by a factor of 10.
Varun thinks it will be a gradual or incremental process to continue to shave down time from every single aspect of this process. Even today, if you could write code instantly, the time it takes to review code will become a bottleneck.
The time it takes to deploy code will also become a bottleneck. People are not willing to ultimately deploy arbitrary software that an ML or AI system generates into production without any review.
Leadership and Team BuildingAt present, Codeium has around 50 employees and is heavy on the technical side. It has incredible engineers, and Varun concedes that hiring and retaining them is a challenging process. Transitioning from an engineer to a CEO was a significant shift.
He underscores the importance of resilience, mission orientation, and high accountability in building a strong team. “We look for people who are incredibly mission-oriented and resilient. Our technical bar is one of the highest in Silicon Valley.”
Varun also highlights the necessity of humility and a relentless focus on providing value. He says that having a company is a humbling experience. Milestones like fundraising or building a technical product don’t mean much if you’re not providing value.
Focus ruthlessly on providing value, and the rest will figure itself out; that’s Varun’s mantra.
As he says, “If we are able to do that, we will capture a lot of value at that point, but the sheer amount of value we will be able to generate is going to be so massive. That would be the true north star for a company.”
Varun’s Advice for Aspiring FoundersVarun advises entrepreneurs that founding companies requires a deep amount of humility because the first idea you will have when you start a company is very unlikely to be the right one.
You’ll need to change directions and constantly assume you were wrong. The hardest part about a startup is that you need to operate with two modes in your head and be irrationally optimistic to execute a critical vision faster.
Because a big company has more people, more capital, and more distribution, you also have to be uncompromisingly realistic. And that requires a tremendous amount of humility and a truth-seeking nature for the company.
Looking AheadAs Varun continues to lead Codeium, his vision remains focused on leveraging AI to transform software development. He believes that while developers will still write code in the near future, the efficiency and speed of doing so will drastically improve.
We’re far from a world where AI-generated software can be deployed without review, but incremental improvements will continuously push the boundaries.
Varun’s journey from Sunnyvale to the forefront of AI innovation is a compelling narrative of resilience, strategic pivots, and an unwavering commitment to impactful solutions.
As Codeium continues to grow, it stands as a testament to what’s possible when visionary leadership meets cutting-edge technology.
Listen to the full podcast transcript to know more, including:
- Varun Mohan, co-founder of Codeium, emphasizes the importance of resilience, mission orientation, and accountability in building a successful startup team.
- Codeium pivoted from a GPU virtualization company to an AI code acceleration tool, now serving over 600,000 developers and 700 enterprises.
- The company’s rapid growth and success are attributed to its focus on providing tangible value and leveraging internal talent to solve problems before hiring specialists.
- Codeium’s technology aims to significantly reduce the time developers spend on repetitive tasks, thus increasing their overall productivity.
- Varun stresses the importance of humility and truth-seeking in navigating the uncertainties and challenges of startup life.
- The company has raised $93M to date, with a strong emphasis on responsible capital management and avoiding unnecessary expenditures.
- Varun’s transition from engineer to CEO involved learning to effectively communicate business value and building a robust go-to-market strategy alongside technological innovation.
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One of the primary objectives of any M&A deal is cost synergies and the maximum value gained from the transaction.
The synergies that result when two independent companies pool resources should be higher than the synergies in each participant.
Dealmakers aim for different types of synergies, including hard synergies like costs and revenue gains or soft synergies.
Soft synergies contribute significantly to successful integration and boost value from the transaction. For example, company culture, employee coordination, and lower attrition.
The most crucial is cost synergy, or lowering the operating costs post-merger, which companies can achieve with increased efficiency.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding Cost Synergies and How to Achieve ThemCost synergies are essentially cases where the new company post-merger has lower expenses than the combined expenses of the participants.
The amount should be lower than the combined costs when totaling the buyer’s and seller’s operating expenses.
These cost efficiencies can result from benefits from the merger, like economical vendor contracts and consolidating premises and manufacturing facilities.
Eliminating duplicated tasks, distribution channels, worker roles, and other expenses frees up substantial capital and resources for other uses.
Better resource management leads to wealth creation for the new company, which is something shareholders and stakeholders appreciate. That’s how cost synergies boost M&A outcomes. Here’s an example:
Company A generates revenues worth $1M per quarter, and Company B generates $1.5M during a similar interval.
Post-merger, the combined revenues of both companies is $3.25M. This excess value generation can result in higher sales since customers can purchase package deals.
Alternatively, their products now carry enhanced features because of IP and technology sharing. Users benefit from higher-quality products and are willing to pay more.
Then again, both companies take advantage of efficient distribution channels, and the market presence each has in broader locations.
Combining logistics helps achieve cost synergies, which translate into economical pricing and higher sales and revenues.
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How Cost Synergies Boost M&A OutcomesWhen two companies enter into a strategic partnership and merge, their primary objective is adding value to their operations.
They can do this by getting rid of duplicated and redundant equipment and machinery and investing in better technology.
Expanding to other locations, countrywide or global, to capture new markets and client demographics is a huge advantage.
Both companies can pool resources for economies of scale, buying inventory in bulk and getting better deals from vendors and suppliers.
Cost synergies are distinct from revenue synergies, which are the result of higher sales generated by the merged company.
Offering complementary products and deals, cross-marketing, cross-selling, and better customer service entice buyers to spend more.
Different Types of Cost SynergiesCombining R&D CapabilitiesConsidering that innovation drives business success, ideating new technology for products is crucial.
Since R&D requires significant investment, pooling resources makes sense for companies. They can outsource research and partner with companies that have developed new ideas.
Alternatively, executing a merger and investing in R&D facilities that benefit the legacy company is a strategy.
For instance, a company developing a new super chip for faster processing may partner with a company building computers. Combining their capabilities could take over the market entirely.
Shutting Down Duplicated Manufacturing and Administrative UnitsOnce the two companies merge, they can work out of the same administrative premises and shut down redundant manufacturing facilities.
By producing products within a single unit, they can benefit from economies of scale and save on rent and utilities. Saving on insurance costs, leases, costs of renting, and depreciation are other advantages.
Selling off unnecessary real estate brings in liquidity that the legacy company can use to expand the business.
The savings on rent can be diverted toward sourcing inventory, hiring talent and skillsets, or investing in further R&D.
Eliminating the Cost of Intellectual Property and PatentsIf a company must pay a subscription to a smaller agency owning IP patents and assets, acquiring or merging with it is a strategic partnership.
The proprietary assets become in-house property and don’t need to incur the fee. The acquiring company can also take advantage of running the R&D division.
Technicians and engineers can continue to develop more IP and IA thanks to access to advanced resources.
Not only does the legacy company continue to use the IP to manufacture its products, it can also generate revenues. Leasing out the patents to third-party lessees creates an additional income source.
Then again, sharing information about the best practices for running the business efficiently and economically also results in savings.
Cutting Back on Salaries and WagesPost-merger integration typically involves lay-offs. The surviving company has shared administrative and manufacturing units.
As a result, it can cut back on the workforce needed to run them. Fewer employees translate into lower wages and salaries and eliminate the need to provide benefits and retirement packages.
A single board of directors and executives can efficiently run the integrated company, making it less top-heavy and more economical. However,
if the merger is executed for the purpose of expansion to cross-country or cross-border locations, the reverse may be true.
The new company may need to maintain separate offices and hire bigger teams to keep up with expanded operations.
However, the expansion cost will pay for itself by increasing sales and higher revenues.
Aside from in-house teams, mergers result in saving on professional services costs, such as legal and accounting.
Companies also need to hire firms that provide financial advice, IT management, architects, and more. Instead of two companies paying for services, they can save on costs by merging.
Efficient and Economical Supply ChainAn integrated larger organization is likely to ramp up its need for inventory, including raw materials, tools, and equipment.
Thus, it can bargain for discounted prices for bulk orders. Better supply chain connections and long-term contracts are another strategy for economies of scale.
Multiple vendors vying for orders can also gain the advantage of competitive pricing. This, is turn, results in significant savings for the surviving company.
Improved Sales, Marketing, and AdvertisingA merger between two distinct, well-known brands enhances the brand value of the new company.
Announcing the collaboration attracts customer attention, and combining advertising efforts needs fewer resources. The company can get enhanced marketing success with less spending.
Advertising complementary products as part of package deals customers can take advantage of is a great strategy.
Economizing on Manufacturing CostsCompanies often enter into mergers to take advantage of cost-effective manufacturing resources.
Collaborating with off-shore companies lets them benefit from cheaper labor costs and lower overhead prices. These may include power, water, and raw materials.
Keep in mind that storytelling is everything in fundraising, mergers, and acquisitions. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Why Accurately Estimating Cost Synergies Pre-Merger is CrucialM&A advisors from both parties estimate the merger’s benefits and the resultant synergies.
They may rely on top-down indicators to calculate the cost synergies and include them in the M&A valuation. These indicators may include financial metrics and commercial due diligence.
Testing customer satisfaction levels with companies’ products and services and their market presence is also part of the due diligence.
However, companies often think that cost synergies are easy to achieve. As a result, they may miscalculate the cost synergies or overestimate them.
Dealmakers may realize that the operational advantages they anticipated don’t pan out as expected or take longer to achieve.
This impacts the management’s credibility in its ability to manage the transaction properly.
This scenario can be easily avoided by deploying the right strategies to estimate the potential cost savings, such as comparing transactions.
Both companies should list their internal costs and do a comparative analysis to see how removing duplicated assets and operations work. And if they influence costs.
Identifying the particular cost savings accurately and how to achieve them is thus crucial.
Advisors and dealmakers should include them as a part of the due diligence process. That’s how they can ensure that M&A valuations are precisely calculated.
Dealmakers can thus design a new operating model that leverages the maximum advantage from cost savings.
How to Estimate Potential Cost SynergiesMost dealmakers and advisors invariably focus on revenue synergies as the real indicator of the merger’s success.
However, these metrics can be speculative since it is impossible to predict how customers will respond to the merger. Or if market conditions will remain unchanged.
Customers may continue to purchase products as before and welcome the opportunity to buy combo deals. Alternatively, the combined brand value may not generate adequate interest and sales may actually drop.
An unexpected downturn because of unforeseen macroeconomic conditions could also result in falling revenues.
However, adding up current costs accurately requires pulling numbers from both companies’ balance sheets. For instance, if one company is merging with another for its IP, the subscription costs are instantly eliminated.
The surviving company will also cut back on the costs of maintaining two distinct administrative offices and manufacturing units.
The costs associated with rent, utilities, employees, and other add-ons also go away. These are actual expenses that translate into real savings.
When estimating cost synergies, companies can do a comparative analysis of similar M&A deals within their vertical.
Their M&A advisors may review comparable acquisitions and use them as a starting point.
For instance, let’s assume that the cost synergies in a comparable transaction totaled 5% of the enterprise value (EV). It would be safe to assume that the savings in this transaction can also be 5%.
However, the actual synergies may also depend on the internal operational efficiencies of each brand.
Alternatively, both participants in the M&A deal can draw numbers from their financials and compare them.
Executing this step as part of the due diligence ensures that the surviving company derives maximum value from the transaction.
Criteria for Accurately Estimating Cost SynergiesWhen working out how cost synergies boost M&A outcomes, dealmakers should be aware of certain criteria.
For starters, they’ll verify the sources of the numbers and how they are generated. If the metrics come from actual costs on P&L statements, they are reliable.
For instance, adding up salaries and wages, rental fees and utilities paid month-over-month and insurance premiums. If the estimates are in the form of percentages and estimated savings, they may not be reliable.
Dealmakers should also factor in the time needed to execute the integration and realize the synergies. Transitioning to new premises, closing leases, and selling off furniture takes time.
The surviving company will also need time to manage human resources and assess the skill sets they absolutely need. Next, they’ll execute layoffs and ensure a new company culture is instituted and accepted.
Mergers and integrations are never smooth, and challenges arise, such as disgruntled employees, attrition, and high customer churn rates. These hurdles can involve added expenses that dealmakers can’t anticipate accurately.
For instance, dealmakers may factor in cost synergies like savings on leases and rental costs. However, they may also have to pay lease-break fees.
Then again, lowering employee headcount is a cost synergy. But, before the synergy can be achieved, the company will incur severance costs.
In the initial stages of the M&A implementation and integration process, the surviving company may incur significant costs.
These costs are one-time but may offset the savings the company hopes to make from cost synergies. Factoring in this possibility is crucial to avoid unpleasant surprises later.
The Takeaway!Companies have their objectives for entering into M&A transactions, and cost synergies are one of the most critical.
Cutting back on costs by pooling resources helps raise the surviving company’s bottom line. Higher profits contribute to long-term success, scalability, and sustainability.
However, before the cost synergies and savings add up, the merger may incur expenses. Integration costs and getting the surviving company back on track and operating as usual may require some capital investment.
However, after the company completes the integration, the cost synergies ensure long-term growth.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Reaping The Rewards: How Cost Synergies Boost M&A Outcomes appeared first on Alejandro Cremades.
Should you sell your business? This is a question every entrepreneur faces at some point during their career. Coming up with the right answer involves difficult decisions. If the company is scaling well and generating rich profits, it makes sense to continue running it.
Then again, if market conditions are uncertain and sales and profits are dropping, that might seem like a good time. You’d think about cutting your losses, liquidating the company, and diverting the funds toward setting up a new venture. An impending retirement can also be a deciding factor.
How would you work out the opportune time to sell your company? Your objective would be to exit with good profits to compensate for the time and sweat equity you invested. Financial considerations are also high on your list of priorities; to retire comfortably or invest in the next startup.
Each company is unique, as are the founder’s circumstances, so weigh your options carefully before accepting the next purchase offer. Here are some of the key factors that can influence your decision.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Company is Performing Well. Should You Sell Your Business?When a company is thriving with great valuations and successful fundraising, the last thing you’ll think about is an exit. However, as seasoned entrepreneurs will advise, the opportune time to exit is when the company has excellent future prospects.
Potential buyers are likely to assess its future scalability and profit-generation capabilities. You’ll factor in these metrics when valuing the company and determining a selling price. Your pitch will also depict a dedicated customer base, consistent revenue channels, low churn rates, and more.
As your M&A advisor will suggest, acquirers will likely examine the last three years of your financial statements. The company’s performance over the last three years and other non-financial factors influence their decision to make a bid. The team, brand value, market reputation, and credibility count.
Great metrics can start a bidding war and bring you competitive offers so you can accept the best price. You’ll take your time picking the right buyers who share your vision and will keep the company running.
You can also negotiate for the best exit terms that benefit employees, customers, and other stakeholders.
The Company Isn’t Performing WellThis one’s a no-brainer. If the company is struggling, it would make sense to cut your losses. You’d accept the next good bid that comes your way. Selling it to a more capable acquirer could raise its chances of survival. The company could benefit from expert management and an infusion of capital.
Instead of declaring bankruptcy, you’ll use the sale as a last-ditch effort to safeguard stakeholders’ interests and secure jobs. A sale could also ensure that you receive at least some returns from the business you built.
A good indicator is the difficulty in finding investors for the next funding round. If your company can’t make it through the due diligence process and investors are hesitant to offer you capital, consider that as a good indicator. It’s time to exit.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Industry is Undergoing Drastic ChangesThe business landscape in the 21st century is consistently evolving, with technology developing at breakneck speed. Companies that can seamlessly assimilate technology, automation, AI, and robotics will quickly overtake traditional businesses.
Those who can keep up with changing trends, customer preferences, and cutthroat competition will survive. If your company can pivot and adapt, and products can evolve to be futureproof, you’ll sustain the company. But, if you foresee that the products will soon become irrelevant, a sellout is advisable.
When scouting around for buyers, look for people who can transition and digitize your company to keep it functional. Welcome innovators and ideators who’ll maintain your timeless assets.
Yet another factor is regulatory changes. Climate change, pollution levels, and other issues have resulted in federal and state governments instituting new policies and laws. These rules can impact how companies do business. You may need to pivot the product portfolio or operating practices.
Companies that can easily make the transition and become sustainable will remain in business. Others may have to phase out. If you think upcoming regulations will impact the company’s bottom line, you might want to think about selling out. Cash in while you can still find buyers.
The Business is Growing Exceptionally WellYou did all the right things when laying the cornerstone of the company. You hired an excellent team with high-grade skill sets and instituted a great culture. The product portfolio is innovative, and the brand is poised to make rapid strides to build a market presence.
At this time, the company may have grown beyond the founder’s vision. It may require more expertise than you can provide, and the management is better equipped to handle the challenges and hurdles. The quickly growing clientele and demand need the company to expand its manufacturing abilities.
There also may be talk about taking the company to IPO and expanding nationwide or going global. If you clearly see that the brand has immense, untapped potential, handing the reins to capable people is the right way to go. Accepting a management buyout could well be the right strategy.
Other options include a corporate merger, where you sell the company to a large corporation within your vertical. When faced with the question: should you sell your business, the answer is: absolutely.
Cash in your investment by accepting the best bid you get. Staying on as a consultant to keep the company stable and running while transitioning out is also an option.
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The Business is Self-Sustainable?A self-sustaining business with excellent management that needs minimum supervision from the founder is a win for you. Now that it is functioning well and raking in profits, you can focus on new projects. The company has an excellent management team that is well-experienced and trained.
The customer base is diversified, with low customer acquisition costs and churn rates. The company has an established brand value that doesn’t need aggressive advertising. New products capture the market instantly thanks to customer confidence in the brand name.
The company has adequate assets to keep it functional over the long term. It will not need to invest any major capital expenditure for upgrades in its manufacturing capabilities. If you can check these factors off your checklist, it’s the right time to sell the company.
Many entrepreneurs are ready to sink their teeth into a new venture, and selling the established brand makes sense. If you have a new project that is taking up all your time and attention, focus on it.
Let the team take complete control of the existing company and continue to push it to new boundaries.
You’re Ready to Channel Your Energies into a New CompanyUse your entrepreneurial talents to build a new company. If you’ve been developing a distinct product portfolio within the company, consider a breakaway division. Set it up independently with a new team, manufacturing facility, and other resources.
Working within an industry for an extended time gives entrepreneurs in-depth knowledge about how it works. Chances are that you’ve identified a new customer pain point you can address with a product. Or, you have ideas to branch out into an entirely different niche.
Developing new IP that can potentially overtake competitors quickly can also be a factor. You’ll want to nurture the concept and convert it into a market-ready product before competitors catch on.
Dedicating your entire time and attention to these ideas is only possible if you sell the current venture. Select buyers who have a similar understanding of the industry and can continue running it profitably.
You Get an Offer You Can’t RefuseNew companies with innovative ideas that are quickly capturing a significant market share attract corporate attention. Mega brands may offer to purchase the company that has products in high demand and untapped potential. If that happens, you’re doing all the right things.
If you get an offer you can’t refuse, and you’re thinking: should you sell your business? Well, you should! As a fast-upcoming brand, appreciate the bigger brand’s interest and negotiate for the best M&A deal. This is the right time to grab the offer, but also consider the option of a merger instead.
As the entrepreneur, if you think the company could benefit from your direction, refrain from a sale. You could structure the transaction so that you continue to operate with some autonomy. But you’ll also benefit from the backing of the mega-brand name, capital infusion, and other resources.
Alternatively, maintain a stake in the company so you continue to earn profits over a longer period. Or continue working as a consultant. The terms and conditions of the deal will depend on your vision for the future of the company you built.
You’re Ready to Retire or Need the FundsShould you sell your company? The answer to this question also depends on the financial aspect. The optimal time to exit the business could result in significant monetary gain for you. With the assistance of the M&A advisor, you’ll sell for the highest amount possible with favorable terms and conditions.
The expert will assist in company valuation depending on macroeconomic trends, the overall current industry standards, and brand value. Of course, the company’s metrics will also influence the pricing. This money will provide you with financial stability if you intend to retire after the exit.
Getting a great price for the company influences the possibility of the sale. You’ll calculate the bank balance needed to maintain your current standard of living through your retirement years.
And, if you intend to invest the funds into a new business, you’ll want to get the maximum returns possible from selling the current company.
Entrepreneurs may also consider a sale for personal reasons like changes in their life situation. They may need to divert more time toward their families and friends, perhaps necessitating a relocation. Then again, health issues may become a concern, which is why they may need to step down.
The most crucial aspect of running a business is knowing how to value your company. This skill will come in handy when you’re fundraising or selling it to the highest bidder. Check out this video in which I have explained exactly out to execute the valuation.
Not Ready to Sell? How About a Partnership Opportunity?If you’re not ready to sell your company, consider the possibility of a merger, which is more about pooling resources. If you can achieve successful integration, the resultant synergies bring about cost and resource efficiencies.
Entering into a strategic partnership with another company within the industry where you work could bring multiple benefits. Explore the possibility of vertical collaborations to enhance distribution or supply chains and streamline your business.
You can also partner with brands that provide complementary products and services and thus enter into symbiotic relationships. Strategies like these help expand your market presence and reach out to customers beyond geographical boundaries. You could also attract a customer base in other niches.
Mergers between competing companies offering similar products work well for both participants. Combining production processes results in economies of scale, leading to cheaper prices and happier customers.
If you have been facing setbacks and are wondering if you should sell your business, consider the option of a merger instead.
Should You Sell Your Business? Start Preparing for an ExitIf you’re starting to think about making an exit, start prepping even if you haven’t made the final decision. As expert M&A advisors recommend, the right time to prepare for an exit is when you start building the company.
Make sure the financials have complete clarity and you separate personal and company accounts. Get the necessary IP protection for the intangible assets and work out the ownership titles. The same rule applies to other fixed assets the company may own.
Get your legal team to work out exactly what the company owns and will be handed over to the buyer as part of the deal. Working out these issues will help you value the company more accurately.
The bottom line is that each company is unique, and the ultimate decision to exit depends on the founder. Trust your gut just as you trusted your instincts when building the company. That’s the right time to sell your business.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Should You Sell Your Business? 8 Signs It Might Be Time appeared first on Alejandro Cremades.
Entrepreneurs operating in any business vertical across the board should understand the impact of macroeconomic trends on startup valuations and fundraising. Raising funding is crucial for the company. You’ll need money to support its growth and stability while innovating new ideas.
Impressing venture capitalists with a compelling pitch deck and attracting investment is challenging as it is. Cutting through the chatter and gaining elbow room amidst aggressive competition to impress VCs needs you to leverage unique strategies.
Macroeconomic conditions play a significant role in investor sentiment and their perception of the risks they are willing to take. As market conditions change, expect an ebb and flow in VC and private equity capital availability.
Economic downturns, industry-specific developments, customer buying trends, and regulatory updates can influence startup valuations. Since your ability to attract funding relies wholly on the company’s valuation, you’ll need to stay informed about upcoming trends.
Read ahead to understand in detail how macroeconomic factors can influence your fundraising efforts. You’ll also learn how to work your way around potential setbacks and ensure the startup is sustainable.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks How Macroeconomic Trends Influence Venture Capital Availability – StatisticsTo understand how macroeconomic trends influence VCs, let’s check out the statistics through the last few years. In 2022, VC investing in the US dropped by close to 30%, and this slump continued through 2023 by 40%. Startups were able to raise just over $140B from venture capitalists.
Several factors contributed to this decline, such as substantial interest hikes that the Federal Reserve Bank executed. The markets also experienced the highest inflation rates in the last 40 years or so, along with market instability. Startup valuations also took a major hit.
Conditions seem to be improving in 2024 thanks to stabilizing interest rates that indicate a reduction in inflation and more stable markets. Reports suggest the availability of $317B worth of dry powder ready for investment, which is a record high.
This uncommitted capital is a remnant of the aggressive fundraising that occurred in 2021 and 2022. However, macroeconomic trends resulted in a halt in investments. As Q3 2024 rolls around, trends seem to be changing, though investors continue to be hesitant about deploying the capital.
93% of CEOs have expressed interest in hiking or maintaining their corporate venturing in 2024. This indicates that the coming months are likely to see a surge in fundraising and M&A activity. And the possibility of VCs regaining confidence in startups’ ability to manage capital and return profits.
Macroeconomic Trends that Impact Startup ValuationThe impact of macroeconomic trends on startup valuations and fundraising is evident as you examine the different factors. Macro trends are the major conditions that impact the economy as a whole, including global climatic conditions.
Macroeconomic conditions influence valuations since they can boost or reduce product demand or affect inventory and labor availability. Increasing competition, thanks to innovations, can affect the startup’s bottom line and the profits you can generate.
Uncertain economic conditions can shake investor confidence, leading to higher interest rates and lower capital availability. Here are some of the main macro trends to focus on.
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- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Book a Call
Market Stability and Economic GrowthAs long as the country’s economic health is stable and investor confidence is high; they are willing to participate in funding rounds. A flourishing economy lowers the potential for risk thanks to GDP growth, demand for products and services, and higher employment.
As a result, VCs and PEs are more open to deploying capital and backing startups and later-stage companies. However, the risk factor rises, and the potential for returns drops during economic downturns and crises.
Investors are more cautious about the startups they support and may use stringent screening processes and due diligence before investing. They’re likely to pick candidates with robust business models, higher growth prospects, and the ability to navigate setbacks effectively.
Industry-Specific TrendsTrends that influence the entire industry and its dynamics vis-a-vis customer purchasing choices and disruptive technology also affect startup valuations. Companies that develop innovative products to attract customer attention or cater to changing preferences are sure to scale quickly.
For instance, the shift toward healthier eating habits, vegetarianism, and veganism spurred the growth of companies offering meat alternatives. This trend also extended to pet food, with startups creating products that mimic meat but provide the same nutritional value.
The increasing awareness of green products, ESG, and responsible manufacturing has pushed larger corporations to alter their practices. Brands that can keep pace with this awareness and the relevant federal regulations have a higher chance of attracting capital.
For instance, regulations impacting energy efficiency, minimizing waste, and maximizing resource usage. Consumer support for companies that made efforts to recall, recycle, and reuse products is also higher than for their competitors.
Investors are likely to scrutinize business plans and check for compliance that indicates long-term stability. If you can demonstrate adaptability, your company will have higher valuations and investor support.
Worldwide Economic TrendsGeopolitical events like the Ukraine-Russia war, consumer purchasing and spending behavior, and new innovations and technology also impact global economies. Other factors include demographic shifts, changing governments and regulatory policies, and social structures.
Another good example is the COVID-19 pandemic that brought worldwide economies to a grinding halt. Even so, there was a paradigm shift toward verticals like digital solutions, healthcare, R&D in drugs and medicines, and eCommerce.
Startups working in these industries or those that quickly came up with ideas to help customers navigate lockdowns gained traction. They also had higher valuations.
However, startups that were unable to adapt or didn’t have the resources to weather the downturn went out of business. They simply could not raise funding to stay afloat.
Present-day global economies are closely interlinked, and any events or disturbances in any part of the world impact the rest. Factors like trade policies, border tensions, political events, and currency fluctuations may influence investor decisions.
They may prefer to wait for economic upticks before sinking capital into startups and early-stage companies. And that’s the impact of macroeconomic trends on startup valuations and fundraising.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Federal Interest RatesLower federal interest rates work well for investors and startups, boosting the economy as a whole. With lower interest rates, investors are more inclined to deploy capital and support startups, even if the risk is higher. Thus, lower interest rates lead to higher valuations.
Startup founders quickly pitch for funding to raise capital while borrowing is cheaper. Investors are keen on supporting companies that demonstrate the potential for high growth over the long term. On the other hand, when interest rates are high, the game changes completely.
Startups with limited resources may not be able to pay the high interest rates and borrowing drops. Investors also become more risk-averse and use more stringent screening processes before selecting candidates. As a result, startup valuations and fundraising success take a hit.
UnemploymentA weak economy often leads to high unemployment and low wage growth. These factors influence demand, but a healthier economy translates into a favorable environment for startup funding.
Startup valuations are higher, and investors are open to backing projects that have a strong customer base. Pitch deck metrics like consistent sales, revenues, cash flows, and profits attract capital more easily.
Uncertain macro trends may push investors to adopt more conservative investment strategies. They’re likely to analyze the risks more comprehensively and focus on reducing them. Their objective, understandably, is to minimize the risk their shareholders must carry.
On the other hand, steadier markets result in higher capital infusions and higher valuations. On their part, startups are more concerned with getting liquidity for the operations to ensure long-term scalability.
Pitching to investors during favorable economic conditions is easier. The real crunch comes during downturns when the risk factor is high. That’s when you’ll need to know how to put together an investor outreach strategy, Check out this video in which I have explained how it’s done.
Navigating the Impact of Macroeconomic Trends on Startup ValuationsConsistent Communication and Long-Term RelationshipsThe best strategy for navigating the impact of macroeconomic trends on startup valuations is consistency. Focus on building long-term relationships with investors and earning their loyalty and confidence. Use approaches like open communication lines and engagement to stay connected.
Nurturing the relationship will ensure their support even during downturns when liquidity is low in the market. Even at the onset of your fundraising strategies, your goal should be to build long-term partnerships. Focus on the possibility of further funding rounds with the same investors stepping up.
When putting together a list of investors, pick firms that share your startup’s vision and mission statement. They will continue to support your brand even in lean times. Provide constant updates to your investors about how the company is progressing. You don’t need to wait for annual reports.
Deliver updated metrics that indicate both wins and losses and your efforts to navigate challenges. You’ll also reach out for feedback and direction to manage difficult trends. As a rule, VCs and PEs maintain board seats and decision-making rights in the company.
Their constant involvement in the company will give them insights into its resilience and propensity to deal with potential downturns. Founders should also make an effort to leverage the resources VCs provide to them, whether in the form of networking and connections or knowledge.
This approach builds loyalty and confidence in your business acumen. You can expect extended support that will see you through all macroeconomic trends: downtrends or upticks.
Other Strategies to Maintain ValuationsAs the founder, your goal should be to build a robust and resilient company that can weather all macro trends. You’ll develop innovative, market-ready products and services that are likely to gain a dedicated customer base. Consistent sales, revenues, and profits demonstrate a successful venture.
Adding these metrics to your reports indicates a stable business worth backing. Also, work on new product features and constantly reinvent the product portfolio to match competition and disruption.
You’ll also keep your finger on the pulse of the market to identify changing preferences and needs and adapt accordingly. Strategies like these will ensure that you stay in business despite any major macro trends.
Your M&A and fundraising advisor will recommend that you build robust relationships with investors. Side-by-side, run a customer-centric company providing excellent after-sales support. Encourage reviews and communication to get inside the consumer mindset and understand their needs.
The brand value and word-of-mouth advertising you get can be an invaluable asset. Not only can you sustain sales despite changing trends, but reviews give you insights into the product improvements customers expect.
Although relying on VCs and private equity firms is a good approach, don’t overlook alternate capital sources. Be open to reaching out to angel investors, running crowdfunding campaigns, and applying for government grants. Your focus should be on non-dilutive capital to supplement other funds.
Yet another strategy to build a sustainable company is to implement lean operating practices from the onset. Ingrain resource efficiency into the company culture, which is something that looks good on your pitch deck. Cutting costs by leveraging technology projects your startup in a good light.
Investors appreciate your staying relevant in a tech-driven business landscape and using their capital wisely for maximum returns.
To Conclude!Entrepreneurs need to stay on top of the impact of macroeconomic trends on startup valuations. These global, countrywide, or industry-specific changes can influence your fundraising success. This is why you’ll evolve with the trends and build a resilient business that can navigate the volatility.
Ensure that the pitch deck highlights a robust business plan, failsafe measures to deal with possible contingencies and top-notch skillsets. You’ll hire experienced people who have seen how trends change and know how to steer the company through them successfully.
Don’t overlook the value of gathering credible data and analyzing it expertly to predict changing trends. Leverage data analytics tools and build a data-driven business that can remain operational during the worst crisis. And scale rapidly during favorable business conditions.
The underlying strategies to build a strong startup foundation include decision-making driven by data, agility, and lean operating practices. Your company should be able to pivot quickly if needed and focus on consistent innovation to stay relevant within your business ecosystem.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Impact Of Macroeconomic Trends On Startup Valuations and Fundraising appeared first on Alejandro Cremades.
With markets recovering quickly from the COVID impact, real estate and infrastructure startups can find the investor backing they need. Customers and homeowners are showing interest in purchasing real estate, and low interest rates are a great incentive.
Many families are now looking to buy their first homes. The lack of inventory to meet rising demand has spurred a flurry of activity. At the same time, homes are more expensive, and construction costs are rising quickly. Multi-family homes are also in demand, alongside single-family residences.
Statistics indicate that these factors have led to the real estate market growing significantly. Tech and the Internet have also triggered activity since buyers can leverage digital marketplaces to search for homes. They can use virtual tours to walk around the house and evaluate it per their needs.
Buyers no longer need to visit the property or meet with real estate agents. They can execute deals over digital platforms, sign ownership deeds remotely using online notaries, and make payments. The availability of government grants to promote real estate and infrastructure startups is another boost.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Statistics Show that the Real Estate Sector is BoomingOnce the worst of the pandemic crisis had passed and lockdowns were lifted, people started to invest in homes. Millennials, in particular, are taking advantage of streamlined purchase processes to buy homes. In 2021, residential estate captured 35.5% of the revenue share in the real estate sector.
Commercial property is also attracting buyer interest with a projected growth of 5.1% between 2022 and 2030. Rising travel and tourism are leading to growth in infrastructure and building hotels and resorts.
If you focus primarily on residential real estate, the year-over-year growth rate from 2024 through 2028 is likely to be 4.99%. By the end of the year 2024, the market will reach a valuation of $94.39T. And by the year 2028, this growth will likely translate into a market volume of $114.7T.
These numbers indicate the market sentiment is strong despite crises like the Russia-Ukraine war. Real estate and infrastructure startups continue to raise billions of dollars in funding from different sources.
Some of the established players that rule the industry include Zillow, Compass, OpenDoor, and Trulia. Each of these companies leverages technology to provide buyers with a selection of resources and detailed information about the property.
Buyers and sellers can also access support from experienced real estate agents to help them through the transactions. Making decisions about the real estate they want to deal in is made so much easier thanks to the platforms. Updates about the local market trends help make informed purchases.
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Funding for Real Estate and Infrastructure Startups is Readily AvailableIf you have an innovative idea that can attract investor attention, now is the right time to create your MVP. Historically speaking, the market went through a major crash in 2008, resulting in many people losing their homes.
On the flip side, the crash proved to be beneficial for people who had the money and resources. Many of them were able to purchase homes at low prices and low-interest mortgages. The market has recovered quickly because of the continued activity, regardless of the downturn.
Yet another factor is the demand for housing by millennials and population growth. Demand spurs supply, which is why many construction and infrastructure development projects have been initiated. Since interest rates continue to be low, higher affordability is an incentive for more people to buy.
Aside from buyers, investors have ramped up activities in the real estate sector. Volatility in the stock exchange has prompted them to diversify their investments across different channels. This strategy allows them to spread out the risk, considering that the next recession is expected soon enough.
Funding for the real estate and infrastructure vertical is also gaining traction because of the new technology available. Buyers, sellers, and agents are using digital capabilities to conduct transactions more successfully. The ease and convenience are resulting in rapid growth in the sector.
Consumers can compare prices, listings, amenities, and facilities online before making their final choice. Startups that can develop tools to enable the process are in high demand. Architecture and construction companies also use technology to speed up the designing process.
Designing blueprints, getting approvals, making tweaks, and regulatory compliance are streamlined thanks to the various tools and applications now available. Builders can also scout around for eco-friendly, greener building materials and techniques for cost-effective construction.
Research and Disruptive Ideas Are Attracting Government GrantsInnovation and technology are clearly the drivers of the real estate industry moving forward. That’s where you’ll concentrate your efforts when coming up with an exciting concept for your startup. For starters, know that the federal government is offering several grants to promote scientific research.
Several federal programs are now available to promote research for innovative ideas for developing infrastructure. You could apply for funding to cover the costs associated with building research facilities and overhead expenses. You can also use the money to hire and retain trained scientists.
The US government understands that the world’s more pressing issues today are related to building greener communities. Integrating eco-friendly building practices, energy-efficient homes, and recycling techniques are crucial elements of a sustainable infrastructure. A few examples are:
- The Federal Home Loan Bank (FHLB) system offers Affordable Housing Grants (AHG) to help acquire, rehabilitate, and rebuild affordable housing units. These units are designed for low-income households with an average income of less than 50% of the local community.
- The USDA Rural Development office provides Main Street Grants to promote construction and real estate development in rural downtown locations. Any ESG-driven projects for locations with a population of 50,000 or less can get these grants. Both for-profit and non-profit founders can apply for these endowments if they can match the funding with other capital.
- The U.S. Department of Housing and Urban Development (HUD) has the HOME Investment Partnerships Program (HOME) for low-income households. Non-profit and for-profit developers can apply for these grants to build or repair affordable housing units.
- The Department of Commerce and Economic Opportunity (DCEO) has Illinois Infrastructure Grants to encourage infrastructure development in the state.
Other Investors in Real Estate and Infrastructure StartupsThe above-mentioned are only very few of the multiple grants available to startups from the federal government. You can also research endowments that private family offices, philanthropists, and angel investors may give out to deserving candidates.
You’ll find out about their criteria for approving projects before reaching out to them. For instance, VCs and other profit-oriented investors could be more inclined toward supporting startups developing technology and innovations.
Since they focus on high returns, their support is for cutting-edge ideas. If you can demonstrate a fundable idea, you could also get funding to set up research facilities and labs.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Accelerator and Incubator ProgramsApplying to incubator and accelerator programs interested in backing real estate projects is also a great strategy. For instance:
- Plug and Play Tech Center operates out of Sunnyvale and has made 1,285 investments to date. This accelerator program has had 116 successful exits.
- Established in 2001, Rose Tech Ventures operates out of New York City. It supports founders in building the next generation of businesses matching global standards.
- ShelterTech is a fast-upcoming program supporting disruptive housing solutions. The program operates out of Atlanta and is run by Habitat for Humanity.
- URBAN-X is an accelerator program with a duration of 20 weeks and operates out of Brooklyn. It supports founders in developing tech solutions for sustainability.
- Florida-Israel Business Accelerator operates out of Tampa, Florida, and supports Israeli founders wanting to build startups in the US.
- SF Housing Accelerator operates out of San Francisco and is geared toward high-quality, affordable housing solutions.
Venture Capital FirmsHaving developed the MVP and set up the startup, you’ll need funding and guidance to have it running. That’s where venture capital comes in. Check out some of these venture capital programs for real estate and infrastructure startups.
- RRE Ventures operates out of the Metropolitan area of New York City and primarily invests in real estate tech companies. Its investment range is from $250K to $3.8M. RRE boasts a portfolio of more than 500 companies specializing in real estate and property.
- Formerly known as 500 Startups, 500 Global has backed more than 5,000 entrepreneurs in building 2,800 businesses across over 80 countries. Its investment range is $150K for a 6% equity stake.
- If you’re looking for higher funding amounts, Camber Creek is a good VC option to approach. This firm offers up to $9M in funding and supports startups working in areas like construction, leasing, and property management.
- JLL Spark is one of the top VC firms in the real estate vertical, with an investment range of $25K to $125M.
- Entrepreneurs developing concepts in areas like smart buildings, ESG, construction tech, Future-of-Work technologies, and property tech can get support.
- Alpaca VC has invested in 86 projects to date, with an investment range of $500K to $50M. It supports startups developing real estate infrastructure, property tech, and construction technology.
Private Equity FirmsSeveral private equity firms operate in the real estate vertical. Their objective is typically to quickly accelerate the startup and exit for a significant profit. Before approaching them for support, you’ll explore their terms and conditions in detail.
- Founded in 1990, Apollo operates out of New York and has a portfolio of 72 investments. It has had 30 exits.
- Vulcan operates out of Seattle, Washington, and has invested in 29 startups to date.
- Trinity Private Equity Group, headquartered in Southlake, Texas, has had 18 investments.
- Singularity Capital MGMT operates out of Tucson, Arizona, and supports startups integrating AI with real estate.
- Saratoga Partners operates out of New York, New York, focusing solely on real estate startups.
The above-cited examples only give you an overview of the investors to approach for capital for your startup. Also, explore the possibility of attracting offshore investors to support your ideas.
Now that you have an overview of the investors you’ll approach, let’s move on to the next step. Check out this video, in which I explain how to put together an investor outreach strategy. Use the tips to get your project off the ground successfully.
How to Raise Funding for Real Estate and Infrastructure CompaniesBefore reaching out to potential investors, you’ll create a compelling but concise business plan to talk about the idea. You’ll include information about how you’ll generate revenues and the customer base to target.
If you’ve built companies earlier, that’s a good way to demonstrate business acumen. If not, talk about the founding team and their track record with successful companies.
Getting funding from investors typically involves ceding board seats and decision-making rights. You may also have to give up some percentage of your equity and other collateral like preference shares or convertible notes. These instruments offset some of the risk and guarantee recovery in case the startup fails.
Having a business plan also indicates the startup’s objectives, mission statement, and strategies for achieving them. This is valuable information for investors but also helps founders stay on top of their progress. That’s something investors will also want to monitor.
Keep in mind that investors are more likely to back startups with revenues and an established client base. If you’ve yet to generate revenues, you’ll leverage other strategies to value the company and get funding. Consider partnering with a well-known brand by entering into a corporate venturing deal.
Also, try other strategies like crowdfunding, friends and family rounds, and personal loans. Leverage social media platforms to create hype for your company and build a robust network of contacts before you reach out to investors.
On a Final NoteReal estate and infrastructure startups can attract investor attention if they can come up with exciting new ideas. This vertical is geared toward rapid growth in the coming few years, and the stress is on sustainable housing solutions.
Entrepreneurs with innovative solutions for greener construction and building projects or streamlining deals are sure to get backing. The real estate and property sector has a broad scope and has the potential for integrating technology, AI, and automations.
Any disruptive ideas that can enhance how projects are handled and help customers find the estate they need will be very much in demand.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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Corporate venturing, or corporate venture capital, as it is also called, is gaining traction in the last decade or so. A form of venture capital, corporate venture funding is a strategic investment strategy where large corporations invest in early-stage startups.
The objectives behind the investment can range from financial returns to capturing new markets or harnessing innovative technologies. Depending on the objective, the investing company may set up a separate VC arm that identifies good candidates for backing.
Or it sets aside funds from its balance sheet to support new ventures that can eventually be acquired and integrated. At the onset, corporate venturing provides funding and added support to get the startup off the ground.
Once the new company is established, scaling, and generating profits, the investor could make an M&A offer. Or assist it in going to IPO. Either way, the investor stands to make significant profits–by purchasing the company or making a strategic exit.
Corporate venturing or corporate venture funds (CVC) can be of different types. Large corporations invest in early-stage companies and offer funding to later-stage and series A through series C companies.
Founders can approach these funds for support at any growth stage and benefit from the partnership. When reaching out to potential investors, you’ll want to understand their goals behind the funding. Also, understand the kind of support you can expect and align the offer with your startup’s needs.
Keep in mind that corporations are entering into mega investing deals which can go up to $100M and more. Further, at least 33% of Fortune 500 companies have a venture capital arm for investing in new startups. Connecting with the right partner can propel your startup in the right direction.
Read ahead to understand how corporate venturing deals work.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Corporate Venture Funding as Purely Financial InvestmentsCorporations often invest in startups solely for the purpose of financial returns and don’t have any other strategic interest. Their only goal is to make profits from their stake in the company, and they don’t offer any expertise.
You can’t expect any other perks from the partnership besides financial benefits. Typically, the terms and conditions of this corporate venturing may involve a major equity stake, often going up to 50%. However, you’ll enjoy complete autonomy to run the company with zero interference.
Such corporate investors are financial CVCs with minimal resource sharing and strategic guidance. Their objective is typically investing in an entirely distinct vertical from their own and are unconcerned with your mission.
As long as you demonstrate potential for scaling and generating profits, getting their support is easily done. Their valuation and due diligence typically center around financial stability and robust metrics.
More often than not, this form of investment is the corporation’s initial foray into the venture capital world. It may or may not rely on accelerator or incubator programs and venture capital firms to dabble in investing. The focus is on startups with a ready MVP and infrastructure for quick growth.
Over time, the corporation may set up an entirely autonomous venture capital arm that solely works to invest in upcoming startups. But then, it ceases to be a corporate venture capital firm.
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Corporate Venturing as Strategic InvestmentsCorporate venture funds may target startups as strategic investments with the end goal of advancing their own interests. They typically look for new companies with innovative concepts and technologies that they can leverage to expand operations.
For instance, a tractor manufacturer may invest in and nurture a startup that innovates farming tools and implements. You’ll get their support if your startup can support the investor’s product lines and core business and improve its market position.
Corporate strategic investors target new companies within their business vertical, and their objective is primarily strategic. These corporations provide much more than just funding. Their VC arm provides in-depth, industry-specific knowledge and expertise along with access to the investor’s infrastructure.
Such strategic investments are called driving investments because they are geared toward scaling the investment quickly. And indirectly promote the investor’s growth also. Accordingly, they identify small companies that can help them navigate supply chain, technical, and regulatory hurdles.
You’ll attract corporate investment if your startup ideates complementary products or spare parts. Also, expect access to marketing and distribution channels, networking opportunities, and assistance with other management techniques. Hiring top talent will be made easier thanks to the partnership.
Corporate Venture Funding to Expand Core OperationsCorporations must consistently evolve to stay competitive in a rapidly changing business ecosystem. For that to happen, they must expand into new and emerging markets and develop new technologies to keep pace with the competition.
Adapting to changing consumer buying trends and preferences is also crucial. Corporate venturing could be the ideal strategy to make that happen.
Larger corporations may find it harder to adapt and stay agile because of their sheer size. Investing in in-house research and development divisions typically involves a high amount of money. Results and marketable products can take too long to develop to make sense to shareholders.
A better option is to support upcoming startups that are creating new technologies. The capital diverted to the company can yield effective results at minimal expenses without the need to build separate R&D departments.
Similarly, expanding to new locations is easily executed by backing a startup with a local presence. Your company has an established customer base and proven sales and revenues, which is an advantage. If it demonstrates success, you could exit with an M&A deal.
Corporate venturing may come with added benefits designed to assist you with R&D, such as equipment, tools, and talent to develop new products. You could also benefit from the investor’s infrastructure, distribution channels, networking opportunities, and more.
For instance, a mega pharmaceutical corporation may partner with a startup developing advanced AI and automations to test drugs.
Enabling Corporate Venturing to Create DemandLarger corporations have the resources to promote the entire business ecosystem in which they operate. They are open to backing startups that are not directly linked to their operations. Their objective is to indirectly stimulate demand for their products.
For instance, the microprocessor Intel’s investment arm is Intel Capital. This company invests in smaller startups developing products that must use the chips to function. Similarly, enabling corporate venturing is all about supporting customers, suppliers, and third-party startups and developers.
Corporate venture capital (CVC) is also known for nurturing distinct cultures and unconventional business frameworks. Although most corporations have end goals like acquisitions, they are open to encouraging and supporting unique concepts.
By supporting underserved customers and underrepresented founders, they foster inclusive cultures. If you have radically unique ideas or a fresh perspective of how the industry operates, corporate venture capital might just be the funding you need.
Encouraging open innovation is how they aim to stay ahead of not just the competition but also evolving customer needs. When negotiating the terms and conditions for corporate venture capital, understand that there are no cut-and-dried distinctions.
Corporate investors may offer you capital and additional support depending on their objectives and future M&A goals. You can also negotiate for hybrid forms of CVC that align with your needs.
In this post, I have talked about corporate venturing and venture capital. If you need more information about the different types of investors you can approach to back up your company, check out the video below.
How Corporate Venture Capital Differs from Conventional Venture CapitalCorporate venturing is different from conventional venture capital in several ways. Here’s how.
StructureVenture capitalists (VC) are essentially firms in which different entities pool their resources. These entities may include angel investors, institutions, university endowments, family offices, and other investors who participate as limited partners.
The fund managers can then invest the funds and support viable startups. The venture capital management screens potential candidates and conducts the due diligence before investing capital. Corporate venture funds are provided solely by large corporations that directly invest in the startups.
The capital for investment is sourced from the corporation’s balance sheet. No third parties can be involved for the investment to qualify as corporate venturing. The investing division can function as part of the corporation but not as an independent entity.
Investment ObjectivesWhen venture capitalists invest in startups or early-stage companies, their objective is returns and a profitable exit. The managers are accountable to the limited partners for delivering returns. CVCs, on the other hand, think beyond profits.
Their objectives can range from gaining innovations, ground-breaking technology, access to new markets, and an expanded customer base. They could also be looking to grow their network and build their brand reputation. Some corporations may also want to acquire the startup eventually.
Advantages for StartupsPartnering with venture capitalists will give you access to capital along with guidance and expertise. VCs typically request board seats and decision-making rights. Your startup can benefit from the know-how they provide, along with access to their networks.
Since the VC’s objective is to earn returns and scale the company, this goal aligns with the founder’s. On the other hand, partnering with a corporation could offer you much more. Depending on the investor’s goals, you could get access to their labs, manufacturing units, distribution channels, and much more.
Expect to share in industry-specific expertise and networks of vendors, suppliers, customers, and third-party service providers. The collaboration with an established brand adds validation to your startup and adds to its market value. Subsequent funding rounds are likely to be more successful.
Because VCs are primarily concerned with profits, they may not be open to backing new companies. Their due diligence could be more stringent, and startups must demonstrate an MVP and profits to make the cut. VC fund managers may only pick the best companies to back.
Although CVCs also target viable companies, their screening processes go beyond profits. They can identify projects with the potential to grow quickly per industry standards. You have a higher success rate with corporate venturing funds, even if you have a disruptive business idea.
Holding PeriodVenture capitalists stay invested in startups for anywhere from five to seven years. At times, they may choose to stay vested for around ten years. However, corporate venturing does not have a specific timeline.
Corporations often stay invested for longer periods and may maintain the funding right up to IPO. Such investments are thus also called evergreen funds. Because of the longer holding periods, CVCs typically evaluate startups meticulously.
They will select candidates who demonstrate the potential to scale rapidly from the long-term perspective rather than short-term gains.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Exit StrategiesVenture capitalists are accountable to their limited partners to make an exit with significant profits. With this objective, they tend to push for an IPO. They may also be open to selling their stake in the startup for a profit.
Their exit strategies can sometimes work against the interests of the startups. You may feel the pressure to take the company to IPO prematurely. Or risk the VCs selling their equity to investors who have different policies and game plans for your company.
Corporate venturing is never about an exit, though the investors would be interested in your startup going public. Although they do seek to earn profits and returns from their investment, they are also interested in long-term collaborations.
Most corporate investors nurture their investments with the intention to acquire them eventually. They foster synergies early during the holding period and seek out startups whose culture and mission align with their own.
In a Nutshell!Corporate venturing or corporate venture capital (CVC) is a great source of funding for early-stage startups. If you can collaborate with a mega brand within your business vertical, you can harness more than monetary resources.
Most corporations are keenly interested in supporting upcoming ventures with disruptive ideas that can complement their products and services. These partnerships help them stay competitive and consistently reinvent themselves to cater to evolving customer needs.
Startups stand to benefit from access to a whole range of resources that the established partners can make available to them. But before accepting CVC, understand the terms and conditions in detail.
You’ll also scout around for other market capital sources, including venture capitalists, angel investors, family firms, and more.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Harnessing Types Of Corporate Venturing To Propel Early-Stage Startups Forward appeared first on Alejandro Cremades.
Eric Chen, the visionary behind Injective, has a remarkable story that spans continents and industries. From his early years in China and Colorado to his ventures in the crypto world, Eric’s journey is a testament to resilience, innovation, and a forward-thinking mindset.
In this interview, we delve into his life, his inspirations, and the creation of Injective, a groundbreaking blockchain platform. Eric talks about how his long-term view kept him going despite getting off to a slow start. And, how he knew his vision went way beyond the initial hurdles.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and Formative YearsEric’s journey began in China, but his family moved to Boulder, Colorado, when he was just a baby. Although he doesn’t recall much of his early childhood in China, he has fond memories of his time in Colorado.
The small, close-knit community of Boulder provided a nurturing environment that played a significant role in shaping his worldview. However, his life took a drastic turn when his family relocated to Hong Kong.
The bustling urban environment of Hong Kong was a stark contrast to the serene surroundings of Boulder. Adjusting to this new world was challenging, but it broadened his perspective, exposing him to different cultures and ways of thinking.
A Global PerspectiveEric’s unique upbringing in both the United States and Asia gave him a global perspective. He developed a keen awareness of the differences in technology adoption between these regions.
In the US, he observed firsthand the rapid advancement and availability of new technologies, while in Asia, he noticed a lag in the adoption of these innovations.
Or worse, as Eric notes, “technology ends up being like a localized Asian counterpart of the similar type of technology that shows up in everyone’s daily lives instead of the original innovation.”
This awareness of technological disparities sparked his interest in computers and the internet. In Hong Kong, access to the latest tech was limited, which led Eric to explore every corner of the internet.
This early exploration laid the foundation for Eric’s future endeavors in the tech world. In retrospect, he realizes that he didn’t know the implications. He only knew which tools to use and some of the concepts and primitives within the open web ecosystem.
While still in high school, Eric moved back from Hong Kong to Northern California, where he found himself immersed in a vibrant tech scene.
Surrounded by peers and even their parents who were actively coding, Eric eagerly participated in hackathons. This experience not only sparked his interest in programming but also helped him connect with his new community.
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From Tech to Finance and BackDespite his burgeoning interest in technology, Eric decided to pursue finance in college, seeking a fresh perspective outside the tech bubble. He recalls wondering if the industry was oversaturated and if he would get access to high-value jobs in the marketplace.
In going to college and taking courses, Eric realized that STEM was the most important undergraduate education he could possibly have, and his passion for technology soon resurfaced. In his opinion, the finance-related curriculums offered in business schools were too simple and rudimentary.
Eric realized that the theoretical aspects of computer science, particularly cryptography, were intellectually stimulating and extremely gratifying. It just so happened to be a specific discipline where the prerequisite for a lot of the knowledge was actually pretty easy to grasp and catch up on.
Eric could cover the first year quickly by just focusing and concentrating on the cryptography path. His fascination with cryptography grew, and he immersed himself in research, often losing track of time as he delved into the subject.
This deep dive was the precursor to his eventual venture into the blockchain space.
The Birth of InjectiveEric’s journey took a significant turn in 2017-2018 when the crypto and blockchain space began to gain traction. His research in cryptography led him to explore the practical and real-world applications of theory, specifically diving in further into a cryptographic primitive called verifiable delay function.
Eric’s initial interest was in building a product that other people would use in an open-source way in the real world. As Eric reminisces, the concepts he continued to look into were very groundbreaking and exciting.
This exploration inspired the creation of Injective, a decentralized on-chain exchange mechanism designed to address the limitations of existing decentralized exchanges built on chains like Ethereum.
Although there were existing solutions, they were extremely rudimentary, difficult to use, and not secure. Further, Eric faced problems with addressing an adjustable market at the time.
With his co-founder, Albert Chon, they came up with a solution to utilize the exchange mechanism to address the problems they were facing.
However, the initial development of Injective was challenging. Eric and Albert faced numerous engineering roadblocks and had to be extremely economical with their resources. Eventually, their perseverance paid off, and Injective began to take shape.
Injective TodayEric explains that Injective has evolved quite drastically away from the initial idea of solely creating a decentralized order book exchange. But, although Injective has evolved, it actually never deviated from its larger mission of what it was trying to do and what it was trying to offer.
Today, Injective has evolved into a comprehensive layer 1 blockchain optimized for financial applications and with a thriving community and ecosystem. The chain facilitates billions of dollars in trading volume and supports numerous applications on its decentralized ecosystem.
At the time of publishing, Injective has reached over $33B in cumulative trading volume and over 700M transactions on-chain. A lot of value is entrenched within the Injective ecosystem.
As Eric explains, the product and tech stack have evolved drastically since the initial concepts six or seven years ago.
Once Eric and Albert completed Binance’s incubation program, while they had $500k to begin working on the protocol, it was the peak of 2018’s crypto winter. As Eric remembers, acquiring venture funding to progress and scale up was very difficult.
DeFi wasn’t even a term back then, so people were not particularly interested in financial applications or financial utilities in an on-chain fashion. DeFi started to pick up sometime in 2020. That’s when Eric and his team built the initial demo to test applications and got a seed funding round.
Fundraising and Sustained GrowthInjective started to progress quickly after that. But by then, Eric had planned for years of runway and longevity and prepared for the worst. Using resources conservatively paid off in a big way.
He has been able to scale the company consistently at its current pace, achieving significant results in a time when his competitors “burned through their treasury.”
Eric reveals how the Injective ecosystem has raised a little more than $56M, helping to ensure that the network is operational for the next five to ten years.
Storytelling is everything that Eric Chen was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Eric’s Vision for InjectiveEric’s vision for Injective is grand. He envisions a future where Injective plays a crucial role in the global financial system, integrating with major financial institutions and addressing critical issues like the T-plus-2 settlement problem.
Eric’s goal is for Injective to become the backbone of financial transactions, ensuring efficiency and security. He sees a time when some of the most critical staff within financial systems will utilize an Injective network, one way or another.
For instance, the New York Stock Exchange, NASDAQ, CBOE, any type of exchange house for securities derivatives, etc., will sell on top of Injective one way or another via different venues.
As Eric opines, given the cyclical nature of a lot of these rapidly growing technological trends, crypto will have a strong spiking interest that will also taper over time. At times, there might be an overzealous allocation of capital or interest and then a plateau period when it starts to come back down.
Lessons Learned and Future OutlookEric’s journey with Injective has been anything but smooth. The early years were marked by financial constraints and the challenges of navigating the nascent crypto industry. However, these hardships instilled a sense of resilience and prudence in Eric and his team.
Eric and Albert learned to plan for longevity, always preparing for the worst while striving for the best. Looking back, Eric believes that the tough times were essential for their growth.
These experiences taught them the importance of being economical and making sound decisions, ensuring the sustainability of their venture.
ConclusionEric Chen’s story is a powerful example of how a global perspective, a passion for technology, and a resilient mindset can lead to groundbreaking innovations.
Injective is not just a creation of Eric’s technical expertise but also a testament to his ability to navigate challenges and envision a future where technology drives financial transformation.
As Injective continues to grow, Eric’s journey serves as an inspiration to aspiring entrepreneurs in the tech and crypto spaces.
Listen to the full podcast episode to know more, including:
- Eric Chen’s upbringing across different countries has given him a unique, globalized worldview.
- Growing up in Hong Kong, Eric’s early interest in computers was fueled by the challenge of accessing cutting-edge technology.
- Despite his initial academic foray into finance, Eric’s passion for computer science and cryptography redirected his career path back to tech.
- The creation of Injective was sparked by groundbreaking cryptographic research and the need for improved decentralized exchanges.
- During 2018’s crypto winter, Eric and Albert operated economically, prioritizing long-term sustainability over immediate growth.
- Injective has grown from its original concept to a robust infrastructure for financial applications, facilitating significant trading volumes and transactions.
- Eric envisions Injective becoming a foundational layer for global financial systems, solving critical issues like T-plus-2 settlement delays.
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Corporate venture capital for early-stage startup funding and growth has been ramping up in the last decade or so. Large corporations and multinational companies are diverting money and resources to external ventures and startups. Entrepreneurs also benefit from expertise, funding, and other support.
These corporations aim to support new small businesses with disruptive and innovative ideas and operating techniques. They stand to earn rich profits from their investments and use them as a side income while also demonstrating responsibility.
Shareholders may welcome the opportunity to earn higher interest while supporting underrepresented founders and ESG-driven startups. In short, it’s a win-win situation for all the participants of these investment deals.
Read ahead for detailed information about how corporate venture capital (CVC) works. You’ll also learn more about the pros and cons of this funding source, which will help you design compelling pitches.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Corporate Venture Capital (CVC) Transactions Are Growing RapidlySimilar to conventional venture capital and other investment sources, the CVC market experiences its share of ebbs and flows. Corporate venture capital investments each quarter grew from $468M in the Q$ of 1998 to $6.2B in Q1 of 2000. However, these investments dropped to $848M in Q3 of 2001.
Despite the dramatic historical volatility, experts expect that the CVC market will demonstrate accelerated activity in 2024. In 2021, transactions worth $130.9B were executed worldwide, which is more than twice the amount traditional VCs invested. In the US alone, CVC investment was over $71B.
Statistics indicate that early-stage startups have attracted 66% of the corporate venture capital deals worldwide up until May 2024. In the US, 59% of funding deals have targeted early-stage businesses. Europe and Asia have diverted 73% and 66% of deals, respectively, to early-stage ventures.
Corporations have invested $15B in total funding in Q1 of 2024 to small and emerging startups, as the graph below shows. Interestingly, 47% of the deals were mega transactions worth $100M and above.
As a founder with an innovative concept that can capture the market, this is the capital source you’ll look at.
Understanding Corporate Venture CapitalCorporate venture capital (CVC) is the funding large corporations offer directly to small, external, early-stage startups. However, the funding does not qualify as CVC if it is executed through third-party entities and the corporation provides the capital.
The investment has to be direct regardless of whether the corporation creates an investment product specifically to meet a particular objective. Further, the targeted startup should be an independent entity for an investment to qualify as a CVC.
The new venture should be a legally independent entity, distinct from the corporate investor’s core business, and have operational autonomy. If the parent company retains legal ownership, the capital is not CVC. Large corporations typically enter into such deals to back small, innovative ventures.
These investments are in the form of joint venture agreements where the investor acquires equity and stock. In addition to capital, the investor also provides strategic and management guidance and expertise in areas like marketing and sales. In some cases, a line of credit is an additional perk.
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Objectives of Corporate Venture FundsAs a founder exploring corporate venture capital for early-stage startup funding, you’ll start by exploring the investors’ objectives. While significant profits are high on their list of priorities, they may also have other goals for seeking investment options.
If you can align your needs with their goals, your fundraising efforts are likely to be more successful. You’ll start off by exploring the investor’s portfolio to understand their degree of involvement with their investments.
By entering into a partnership with an established company, you could get access to their production and manufacturing facilities. Other perks can include sharing their distribution channels and marketing campaigns.
Partnering with a well-known brand adds validation to your company, making it easier to attract buyers. You could also get credit lines from vendors and suppliers when sourcing inventory, not to mention assistance with advertising.
Strategic Investment for Mutually-Beneficial SynergiesCorporations may seek to invest in startups for strategic purposes such as raising their own sales and capturing new markets. If the new startup will purchase inventory and parts from the corporate investor, it’s a viable deal.
By investing in emerging startups, they can consolidate their positions in upcoming markets, expand their networks, and explore potential acquisitions. Investors may also want to expand their digital capabilities or acquire new technology at competitive rates.
Their end goal is potential synergies through partnerships. Once the startup is stable and generating profits, corporations can explore the option of an M&A deal. But, if the company is unsuccessful, they can exit the investment and minimize risk.
Acquiring New Technologies to Stay CompetitiveEstablishing and running in-house research and development divisions typically involves high spending. That’s because there’s typically no guarantee of returns or the timeline within which the R&D will yield results.
Larger corporations are typically hampered by their size, which makes them less agile.
Instead, these corporations invest in upcoming startups with innovative concepts. Offering capital to startups with tech innovations allows corporate investors to stay ahead of the curve. They get first access to the technology and prevent their competitors from gaining an edge.
The investors nurture the ventures with capital and know-how and purchase their products. In this way, they can leverage independent business networks to break into new markets and disruptive fields. And effectively partner with startups that can potentially become competitors.
Financial Returns and ProfitsSome corporate investors may look for viable startups solely for the purpose of generating profits. However, unlike traditional venture capitalists, they may look for upcoming ventures within their vertical.
That’s because their industry-specific knowledge gives them an added edge when evaluating startups for investing. CVC investors know what to look for when examining technologies and MVPs, the startup’s balance sheet and financials, and other metrics.
These investors understand the startup’s potential better than other VCs, which is why they may be open to low interest. Funding smaller ventures also builds an additional revenue source beyond public markets. Once the startup is established and scaling, the possibility of high-value exits also rises.
If the startup grows to a point when it can go to IPO, the potential for ROI is even higher. This is why corporate venture capital for early-stage startups works well for investors.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Criteria for Getting Corporate Venture CapitalWhen corporations assess startups as potential candidates for investing, their criteria differ from those of conventional venture capitalists. Typically, their goal is to select startups that align with their goals from a futuristic perspective.
These corporate investors focus on features like a robust MVP with a strong product-market fit that operates within their industry. They may also look for ventures that fall in with their core business structure. And preferably with a culture that can integrate with their own in case of an M&A deal.
Here are some of the other criteria for corporate venture capital for early-stage startup funding.
- Startups that can demonstrate a product-market fit, have an established customer base, have sales and revenues, and have actual traction can attract CVC. This investment is best suited for ventures that show potential for rapid growth. Corporate investors tend to avoid pre-revenue businesses.
- If your pitch deck depicts a robust skill set and strong management team, that’s a good plus. CVC investors focus on the founding teams and their track records with leading ventures to success and growth.
- Your startup’s culture and operational styles should align with the investors’ since they’ll want to make you an acquisition offer.
- Corporate investors are open to accepting an equity stake ranging from 10% to 30%. Instead of large stakes and ownership, they are more about building relationships and providing support. They are content to allow the founders to run the company according to their visions.
When evaluating your financials and metrics, they’ll want assurance that you can deliver rich returns. CVC investors will require 20% returns + IRR over a vesting period of 5 to 7 years. - Corporations investing in startups may offer follow-on capital and participate in subsequent funding rounds. They may be open to expanding their ownership as your startup scales. However, their decisions are also driven by the continued value your company delivers. And if they see long-term benefits in the partnership.
- Corporate venturing, as CVC is also called, is more for early-stage, later-stage, and Series A through Series C-stage companies.
- Your pitch deck must demonstrate strategic partnering value to the investor with disruptive technology and innovative ideas.
Advantages of Corporate Venture Capital for Early-Stage Startup FundingGiven the choice between VCs and CVCs, you’ll want to understand the benefits of the latter in detail. Here’s some information you might find helpful.
- As mentioned earlier, corporate investors don’t require a high amount of equity. As a result, you won’t have to worry about early dilution in exchange for capital. Accessing corporate venture capital for early-stage startup funding has the advantage of providing a rich infusion of cash. You can use this money to accelerate the company quickly. Accepting VC money typically involves ceding board seats and decision-making rights, which you can avoid.
- Partnering with an established brand with corporate venture capital gives your company instant recognition and market presence. The investor brand is also committed to your success and will likely advertise the partnership. This hype gives you access to a ready customer base and allows you to leverage existing distribution channels to sell your products. You’ll enter the market with a launchpad to catapult you to success.
- Entering into a partnership with an existing, well-known brand gives your company validation. Your company’s reputation and credibility will get an instant boost that can prove to be highly beneficial. The endorsement from a corporate giant helps you attract top-notch skills and talent along with capital from other investors.
- Larger corporations have an established infrastructure and extensive network of customers, investors, and other stakeholders that you can use. Founders also get guidance with aspects like marketing, distribution, customer support, operational strategies, R&D, and HR resources.
When corporations invest in startups, their end goal is usually an acquisition in the future. If your company aligns with its culture and business roadmap, you have a ready exit strategy.
Corporate venture capital is only one of the sources of funding you can approach. If you’re looking for more information about the types of investors for startups and how to connect with them, check out this video I have created.
Downsides of Corporate Venture Capital for Early-Stage Startup FundingAs with any other funding source, corporate venture capital does come with its share of downsides. If you’re considering accepting CVC, explore the potential risks and find workarounds. Here’s what you need to know.
- As a rule, CVC investors tend to maintain a backseat and let the startup operate independently. However, they may request board seats and try to influence product designs and other strategic decisions. This can happen particularly in cases where the investor has strategic interests or intends to acquire the startup eventually. Secure your autonomy and independent decision-making by setting ground rules about governance rights early on during the negotiations.
- If you’re developing IP and IA, you could risk losing business secrets to the corporate investor. A conflict of interest can arise when a larger corporation develops products using your IP and competes with your company. Secure your IP with robust terms and conditions and carefully demarcate data and information exchange.
- As part of the investment terms, the corporation may require you to get approvals before making decisions. This process can quickly become complex and tedious, hampering your ability to accelerate growth and innovation. Be wary of the controls the investor requires.
- Although CVCs come with a vesting period of 5 to 7 years, their exit protocols can become cumbersome. You may also feel the pressure to sell your startup prematurely or at prices that don’t make sense to you. Clarify the probability of an M&A deal and its terms when entering into the investment agreement.
To SummarizeCorporate venture capital for early-stage startup funding can prove to be a viable solution. It works well for small businesses working in the same vertical as larger corporations. You can access the many benefits that can help you accelerate growth.
However, weigh the pros and cons carefully and make sure the investor aligns with your mission and vision. Ensure that you have adequate autonomy to build and operate the company with minimal interference and secure your interests.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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Imagine a startup that doesn’t fit the usual mold—one that manages over $100B in assets with a team of nearly 600 employees. This is the incredible story of Matthew Fleissig and Pathstone, a company that has experienced tremendous growth and continues to innovate in the world of finance.
Join us as we delve into Matthew’s journey, from his North Jersey roots to co-founding a trailblazing financial advisory firm.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life: North Jersey BeginningsMatthew Fleissig’s story begins in North Jersey, a place he fondly remembers. Life was good, filled with tennis and a keen interest in computers.
With a father who was a dedicated real estate lawyer and a mother who worked as an occupational therapist, Matthew grew up with strong role models and a solid work ethic.
“I always aspired to be like my dad,” he recalls. “He genuinely loved the law, and that passion for his work was something I admired and wanted to emulate in my own career.”
Tennis played a significant role in Matthew’s upbringing. Competing at Livingston, a top 20 tennis team in the state, he developed a competitive spirit that would later serve him well professionally.
“Playing tennis, especially in a competitive environment, gave me an edge. It was a fun and integral part of growing up.”
It was the early days of the Internet and eBay, and Matthew enjoyed exploring new and interesting ways to make money.
Finding His Path: From Computers to FinanceWhile computers fascinated Matthew, the world of finance eventually captivated him, which he chose above other career paths, including law.
During college in the late 90s, he wrote software to auto-confirm IPO trading amidst the IPO boom. This experience, though it impacted his academic performance, provided invaluable lessons.
“My entrance into finance was marked by significant gains and losses in the stock market. I learned crucial lessons about investing and financial management during that time,” as Matthew remembers. He had fun with the money he made but also invested in volatile stocks like Cisco and Lucent.
After college, Matthew faced a crossroads. It was in the early 2000s after the bubble burst, and there weren’t a lot of jobs available. He could pursue a computer science job or take a leap into the unknown with a finance position at Lord Abbott in New York City.
Choosing the latter, Matthew stepped out of his comfort zone and into a rigorous training program that honed his presentation and storytelling skills.
“Calling brokers across the country and getting hung up on repeatedly was a humbling experience. But it built confidence and opened the door to a career in finance,” Matthew reveals.
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The Goldman Sachs ExperienceA pivotal moment in Matthew’s career came with his tenure at Goldman Sachs, particularly in the AYCO division. He gained exposure to the world of family offices, taxes, accounting, and investments, working with Fortune 500 CEOs and Goldman Sachs partners.
They had the AYCO University, where they would send employees to learn about estate planning. The comprehensive training and holistic business approach from straight investment to the wholesaling and investment side were transformative.
“This experience rounded out my skill set, preparing me for the multifaceted world of financial advisory,” Matthew recalls. In the early 2000s, not many firms offered this full suite of services beyond direct investments.
The culture also had a lasting impression on Matthew. He was impressed by just how much training was done to grow their people in-house and make them smarter and better advisors to be able to work with more and more clients.
The Birth of PathstoneMatthew’s journey took a significant turn when he met Steve Braverman, a visionary entrepreneur whose family had invented the powder-free latex glove. Their chance meeting at a barbecue at Catskills led to the founding of Pathstone in 2010, following the financial crisis of 2008.
Steve had a vision of investment services for families and was looking for a solution. He had the investments covered, being a financial engineer and running his family’s single-family office for years. Steve’s family had sold their rubber glove business for safe skin to Kimberly Clark in 1998 for $1.4B.
Steve’s idea was to find a firm to provide services like taxes, accounting, bill payments, etc., for ultra-high-net-worth families.
He needed someone with expertise in asset planning, and Matthew also fit the bill because of his software capabilities. Initially, the firm managed assets worth $1.4B for 19 prominent American families.
“We started with seven shareholders and built the business from the ground up. It was an exhilarating time, and we effectively tripled our assets in four years,” says Matthew.
Pathstone’s growth trajectory continued, driven by a unique business model that offered unbundled services and investments. Unlike traditional banks and broker-dealers, Pathstone charged clients separately for the services they consumed, fostering transparency and efficiency.
Matthew remembers writing their own optimizers and rebalancers since there was no technology to handle them. They also designed their own reporting systems. Matthew enjoyed leveraging his computer science and programming skills for estate planning and taxes.
Scaling New HeightsBy 2015, Pathstone had grown to $4B in assets with 50 families. Realizing the need for scaling and additional capabilities, Matthew and his team took on outside capital. They acquired their first firm in Boston in 2014 with the assistance of two investment bankers.
Storytelling is everything that Matthew Fleissig was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Taking on convertible debt marked the beginning of Pathstone’s journey into mergers and acquisitions (M&A), a strategy that propelled the firm to new heights. After the first Boston firm, Matthew and Steve took on another $4B firm in 2015.
Pathstone scaled quickly to become a $8B firm and opened new offices in Los Angeles and DC. It continued to expand organically from $10B to $16B over the next few years, 2015 to 2019, essentially quadrupling its assets.
Matthew and Steve realized they were no longer a club for a select group of families but a blue ocean opportunity for a completely underserved customer base in the ultra-high-net-worth market.
Pathstone’s innovative approach and commitment to client service set it apart. Unlike the traditional world of banks and broker-dealers, it was a completely unbundled business around services and investments.
The firm never said no to clients’ requests, whether it involved arranging a plane on short notice or conducting mock trials to prepare clients for legal battles.
Steve and Matthew would do anything from the investment side to reporting to the admin. They would buy planes, hire pilots, do background checks on the dog walker, manage payroll for the household staff, and collect mail from five homes.
Pathstone charges separately for the services customers consume instead of charging them a percentage of their assets.
Managing Post-Acquisition Integration ChallengesConsidering that 99% of acquisitions fail because of integration challenges, the question arises: How can we acquire service-based businesses where it’s all about people? How does Pathstone make sure that people stay on for the long haul?
As Matthew explains, the big differentiating factor is that they fully integrate. They developed this strategy when they acquired the Boston firm.
Families need people to interact with in a world of chatbots and AI. The firm focuses on providing consultative support and services to clients that serve their needs rather than selling products.
Pathstone has a robust equity program. In the traditional private equity world, people don’t view VCs favorably. Instead, Pathstone tries to equitize the next generations of Pathstone advisors.
Of the nearly 600 people they have working at Pathstone, almost 50% are shareholders. The company has had three rounds of private equity come through, and every four to six years, it will have a transaction. Shareholders have a great incentive to support the growth of the firm.
They also build net worth with a lot of these incentive unit programs that Pathstone creates with the private equity firms as part of the transaction. Every four to six years, folks have mini-transactions that they never would have had if Pathstone had not been an outside provider.
The shareholders know that the company will keep stair-stepping up to larger private equity firms every four to six years in the foreseeable future.
Pathstone’s Objectives Behind M&A DealsMatthew explains that Pathstone engages in horizontal and vertical deals, and execution is about culture.
They have executed 14 deals in 12 years, and until around two years ago, when they acquired a trust company and a direct indexing firm, Matthew and Steve mainly focused on acquiring other RIAs that fit their culture and people.
They have been engaging in social activities and dinners with potential acquisitions and trusting their guts before finalizing the deals. That’s how they have successfully built a strong team and a large equity base.
Matthew and Steve also realized that Pathstone is a multi-generational firm for multi-generational clients, and they were missing things. Each time they made a referral out to a law firm, accounting firm, aircraft firm, or travel firm, they were effectively taking a risk with their relationships with their clients.
By outsourcing, Pathstone couldn’t control the experience any longer. Thus, its M&As have been more about insourcing. Since it was a multi-generational firm, Matthew and Steve saw that there was a gap in the business.
They also needed tech and automation to manage portfolios on an after-tax basis in an incredibly efficient manner.
With this objective in mind, the duo acquired a trust company and merged with a firm in Walnut Creek. This firm had AI automation portfolio implementation technology that managed portfolios that were compliant with tax laws.
Pathstone also integrates aspects like property management and insurance. Matthew and Steve are looking potentially to acquire a law firm and bring that in-house. That’s how they will perfect the client experience and not take on that risk whenever they use an outside party to provide services.
Matthew explains that when clients call them for issues not involving investment or tax, they know that Pathstone has become a part of their family.
They are available 24/7 and have handled situations like emergency flights arranged within 90 minutes, delivering goats and gold, and purchasing engagement rings.
The Future: A National Brand in the MakingToday, Pathstone is a $100B firm with nearly 600 employees and over 1000 clients, including 700 families, each with an average net worth exceeding $100M.
The firm’s unique structure, including a non-depository trust company and proprietary technology platform called Arrow, positions it for continued growth.
This strategy allows Pathstone to operate with unique flexibility. It can administer and be the trustee and not actually control the assets while providing a broad portfolio of services to client families.
Matthew explains that they have spent almost seven years building ARROW, which has accounting, reporting, rebalancing, optimization, and workflow, leveraging data as the new oil for the system.
They have a centralized data warehouse with a front end on top that connects to investment custodians. ARROW also connects to accounting and all the users work through the platform at Pathstone.
The US has around 230,000 families, but Pathstone still has a low market share. “We see a vast, underserved market for ultra-high-net-worth families. Our goal is to become the national brand in fiduciary services, disrupting the traditional bank and broker-dealer models,” says Matthew.
Having already passed a decade and 100 times bigger than when it started out, Matthew sees the firm managing more than $1T worth of assets, similar to some of the top firms in the country.
ConclusionMatthew Fleissig’s journey from North Jersey to leading Pathstone is a testament to the power of passion, perseverance, and innovation. As he looks to the future, the possibilities are endless, with Pathstone poised to redefine the landscape of financial advisory services for generations to come.
“I wish we had started Pathstone sooner, but there are no regrets. Building this firm has been the most exciting and fulfilling experience, and we’re just getting started.”
Listen to the full podcast transcript to know more, including:
- Matthew Fleissig’s early passion for computers and entrepreneurial ventures set the foundation for his future success in finance and tech-driven solutions.
- His experience in competitive tennis fostered a resilience and drive that he carried into his professional life, particularly in the challenging finance industry.
- College was a crucial period where Fleissig engaged in IPO trading and software development, sparking his deep interest in finance.
- Fleissig’s journey included diverse financial roles, from wholesaling mutual funds to comprehensive training at Goldman Sachs, which rounded out his expertise.
- Pathstone was born from a vision to provide a full suite of financial services to ultra-high-net-worth families, driven by Fleissig’s diverse skill set and experience.
- The firm’s unique model of offering unbundled, personalized services and solving clients’ diverse needs has been key to its rapid growth.
- With a current $100B in assets under advisement, Pathstone aims to become a national brand, addressing the underserved ultra-high-net-worth market with innovative, technology-driven solutions.
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Leveraging media and public relations for startup fundraising is an excellent strategy to ensure long-term growth and success. Early-stage startups can use this tool effectively to attract investor attention and connect with other stakeholders–primarily customers and collaborators.
Public relations is the art of opening communication lines between a company and the industry where it operates. You need PR marketing to build relationships with customers, investors, public platforms, and potential partners. Leveraging this strategy, you’ll broadcast the startup’s activities.
Startups with limited resources tend to overlook the importance of PR and how it can add value to their reputation. Building brand awareness and credibility is crucial for the company’s growth, which is why experts recommend a headstart.
The sooner you start talking about the brand and what it can offer, the higher its chances of success. As a low-cost strategy, you’ll start creating hype around the company as soon as you’re ready with an idea. Social media channels are an excellent start.
Once you’re ready with a market-ready product prototype, engage the services of professional teams to propel it to the limelight. Allocate the necessary resources and start the public relations campaigns around nine months before you’ll need capital.
Before each subsequent funding round, ensure you have four to six months of runway left. Your PR campaigns should be up and running to build credibility and a market presence by this time. Investors should have adequate information about the startup before you reach out to them.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Why Leveraging Media and Public Relations is Crucial for FundraisingYou’ll ensure the brand gets favorable coverage from reputable media channels when running PR campaigns. Here’s how that can work for the brand.
- Getting mentions in the top-ranking digital periodicals adds authenticity to your company.
- Customers are more inclined to trust the company and offer reviews of their experiences with the products. You’ll generate a buzz with testimonials from satisfied consumers and viral word-of-mouth advertising.
- PR strategies work not only to get traction for the company but also to convince investors that it is worth backing.
- PR advertising is an effective differentiation tool that tells stakeholders what sets the company apart from the competition.
- You’ll use effective storytelling to offer information about the brand’s USP, mission statement, and vision. Rely on the professionals to craft a compelling narrative about the milestones the company has achieved and market traction. A powerful story can evoke excitement and interest, prompting investors to fund the company with capital and valuable expertise.
- Effective public relations and media coverage establishes the brand as a leader, innovator, and expert in your specific vertical. You’ll provide information about not only your brand but also about the industry as a whole.
- PR advertising, multimedia content, social media postings, press releases, and investor meets have the potential to evoke action among audiences. Impressed customers will want to buy the products and services, and investors will see the potential of an investment opportunity.
- You’ll also have interested collaborators reaching out with mutually beneficial deals.
- You can leverage PR coverage in times of crisis to connect with customers and investors and provide updates. Use press releases to respond to feedback and present your side in case of a controversy or criticism. You’ll rebuild trust and regain their confidence. Prompt and timely damage control can resolve every situation.
Leveraging Media and Public Relations for Startup Fundraising StrategiesAlthough leveraging PR and media broadcasts is an excellent strategy to catch investor interest, you’ll use the approach cautiously. Here’s what you need to know.
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Back Your PR Claims with Verifiable Data and InformationClose to 85% of PR professionals reveal that they prefer to broadcast authenticated information on their channels. Accordingly, it’s best to refrain from using PR releases unless you can back them with data and verifiable information.
Whatever traction you demonstrate should have a robust business model as a cornerstone. Without plausible milestones, even the best PR campaigns will be ineffective.
Statistics show that the top billion-dollar corporate giants worldwide may spend anywhere from $250K to $25M on public relations yearly.
However, reaching out to journalists to promote your company or release information about it is not exactly easy. On average, journalists get close to 100 pitches each week. Of these, they may respond to 3.27% of the ones they think carry some weight and may interest their audiences.
Time Your Releases and Select the Appropriate ChannelsThe key to successful PR for fundraising is to reach out to the appropriate audience at the opportune time using the right channels. Your PR team or agency should time the releases when they are most likely to generate a buzz.
Select the appropriate channels because although you would want the brand featured in magazines like TechCrunch, it may not be suitable for your niche audience or investors. For instance, if you’re running a company in the food and beverage sector, you’ll leverage the WGSN platform.
Side-by-side, you’ll use LinkedIn to establish credibility as the founder who built the company. Keep in mind that investors are more likely to back the entrepreneur for their expertise and business acumen.
And LinkedIn is the best channel for getting exposure for your skills and talents as a founder worth backing.
Although PR agencies go with traditional channels like press releases, events, and newsletters, don’t forget to harness digital PR. Tap into channels like social media sites, content marketing, and email marketing.
Staying Current and Relevant is CrucialWhen leveraging media and public relations for startup fundraising success, know the intention is to stay relevant. Public and investor attention is short, and your PR is the right tool to stay fresh and engaged with the audience amidst the chatter.
Broadcasting information about the company’s achievements and milestones ensures investors stay engaged with its success trajectory. They are more likely to offer money when you approach them for funding since they have been following your journey.
Remember, investors are always looking for potential unicorns from which they can back and earn profits. However, remember not to talk about the fundraising rounds you’ve raised successfully. Investors may not be interested since the company is unlikely to need more capital.
The objective is to discuss what you’re doing with the funding and the areas where you allocated resources. You’ll also reach out to customers with details about the new products you’ve added to the portfolio. Or the newest features that enhance the value they can get from existing products.
PR releases at this time are also useful for attracting strategic partners and collaborators. Entering into horizontal and vertical deals can help cut back costs and translate into more economical prices for customers. And potentially higher profits for investors that they want to hear about.
Broadcasting information about investors who backed the company previously is better timed during the next funding round. Or when you start creating the next pitch deck. That’s when you’ll leverage the element of FOMO to entice new investors to support the brand.
Public Relations and Press Coverage is a Consistent ActivityAn essential facet of effective PR is consistency. The startup landscape has cutthroat competition, with hundreds of new startups emerging every day. You’ll need to invest in this strategy regularly to maintain the buzz. Consider PR a long-term approach over three to six months.
That’s the time you’ll take to establish the brand as a permanent fixture in the industry. Reputable online publications and periodicals will start referencing your press releases and writing about your brand and the milestones it covers.
Understand the importance of recall value, which is indispensable when you reach out to investors for funding. Although PR is not exactly marketing, the two are closely interlinked. 90% of PR experts believe the two teams should collaborate for the best results. Hiring external professionals is a value-adding investment.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!PR Releases Need Not be Only About Company Activities and TractionPR releases need not be only about the company’s traction, product releases, and other data. As the founder, you can leverage the exposure to establish yourself as an innovator and disruptor in your space. Talk about new developments in the sphere that are likely to impact the entire industry.
Each release should be carefully researched and backed by scientific research and data. This form of advertising takes a lot of dedicated effort but can establish you as an authoritative figure. Also, make sure to post regularly on professional social media sites like LinkedIn and Twitter.
Write impactful blogs, get invited to podcasts, and maintain engagement with the audience. Be unique and authentic and focus on building brand value.
Your objective should be to broadcast your industry-specific knowledge and encourage customer interaction. That’s how you’ll lower CACs and customer churn rates.
PR and media are only two of the strategies to deploy. Check out this video, in which I explain what to do if your investor outreach isn’t working. You’re sure to find it helpful.
PR Opens Networking and Partnership OpportunitiesLeveraging media and public relations for startup fundraising works well because this strategy opens networking opportunities. Media coverage attracts attention from not just customers but also investors and potential collaborators.
As the founder, make an effort to attend conferences, seminars, and other events that journalists cover. Interact with people and gain the maximum exposure you can. Even a small mention in any online or on-paper magazines or news channels is a step forward.
Investors spotting you at the events or reading about them later will quickly learn to recognize the face. Later, they’ll connect the name to the face when you reach out for funding. And you’ll get a foot in the door. This is not the time to be vanity-conscious. But get aggressive and blow your trumpet.
As for sales and brand value, statistics indicate that a well-crafted PR campaign will likely be 90% more effective than just advertising.
You have a higher chance of increasing your website’s ranking, better positioning on search engines, and organically boosting brand awareness. You’ll also earn customer trust, and these benefits will make attracting funding easier.
Also, reach out to top podcasts in the vertical where you work through your PR agency. Giving an interview about your entrepreneur journey makes for interesting conversations. You’ll establish authority and likeability among your peers, investors, and other audiences listening in.
Now For Some Actionable Tips – How to Leverage Media and PR for FundraisingUsing social media channels when you’re still bootstrapping the company works in the initial stages. But as the brand starts to take off, you might need to bring in the big guns. Consider investing in the services of a reputable PR agency that can complement your marketing team.
Start by creating a compelling press kit to spotlight your brand and enhance its credibility effectively. This PR kit is a tool that provides quick snapshots of your brand when communicating with bloggers, influencers, media outlets, and journalists.
The basics of any effective PR kit start with a compelling narrative that quickly outlines the mission statement and vision. It will also highlight the brand’s USP and what differentiates it from competing brands. Also include the traction you have on social media and other platforms.
The number of likes, follows, positive reviews, and engagement on Facebook, Pinterest, Instagram, and other platforms builds credibility. You can also talk about any endorsements from celebrities or reputable users. Testimonials from happy customers also go a long way.
Don’t forget to add visuals since compelling and attention-grabbing images speak louder than words and create a lasting impression. Journalists and bloggers will likely pick up these images and use them when writing content about your company.
Ensure you have adequate brand aesthetic floating around in the form of logos, catchy slogans, and other hi-def visuals. Also, include statistics and other numbers like revenues, profits, the number of customers served, and growth rates.
Nothing is more convincing than actual numbers to add credibility. Statistics provide valuable data that journalists can use when compiling pieces about your company. Round off with contact details like official email addresses, phone numbers, and website links.
You’ll use the PR kit to build engagement with audiences on all levels. A well-known company in the news always has a better chance of convincing investors of its viability and growth potential.
To ConcludeLeveraging media and public relations for startup fundraising is an effective strategy that you can tap. But remember to back the hype with actual performance, and you will successfully get the funding you need.
Aside from equity, you can reach out to micro investors, crowdfunders, and other sources to get small and large advances as needed.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Leveraging Media And Public Relations For Startup Fundraising Success appeared first on Alejandro Cremades.
Welcome to another exciting episode of the Dealmakers Show, where we delve into the stories of entrepreneurs shaping the future. Today, we have the pleasure of speaking with Matt Luongo, a visionary in the realm of Bitcoin and freedom technology.
Matt’s journey is one of resilience, innovation, and an unwavering pursuit of knowledge. He talks about the challenges he faced with his first company, dealing with failure and subsequent successes. He also reveals tips on raising funding, which are inspiring for budding entrepreneurs.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and the Spark for TechnologyMatt was born in the suburbs of Atlanta, Georgia, a place far removed from the tech hubs we typically associate with pioneering entrepreneurs.
Growing up, Georgia was predominantly focused on football, while Matt found his passion in computers, doing a lot of scouting and camping programming computers.
Despite his parents’ professions—his father a carpenter and his mother a psychologist—Matt gravitated towards technology, a passion ignited by a fifth-grade teacher who introduced him to programming.
“I was the computer nerd when everyone cared about football,” Matt recalls. This early interest in computers led him to explore hacking magazines like 2600, where he discovered a love for understanding and exploiting rules.
His high school years were marked by an infamous incident where he enabled classmates to cheat via a local network. Threatened with suspension, Matt simply explained that what he did was actually allowed according to the school policy.
He wasn’t using unauthorized access but had authorization from another user and only allowed people to chat. Although all the other people involved were suspended, Matt walked away without repercussions. Rather than derailing his path, this incident solidified his love for technology and rules.
The Challenges of Being a Gifted KidMatt’s intelligence was both a blessing and a curse. He explains that it messed up his worldview because he would get praised for things he didn’t earn and got bored quickly.
He excelled in areas he was passionate about but struggled in subjects like math until he discovered calculus, which he appreciated for its application in physics.
A chemistry teacher was pivotal in his academic turnaround, recognizing Matt’s potential and advocating for his placement in advanced classes. This support was crucial, highlighting the impact of educators who see beyond a student’s immediate performance and see them as individuals.
The letter she wrote asking the calculus teacher to accept Matt ended up being a cornerstone to his engineering education later and everything he’s done professionally.
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The First Foray into Startups: ScholarlyAfter college, Matt ventured into the tech startup scene with his first company, Scholarly, an ed-tech startup focused on research search. Despite initial enthusiasm, the company struggled. “We had user insights but not business insights,” Matt explains.
Matt and his co-founder worked on a tool to find papers more easily when digging through the citation graph. They had been considering academia and wanted to venture deeper into it.
Their objective was to commercialize recent research. However, all they had were user insights and not business insights.
The venture from 2010 to 2013 taught him valuable lessons about the challenges of raising capital, the importance of understanding venture capital incentives, and the necessity of having a firm grasp on a startup’s technical and business aspects.
As the CTO, Matt focused entirely on coding and interacting with customers. Being a tech guy, he did not exert more control or offer inputs into the other aspects of the business.
Matt and his co-founder realized that getting funding would be easier on the West Coast because of the more advanced infrastructure.
However, they stayed on in Atlanta, raising small checks from angel investors. Eventually, they moved to Boston and tried to get into an accelerator program.
Dealing with Health Issues and BereavementWhile trying to secure funding, Matt faced personal turmoil as his father was diagnosed with terminal cancer. The stress of managing the startup, coupled with his father’s illness, led to severe health issues for Matt.
As a coping mechanism for his father’s passing, he threw himself into work, pushing harder on coding and working out. He even got a standing desk, believing the exercise to be good for his health.
Matt contracted an autoimmune disorder that left him hospitalized for six months. “The low point was coding at a hospital table with a gown on,” he recalls.
Matt reflects on the misplaced priorities that nearly cost him his life. The demise of Scholarly was particularly painful, and soon after, Matt had to get major abdominal surgery that took him six months to recover. He could no longer continue with his favorite high-impact hobbies, such as martial arts.
Resilience and the Birth of ThesisDespite these hardships, Matt’s entrepreneurial spirit remained unbroken. After his recovery, he continued working in the Atlanta startup scene as a CTO for hire and stumbled upon an idea that would eventually become Thesis, a Bitcoin and freedom technology venture studio.
The idea sparked from a stack of Starbucks gift cards he found in a drawer that was worth more than $81K. Instead of using them, Matt explored the secondary market for gift cards, which led him to discover Bitcoin as a payment method.
Matt started out by diving in, buying for friends, and reselling them. He worked in a local coffee shop so friends could accept Starbucks gift cards and exchange them for store credit, maybe 60 cents to a dollar.
However, he did not have the cash to set up a proper merchant account. That’s when he discovered Bitcoin.
In late 2013, Matt relaunched his business using Bitcoin and saw immediate success, doing $50K in volume in the first two days. This venture evolved into Fold, a Bitcoin rewards card, and marked the beginning of Thesis.
Today, Thesis is an innovative studio that has launched multiple companies, all focused on leveraging Bitcoin and other technologies to promote financial freedom.
Building Thesis and the Vision for the FutureThesis operates differently from traditional venture capital firms. It builds companies internally and rarely writes outside checks. “We’re not like normal VCs. We invest off our balance sheet and build things ourselves,” Matt explains, having successfully raised $120M for Thesis.
Storytelling is everything which is something that Matt Luongo was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!This hands-on approach allows Thesis to develop businesses that are deeply aligned with their mission and vision. One of the key insights Matt shares is the importance of understanding who you are selling to—users, customers, or investors.
As Matt opines, for the longest time, people were too afraid to build for consumers in the cryptocurrency space because it’s very easy to get investment to build infrastructure, and it’s very hard for an investor to have the guts to choose an application they think will succeed.
Each group has different needs and expectations, and success comes from aligning product development with these needs. For Thesis, this often means focusing on infrastructure in the cryptocurrency space, an area with significant gaps and opportunities.
As Matt explains, startups in the cryptocurrency sphere don’t have attribution for marketing and growth tools and often encounter obstacles, unlike other startups. People also struggle to get paid in Bitcoin and instead receive payments only in dollars.
Matt’s objective is to bridge the gaps in the space and identify great ideas. He focuses on their existing portfolio, targeted markets, the talent they have available, and how to use the portfolio to get distribution in this new market.
The Impact of Bitcoin and Freedom TechnologyMatt’s vision for the future is one where Bitcoin and freedom technology play a central role in financial systems worldwide. “Everyone who wants to will have opted out of the US financial system and primarily hold Bitcoin,” he predicts.
This shift will enable people to take USD loans against their Bitcoin holdings, becoming their own financial institutions without relying on intermediaries like PayPal or Venmo.
This technology represents a lifeline for those living under oppressive regimes or with intense capital controls, offering true ownership of their money and protection from political and financial censorship.
In Matt’s opinion, much of fundraising is about momentum, and you can show momentum in many different ways. However, the best rounds are those that have a competitive dynamic and don’t involve pitting people against each other, especially when they will be working together.
Fundraising can also give entrepreneurs the chance to finally get their ideas validated when too many people don’t believe in their potential.
Advice for Aspiring EntrepreneursReflecting on his journey, Matt advises aspiring entrepreneurs to stick to their convictions, even when faced with skepticism. “Stick to your guns more,” he says, recounting the early days of Bitcoin when many thought it was a passing fad.
Matt’s persistence and belief in the potential of Bitcoin have paid off, leading to successful ventures under Thesis. His story is a testament to the power of resilience, the importance of a supportive network, and the potential of technology to drive significant societal change.
From a suburban computer nerd to a pioneer in Bitcoin and freedom technology, Matt Luongo’s journey continues to inspire and pave the way for future innovators.
Listen to the full podcast episode to know more, including:
- Matt Luongo’s journey demonstrates that dedication and resilience are crucial for entrepreneurial success, even through personal and professional hardships.
- Transitioning from a tech-focused role to a more comprehensive business role taught Matt the importance of understanding all aspects of a startup, not just coding.
- The influence of dedicated teachers and mentors can significantly impact one’s educational and career trajectory.
- The stress and lifestyle of startup life can take a severe toll on health, underscoring the importance of balancing work and well-being.
- The failure of his first startup, Scholarly, provided Matt with invaluable lessons about the intricacies of business and the importance of having business insights alongside user insights.
- Discovering opportunities in everyday situations, like turning Starbucks gift cards into a business, can lead to significant entrepreneurial breakthroughs.
- With Thesis, Matt emphasizes creating a nurturing environment for new businesses and founders, focusing on projects aligned with his expertise and interests.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $120 Million To Build The Infrastructure For Bitcoin Projects appeared first on Alejandro Cremades.
Federico Malek, a seasoned entrepreneur from Buenos Aires, Argentina, has navigated the complex waters of startups and acquisitions, establishing himself as a prominent figure in the business world. His journey, marked by strategic decisions and keen insights into the dynamics of emerging markets, offers a wealth of knowledge for aspiring entrepreneurs.
In this detailed blog post, we delve into Federico’s experiences, from his early days inspired by local success stories to his latest venture in e-commerce. He also talks about running regional operations and managing and scaling regional teams. And going through the full cycle of building companies.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Beginnings: Inspiration and EducationBorn and raised in Buenos Aires, Federico’s love for his hometown is evident. “Buenos Aires is one of the best cities in the world,” he enthuses, describing its eclectic culture and rich talent pool. This vibrant environment fostered his interest in entrepreneurship.
As an economics student, Federico was inspired by the first wave of Argentine internet entrepreneurs in the early 2000s, such as the founders of Mercado Libre and DeRemate. These success stories fueled his ambition to build something impactful and transformative.
Federico looks back to his school days when he knew from the beginning that he wanted to build companies and raise money from international and global investors. He wanted to change the way the world does certain things.
With this objective in mind, Federico started working as an investment banker right out of college.
First Foray into Entrepreneurship: Walooz and the Groupon AcquisitionAfter a stint in investment banking, Federico took a leap into entrepreneurship, co-founding Walooz, a Groupon-like e-commerce platform offering deep discounts on local services in Buenos Aires. He was just 24 at the time and started analyzing what type of companies he wanted to build.
“We were really lucky,” Federico recalls, “because we identified early on that e-commerce had massive potential in Latin America.” His analysis proved accurate, and as Federico recalls, the penetration they had in the region was much higher than even in European countries.
So, they started a company called Walooz, which was a Groupon clone. They offered hard discounts in different local services in Buenos Aires. Within a year, Groupon acquired Walooz. This experience, while exhilarating, was not without its challenges.
The acquisition process was daunting, yet it propelled the small team from 16 to nearly 180 employees within six months. Federico reflects, “It was obvious for us to go down that path, despite the risks and the early exit.”
The structured earn-out ensured they could benefit from the company’s future growth, making the deal highly beneficial.
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Venturing into E-Commerce: Avenida and the Challenges of Emerging MarketsPost-Groupon, Federico launched Avenida, an Amazon-like e-commerce platform, in 2014. Over three subsequent rounds, they raised $50M from global VCs, including Tiger Global and Naspers.
Seeing the penetration they had in countries like Argentina, Chile, and Columbia, as well as the exceptional success rates, it made sense to Federico to start a company in the multi-category e-commerce niche similar to Amazon and eBay.
He started a pure-play commerce with end-to-end fulfillment, a marketplace for other players selling stock and inventory, offering great customer service and customer experience. However, the volatile macroeconomic environment in Argentina posed substantial challenges.
“Raising money for a capital-intensive business in an emerging market like Argentina is tough,” Federico explains. Political and economic instability made sustaining their high-growth model difficult.
Recognizing these challenges, he pivoted Avenida towards a software-as-a-service model. He leveraged their robust tech platform to help other companies like banks and retailers in the non-e-commerce category to create marketplaces.
This shift underscored a critical lesson: businesses in emerging markets must focus on sustainability and strong unit economics from the outset rather than relying on continuous fundraising. Federico realized back in 2015-2016 that the high-growth, high-burn model was not sustainable.
He also realized that the markets where they were operating could change dramatically for investors and other stakeholders within 18 months. Unlike in locations like Europe and Asia, Latin America is an emerging market, and sustainability should be the core tenet.
Transition to InsurTech: Starting iúnigoAfter his e-commerce ventures, Federico explored new horizons in InsurTech with iúnigo, the first end-to-end digital insurance company in Latin America.
This venture offered a different set of challenges and learning opportunities, but its main shareholder was one of the biggest insurance companies in the region.
Federico recalls how they approached him, and he accepted since he wanted to experience working within a large institution for a couple of years. Developing sophisticated software for underwriting, fraud prevention, and customer interaction marked a significant shift from e-commerce.
Federico assisted in creating the entire digital interface to interact with digital customers purchasing their products. Despite enjoying this new domain, Federico’s passion for e-commerce led him back to his roots.
Since LaTAm e-commerce is the fastest growing market in the world, Federico’s colleagues and partners wanted to go back to the industry–particularly Mexico, which has a lot of room for expansion.
Armed with lots of experience and lessons learned from the previous companies he had founded, Federico was ready to build his next venture. This time, he was determined not to build a company that loses money but one that was sustainable and profitable from day one.
Secondly, Federico did not want a company that relied exclusively on customer acquisition, which is insanely high in Latin America, much like in other countries worldwide.
Building Wonder Brands: A New Approach to E-CommerceIn 2021, Federico co-founded Wonder Brands, focusing on creating consumer discretionary brands for the burgeoning middle class in Latin America, a market with 400 million people. They currently manage over 16 brands and 3,000 products.
Wonder Brands offers pet accessories, baby accessories, tools, do-it-yourself essentials, mattresses, sleep products, and much more. The company operates through online marketplaces and two direct-to-consumer channels.
Further, many of the brands in their portfolio have become champions in their categories. For instance, Wonder Brands has the number one selling mattress brand on online channels in Mexico and sells more mattresses than any other brand.
Rumbo, the number 3 luggage brand from Amazon in Mexico, is also on Wonder Brands. The company has many success stories and has penetrated several categories with its brands. As Federico opines, they have been successful because of their unique approach.
At present, Wonder Brands is one of the top 10 marketplace operators in Latin America. Their approach is innovative: developing brands with the agility and iteration typically seen in software development.
As Federico explains, they start off by developing an MVP, iterating the product until they find the winner. Once they develop this version and are confident it will be successful, they start investing in it.
This lean strategy that Federico developed over years of building software is essentially their secret sauce and Wonder Brands’ main differentiator.
Fundraising in Latin America vs. the U.S.Fundraising in Latin America, Federico notes, is markedly different from the U.S. “In the U.S., you might close a deal in a month and a half; in Latin America, it can take four months or more,” he says. Interest rates are also higher. Even so, Federico has raised $35M for the company.
Storytelling is everything that Federico Malek was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The due diligence process is more stringent, and investors are more cautious due to the region’s economic fluctuations. Despite these challenges, great companies with solid foundations still attract investment. Federico also considers their tech capabilities to be a huge advantage for fundraising.
LatAm has made a lot of progress, and some of the Latin American e-commerce markets have become very big. As Federico says, they just need time to realize their mission. Currently, his company is raking in net revenues worth $100M, and he is gearing up to expand to Brazil.
Wonder Brands is on a promising trajectory, currently on a $100M with plans to expand into Brazil, potentially tripling their revenue. Federico envisions continued growth, aiming for $500M in sales within three years. “The market is ready; it’s just a matter of time and execution,” he asserts.
Strategic Advice for Emerging Market EntrepreneursFederico emphasizes the importance of choosing the right market for your startup. “Don’t be overly attached to your home country,” he advises. Starting a business is hard regardless of location, but choosing a market with fewer obstacles can significantly impact your success.
Federico reflects on the potential benefits of starting his ventures in larger markets earlier in his career, highlighting the strategic advantage of targeting scalable markets. He also advises younger founders to leverage their ability to travel and move to other countries and regions.
ConclusionFederico Malek’s entrepreneurial journey is a testament to resilience, adaptability, and strategic thinking. His experiences highlight the unique challenges and opportunities of building businesses in emerging markets.
For aspiring entrepreneurs, Federico’s story offers invaluable insights: focus on sustainability, choose your market wisely, and be prepared for the complexities of fundraising in less mature markets.
As Wonder Brands continues to grow, Federico’s vision and expertise will undoubtedly drive further success, solidifying his legacy in the world of entrepreneurship.
Listen to the full podcast interview to know more, including:
- Building startups in emerging markets like Argentina requires strong unit economics and sustainability from day one due to macro and political fluctuations.
- Early exposure to successful entrepreneurs inspired Malek to pursue entrepreneurship in Argentina’s burgeoning tech scene.
- The high-growth, high-burn model is less suitable for emerging markets, where stable capital markets are scarce.
- After selling his first company to Groupon, Malek shifted to developing sustainable, profitable business models.
- Wonder Brands focuses on creating consumer discretionary brands for Latin America’s rising middle class, emphasizing sustainable and profitable growth.
- Raising capital in Latin America is more challenging and time-consuming compared to more mature markets like the US and Europe.
- Aspiring entrepreneurs should carefully choose their market, considering both potential and challenges, rather than being attached to their home country.
SUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The post He Sold An E-Commerce Company To Groupon And Has Now Built A $100 Million Revenue Brand In LatAm appeared first on Alejandro Cremades.
From a humble beginning in South Africa to becoming a serial entrepreneur in the United States, Wayne Slavin’s story is one of perseverance, adaptability, and relentless pursuit of innovation. As a young immigrant in Southern California during the late 80s, Wayne experienced a world where possibilities seemed endless despite the initial challenges his family faced.
This backdrop of change and opportunity shaped Wayne’s entrepreneurial spirit and work ethic, leading him to build and scale multiple successful ventures. In this exclusive interview, Wayne talks about his 9-year journey as a founder leading up to building Sure.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Formative YearsWayne’s early life in San Diego was marked by a unique blend of freedom and community. He recalls stories of empty freeways where cars would cluster together for company, a stark contrast to the bustling metropolis Southern California has become.
This period, coupled with the determination and grit of his immigrant parents, instilled in Wayne a deep appreciation for hard work and resilience.
His parents’ journey from South Africa to the US in the 80s, leaving behind everything to start afresh, became a cornerstone of his character and approach to business.
In Wayne’s opinion, the key is to share stories, knowledge, and the perspectives of each generation about moving to a new place and having an appreciation for the generations before you.
As Wayne notes, people’s stories repeat generation after generation, just as he did when he packed up his family during the COVID and moved to Texas. Moving to a new place and leaving everything behind takes a lot of grit and bravery.
Academic Pursuits and Early VenturesWayne pursued his undergraduate studies in San Diego and later attended Columbia University in New York City for graduate school. His passion for technology was evident from a young age, tinkering with DOS, dial-up connections, and bulletin boards, often breaking and fixing computers.
Wayne remembers how he eventually started to fix computers for not only his family but for other people also. The tech aspect came easily to him, and he always believed that the best product would win, but other things didn’t really matter. He calls himself a “tech beauty perfection purist.”
However, Wayne recognized early on that building and scaling a company required more than just technical expertise.
This realization drove him to study management, seeking to understand the intricacies of team building, culture creation, and the often unpredictable nature of human behavior in business.
As Wayne points out, management is more an art than a science. It is more situational than actually data-driven and empirical, which is code for product and things working together. People don’t always behave rationally; systems don’t always congregate around the most efficient solution.
You could learn how to manage things more efficiently and don’t see the need to get approval for technology. Wayne recounts a funny story from his undergrad year when he had to pass a mandatory technology course.
Wayne went up to the professor and told him he could either disrupt the class or correct him every time he made a mistake. Or, the professor could allow him just to show up and take the final.
Wayne ended up teaching the class for a whole semester, waking up at 7:30 am and leaving by lunch to go to his day job. The whole experience was similar to running a data center for a big startup in San Diego, proving once again that he didn’t need to get a stamp of approval to do tech.
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The Spark of EntrepreneurshipThe entrepreneurial spark in Wayne was ignited by a simple yet profound philosophy imparted by his parents: if you want something, figure out how to get it.
This mindset, coupled with the early days of the internet, where innovative ways to make money were abundant, fueled his drive to create and innovate.
Wayne realized that everything is commoditized. Although they had tools like Shopify and WordPress, there were barriers to entry, so it came down to his determination to figure out how to overcome those barriers.
Wayne calls it his “imposter syndrome,” because every time something worked well, his instinct would be to go out and do it more, bigger, and larger. However, it always came with a big dose of skepticism about whether or not his ideas would work.
Some of them would have been more successful if Wayne had poured more resources into them. In his opinion, that’s essentially what management is all about—knowing when an idea is working and worth pursuing.
Bootstrapping His Early VenturesWayne’s ventures, from ad-driven models to SaaS businesses, were a testament to his ability to adapt and evolve with the changing landscape of technology and business.
Wayne’s initial ventures were bootstrapped, driven by an immigrant mindset of self-reliance and profitability. He was working out of Southern California, where the VC network had not yet taken hold and wasn’t part of the culture.
Wayne concedes that things might have been different if he had been in Northern California. Southern California is a great place to live and work, but the concept of venture capital is foreign and entrepreneurs would bootstrap their startups, which Wayne also did.
However, the concept worked because founders were disciplined in building a company and making it profitable. His first companies, built on ad-driven and SaaS models, taught him valuable lessons about market dynamics and controlling one’s destiny.
The first company helped cash flow, and Wayne bootstrapped the second, going from an ad-driven revenue model that was unpredictable. He realized that he wasn’t comfortable with Google being the overlord.
Google controls the clicks, the top of the sales funnel, and the cost per click. Wayne was not in control of his company’s destiny, which was his life’s theme and the culture he had instilled in his companies.
Ultimately, Wayne moved his company to the SaaS model at a time when SaaS wasn’t even a concept. Essentially, he was looking for solutions to get monthly payments without having to restart from the baseline.
Wayne points out that figuring out when to divert resources to a company is challenging or determining when the company has reached its ceiling and that his ideas have worked is challenging. In hindsight, his company had elite retention numbers and NRNs for a SaaS company.
These experiences laid the foundation for his future endeavors as he continuously sought ways to scale efficiently and effectively.
Going Back to Grad SchoolWayne next decided to go to grad school in New York to get a change of pace. When he applied to the program, only 20 people were accepted. Wayne thinks that he got in because of an error in the system.
He wanted to join this particular program since they matched every student with a sitting Fortune 500 CIO or CTO of a big company, bank, private equity firm, or any other. Wayne wanted to be around a mentor who knew the venture capital world.
With this objective in mind, he tailored his thesis and coursework to attract a mentor. He was successful in his endeavor and now has an awesome venture investor on his company’s board.
Wayne wanted to do two things in parallel—go to school to learn to be a better manager and find someone knowledgeable about what he didn’t know. He wanted to learn from someone who had done it before instead of learning by failing.
Learning to Run Companies from Successful ManagersWayne decided he wanted to learn from others how to manage a company, which is why he joined a big company, trying to go online and facing challenges along the way. This company later became a scaling SaaS startup, one of the biggest successes in New York tech history.
Wayne talks about how his experiences in the company helped him level up his skills. He watched great and terrible managers, the company politics, aligning incentives, and other aspects of the company.
Wayne was also a part of Buddy Media, which was later acquired by Salesforce, and Tapingo, which was bought out by Grubhub. He talks about how he worked for businesses like consumer electronics, enterprise software, and payments.
At Tapingo, they started food-ordering mobile payments on closed ecosystems that changed college campuses and the world of ordering food. Wayne was the VP of product before the company became Techcrunch’s most innovative company in 2013.
In the era before Snapchat, Amazon, and Tesla, the San Francisco company was doing amazing things and winning acclaim even though it hadn’t raised much capital.
Tapingo faced multiple challenges not just on the technical side of things but also on the payment and money aspect and selling to governments and universities.
The Birth of SureAs Wayne reveals, when he started Sure, peak VCs were subsidizing Uber across San Francisco. At the time, any founder with an idea could raise seed capital and build a company. Once he had the idea for the company, it was impossible for Wayne to set it down.
The idea for Sure, Wayne’s digital insurance technology company, came to him in an unconventional setting—a turbulent flight to Las Vegas. Observing the fear and anxiety of his fellow passengers, Wayne wondered if he could sell life insurance to them in real time, right before takeoff.
Initially a joke, this thought evolved into a serious business proposition as he developed and tested a prototype. The overwhelmingly positive response to his initial tests, with a conversion rate of 16%, solidified his decision to pursue this venture.
At the time, Wayne knew nothing about insurance but knew about eCommerce and contextual commerce and was ready to leverage his experiences. He was unsure if people would buy insurance worth $50K or $5M and if they would spend $0.90 or $20.
Wayne also wanted to test if people would buy insurance a week or five hours before their trips. Or if they would buy for just one trip or a round trip. He had to figure out the price and product and collect data. He also spent a weekend testing the prototype.
Sure’s journey began with a mobile app designed to sell various types of insurance quickly and efficiently. However, through numerous meetings with major insurance companies, Wayne realized that the real value lay in the enterprise software he had developed to manage the business.
The Sure Business ModelWayne started Sure based off of the idea that, eventually, insurance was going to come online. This insight led to a strategic pivot, focusing on providing SaaS infrastructure to run end-to-end insurance programs.
Sure works similarly to apps like DoorDash which display every restaurant on its interface. Sure provides users with detailed information about every type of insurance they can buy. They don’t need to re-enter their information but can avail of the automated service.
Wayne quickly realized that his management degree hadn’t taught him about aspects like marketing, customer acquisition, LTV to CAC ratios, and more. He ended up going through the process to see the C-Suite side of the company.
Wayne simply reached out to the major insurance companies in the US and asked them if they wanted to sell their product through the Sure mobile app. And that included home, pet, and travel insurance.
Next, Wayne provided them with a 30-second demo in which he demonstrated that purchasing insurance took just 30 seconds. He recalls traveling across the country, spending multiple days on the road.
Wayne realized that they were really good at building enterprise software, the distribution piece, and the customer acquisition piece. So, eventually, Sure evolved into a much more enterprise-focused infrastructure-focused application.
That’s how his InsurTech market unfolded, going from insurance companies that were trying to bring technology to where Sure is today.
Scaling and SuccessAs Wayne explains, the insurance infrastructure that they built is capital-intensive. Sure’s evolution into an enterprise-focused company has been marked by significant milestones and substantial capital raises.
To date, the company has raised approximately $123 million in venture capital, positioning itself as a pre-IPO company ready for the next phase of growth. Sure has received venture capital from traditional VCs and also corporate ventures in their space that understand the industry.
Storytelling is everything that Wayne Slavin was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Wayne’s emphasis on profitability, even in the face of substantial venture funding, reflects his commitment to sustainable business practices and controlling the company’s destiny. Sure’s success is a testament to Wayne’s vision, adaptability, and relentless pursuit of excellence.
He underscores the importance of capital efficiency and knowing the opportune time to scale and grow. He also talks about navigating the pandemic, four years of COVID furloughs, layoffs, poor profitability and ventures, and drying up deals and valuations.
Sure has positioned itself at the forefront of the Insurtech revolution by providing innovative insurance solutions through robust SaaS infrastructure, transforming how insurance is sold and managed in the digital age.
Wayne’s Vision for SureWayne quotes McKinsey data and his real-world experiences with running billion-dollar programs. He reveals that nearly 1% of insurance transactions are done online without a single human involved.
The Internet has been on a mass adoption curve since 1995, and although it has been evolving for a long time, humans are involved in 99% of transactions.
An agent shows up at the customer’s house to examine the roof, pool, and fence, and another then enters information from one system to another for lack of automation.
In the next 10 years, drastic changes are going to come about. Wayne and his team have built a massive technology infrastructure requiring capital and pragmatism. Sure is essentially the visa of insurance and the rails to bring insurance transactions online between two constituents.
Insurance companies are underwriting and, in essence, issuing policies. Sure is enabling a new set of distribution for global Fortune 10 and Fortune 500 consumer brands that don’t sell insurance today to sell insurance.
Sure has helped the world’s largest EV manufacturer launch its auto insurance business. It runs the digital auto insurance business for the largest car manufacturer, Toyota. It enables it to do the same thing for small business insurance companies like QuickBooks and Mastercard.
Similarly, it provides the rails to run the embedded homeowners’ insurance program for online home lenders, Better.
Sure is at 1% adoption of insurance and will be truly online by 2030. Wayne estimates it to have 9% of insurance transactions, and aside from payments, insurance has the biggest dollar value in the biggest TAM in fintech. Sure is already running billion-dollar insurance programs.
Reflections and Future AspirationsWayne Slavin’s entrepreneurial journey is a powerful narrative of innovation, resilience, and visionary thinking.
From his roots in South Africa to his impactful ventures in the US, Wayne’s story inspires and exemplifies the transformative power of perseverance and ingenuity in the world of entrepreneurship.
Listen to the full podcast episode to know more, including:
- Wayne Slavin’s immigrant background in Southern California instilled a strong work ethic and entrepreneurial spirit.
- Wayne’s passion for technology started early, leading him to pursue education and hands-on experience in tech management.
- His entrepreneurial journey began with bootstrapped startups, learning the importance of controlling destiny and profitability.
- Wayne transitioned from bootstrapped ventures to seeking external capital and mentorship to scale businesses effectively.
- His experience across consumer electronics, enterprise software, and payments led to the creation of Sure, a contextual insurance platform.
- Sure evolved from a consumer-facing app to an enterprise-focused SaaS infrastructure provider for the insurance industry.
- Despite significant venture capital raised, Wayne emphasizes the importance of profitability and financial prudence for sustainable growth.
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Your email address is 100% safe from spam!The post He Raised $123 Million To Build The Rails That Connect Consumers To Digital Insurance appeared first on Alejandro Cremades.
Leveraged buyouts drive business growth and innovation by making available funding for purchasing viable companies. On the face of it, taking on significant amounts of debt typically raises the risks of failure. Disasters are common; several high-profile case studies have demonstrated what can go wrong.
The biggest leveraged buyout ever was the purchase of TXU, the largest electricity utility in Texas. A consortium including Kohlberg Kravis Roberts & Co., Texas Pacific Group (TPG Capital), and Goldman Sachs purchased the company.
They created Energy Future Holdings, which filed for bankruptcy seven years later. It is considered one of the 10 biggest nonfinancial bankruptcies in history.
Yet another example is the Hilton Hotel acquisition by the Blackstone Group, partnering with Bear Stearns and Lehman Brothers. The latter two collapsed in 2007 when the real estate bubble burst.
Although several examples of failed leveraged buyouts exist, strategic planning and sound business decisions can benefit the stakeholders. Read ahead for detailed information about LBOS or leveraged buyouts and the best way to extract maximum value.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding Leveraged BuyoutsWhen the buyer of a company raises a significant amount of debt to purchase a company, that’s a leveraged buyout. The buyer leverages the acquired company’s assets as collateral for the debt. They may also estimate that the company will pay off the debt out of the revenues it generates.
Buyers are typically private equity firms or the company’s management that believe in the company’s viability. They believe in the value they can derive from the deal and that it will supersede the risks they may have to carry.
The debt raised to purchase the company may vary, but typically, it comprises 70% to 80% of the total value. The buyer may cover the balance amount with equity, loans, and bonds.
Sometimes, the debt-to-equity ratio can also be 10% to 90%, where the buyer invests just 10%. And raises the balance by 90% from external sources. The higher the debt-to-equity ratio, the higher the risk factor.
A smaller private equity firm purchasing a publicly traded company is also a leveraged buyout. The buyer may partner with a group of financiers who provide the necessary funding to buy the company.
How Leveraged Buyouts WorkBuyers fund the acquisition using a combination of different funding sources, such as the company’s cash reserves and assets. They may also purchase equity and borrow funding from third-party investors. The company’s current owners sell a major chunk of their stock to the buyers.
Once the deal closes, the buyer takes over the company’s debt. As the new owner, they can use the company’s assets as collateral and cash flows to repay the debt. Since the new owners have a controlling stake in the company, they can use its assets for other purposes.
These objectives may include funding the buyer’s own company’s growth and operations. It is not uncommon for buyers to restructure the management and set up new objectives and goals.
Leveraged buyouts can be management buyouts where the target company’s management buys the company entirely or in portions. Alternatively, external buyers may partner with the company’s top executives to buy the business, which is a management buy-in deal.
Usually, in the case of a management buyout, the buyers may use their personal assets, both monetary and non-monetary. They may also raise bank loans and use their pension funds. Approaching private equity firms, family offices, and trust companies is also a strategy.
Leveraged buyouts are often considered predatory practices. That’s because the buyer may issue bonds using the acquired company’s assets as collateral to raise money. It can be argued that the buyers use the company’s own assets against its interests.
The bonds offered are also referred to as junk bonds because they are based on a high debt-equity ratio. They are not exactly considered investment-grade.
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How Leveraged Buyouts Drive Business Growth and InnovationLeveraged buyouts can drive business growth and innovation if the new owners choose to replace the management with new talent. If the company has been underperforming, the owners may bring fresh skill sets and expertise.
The new executives could turn the company around and ensure it scales and becomes profitable. Alternatively, the buyer may choose to retain the existing team and set up new goals. They may also restructure compensation packages to include more incentives for C-Suite executives to perform.
Whatever the strategy, new owners are typically closely involved with the company’s operations at a board level. Having raised debt from the market, their objective is to generate cash flows and profits to pay it back quickly.
Leveraged buyouts, where a private company purchases a publicly traded company, are also a form of reverse takeover. The smaller private company executes an asset swap and share issue to take control of the larger company.
This strategy enables it to go public without navigating the expensive, lengthy, and complex IPO procedures. The buying company gains voting rights, and its board takes over the management of the acquisition. The acquirer can combine and reorganize the assets to form a new private company.
On the other hand, giant corporations may choose to spin off a specific division and allow it to work independently.
The parent company may hold a controlling stake in the new company but allow it to continue with R&D. The new brand can release an entirely distinct product portfolio for profitability.
Essentially, the target company is taking on debt by using its assets as collateral, which translates into substantial tax benefits. Partnering with a new acquirer adds to its credibility, and the company can benefit from more customers and projects.
Benefits of Leveraged BuyoutsLeveraged buyouts drive business growth and innovation in more ways than one. Here are some of the reasons why:
- When a private company acquires a public company by way of a reverse merger, the new owners can restructure it. By overhauling its operations and costs, the LBO can give the public company a new lease of life. This factor is particularly relevant to shell companies or firms that have failed products or R&D. These downsides may have led to drastic drops in their stock prices.
- Leveraged buyouts are an excellent solution for distressed businesses in danger of going bankrupt. A takeover by a private equity firm can inject new capital and talent to salvage the company from closing down.
- Leveraged buyouts allow acquirers to purchase a company without investing much of their own capital. This strategy works well if the targeted company has the potential to generate cash flows and revenues. This factor allows the buyers to pay off the loan quickly.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Downsides of Leveraged BuyoutsAlthough leveraged buyouts have benefits for companies, these acquisitions do come with their downsides.
- Since buyers may leverage the acquired company’s assets to finance the sale, it runs the risk of bankruptcy. Chances are that the company is unable to keep up with monthly payments. Several reasons can contribute to non-payment, such as macro-environment changes or unforeseen conditions, such as political or climatic factors.
- In the case of a hostile takeover, employee morale may take a huge hit. Attrition and loss of top talent may result in the company running losses and failing. Buyers in a leveraged buyout often make radical changes in the management and bring in their own board members. This factor can change the company culture, mission, and vision that the workforce does not accept.
- The new owners may resort to drastic cost-cutting measures for leaner operations to improve profitability. That may include firing employees in the acquired company.
- Buyers must make large monthly payments because of the substantial amount of funding needed to execute the leveraged buyout. Keeping up with this debt service can be very challenging, particularly during an unexpected economic downturn.
Selecting the Right Candidate for a Leveraged BuyoutPrivate equity firms or other acquirers typically target well-established, mature companies in stable verticals for purchasing. When evaluating the target, their objective is steady cash flows, robust financials, a great product portfolio, and a strong customer base.
Although management is also on the list of priorities, they can always replace it with their own board members. Companies that demonstrate great exit strategies are also good candidates for a leveraged buyout. Ultimately, the buyer’s objective is to realize profits quickly and cover the debt.
The target company would also need to have high margins and low capital expenses to make that happen. Servicing the debt consistently will mean that the acquirer is rid of the debt sooner.
How the Leveraged Buyout ProceedsWhen evaluating a company for a leveraged buyout, acquirers start by creating a detailed financial model. This analysis involves understanding the company’s stability and sustainability. In addition, buyers conduct a predictive analysis for five years on average.
The objective is to ascertain its future cash flows and potential for generating revenues. Buyers may also calculate the terminal value, which is the total sum of the value of all future cash flows. But outside of a specific projected time frame.
The results of this analysis are then communicated to banks and other lenders with the objective of raising debt funding. Buyers would also want to maximize the returns on the equity they invest. Once this information is in place, investors determine the final terms and conditions of the deal.
When negotiating the terms of a leveraged buyout, buyers also communicate their business plan to investors. This plan includes information about their intended strategies to improve operations, lower costs, and maximize profits.
At this time, buyers also estimate the cash flows and the Internal Rate of Return (IRR) they can get. These figures consider the monthly payments and interest payable on the debt.
Due diligence is a crucial part of the process, and all the stakeholders conduct independent evaluations to determine viability.
Once the transaction closes, the buyer, private equity firm, or management gets to work to add value to the acquisition.
They may restructure the company to eliminate unnecessary costs and overheads and appoint new members to the board. That’s how leveraged buyouts drive business growth and innovation.
Regardless of whether you’re looking to raise funding or sell your company, you should know how to create a pitch deck. Check out this video where I have explained all the essential slides to include.
Why Buyers Use the Leveraged Buyout Funding StrategyPrivate equity firms and buyers can maximize their returns using the leveraged buyout strategy. Since they are investing only a small portion of their own money, they can hope for a higher ROE or the return on equity.
They can also hope for a higher internal rate of return (IRR), which can be typically 20% to 30% or higher.
The debt funding from investors is paid back along with interest, leaving returns for owners. However, this factor also raises the risk level. The possibility of the acquisition being unable to service the debt is a real factor.
If that happens, the buyers stand to lose all their anticipated returns on equity.
On the other hand, if the company successfully pays off the debt and stabilizes, buyers can assess the best exit strategy. For instance, taking the company to an IPO or selling it for a higher return, as is the case with most PE firms.
Alternatively, the acquirer may sell the company to a bigger private equity firm with a better strategy to scale the company further.
In ConclusionHistorically, LBOs attracted a lot of flak from critics because of their hostile takeover practices. They are also known for using the company’s assets to pay off the debt, which can be against its interests.
However, with the right business plan and approach, leveraged buyouts drive business growth and innovation. A struggling company or an owner looking for a profitable exit can use this option to salvage the company. Buyers may infuse capital and talent to grow the company profitably.
The ultimate principle is to acquire a company leveraging debt funding from sponsors and investors. Although viewed as predatory if owners are unwilling to exit, the strategy can have several benefits for the company.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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Executing a management buyout is an excellent strategy for owners to monetize the company they built from the ground up. Allowing the company’s top executives to take ownership lets the owner step down confidently.
They can leave operations in safe hands, knowing that the business will continue to scale and remain profitable.
A management buyout or MBO is particularly advantageous for a family business operating in a small town. The owners can leave behind a legacy carried forward by the local employees who have been instrumental in growing the company.
Public companies and giant corporations may also engage in such transactions by allowing a specific unit to break away. The smaller business continues to operate independently, with the management acting as its new owners.
Executing a management buyout is an intricate process that involves several steps, with due diligence forming an essential component. Here’s everything you need to know about how it works.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Executing a Management Buyout – Understanding the Step-by-Step ProcedureWhen the company’s top management purchases it in part or entirety from the owners, the M&A deal is a management buyout. Typically, the top executives raise funding from third parties to complete the transaction in a combination of equity and debt.
If a large portion of the company’s price is paid using these third-party financing methods, that’s a leveraged buyout. At times, the original owners may choose to accept stock or shares in the new company in lieu of part payment. Or choose to stay on as a consultant until the business is stable.
Step 1 – Demonstrating Business Acument and CapabilitiesBefore initiating the company purchase, the management must plan the entire process in detail. For starters, they must demonstrate adequate business acumen and capability to run the company efficiently and profitably.
Company owners will likely accept the offer only if the management is trustworthy and competent. On their part, the executives should come up with the right game plan to take over the company. This plan starts with a detailed assessment of the company’s financials, current status, and viability.
The objective is to view the transaction as any other M&A deal–an opportunity. Next, the executives must conduct market research and evaluate the company’s existing product portfolio and optimum product-market fit. Having gathered the necessary data, they can value the business accurately.
At the same time, the management should constantly communicate with the owners about their intentions. Communication is crucial for building credibility and ensuring transparency in the deal.
If the company is underperforming, the management should have a game plan ready to turn it around. Communicating this plan to the owners will reassure them that the business is in safe hands.
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Step 2 – Estimating Fundraising StrategiesNow that the management has a fair overview of the company’s value, they must plan to acquire the asset. To do that, they must build a financial model and create a list of potential investors they can approach. Depending on the type of investors, they’ll draw up the relevant terms and conditions.
While the initial valuation gives executives an estimate, the owners and investors may conduct their own valuations. Preparing for aggressive negotiations is always advisable, as is retaining the services of expert advisors. These professionals can direct the acquisition and assist with funding.
The management may also want to estimate the funding they need to execute their growth strategies. Assigning responsibilities to individual board members according to their skill sets and experiences is a crucial planning step.
Aside from funding, the future owners must also plan their strategies for retaining core employees. This is a good time to connect with the workforce, shareholders, and other concerned entities to inform them about the buyout. Providing details of how the deal can impact them ensures their buy-ins.
Step 3 – Approaching the Owners with an Offer to PurchaseBuilding credibility and planning the acquisition can take months of preparation. But, once that is done, the management is ready to approach the owners. The open communication lines they have built now enable them to have an informal conversation where they put forward their proposal.
Alternatively, the management can send out a formal letter outlining their proposal, terms, and conditions. If the owners have been considering an exit, they may also have other offers. They may weigh their options and assess the best candidate suitable for managing their company.
Oftentimes, when the owners are ready to retire, they may approach the management with an offer. Depending on the value they estimate, further negotiations can take place. The executives can consider the viability of the offer and if they can raise the required funding and make profits.
Step 4 – Raising Funding for the PurchaseExecuting a management buyout typically involves a substantial sum of money, which is why buyers may need external funding. Management may start off by investing in some of their personal assets and money.
Demonstrating that they have skin in the game could make it easier to convince investors that the company is viable.
When raising funding, executives approach sources like banks for loans or debt financing, which allows them to retain equity. Seller financing is another option where the owner agrees to receive a part of the compensation later.
The seller may also accept an earnout deal and receive a portion of the profits. Staying as an investor and receiving stock is another option. Other funding sources include mezzanine finance, leveraged buy-outs, and private equity firms.
Using the company’s assets as collateral to raise loans is also an option. However, the company retains ownership and control over the assets until the loan is paid off. Depending on the amount of funding needed, the management may also choose to raise personal loans to fund the buyout.
Executives may leverage their homes, non-cash assets, and pension plans as collateral to raise money for the buyout. Strategies like these allow them to avoid dilution and retain decision-making rights in their purchased company.
Relying on mezzanine lenders, venture capitalists, leveraged lenders, and private equity firms typically involves ceding board seats. The management may want to avoid this situation.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Step 5 – Conducting Extensive Due DiligenceAs with any M&A and fundraising deal, due diligence is crucial for all the parties involved. The owners, investors, and buyers must conduct meticulous research into the company to understand its actual value and viability.
The due diligence process is speedier when executing a management buyout since board members typically have all the relevant information. Even so, they should also ask the necessary questions to mitigate risks. Digging into potential previously unknown liabilities is critical.
For instance, examining IP ownership and usage rights, ongoing litigation, the possibility of a primary customer pulling out, or asset liens. Issues like these can negatively impact the company’s stability and profitability in the future. All the stakeholders would want information about them.
Retaining the services of professionals is the key here. The team will conduct market analysis, confirm compliance with regulations and legal obligations, and run financial projections. Accountants on the team may also examine statements from previous years to ensure a robust financial base.
Any liabilities that can impede the company’s potential for scaling should be identified and addressed during the due diligence.
Step 6 – Negotiating the Terms of the Management BuyoutLegal teams on both sides now draw up the purchase agreement and other acquisition documents to conclude the deal. Since investors will fund the deal, they may include their terms and conditions to secure their stake.
At this point, it is also crucial to clarify how the new owners will divide up the equity among them. Creating documentation clarifying members’ rights and responsibilities is essential to avoid confusion and disagreements later.
If investors bring in board members, agreements will detail their roles in the company under the new ownership. An essential facet of the negotiations is working out the transfer of Intangible Assets to the acquirers. For instance, any internal knowledge, IP, and data that only the owners were privy to.
Step 7 – Closing the DealOnce the deal is signed, the management becomes the company’s new owners. It is always advisable to restrict broadcasting information until the deal is finalized.
Further, executives must ensure that the company remains in operation throughout the deal. Business must go on as usual regardless of internal activities.
Advantages of a Management Buyout (MBO)Management buyouts have several key advantages for all the stakeholders involved in the deal.
For Investors* Hedge funds, giant corporations, and high-profile investors may encourage management buyouts that enable companies to go private. This strategy enables the business to streamline operations and raise profitability without public scrutiny. Releasing an IPO would work well once it is stable and attains a higher valuation. * Private equity firms are open to backing an MBO involving a highly-experienced board of directors owning a company. They rely on the business acumen and expertise of the members to scale the company profitably for rich returns.
For Sellers* Large corporations accept management buyouts to cut loose smaller divisions that are no longer a part of their products. * Company owners understand the tactical advantage of selling the company to the executives. This deal protects its confidential business secrets, IP, and IA that would have been disclosed to external acquirers. * Executing a management buyout typically takes much less time than selling to other buyers. That’s because the buyers and sellers are acquainted with each other and the company’s viability. * An internal management buyout incurs lower costs than when selling to external buyers.
C-Suite executives looking to purchase a company have a distinct advantage since investors focus on the team’s skill sets and core talent. Before you create a pitch deck, check out this video, where I have explained in detail what investors look for in founding teams. Use the tips to enhance your deck and get the funding you need.
For the Management/Buyers* The top executives can benefit from direct rewards the company generates, which is fair compensation for their hard work and dedication. * Such teams are confident of their skills and expertise to run the company profitably and scale it quickly. They are also willing to invest their own resources toward scaling the business. * As opposed to purchasing an unknown asset, members can invest in a company they are familiar with and know its potential. This factor lowers the risk levels and raises success rates.
For Employees and CustomersThe company remains functioning as before without the challenges that often accompany a buyout. Transitioning to a new company culture and navigating the integration process can be difficult for employees. Such transitions often lead to employee attrition and loss of core talent, impacting the company’s stability.
Customers can also rest assured of the continuity of the products and services they have come to rely on.
Downsides of Management BuyoutsDespite the many advantages, MBOs are not without downsides.
- Many known brands are successful and profitable because of the company leader that customers and stakeholders believe in. If they were to step down, that could shake confidence in the company.
- The management may have to change their mindset from employees to owners, which they may not be able to handle.
- The company owner may not be able to value the company accurately.
- There can be a conflict of interest between the owners and management. Members are known to sabotage the company to bring down its value and acquire it for a lesser price.
- Raising funding to purchase the company can be a challenge. The deal may fall through if investors are not convinced of its viability.
Smaller units breaking away from a publicly traded company may risk being accused of insider trading.
To Wrap Up!Executing a management buyout may involve fewer challenges than a typical M&A deal. The process is fairly streamlined because the sellers and buyers are familiar with the company’s workings and potential.
As a result, company owners who are ready to retire or exit the company to start another consider this option. They can step down and leave the company in capable hands with assurance of its stability and long-term success.
Such deals also work well for large publicly traded corporations. They can separate a particular unit and allow it to continue operating independently. At the same time, the larger company may retain an ownership share in the breakaway through equity.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Employee To Entrepreneur: Successfully Executing A Management Buyout appeared first on Alejandro Cremades.
Steven Zhao has had an inspiring entrepreneurial journey that started from humble beginnings to groundbreaking innovations in the world of virtual reality. He is the dynamic founder behind Sandbox VR. His story is a testament to resilience, innovation, and the relentless pursuit of a dream.
In this exclusive interview, Steven talks about his experiences with sinking all his savings into his business, pulling it back from the brink of bankruptcy, and then taking it into rocket ship mode. He also reveals how he successfully raised funding from the best VCs and survived COVID. Read ahead to learn more about this exemplary founder.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Passion IgnitedSteven Zhao’s journey began in China, but his entrepreneurial spirit truly took root in San Francisco, where he moved with his family at the age of one. Growing up loving games like Mario, Zelda, and Final Fantasy, Steven discovered his passion for game development during his college years at UCSD.
Studying electrical engineering by day and creating games by night, Steven was enthralled by the creative process. His first taste of success came while still in his dormitory, selling games online.
This early venture laid the foundation for his career in game development, which soon led him to Hong Kong, where he launched his first PC and mobile game company.
As Steven recalls, the timing was perfect since internet gaming was just kicking off, and independent studios were mushrooming across the globe. Initially, he developed free games and worked with a publisher. However, Steven soon realized the monetary potential of the industry.
The Birth of a Gaming CompanyIn 2009, with a modest team of two artists, Steven’s company began producing PC and mobile games. Over the course of the next four years, the company grew to 45 people.
Their monetization model was straightforward: players could try a game for an hour and, if they liked it, pay between $6 to $20 for the full version.
Each of their titles was between 6 and 10 hours long, with deep, story-driven themes and multiple sequels. Steven’s team would create two titles every year and build that cadence. However, the rise of mobile gaming caught Steven off guard.
Believing that mobile games wouldn’t gain traction, he was slow to pivot, which led to a steep decline. Despite efforts to break into the mobile market, fierce competition and a lack of expertise forced him to scale down significantly. By 2016, the company was reduced to just five employees.
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Lessons Learned and a New OpportunityReflecting on his experiences, Steven learned a crucial lesson: always build for the future, not the present. The industry evolves quickly, and what works today could become redundant within the next few months.
Around 2015, Steven and his team produced their biggest game ever and even got support from Apple, which featured their game.
However, they could not profit from that title even though they had dedicated every resource to the game. Steven realized they were competing against companies that had far more resources than them.
The final four years of the company involved a painstaking transition to mobile gaming but for the first time, Steven was forced to face up to the fact that the industry had advanced too much. Since college, he had built his identity around gaming and created some really great games.
After a lot of introspection, uncertainty, and lack of confidence, Steven decided to wrap up his company after a 10-year stint. This decision came just as the VR industry was starting to take off.
The acquisition of Oculus by Facebook in 2014 marked a significant turning point for VR technology. By 2015, commercial VR headsets, including the PlayStation, Oculus, and HTC Vive headsets, were becoming available.
Seizing this opportunity, Steven decided to pivot once again since he knew how to build games. He envisioned a future where VR would offer immersive, interactive experiences that couldn’t be replicated at home.
This led to the birth of Sandbox VR in 2016, funded initially by friends who believed in his vision.
Building Sandbox VRSandbox VR’s business model revolves around physical retail locations where customers can book tickets to experience VR games.
These aren’t just any VR games; they are fully immersive experiences where players can physically interact with each other in a virtual world, which is an intense experience.
With titles ranging from original creations to partnerships with brands like Netflix’s “Squid Game,” Sandbox VR has captured the imagination of gamers and VR enthusiasts alike.
Steven and his team have original titles and zombie experiences but also offer branded titles. As he explains, Sandbox has 47 locations with over 100,000 customers coming in every month.
Learning from his experiences with his first company, Steven was determined to think into the future. He saw the gaming world as “The Matrix,” a reference to the Wachowski film, that would have to break the confines of the limited spaces of living rooms.
Steven also saw that a headset alone could not give players the complete experience and outcome even if the cost of the headsets lowers with advancing technology.
He and his team realized they would have to build something outside the home, which was a problem since they were unfamiliar with the retail space.
Their solution was to create a separate project where they built the infrastructure to enable The Matrix experience, where players can touch a friend’s shoulder in VR and actually physically touch them in real life to create a deep immersion.
Navigating ChallengesSteven and his team launched their first VR consumer game in 2016, making it to the top 10% of games. However, the market was not big enough, and they ended up losing money on the project. Like other VR developers, Steven was also concerned about being able to make it work.
In 2017, the team invested in a location-based project, which came to be known as the Winter of VR. That’s because, post-Christmas, they realized that few headsets were sold and people were not really using them.
VCs were hesitant to invest in Sandbox. Further, Steven started the company in Hong Kong, where his team was based. VCs weren’t convinced that Sandbox had the talent to build VR games. The biggest company for out-of-home VR has also raised $50m with a team of 50 to 100 people.
In contrast, Sandbox had a small team of just 6 people, and VCs were doubtful they had what it takes to beat the competition. By 2017, Sandbox had just three months of runway left.
Since Steven was convinced that VR had a great future, he invested all his life’s savings into the company despite his family and friends trying to dissuade him.
With six months of runway and complete unconditional support from his team, Steven built the technology infrastructure, enabling full-body play with a group of people.
Because it was a brand-new platform, they also had to create their own content. They also had to build a retail center and launch the location in Hong Kong.
Despite the hurdles, their innovative concept quickly gained traction and went viral, selling out tickets for 100 consecutive days within the first day.
The Crucial Series A FundingThe success in Hong Kong caught the attention of investors, leading to their first institutional funding from Gobi VC and Alibaba Hong Kong Fund.
Although the initial checks were from $3M to $5, the money validated Steven’s efforts. He used the funding to expand Sandbox VR, including opening a location in San Mateo in Silicon Valley in 2018.
This move was crucial in gaining the trust of American VCs, including Andreessen Horowitz, whose investment was a significant validation of Sandbox VR’s potential.
As before, Steven had to face misgivings from VCs since the company and its team were from Asia. They weren’t convinced it could work in the US.
However, after getting the first check, everything started to change. It changed the entire narrative. Soon, Steven got the IP for Star Trek and started working with Brookfield and Westfield to bring Sandbox to other locations across the US.
They also got additional funding from celebrities, including Katy Perry, Will Smith, and Kevin Durant, which opened a lot of doors and allowed them to scale aggressively. Sandbox went from one location in the US in 2018 to seven by the end of 2019.
As Steven reveals, they raised a total of $100M for Sandbox, including venture debt.
Storytelling is everything that Steven Zhao was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Surviving the PandemicThe pandemic in 2020 posed an existential threat to Sandbox VR. Forced to shut down operations and refund customers, the company faced a financial crisis.
However, the belief in their product and support in the form of emergency funding from investors like Andreessen Horowitz, Gobi, and Alibaba Hong Kong enabled them to weather the storm.
They restructured their debts through Chapter 11 bankruptcy and optimized their business model during the downtime. However, Steven had to let go of 80% of the team and cut back their costs to the bone.
Throughout the crises, he maintained complete transparency about the situation and the challenges the company was facing.
By 2021, as vaccinations rolled out and restrictions lifted, Sandbox VR experienced a surge in demand. Customers, eager for social and immersive experiences, flocked back, driving phenomenal profitability.
Steven remembers that customers wanted a reason and a safe place to go out, and Sandbox was all that. After months of running empty, 100% of customers booked ahead online and were crowding parking lots.
The stores were phenomenally profitable since Steven had spent months optimizing his profit and loss.
Sandbox numbers were higher than those of some of the best retail businesses, with 80% of customers booking ahead. The company’s economics were so strong that they could work out a deal with landlords and have them fund the build-offs of their subsequent stores.
A Bright Future AheadToday, Sandbox VR operates 47 locations, serving over 100,000 customers monthly. The company is on track to generate over $70M in revenue this year, a remarkable turnaround from the dark days of 2020.
With ambitions to become a ubiquitous entertainment destination akin to the new movies, Sandbox VR is poised for exponential growth. Steven envisions a Sandbox in every neighborhood with new releases every week.
He foresees working with some of the biggest IP holders to bring their world into Sandbox, which will give creators more reasons to go out and build these human-to-human connections.
Words of WisdomSteven Zhao’s journey offers invaluable lessons for aspiring entrepreneurs. His story underscores the importance of building for the future, adapting to market changes, and the power of resilience.
He aptly advises, “Read a lot, learn from the successes and failures of others, and incorporate those lessons into your own journey.”
Steven Zhao’s journey from a dorm room game developer to the visionary founder of Sandbox VR is nothing short of inspiring. His story is a beacon of hope and a blueprint for success in the ever-evolving landscape of technology and entertainment.
Listen to the full podcast episode to know more, including:
- Steven Zhao discovered his passion for game development during his college years, laying the foundation for his career.
- Zhao learned to pivot and adapt, recognizing the importance of building for the future and not just the present.
- Despite setbacks in mobile gaming, he leveraged lessons learned to pivot to VR technology successfully.
- Sandbox VR’s unique business model offers immersive, interactive experiences that can’t be replicated at home.
- Surviving the pandemic through strategic restructuring and investor support, Zhao showcased remarkable resilience.
- Sandbox VR has grown to 47 locations, generating significant revenue and serving over 100,000 customers monthly.
- Zhao emphasizes the importance of continual learning and adapting, advising entrepreneurs to read extensively and learn from others.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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Your email address is 100% safe from spam!The post He Raised $100 Million To Build An Immersive Virtual Reality World For In-Person Interactions appeared first on Alejandro Cremades.
Company owners wanting to make a strategic exit can consider management buyouts as an option. This strategy involves selling the company to a single member or the entire management. These top executives may acquire a majority stake in the company or purchase it outright.
The management buyout (MBO) strategy is typically used by private company owners wishing to retire and leave the company in capable hands. Members of the management coordinate efforts to own and take full control of the company instead of selling it.
The management, employees, customers, investors, and other stakeholders stand to gain from this initiative. Since all of them are familiar with the company and its workings, the transition is smooth.
The process eliminates complex integration that often results in failed acquisitions, and the company will continue running as before.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding Management BuyoutsManagement buyouts are a form of acquisition transaction where the top executives of a company purchase it from its owners. The owners sell the entire company as is, complete with assets, debts, and anything else associated with the brand.
Members of the management see the potential rewards in becoming company owners as opposed to remaining employees. They may pool their resources to acquire a part of or the entire business under their control.
If these executives think they are in a better position to run the company profitably, they offer to purchase it. Aside from private company owners, larger corporations may also choose to sell off smaller units. This form of divesting is effective for consolidating their finances for other purposes.
Funding Management BuyoutsTo execute the acquisition, the management must organize the necessary funding. Here are some of the options:
- Executives may use their personal funds, such as savings and other assets, to purchase the company. These individuals are typically wealthy and have substantial personal assets.
- Executives reach out to private equity firms for funding. However, these PE firms may require a share of the company as compensation for the investment.
- Seller financing is also an option that involves an agreement between the management and the company owner or seller. The owner may agree to accept a promissory note for the unpaid portion of the purchase price.
- Bank loans are also a source of capital, but MBOs are a risky investment. For this reason, they may offer only a portion of the funding. The management may have to look for other sources as primary investors.
Mezzanine FinancingMezzanine financing is a blend of debt and equity financing. Lenders provide funding on condition that they can convert the debt into equity or stock options in the company. That is, in case the company defaults.
However, the lenders can exercise this right only after venture capital companies and senior lenders get back their investment.
The risk factor is balanced between senior debt and equity. In the case of bankruptcy, mezzanine financing lenders get priority over existing owners to recover their capital.
Mezzanine financing for management buyouts has warrants embedded into it, similar to embedded equity instruments. This factor lends flexibility to the investment when dealing with bondholders.
Leveraged Management BuyoutsMBOs are a form of leveraged buyout (LBO) https://hbr.org/1988/01/lbos-for-smaller-companies where the acquisition takes place using funding from third-party sources. If third-party investors provide the major portion of the funding, the acquisition becomes a leveraged buyout.
Most management buyouts are invariably leveraged since companies cost a substantial sum of money. The buyers must raise a combination of debt and equity to pay the price.
Transitioning from employees to owners does come with its share of risks. While the potential for profits is high, so is the higher risk of running losses.
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How Management Buyouts ProceedManagement buyouts (MBOs) typically involve a series of steps:
- The transaction starts with a viable business or an opportunity the management or a particular member identifies as worth investing in. The business would have to have adequate potential to scale and generate profits.
- The management and potential buyers devise a business plan that outlines how they intend to run the company. As with any other business plan, it will include a vision of the direction in which the new owners intend to take the company.
- At this point, the buyers may want to estimate the funding they need to buy the company.
- The next step is approaching the owner with a proposition to purchase the company. The buyers will communicate their intention to buy in a private acquisition. If the deal is public, there might be an auction in which interested parties propose their bids.
- Due diligence is always crucial, as buyers want to review the in-depth details. Despite being the management, they must ensure that every aspect is covered.
- Once the deal closes, the management completes the transaction and starts implementing its intended changes to take the company forward.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Why Management Buyouts OccurConsidering the high risk factor accompanying MBOs and the high chances of failure, the company management may still push ahead. Here are some of the key reasons that drive a management buyout.
Lack of Offers from Third-Party AcquirersCompanies coming up for sale don’t always get good offers from third-party acquirers. Many reasons may prevent the sale from concluding, such as issues with the company’s financials or the changing economic landscape.
Buyers may not consider the company a viable investment, or issues may arise in the due diligence. The lack of adequate funding to purchase the company can also be problematic.
MBOs can be a safer solution since the top executives may have a handle on resolving the problems. They may know exactly how to maintain continuity.
Owners Can Transition to a Private Equity InvestorManagement buyouts typically occur when the company owner is ready to retire but also maintain a stake in the company. MBOs allow them to transition into the role of a private equity investor. The executives pay the owner a substantial sum, allowing them to retire comfortably.
At the same time, the owner can retain some degree of control and say in how the company is run. The value they bring to the table can be indispensable to keeping the company on an upward growth trajectory.
They will continue to act as a mentor and steer the company in the right direction. In addition, the owner, now a private equity investor, can also get a share in the profits the company generates.
Owners Benefit from a Better DealTaking on the role of a private equity investor may result in higher returns for the owner. Selling the company in the open market often involves aggressive negotiations with third parties, driving prices down.
However, selling to the company’s executives allows the owner to walk away with a significantly higher price. That’s because the management need not pull out cash reserves to pay the owner. Instead, they can convert the selling price into stock and offer returns similar to those of a PE firm.
Regardless of whether the company is entering into an M&A deal with internal or external buyers, the discovery phase is crucial. Both buyers and sellers should know how to navigate the due diligence process. Check out this video, where I have explained in detail how it’s done.
Finding Third-Party Buyers is ChallengingMost importantly, the owner need not scout the market for third-party buyers and simply allow the management to purchase. The sale proceeds seamlessly without creating a buzz in the market that can shake customer confidence in the company.
External buyers and brokers typically evaluate an acquisition according to its potential for generating minimum returns. They may also operate on a minimum valuation criterion. For instance, some brokers may require a minimum valuation of $5M.
Buyers and brokers drive a hard bargain once a company comes up for sale, pushing its prices down even further. Although there are many buyers in the under $5M and $10M market, they tend to value companies at much lower figures.
Several other issues can arise, such as maintaining confidentiality and company secrets when finding external buyers. A management buyout circumvents all these issues since the sale can occur internally without the information being released.
Owners Get Favorable Terms and ConditionsDuring a management buyout, the company owner could be in a better position to negotiate beneficial terms. For instance, they can require an “earnout clause.”
This clause entitles them to a share of the company’s future earnings. These earnings can be in the form of a percentage of the revenues or any other conditions.
However, outlining the earnout conditions in detail is crucial. Owners should ensure the new owners honor their agreements and make payments as decided. Another concern is the management clause.
According to this condition, the owner may be required to stay and work in the company for a fixed tenure. In this case, again, determining the terms and conditions of this tenure is crucial to ensure transparency about responsibilities. And compensation for their time.
When company owners have spent decades building it from the ground up, they want to eliminate the possibility of mismanagement. Selling to third parties means no control over the company once the sale concludes.
Selling to the management may allow the owner to specify terms like keeping workers and securing their jobs. Or maintaining a certain way of working and running specific units even if they aren’t performing well.
Factors like these contribute to the company’s essence that external buyers may be unable to comprehend.
Saving on Time and Transaction CostsMergers and acquisitions typically involve extensive costs because of the large team of professionals engaged. For instance, a single deal requires an M&A advisor, broker, expert lawyers, and accountants to manage the legal aspects. Due diligence and in-depth evaluations can also add up the costs.
Once the deal is final, transaction and registration charges are added to the final bill. Even if the deal falls through, participants must cover the professional fees. Then again, brokers require a percentage of the deal amount as a fee to enable the deal.
An internal management buyout can eliminate these costs and finalize the deal at a fraction of the expense.
Ensuring Company Stability and ScalabilityExternal buyers may choose not to retain the existing management in favor of their own teams to run the company. Or, the existing management may not agree with the new policies buyers introduce. These policies may or may not serve the company’s interests.
Since the executives running the show are familiar with the company’s functioning, they are adept at decision-making. They may also be in a better position to steer the company and ensure its stability and scalability.
Incoming executives that buyers bring in may be unfamiliar with the company, and their decisions could result in instability and failure. Management buyouts also occur when the company executives are confident in their expertise to run the company.
The executives may have the expertise, experience, and skills to run the company better than its owners. This is why they may offer to purchase it from them and take it to new heights. The chance of higher gains and profits is also a deciding factor.
Continuation of Company CultureFailed integration and synergies often result in both parties running up huge losses in an acquisition. Typically, companies have entirely distinct cultures and work processes. Aligning two entirely different teams involves an extensive process and meticulous preparation from HR departments.
A lack of understanding can prove to be disastrous. More so when the acquirer lets go of key workers and personnel to eliminate overlapping talent and skill sets. Job insecurity and loss of morale can also lead to unnecessary employee attrition.
A management buyout makes these issues irrelevant. The company continues operating as before but with some core changes that lead to improvement and long-term profitability.
The Takeaway!A management buyout has several key benefits for all the stakeholders involved. And that includes the owner, top-tier management running the company, workforce, investors, and customers. The company benefits from new leadership but with mentoring and coaching from the old owners.
The owners and founders may have built the company from the ground up and can offer in-depth information. The new owners learn about the pitfalls founders navigated successfully and understand the company culture and mission.
This is why the MBO M&A strategy could be a win-win situation for everyone involved, most of all, the company itself.
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The post The Basics Of Management Buyouts: Key Concepts And Benefits appeared first on Alejandro Cremades.
When it comes to building a billion-dollar company, doing it once might be considered luck, but doing it twice is a testament to skill and perseverance. Sami Inkinen, the entrepreneur behind two successful ventures, shares his journey from humble beginnings on a Finnish farm to founding companies like Trulia and Virta Health.
Sami’s story is about resilience, innovation, and the relentless pursuit of solving meaningful problems. He talks about being an immigrant in the US and an outsider and then, becoming an insider and building a unicorn.
Sami also reveals his journey of shifting from one segment to another: from real estate to healthcare.
Listen to the full podcast episode and review the transcript here. https://alejandrocremades.com/sami-inkinen/
FREE DOWNLOADThe Ultimate Guide To Pitch Decks From Potatoes to Computers: A Finnish Farm Boy’s Quantum LeapSami Inkinen’s early life in Finland was far removed from the tech world. Born and raised on a farm near the Russian border, his parents hadn’t even attended high school. Growing up surrounded by chickens and pigs, Sami learned the value of hard work early on.
However, his interest in technology was sparked by magazines showcasing computers, leading his father to buy him a Commodore 64 sometime in the mid-80s. This early exposure to computers opened a new world for Sami, shifting his focus from farm chores to software and technology.
Even before he turned 10, Sami was reading about modems (U.S.obotics 2400bps was his first purchase) and pre-internet bulletin board systems or BBS’es.
He ended up starting, building, and running one of the first BBSes in Finland from his bedroom in his parents’ house, using the family phone line for people to dial into before investing in a 24-hour dedicated line.
These experiences opened Sami’s eyes to the immense potential out there beyond his life on the farm. He financed his way through college, working as a software developer and IT support person. While doing his Master’s in Physics, he got the opportunity to join eQ Online.
The Birth of a Tech EntrepreneurSami’s journey into entrepreneurship began in Finland, where he joined a startup equivalent to E*Trade, known as eQ Online. As one of the first employees, Sami witnessed the company’s rapid growth from zero to an IPO in less than 18 months.
This experience of building something from scratch that millions of people used was exhilarating and planted the seed for his future endeavors.
Despite his initial training in physics and software development, Sami’s foray into the startup world taught him invaluable lessons about teamwork, inspiration, and the power of creating something meaningful. [my_form_shortform]
A Million-Euro MBAAfter a stint at Nokia, Sami co-founded his first company, Matchem, a software business, for which he raised €1M or $1.08M of venture funding, which was eventually acquired by a German company.
Sami describes this venture as his “million-Euro MBA” due to the numerous lessons learned through mistakes.
This experience solidified Sami’s passion for startups and the excitement of building something from the ground up, reinforcing his desire to avoid large, stable companies.
Learning the Ropes at McKinseySami’s journey detoured through McKinsey, a global management consulting firm. This move might seem odd for someone with entrepreneurial aspirations, but for Sami, it was a strategic step towards gaining entry into Silicon Valley.
McKinsey taught him the importance of balancing analysis and execution, a crucial skill for any entrepreneur. This period helped him calibrate his approach between slow strategic thinking and fast-based execution, preparing him for his next big venture.
The Stanford Reset and Birth of TruliaStanford University served as a reset button for Sami, reigniting his entrepreneurial spirit. Here, he met Pete Flint, his co-founder, and together they founded Trulia, a real estate marketplace.
Despite having no prior experience in the U.S. residential real estate market, Sami and Pete, both students and immigrants, saw an opportunity to revolutionize the industry.
Drawing inspiration from other vertical-specific online search and marketplace companies like Expedia and Match.com, Sami and Peter envisioned creating a consumer-first online marketplace for real estate.
The duo realized that these online classified verticals were essentially a consumer-first internet marketplace or internet service and could be adapted into residential real estate.
Since a consumer-first real estate destination and platform had not been developed in 2004, it was clear that someone was going to own the mind share of consumers in real estate.
They would target customers who wanted to buy, sell, or rent a home.
Overcoming Challenges and Achieving SuccessTrulia’s journey was not without its challenges. The 2008 financial crisis hit the real estate market hard; survival required grit and determination. The Lehman Brothers collapsed, and the industry that was worst hit was mortgages and residential real estate, Trulia’s core market.
Trulia’s clients were going out of business. It couldn’t raise more money and revenues were dropping. By 2009, as the market began to recover, Trulia had weathered the storm and was poised for long-term success.
The company went public in 2012, and in 2014, it was acquired by Zillow for $2.5B. Sami looks back at the deal, which basically involved two public companies coming together. Zillow was bigger than Trulia, but teaming up by industrial logic made sense.
Industrial logic made sense because combining two brands would be more beneficial for customers and lead to operational efficiencies. Reflecting on this journey, Sami describes the merger as a bittersweet moment, marking the end of one chapter and the beginning of another.
From Real Estate to Healthcare: The Vision of Virta HealthSami’s next venture, Virta Health, was born from a desire to tackle the world’s largest health crisis: type 2 diabetes and obesity. Virta’s mission is to reverse diabetes in a hundred million people through telemedicine, lifestyle change, and nutrition.
This for-profit healthcare tech company partners with employers, health plans, and government entities to deliver its services, making diabetes reversal both, effective and accessible.
Sami’s goal is not just to build another successful company but to create a lasting impact on global health at the individual and population levels.
Virta’s business model is that payers – such as employers like Papa John’s, U-Haul, United Airlines, health plans like Humana and Blue Shield of California, and government organizations like the Veterans Administration – pay for the service, and individual patients get free access.
There’s a substantial ROI for payers because Virta saves about $6,000 per patient per year when reversing T2 diabetes and charges less than half of that. Virta Health is VC-backed and has raised $360M of equity funding to scale its business and build its platform.
Storytelling is everything which is something that Sami Inkinen was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Raising Funding Comes with ResponsibilitySami doesn’t take raising money from investors lightly. He compares raising investor capital to a mortgage that has to be paid back not with a 5% or 7% interest but hopefully with 50 to 100% annual interest!
The amount of money raised for Sami is not a measure of success but more of a vanity metric.
Founders should know how to balance not raising too much or too little. Since Virta is in the healthcare industry, it has long B2B cycles, and the need to invest in clinical trials and evidence generation is critical, making it capital-intensive to scale a healthcare tech company.
Sami wanted to ensure they could access capital when they needed it the most. With lessons learned from 2008 in his mind, he pitched for and raised money to be somewhat opportunistic to have the necessary capital available.
Sami’s hopeful vision for the future, when Virta reaches its full potential, is like Europe in the 1970s when there weren’t many people with type 2 diabetes and obesity.
He came out of quasi-retirement to start Virta Health because he had stumbled on a way to help billions of people reverse type 2 diabetes and obesity sustainably.
The solution is to use nutrition and telemedicine to address the root cause of poor metabolic health and reverse its symptoms from obesity to T2 diabetes.
The Secret to Success: A Mix of Luck and StrategyAccording to Sami, there is no formula for building a billion-dollar company. However, he believes in a few universal principles:
- Taking the First Step: Many people have ideas, but execution is key. Taking the first step is the most important, setting the stage for the journey ahead.
- Solving Meaningful Problems: Start with a problem that needs solving and build your solution around it. Technology should serve the problem, not the other way around.
- Playing the Long Game: Building a successful company takes time and perseverance. It’s a marathon, not a sprint, and staying in the game for the long haul is crucial.
As Sami opines, there are no overnight success stories, or it’s exceedingly rare; almost all success stories are 10 years in the making.
He has enjoyed the journey mainly because Virta Health was impactful and successful. In retrospect, he advises founders to be patient and pace themselves with occasional and necessary all-in sprints.
It will take more than a decade to build something, and it’s like running a marathon. You can sprint over a hill, but sprinting all the time means that you’ll never finish the marathon.
Founders should focus on understanding the importance of focus and identifying areas where they can have an unfair impact.
You can’t start a fire with a magnifying glass unless you really focus the sunbeams or the photons into this one little piece. That’s what building a company is all about: focusing energy to start a fire.
Conclusion: The Road AheadSami Inkinen’s journey from a Finnish farm to Silicon Valley is a testament to the power of resilience, innovation, and the pursuit of meaningful goals.
As he continues to build and grow Virta Health, his vision remains clear: to solve some of the world’s most pressing problems through technology and entrepreneurship.
With a track record of turning ideas into billion-dollar companies, Sami’s story inspires aspiring entrepreneurs worldwide.
Listen to the full podcast to know more, including:
- Sami Inkinen began on a humble farm in Finland, showing that big dreams can stem from modest beginnings.
- His interest in computers and software was sparked by a simple Commodore 64, highlighting the importance of nurturing curiosity.
- Inkinen’s journey through the 2008 financial crisis with Trulia exemplifies resilience and perseverance in tough times.
- His first company, Match’em, served as a “million Euro MBA,” teaching him invaluable lessons the hard way
- Experience at McKinsey sharpened his ability to break down complex problems, strategically approach solutions, and calibrate execution vs. planning
- Inkinen’s mission with Virta Health is to reverse T2 diabetes in 100M people.
- Success doesn’t happen overnight; Inkinen emphasizes the importance of dedication and playing the long game in building impactful companies.
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Shahar Alster’s career is a testament to the power of resilience, innovation, and strategic thinking in the tech industry. As a multiple-time founder, Shahar has navigated the complex landscape of startups, scaled businesses, and led successful exits.
Shahar’s journey, from his early days in Israel to his transformative experiences in Silicon Valley, offers invaluable insights for aspiring entrepreneurs.
He has also been brought in as an external CEO, raised funding, and has successfully navigated an acquisition. Here’s a detailed exploration of his experiences and lessons learned.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Journey Rooted in Israel’s Startup CultureShahar Alster was born in Israel, a country renowned for its vibrant startup culture. After serving three mandatory years in the military, he spent 15 years in Israel’s tech industry.
The discipline and resilience Shahar gained during his military service in Israel played a crucial role in shaping his entrepreneurial mindset.
He learned that whether you serve in combat or infantry units, there are no limits to what can be achieved, a lesson he applied in both, his personal and professional life.
The military taught Shahar that people are much stronger than they think and that our limits are much beyond our minds and capabilities.
This mindset was instrumental in his ability to navigate crises and lead teams effectively, whether in the tech industry or during the challenging phases of his startups. After leaving the military, Shahar went on to study economics and marketing and then, joined the tech industry.
From Military Discipline to Business AcumenAs Shahar recalls, when he started his career in 1999, the tech industry was new to the world. Back, then, the challenge was to connect everyone to the Internet, unlike present times, when we don’t even think about having a connection or network.
At the time, the challenge was how to connect more people in every place in the world through the thing called the Internet. Although Shahar did his MBA In marketing, he was really curious about the Internet, connectivity, and Wi-Fi.
For the next 15 years, he worked in the tech industry more on a local level. He was running a technical company and eventually moved to Silicon Valley to further his career. Shahar’s early experiences in Israel’s startup ecosystem laid a strong foundation for his future endeavors.
His move to Silicon Valley, a hub of innovation and opportunity, was driven by the desire to work on larger scales and with more significant impact. As Shahar explains, around 20 years ago, Silicon Valley was a different place, and it came as a culture shock.
Although Israel is called a startup country, it is a small nation with just 10 million people, which is why it has limitations in technology and innovation. Being a small country, it is a small market, which is why, to work in big companies, one would have to run with the big boys.
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Silicon Valley: The Epicenter of InnovationMoving to Silicon Valley marked a significant turning point in Shahar’s career. He considers it the best place in the world for innovation and entrepreneurs to extend their skills and build companies.
When invited by a friend, Shahar packed his bags and moved to Sunnyville, Silicon Valley, with his wife and three-year-old son.
Here, he co-founded and led two companies, both of which achieved successful exits. His first company, ChooChee, was acquired by Deutsche Telecom, while the second, SpaceIQ, was acquired by WeWork. Shahar experienced the full cycle of a company from the start to the finish line.
Shahar recalls how the company started out with 4-5 people and Shahar himself acting as the VP of technology. He then moved on to take additional roles in the company, and two years later, they had a team of 55 workers and lots of customers.
After the acquisition by Deutsche Telecom, Shahar stayed on for another year. He ran it through the entire cycle of presentation, to a small team, to a funding team, to a full scale to M&A, to one year with another company. It gave Shahar the whole spectrum of experience within four years.
Deutsche Telecom expressed their interest in continuing working with Shahar and his team by starting another company. That’s when they came up with the concept of SpaceIQ.
The Importance of Research and Validation – SpaceIQShahar’s approach to building startups is rooted in deep market understanding and validation.
Since Shahar and his team had a B2B background, they were confident they could help small and big enterprise companies to do what they’re doing better from network management to security to any other problem.
With SpaceIQ, Shahar and his team identified a massive, underserved market in workplace management, particularly real estate management and facility management. They conducted extensive interviews with potential customers to understand their pain points and validate their ideas.
The key problem they identified was that the industry had not been digitized. It was still running with paper, pencil, and maybe spreadsheets. Shahar and his team found a few companies attempting to resolve the problem but with old-school ideas.
Before building a deck and presentation, they started interviewing customers, including over 40 facility managers and real estate managers from companies in and outside of Silicon Valley. They asked questions about the activities they did, their procedures, and the problems they faced.
Two months later, Shahar and his team returned with mock-ups and presented their solution. They had the market size, appropriate timing, zero competition, and potential customers. They also had a product that was versatile and could evolve with the changing needs of the customers.
This rigorous validation process ensured they built a product that truly addressed market needs, which was key to their rapid growth and eventual acquisition.
The Power of Validation and the MVP ApproachFor Shahar, validating an idea before fully committing resources is crucial. He emphasizes that an MVP (Minimum Viable Product) should solve a core problem effectively, even if it’s not perfect in appearance.
This approach helped SpaceIQ attract customers early on, providing proof of concept and driving further investment. His mantra: If you’re not embarrassed by your MVP, you’ve likely spent too much time on it.
Shahar’s strategy was to pick out five or six problems that really hurt people and work on them. They first identified move management as the problem and designed a way to solve the problem.
Once people started using it, Shahar added layers of UX and UI, which ensured he always had customers.
Raising Funding and Scaling SpaceIQShahar remembers how getting funding for the company was very challenging. Getting the initial $2M in seed funding involved pitching to many VCs, and convincing them of their concept was tough. After 25 to 30 meetings, Vertex Ventures decided to back them.
Storytelling is everything which is something that Shahar Alster was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Building the company was a streamlined process because Shahar was working with a team he knew, and they eliminated the team and culture-building processes. This factor helped them to quickly scale the company.
Within two and a half years, they had a long list of customers, including big companies that had previously worked with their competitors. SpaceIQ was working with companies like Tesla, Nasdaq, Facebook, and Splunk Technology.
In Shahar’s opinion, the reason for the success was that they entered the industry with a fresh perspective. Their approach was very different from the competition which allowed them to make their mark in the market.
They also went on to raise a series B $20M round, but since they were short of $2M, Shahar contacted the CEO of WeWork with an offer to invest in SpaceIQ and become a strategic partner. Instead, the CEO made Shahar an offer to purchase the company, which he accepted.
Strategic Exits and AcquisitionsShahar’s strategic thinking extends to knowing when to exit. When WeWork expressed interest in SpaceIQ, it was not just about the financials but about how the acquisition could amplify its mission.
WeWork was keenly interested in the company’s capability to connect to every data source in every company and take all this data to run the technology, which was the secret sauce. It could help a big organization.
Post-acquisition, SpaceIQ operated independently within WeWork, allowing it to leverage greater resources while maintaining its innovative edge. However, the eventual sale of SpaceIQ due to WeWork’s strategic shifts underscores the dynamic nature of tech entrepreneurship.
As Shahar explains, they sold SpaceIQ once again as part of WeWork to a competitor. This time, they integrated the team as well, which left him open to exploring new opportunities.
Returning to Israel and New VenturesAfter years in Silicon Valley, Shahar returned to Israel, where he continued to leverage his experience. He joined Yotpo as a General Manager before moving on to lead Ourcart as CEO.
As Shahar explains, Ourcart specializes in understanding consumer behavior in the retail space and other resource companies.
This move highlights Shahar’s adaptability and continuous drive to take on new challenges, even after multiple successful ventures. He recognizes the fact that his entire network was back in the US.
To open a startup in Israel’s business landscape and to build a team of good engineers wasn’t easy.
However, Adam Fisher, a board member of Yotpo offered him the opportunity to work in the company. He could be the General Manager and build something new but under an umbrella and without the pressure of a board.
Shahar’s rationale was that he could focus only on the execution without worrying about aspects like fundraising and board interactions. Unfortunately, within a year, the company decided to close the product.
Joining Ourcart as CEOAfter that, Shahar was approached by headhunters with the opportunity to be the CEO of Ourcart. This was an entirely new experience for Shahar since he had always been an entrepreneur, building a company from scratch, dealing with the execution, raising money, and then going through the M&A process.
Shahar took his time doing due diligence and researching and validating the market before accepting the offer. As explained above, the company specializes in understanding consumer behavior, but with new technology that is complete with AI capabilities,
The business model is to scan physical receipts of purchases customers make at grocery stores and upload the receipts using a program. Scanning these receipts gives them an overview of customer behavior in locations like the US, Europe, and Asia.
The data is then analyzed and used as market research by big brands that can develop insights into what shoppers are doing. They can identify the reasons why customers buy merchandise, groceries, and other products or why they don’t buy them.
Shahar talks about understanding the company’s major assets when he first joined. He identified its strengths and weaknesses and adjusted the structure to align with the opportunities that are now available in the market.
For instance, the new CTO specializes in AI and can understand and implement current technologies. Using the CPQ industry that is now available is essential to keep the company running and competitive. And, this resulted in making some hard decisions about replacing the team.
Shahar also talks about making adjustments in the company’s roadmap to become a better technology provider and help customers gain more value from its products. Without using Ourcart accounts, companies can’t really do their jobs, in Shahar’s opinion.
Ourcart’s product is similar to spreadsheets for accountants and Jira for engineers. To be successful as a marketing manager in any major brand, they need to have Ourcart accounts.
These accounts help understand the customer journey and behavior and other markets and opportunities in real time without spending millions of dollars.
In ConclusionShahar’s journey emphasizes the importance of staying dynamic and open to new opportunities in the ever-evolving tech landscape. His story is one of relentless pursuit of innovation, strategic growth, and the ability to navigate the highs and lows of entrepreneurship.
Shahar’s experiences offer a blueprint for aspiring entrepreneurs aiming to make a significant impact in the tech world. He advises them to always believe in themselves and their abilities. He also tells them to be patient and that entrepreneurship is a marathon, not a sprint.
Most importantly, it’s crucial to surround yourself with people you enjoy working with and savor every moment of the journey to building companies, regardless of the outcomes.
Listen to the full podcast episode to know more, including:
- Discipline and resilience learned in the military can significantly enhance entrepreneurial success.
- Moving to innovation hubs like Silicon Valley can provide unparalleled opportunities and exposure.
- Thorough market validation and solving real problems are crucial for startup success.
- An MVP should solve a core problem effectively, even if it’s not perfect in appearance.
- Strategic exits can amplify a startup’s mission and leverage greater resources.
- Continuous adaptation and openness to new challenges are essential in the dynamic tech industry.
- Building a strong, cohesive team from previous ventures can accelerate new startup growth.
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Your email address is 100% safe from spam!The post He Sold A Company To WeWork And Now Helps Companies Harvest Retail Consumer Behavior Data appeared first on Alejandro Cremades.
Poland’s entrepreneurial landscape is not for the faint-hearted, but Maciej Zawadzinski’s journey is a testament to the power of resilience and innovation. Born at the tail end of Poland’s socialist era, Maciej experienced firsthand the seismic shift from socialism to capitalism, shaping his perspectives and aspirations.
His story is a remarkable blend of determination, technological prowess, and strategic foresight. In this exclusive interview, Maciej talks about his experiences building his company, facing rejections when trying to raise money for it, and eventually exiting. He has now transitioned to an investor’s role.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Days: From Katowice to WroclawMaciej was born in Katowice, an industrial town once known for its coal mines and heavy industry. As Poland transitioned from socialism to capitalism, so did Katowice, gradually becoming a hub for technology and innovation. This environment undoubtedly influenced Maciej’s path.
At a young age, Maciej moved to Wroclaw, one of the Polish technology hubs, to study computer science. However, academia wasn’t his primary focus. His passion for technology led him to self-teach software development, starting with installing his first Linux system at just thirteen.
By the time he was in high school, he was already programming and developing a deep understanding of operating systems. This hands-on experience laid the foundation for his entrepreneurial journey. Maciej remembers buying books about learning to program at 14-15 years old.
Since Maciej was always involved in organizing computer science courses and conferences with some friends, he didn’t really focus on his studies. As he remembers, first-year computer courses in Poland were more theoretical, but Maciej was only interested in the practical aspect.
First Foray into Entrepreneurship: Brand New Media – The Advertising NetworkMaciej’s entrepreneurial spirit first materialized when he co-founded Poland’s first blog advertising network. This venture was born out of a simple idea shared with a friend, which they developed over numerous meetings and late-night coding sessions.
Maciej remembers taking care of the coding while his friend managed the graphic design and marketing. They launched the business after the summer break and quickly started getting clients. They also ran fundraising campaigns and started to get traction.
Despite initial skepticism about paying bloggers, the duo managed to create a viable business model, acquiring several hundred blogs and landing campaigns with prominent consumer brands. They ran the blogs on the network and hired around 15 to 20 people. However, the venture faced significant challenges.
After two years, they struggled to scale the business further and clashed with their majority shareholder, leading to an eventual exit where they sold their shares. Although it wasn’t a lucrative exit, it provided valuable lessons that would shape Maciej’s future endeavors.
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Building Clearcode and Incubating Piwik PROUndeterred by his first venture’s limited success, Maciej founded Clearcode, a software development company. Leveraging their expertise in advertising technology, Clearcode started by developing solutions for clients.
Over time, Maciej’s vision expanded beyond service-based work, leading to the incubation of several products within Clearcode, including the highly successful Piwik PRO and Kanary NEST.
Piwik PRO, a privacy-friendly alternative to Google Analytics, started as an open-source project. Recognizing its potential, Maciej and his team developed a commercial version that targeted enterprises and data-sensitive industries.
Piwik PRO operates on a SaaS licensing model that charges users a fee for using the product based on the usage.
As a result, the amount of data they are processing with the platform is like a privacy-friendly alternative to Google Analytics. Piwik PRO also offers some extra capabilities that may not be found in other analytics platforms.
Despite early challenges, including a skewed focus on R&D over business development, Piwik PRO eventually found its stride, growing to a remarkable €12M or $13.3 ARR with minimal external funding.
Navigating Challenges and Celebrating SuccessThe path to success was far from smooth. Fundraising efforts were met with skepticism due to Clearcode’s dual nature of providing both services and products. The company has 70% of its tech workers doing product and just 30% working on other aspects like marketing, sales, etc.
Many VCs were reluctant to invest in a company that wasn’t exclusively focused on product development. However, Maciej had a technological background and knew the technology that could help them create a great product.
Maciej recalls that, at its peak, the company had more than 200 people since it was a services part and Piwik PRO was the product.
He describes himself as a hands-on person who has always been involved in every aspect of the business and finds it hard to delegate. Even so, he quit the CEO position and moved on to a more supervisory role.
The Clearcode AcquisitionIn the initial years, the company didn’t have much growth but could afford its software development since it was making profits, which Maciej and his team were rolling back. Eventually, he found an evergreen fund willing to invest $2M, recognizing the value in Clearcode’s hybrid model.
Storytelling is everything that Maciej Zawadzinski was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!This investment strategy paid off. When Clearcode was eventually sold, the valuation matched the initial investment, effectively returning the capital while retaining the highly valuable Piwik PRO.
The company’s success culminated in an exit reportedly worth over €50M or $54M, a testament to Maciej’s strategic acumen and perseverance.
Maciej looks back at the acquisition when the initial transaction fell through because of the economic environment and the fund was putting on hold all the transactions in Central Europe.
Although Maciej and his team were disappointed with the setback, they rallied because of another offer they got from the network market.
Sometime in 2022, they started the process again, which Maciej retrospects to have the worst timing ever to start pitching to private equity funds. Although the company had great metrics, it couldn’t attract much interest or the right term sheet.
It took several months to get an acceptable offer to shareholders and Maciej. After several hits and misses, they finally accepted an offer from a buyer who had been a Clearcode client in the past.
Maciej and his team accepted the offer because of their long-term business relationship with them. However, the buyer had to partner with a private equity firm to raise the necessary funds to buy the company.
Transitioning to Investment and MentorshipAfter selling Clearcode and Piwik PRO, Maciej turned his attention to supporting the next generation of entrepreneurs. He started out as an angel investor, and now, his new venture, a venture capital fund, Hard2beat, aims to fill a unique niche in Poland by being led by a seasoned entrepreneur.
Drawing from his extensive experience, Maciej hopes to offer not just capital but valuable insights and mentorship to early-stage startups.
Maciej’s advice to aspiring founders is simple yet profound: be directly involved in sales. His experience taught him that founders who actively engage in selling their products tend to drive the most growth.
This hands-on approach and a deep understanding of technology create a powerful formula for success.
ConclusionMaciej Zawadzinski’s journey from a small industrial town in Poland to becoming a successful entrepreneur and investor is inspiring. His story highlights the importance of resilience, continuous learning, and strategic focus.
As he transitions into his role as an investor, Maciej is poised to significantly impact Poland’s startup ecosystem, fostering a new generation of innovative and successful entrepreneurs.
Listen to the full podcast episode to know more, including:
- Resilience and adaptability are crucial for navigating Poland’s evolving entrepreneurial landscape.
- Early hands-on experience with technology can lay a strong foundation for future entrepreneurial ventures.
- Building a successful business often involves learning from initial failures and leveraging those lessons.
- A hybrid model combining services and products can be a strategic advantage if managed well.
- Direct founder involvement in sales is essential for driving significant business growth.
- Securing investment may require finding investors who understand and value your unique business model.
- Transitioning to an investor role allows successful entrepreneurs to mentor and support the next generation of startups.
Alejandro Cremades · EP 891 Maciej Zawadzinski On Building A $13 Million ARR Company With Minimal External FundingSUBSCRIBE ON:
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Your email address is 100% safe from spam!The post This Entrepreneur Built A $13 Million ARR Company With Minimal External Funding & Now Supports Aspiring Founders appeared first on Alejandro Cremades.
Attracting early-stage funding for circular economy startups is quickly becoming streamlined. In today’s world, sustainability is not just a buzzword but a crucial necessity. Startups with innovative and disruptive ideas are emerging as crucial players in transforming industries.
Their mission statements are all about redefining waste, promoting reuse, and creating innovative products from recycled materials. Although a nascent vertical, investors see the value they can add to the economy. However, founders must demonstrate a robust value proposition to get funding.
Read ahead for detailed information about the potential opportunities that circular economy startups can access when seeking early-stage funding. You’ll get insights into how to navigate this complex landscape and the many capital sources to tap.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding How the Circular Economy OperatesThe circular economy is an economic model involving the manufacture and consumption of products with the objective of extending their lifecycle. The underlying principle is to minimize dependence on fresh, natural resources by reusing existing materials and products.
To do this, startup founders develop new techniques to reuse, repair, refurbish, and recycle materials. That’s how they attempt to disrupt the traditional linear economy, which operates on the ‘take, make, dispose’ model.
Customers welcome the opportunity to save substantially by getting products repaired or exchanged for new versions at discounted rates. They also have the option to lease, share, or subscribe to the products they need instead of purchasing them outright.
In this way, the circular economy model is essentially a win-win solution that works well for users and companies. On their part, manufacturers save significant expenses by purchasing recycled materials that are more economical than fresh inventory.
Transitioning to a circular economy model benefits multiple verticals in the US. For starters, these industries include battery manufacturing, electric vehicles (EV), electronic equipment, and the built environment.
Statistics estimate that the shift to recycling management can significantly lower raw material inputs. Further, this strategy could unlock $883B to $1.5T in new revenue streams and economic value. These figures add up to 4% to 7% of the US GDP or gross domestic product.
A sustainable economy can reduce greenhouse gas (GHG) emissions by 370 million to 850 million tons of carbon dioxide equivalent (CO2e) per year. These numbers translate into a drop of 7% to 16% of total GHG emissions in the US.
With so many positives and customer interest, investors also see the potential for high returns when startups grow quickly. At least 65% of customers are likely to choose brands that demonstrate values like responsibility, recycling, and sustainability.
Basic Principles on Which Sustainable Startups WorkThe circular economy landscape operates on basic principles, including innovations to repurpose and reuse trash. Startups devise new methods to use waste and end-of-lifecycle trash as resources for converting into usable products
Larger established brands may also demonstrate their responsibility to the planet by encouraging customers to return products after use. Customers can donate their old products, deposit them for cashback incentives, or get store credits for new purchases.
The repair and reuse consumer philosophy is also emerging, with people preferring to return their items to the company. On their part, brands have reversed the planned obsolescence strategy and now offer spare parts and repair services.
Brands are also dedicated to manufacturing products with an extended lifecycle that continue providing value for longer periods.
Reverse logistics is another fast-upcoming trend, with companies accepting packaging materials and reusing them. Renting and leasing high-ticket items like luxury cars is another strategy manufacturers and dealers offer consumers.
People need not purchase the products they want to use but can lease them for a few years. Dealers can make much more money out of leasing these items. And consumers need not spend a lot of money on expensive things, but can also enjoy using them.
The subscription model is yet another strategy that works well for consumers and companies. Sellers can create a steady revenue source and again, users need not pay high sums to purchase the items. Gaming applications, media streaming services, and shopping platforms like Amazon Prime are only some of them.
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How Early-Stage Funding for Circular Economy Startups HelpsInnovating and developing new techniques in the circular landscape is typically capital-intensive. That’s because startups may have to invest in extensive R&D before creating product prototypes that can sell. They must also conduct detailed market research to identify the waste that can be reused.
Sourcing inventory, processing it, and then converting it into new products may involve ideating and developing Intellectual Property. New equipment, tools, and machinery to process waste are areas where disruptive concepts are welcome.
The industry also needs fresh talent with perspectives that think out of the box. Since a lot of trial and error can go into creating new prototypes and ideas, founders need heavy capital infusions. They also need investors willing to extend their holding periods until the startup yields results.
Knowing how to build a target list of investors is a great step when you’re ready to raise finding. Check out this video I have created explaining how it’s done.
Best Sources of Early-Stage Funding for Sustainable Ventures – Start With GrantsFounders looking for funding and support for their startups in the regenerative vertical should start by applying for government grants. The federal government has set aside funds to support startups in this space. Awareness of the importance of sustainable solutions has prompted this initiative.
For instance, the Environmental Protection Agency (EPA) has set up the Bipartisan Infrastructure Law. Also called the Infrastructure Investment and Jobs Act, this program offers $275M through Solid Waste Infrastructure for Recycling grants.
From 2022 to 2026, the organization has given out $22M annually and will continue until the funds are exhausted. Their objective–Building a Better America. The federal government also recognizes the need to develop skill sets and a future workforce for the circular economy.
The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) has given nearly $3M in grants. This funding has been made available to six universities to support educational programs and curricula creation. These programs focus on training on extending the plastic lifecycle.
The above are just two examples of the several programs available on the federal, state, and local levels. Research the specific categories they support and explore how to apply for and acquire the grants.
Keep in mind that the circular economy is an entire ecosystem. For instance, you can get support for not just developing new concepts. But also to provide technical and IT support to other startups.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Apply to Incubator and Accelerator ProgramsSome top incubator and accelerator programs are geared toward early-stage funding for circular economy startups. Of course, they offer more than just capital to build a product prototype. You can rely on them for a fully-equipped workshop, tools, equipment, and technical support.
Also, expect a small amount of funding, mentoring, and networking opportunities to connect with other founders for future partnerships. Networking enables introductions to investors to understand how they think.
Mingling with these entities opens doors for future funding collaborations. Check out some of these examples:
- Techstars: Operating out of five global locations, this program supports startups in climate tech, smart cities, food tech, and water conservation.
- Venture For ClimateTech: This is an accelerator program that operates out of New York. It works to promote startups working toward clean energy, transportation, and smart cities.
- Creative Destruction Lab: A non-profit organization, this program works in 12 locations across Europe and North America. Its focus is on climate tech through support for science and tech.
- brinc: This organization operates out of Hong Kong and has an extensive network to connect founders with investors and supporters. Its focus areas include biotech, carbon capture and storage, ocean carbon removal, and mineralization.
- Circular Accelerator — NextCycle Washington – This organization runs
a series of competitions and contests designed to select promising startups and projects in the circular space. - Circularity Accelerator – This program is a part of the WorldGBC initiative to address issues like climate change. It supports the efficient use of resources in the construction and building spheres.
Angel InvestorsWhen looking for early-stage funding for circular economy startups, research angel investors who are dedicated to reversing climate change. Elon Musk is a great example of an angel who invested in Tesla to support electric vehicles and renewable energy. Other notable examples include:
- Mark Cuban operates out of the United States, Vietnam, and Singapore and supports software startups, blockchain, and eCommerce. And the value these industries can add to the circular economy.
- Danny Hayes works out of Switzerland and the United States. He has a history of delivering sustainable energy solutions and now supports ventures in areas like clean energy.
- Sagar Ratilal Bavarva has bases in three locations: India, The Netherlands, and Germany. His focus areas are clean energy, particularly solar energy.
- Rayyan Islam is based in Los Angeles, California, and backs startups in areas like renewable energy and biotechnology.
- Irene Maffini works out of London, England. She has invested in over 30 startups in the circular economy, sustainability, and next-gen materials.
Venture CapitalistsAlthough VCs are more keen on supporting established companies with further funding rounds, they do back early-stage ventures. Aside from capital, you can expect industry-specific expertise and guidance in running the company’s operations.
VCs may expect a board seat and other incentives like preferred shares and profit-sharing. However, agreeing to these conditions is advisable because VCs also carry high risk.
To attract VC attention, you’ll demonstrate that the company has the potential for rapid scalability and high profits. Here are some great examples:
- SOSV – This VC firm operates out of USA, China, Taiwan, and Ireland, and offers funding to startups in climate and sustainability.
- Alumni Ventures Group – This VC group is based in the US but operates out of several cities across the country. Aside from climate and sustainability, this firm invests in tech and health.
- Tencent – This Chinese VC firm backs disruptive ideas in spaces like sustainability and climate along with automation. Combining the two spheres can have a significant impact.
- Soma Capital – This organization is an American VC that exclusively invests in software startups, particularly automation. But with a focus on regenerative verticals, among others.
- Union Square Ventures – This New York-based VC firm aims to leverage the internet through technology companies to have an impact. Climate and sustainability are areas of focus, among others.
- Data Collective – This VC firm works out of Palo Alto and San Francisco and is essentially focused on deep tech. Startups deploying tech for environmental impact and sustainability can approach funding.
Private Equity FirmsSeveral private equity firms now offer early-stage funding for circular economy startups. Some of the best examples you can fund include:
- Closed Loop Partners: This firm is one of the top PE firms in the regenerative economy sector. More than 50 corporations are engaged in the firm, and it operates out of nine countries.
- Circularity Capital: This firm was founded in 2015 with the sole objective of supporting startups in the circular economy. It works out of London and Edinburgh.
- Circulate Capital: This firm focuses on ventures demonstrating the potential for high growth. The core area of focus is plastic supply chains.
- BlackRock: This firm is the world’s largest asset manager, making strategic client investments. It has recently started a specialist arm for funding new ventures in the circular ecosystem.
- Astorg: This organization comprises investors from global locations with 30% located in North America. Operating under the King Baudouin Foundation, it works to build a healthier, more inclusive society.
The TakeawayDo you have a brilliant concept that utilizes waste or can recycle products to extend their life cycles? This is the opportune moment to convert those concepts into market-ready products. And if you need funding to make that happen, many sources are out there.
You can reach out to investors for not just capital but also assistance with building a company from the ground up. Start by researching the concept and making sure it delivers adequate value to investors and customers.
If it has the potential to scale quickly and deliver profits, that’s the concept to work on further. Once you’re there, here’s what to do next.
Check out our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Navigating Early-Stage Funding For Circular Economy Startups appeared first on Alejandro Cremades.
Embarking on the entrepreneurial journey is like diving into a vast ocean of uncertainties, challenges, and opportunities. In a recent interview with Guy Willner, an experienced entrepreneur with a string of ventures spanning decades, we gleaned invaluable insights into surviving crises.
Guy also talked at length about raising funds, understanding private equity, maintaining work-life balance, and contemplating the future of AI. He also reveals his understanding of the role of private equity and venture capital firms.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Journey Shaped by Diversity and LearningGuy is originally from Oxford, though his parents were not English. His mother is Norwegian, and his father is French-Austrian.
So, essentially a foreigner growing up in England, Guy went to Oxford Brookes University to study engineering. He had to choose to be a lawyer, a consultant, a doctor, or work a corporate job.
Guy’s schooling started far from the predictable paths of corporate life, evolving through diverse experiences from failed A-levels due to a passion for music to contemplating a career in the military or Air Force.
In Guy’s opinion, joining the military was advantageous since the military training could give him a complete education.
He ended up applying to the Air Force to be an engineer officer since engineers were kind of second class to the pilots in peace times. While pilots are still flying, engineers make sure that the air base runs smoothly and the toilets are clean.
Working in Paris and HungaryInspired by friends traveling to different parts of the world to pursue diverse careers. Guy resigned after two years and moved to Paris to join his older sister, who was a fashion designer in the city. His objective was to find a job and learn the language.
Guy spent five years in Paris and another three years in Hungary, where he worked with Vivendi, building telecom networks. Guy describes the experience as similar to running a startup for a very big company.
The venture world was not developed as yet and Guy’s transition into the corporate world is an interesting story. He remembers wanting to start a business at 35 and needing a chairman for the company.
Being naive became an advantage because, as Guy reveals, had he known the risks, he might not have ventured into entrepreneurship.
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Raising Funding for and Building IXEuropeOne of the first things Guy did was try to raise $2.5M or £2M to build a small data center, and had no takers. On the advice of a friend in banking, he instead applied for £20M or $25M in funding and instantly attracted investor interest. Guy was asked for a business plan, which he put together.
Eventually, Guy raised £10M with a PowerPoint presentation sometime in 1999. In June 1999, the dot-com bust hit the UK, but a year later, he successfully raised another £42M or $53M. A few months later, he and his co-founder, Christophe de Buchet, were on the road trying to float IXEurope.
Storytelling is everything that Guy Willner was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Sometime in October 2000, they took IXEurope public on the London Stock Exchange. Its product was basically a box to house computers. And Guy and his team were raising money to invest in data centers.
Gradually, the business plan iterated into four countries: the UK, France, Germany, and Switzerland.
JP Morgan had already invested in some businesses and had two data centers in Zurich and Frankfurt. The company invested in IXEurope but was acquired by Equinix during the dot-com bust for close to $555M.
The Learning Experience – From Zero to ExitGuy remembers that challenging time and the team’s dedicated efforts toward cutting costs and keeping the company running. He talks about the transitions his first startup company went through and building it up from zero over nine years.
Even so, Guy considers it a win since they successfully floated the company on the secondary market in the UK. Within a period of nine months, the shares went up by about 4.5x.
However, for Guy, it was an incredible learning experience to go through the full lifecycle of a business from start to exit.
In retrospect, Guy got an understanding of his skills personally and what he could bring to the table. He also learned to laugh about his weaknesses and be humble and candid. Guy considers his co-founder, Christophe de Buchet, a blessing that saved him from a complete breakdown.
Joining Teraco Data EnvironmentsAfter the exit, Guy joined the board at Teraco Data Environments, which gave him structure. Every month, he was traveling to South Africa or on video calls with the boards in the area.
Eventually, this company was also acquired for $125M, and Guy gained important lessons on how to run an effective board.
He also learned the importance of company culture, teamwork, and a positive, constructive environment. The acquirers of Teraco were positive and magnanimous to the management team, which was crucial in the early days of sales in data centers.
Building International Data Centre GroupGuy’s next vision was building a global club or platform for data centers, but he had little luck convincing people about his idea’s veracity. The concept was ahead of its time and beginning to fail.
Guy was working with a team of graduates and then was approached by a European Bank with an offer to run a project in Russia.
Guy got the offer to be the chairman, and when he went to Moscow, he met an Englishman who was trying to build a data center business in the city. Since the concept demonstrated potential, Guy connected with the IFC, a member of the World Bank Group.
IFC was an investor in Guy’s previous business, Teraco, so he was able to raise £350M or ~$444M for International Data Centre Group. Eventually, he also attracted funding from Goldman Sachs, PIMCO, Mubadala Development Company, and Tourmo Group.
Private Equity: Unraveling the DynamicsIn shedding light on private equity, Guy unravels the intricate dynamics that govern this sector. From the cyclical nature of fund-raising to the importance of delivering results within a fixed time interval.
As Guy explains, understanding the language and modus operandi of private equity firms becomes indispensable for entrepreneurs navigating this funding channel. While he speaks an operational and management language, PEs speak differently.
PE firms have a five to six-year cycle; every five to six years, they have to go and raise another fund, which is a really difficult and complicated process.
As a result, the business is not good for long play. Since data centers are typically 10-year plays, the relationship between PEs and the data center industry is very complex.
Having spent 10 to 11 years at the company, Guy was running an office in London with JP Morgan, Goldman Sachs, and Lehman Brothers. The company floated on NASDAQ, and two weeks later, the war started.
Suddenly, Guy became redundant in the company and his equity in the business in Russia became zero. That was a challenging time, and he had to pick up the pieces and take care of his family. Luckily for him, Guy still had his business in Kenya, the IXAfrica Data Centre Nairobi.
Around that time, an investor approached Guy with the offer to advise a company across Africa. He joined as a senior advisor, and soon after, PIMCO in Europe reached out with a request for assistance in Western Europe. They offered to roll out big data centers there.
That’s how Guy ended up jet-setting across Russia and advising in Africa and Western Europe with two separate PE firms.
IXAfrica Data Centre NairobiGuy talks about his experiences with data centers in Kenya. As he explains, every country and culture is different, and Kenya is a young country with an average age of 21 years, compared to 49 years in Europe.
The head of HR was born in 1999 and is young, enthusiastic, and well-educated, which Guy found really exciting. When he built the data center, it was a $50M project, and local contractors were hired to work on it, without the assistance of expats–an indication of the dynamism of the continent.
One of the key differences that Guy notes about working in Africa and the Western world is that contracts are not transactional but driven primarily by trust. He advises entrepreneurs to look for people they can absolutely trust and demonstrate that they are there to build a relationship.
At the moment, Guy reveals that he is on the board of a Brazilian data center company with Goldman Sachs. Although he works with global companies, he no longer holds a full-time job but prefers to sit on boards and advise PE firms.
The Future of AIGuy traces the evolution of the data center market, which started off with little telecom companies putting their telephone exchanges in buildings, which then morphed into the Internet. Next, everyone from Spotify to Meta wanted to put their equipment close to the end user, which grew quickly.
Then came the cloud, and companies like Microsoft, Google, and Amazon brought cloud computing, another type of data center and a big regional hub. Now, with AI entering the fray and people using it everywhere, people are beginning to run out of computing power across the planet.
As Guy opines, no one knows about AI’s future, but the more machines are integrated into systems, the more efficient products will get.
Work-Life Balance: Nurturing Relationships Amidst Entrepreneurial PursuitsGuy’s thoughts on work-life balance highlight the importance of human connection in the midst of entrepreneurial passion. While entrepreneurship requires dedication, nurturing relationships and taking breaks are essential to maintain personal well-being and lasting connections.
Guy looks back at his life and sees it as a fascinating adventure. He reconnects with the people he partnered with in building his companies and focuses on relationships.
While building companies is addictive, he underscores the importance of pacing himself. With that aim, he rarely works weekends.
Parting Wisdom: Embracing Change and Seizing OpportunitiesGuy’s parting wisdom emphasizes the importance of embracing change, seizing opportunities, and building resilience.
His journey showcases the power of diversity, resilience, and relationships in the world of entrepreneurship. His insights can guide aspiring founders to succeed in today’s dynamic business landscape.
Listen to the full podcast transcript to know more, including:
- Guy’s journey underscores the power of resilience in navigating challenges and turning setbacks into opportunities.
- From failed A-levels to founding startups, embracing adaptability is key to thriving in the entrepreneurial landscape.
- Entrepreneurs must grasp the cyclical nature and operational language of private equity firms to navigate fundraising and partnerships effectively.
- Maintaining a balance between professional pursuits and personal well-being is crucial for sustained success and meaningful relationships.
- Understanding the implications of AI on computing demands and technological trajectories is essential for businesses navigating the digital frontier.
- Lessons learned from the dot-com bubble emphasize the importance of strategic foresight, agility, and learning from past experiences.
- Embracing change, seizing opportunities, and fostering resilience are paramount for entrepreneurial success in an ever-evolving world.
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Your email address is 100% safe from spam!The post He Sold A Company For $555 Million And Now Advises PE Firms As A Board Member appeared first on Alejandro Cremades.
Early-stage funding for sports startups is quickly emerging as a lucrative investment opportunity. This vertical has a broad reach and encompasses a range of sub-sectors, including health and wellness, tech, nutrition, and infrastructure. Sports equipment and eCommerce are also attractive options.
Sports is not just a singular field but also includes sports entertainment, e-gaming, merchandising, collectibles, technology, media, and analytics. Startups operating in any of these sectors can offer products and services to cater to an immense customer base.
The sports landscape comprises athletes, fans, training academies, facilities, consumers, investors, service providers, and other stakeholders. Investors provide not just capital but also networking opportunities, industry-specific expertise, and mentoring to startups debuting in the space.
The sports sector is evolving quickly, with innovations and disruptions emerging to challenge existing methodologies of how games are played.
Upcoming trends and opportunities incentivize rapid growth and advancements in the field. This is why attracting early-stage funding for sports startups is easier than ever.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Let’s Check Out Some StatisticsResearch indicates that the sports market will likely grow from $480.12B in 2023 to $506.93B in 2024, with a CAGR of 5.6%. Further, the sports teams and clubs market will grow at a CAGR of 6.85% from 2024 to 2029.
Technology is driving the sports vertical in a big way, and estimates show that, by 2024, the sports technology market will touch $40.2B. The CAGR, or compound annual growth rate, will rise by 20.63% between 2021 and 2026.
While mainstream sports like tennis, cricket, soccer, and basketball have always ruled the industry, several other games now attract attention. For instance, equestrian sports and extreme sports like rock climbing, sky diving, and skateboarding.
Customers are also experimenting with e-sports in a big way, and competitive online games are quickly growing. This sector is now an entirely separate industry with dedicated gaming companies developing apps to play the games. Players, spectators, sponsors, investors, and bettors engage in transactions worth millions of dollars.
Technology has entirely transformed the way sports are generated and consumed. Games are not just about professional athletes but also casual players using equipment, merchandise, and gadgets.
People are open to investing in mobile applications, wearable devices to measure performance, and social media for interactions. Virtual reality and blockchain are other technologies that have found applications in the sports sector.
With so many opportunities opening up, investors are also looking at startups and new ventures for funding and earning profits. Particularly founders with disruptive ideas about taking sports and their enjoyment to the next level.
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How to Attract Early-Stage Funding for Sports StartupsAs the founder of a sports startup, you’ll start by exploring the key factors investors will consider. Their first focus is on startups that demonstrate potential for high growth and can significantly impact the industry.
This sector is intensely competitive and entirely dependent on fans and their interests. A compelling pitch deck should talk about the potential risks the startup may face and how you intend to counter them. Here are some of the main areas to focus on:
Identifying the Right ProblemIdentifying a problem that needs solutions is always the defining feature of any startup in any sector. Investors need to see statistics and research to validate the gap that needs to be addressed. Next, they’ll assess the potential solution you present for validity and scalability.
Most importantly, the solution should be innovative and make sense to the consumers. Then, some innovations create a need in the market even when there isn’t one. For instance, studies have shown that more than 50% of households across the US no longer have cable or satellite TV.
As a result, the bigger sports networks are developing apps to provide streaming services to viewers. A startup building equipment or software to enable these services and deliver them to consumers is a great investment-worthy project. That’s just one example.
Achieving the Ideal Product-Market FitThe startup’s products or services should address the target market and its needs. You’ll demonstrate why the product is better than what’s currently available and its value proposition. If you can present traction with sales figures to indicate customer interest, that’s a win.
For instance, developing an AI-driven program to coach users’ workout sessions according to their body structure. The application will take into account individual lifestyles and fitness goals and design a customized plan, complete with optimum diets.
Users can also update the application with records of their calorie intake and favorite food types. They can connect with wearable devices to monitor physical activity. Solutions like these are ideal for pro athletes and fitness enthusiasts wanting to eat and exercise better.
Put Together a Core Skill SetA great team with diverse skill sets and talent is always an attractive feature in any pitch deck. Your team should feature engineers to innovate product ideas and convert them into marketable products. You’ll also need software engineers to keep pace with the technology aspect.
When pitching for early-stage funding for sports startups, demonstrate a culture that is enthusiastic about sports. Also, it shows agility to adapt quickly to changing customer preferences and interests, particularly since sports idols acquire fame instantly. With a goal or a well-placed kick.
Your startup’s core mission should be team collaboration, dedication to serving customer needs, and coming up with innovative solutions. Also, make sure your team has a well-rounded selection of skills, including graphic designers, advertising and marketing experts, and digital marketers.
Outsourcing some of the digital operations to cut back on costs can be a smart move that investors will appreciate.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Designing a Well-Planned Business ModelAs with startups in any other vertical, investors pay close attention to the business model. You’ll talk about production processes, costs, overheads, sales channels, and logistics. Adding data and financial metrics is crucial for credibility and showing how the business can scale.
The most important metric in your pitch is the profits the company is generating. Even if the startup has yet to generate profits, you can add estimated numbers according to industry benchmarks and projections.
Providing non-financial data to indicate traction is also sufficient to demonstrate that the company has the potential to earn profits. Your business plan should also show the revenue-earning channels and unit economics. Any IP the company owns can also feature on the business plan.
For instance, gaming software that customers are subscribing to for playing games. Business models driven by subscriptions indicate traction instantly since that translates into a steady revenue stream and positive cash flow.
Estimating Market Size and ReachShowing the market size for startups operating in the sports industry is easily done. But what’s crucial is providing numbers to indicate the market for the products you’re developing. A great way to depict that is by listing competitors’ performance statistics.
Next, you’ll outline product features to show how your brand differentiates from competitors. Make sure to target an underserved market with a product USP that sets it apart. You’ll also provide information about the expected market share your brand can capture.
For instance, the pitch will discuss your target customer demographic if you’re developing a new gaming application. And why they are likely to show interest in it.
Even as you start counting around for a list of investors for your startup, also work out the best ways to approach them. Check out this video I have created on how to put together an investor outreach strategy. Each one has to be customized according to the investor you’re targeting.
Targeted Investors for Sports StartupsWhen looking for investors for early-stage funding for startups, you’ll start by thinking like them. Understand that investors focus on startups with innovations, ground-breaking technology, and unusual ideas.
Although sports is an entirely distinct niche by itself, several related verticals also attract investor interest. For example, athleticwear and sports footwear can be relevant to the sports and apparel industries.
Or digital marketing and eCommerce stores selling sporting equipment and collectibles, which can be worth millions of dollars. For instance, the Honus Wagner T-206 Baseball card is worth $7.25 million.
Considering these aspects, don’t limit your list of potential investors only to those interested in the sports vertical. Don’t hesitate to diversify the investors you approach. Here’s how to get started.
Bootstrapping and Friends and FamilyIf you’re really confident in your business idea, start by sinking some of your personal savings and assets. Investors always rely on founders who have skin in the game and are not hesitant to invest money and time.
Trying to build a startup while working full-time at a regular paying job may not convince investors. They’ll want assurance that you’re all in with the concept you’re developing. Next, approach friends and family for small cash advances to help create the MVP.
Rolling back initial revenues from the business to purchase inventory or cover some costs is also a practical strategy. Keep costs low at this point and leverage free social media platforms to sell your first products. For instance, customized sportswear with screen printing.
This strategy will allow you to test the market and customer preferences and get valuable feedback. Most importantly, you’ll create a market presence before the bigger launches. When approaching investors, a social media footprint indicates traction and gets you funding faster.
Crowdfunding PlatformsWhen your startup is still young, it’s advisable to look for smaller investors where you won’t have to cede equity. Crowdfunding platforms work well, and running a campaign can connect you with these investors. You’ll target sports fans, fitness enthusiasts, or consumers interested in extreme sports.
In exchange for money, you can offer free or discounted products. Sneak previews of gaming apps or tester kits of hydration liquids are also great incentives for funding your startup. You can leverage their feedback to make improvements.
Once the final versions are ready, you’ll have a ready customer base to purchase the product. Not to mention free word-of-mouth advertising for the brand.
Apply for GrantsSeveral organizations are now offering grants to startups to encourage innovation in the sports vertical. For instance:
- Innovation grants that back companies developing new software, applications, equipment, analytics, and nutrition. You can use the money for research, developing products, testing them, and producing the MVP.
- Participation grants are designed to encourage participation in sports and promote physical fitness. Startups working for inclusion and diversity can attract funding. Like for instance, to open sports training opportunities for differently-abled athletes. Or athletes of color or those that face barriers because of other disparities.
- Excellence grants are given out to companies that enhance sporting performance by athletes and their supporting teams. For instance, coaches, organizers, nutritionists, analysts, and more.
You may have to fulfill certain terms and conditions depending on the grant awarder. So, do the necessary research into their approval criteria before applying.
Incubator and Accelerator ProgramsAlthough getting entry into an incubator or accelerator program is very challenging, these options can be an excellent solution. Founders can get not just funding but also various other benefits to get their startups off the ground.
For starters, getting accepted into the program is validation that the concept has merit. You’ll also get funding to build the prototype, a workshop, technical support, administrative assistance, and potential partnership opportunities.
Networking channels and the opportunity to meet investors on the demo day are the culmination of the program. Here, you’ll present a pitch deck and walk away with enough funding and credibility to make it big.
Angel Investors, Venture Capitalists, and Private Equity FirmsOnce your startup is stable and ready to scale rapidly, you can bring in the big guns of the industry. You can approach angel investors, VCs, PE firms, and even family offices at this stage. Most investors operate in the sports industry, but others may be willing to support high-growth, high-potential startups.
You can expect much more than just capital, like a board seat, to assist in scaling the company with expertise. However, you may have to give up some amount of equity and a share in the profits along with other compensation.
At the same time, they will be open to providing rich infusions of capital for rapid growth.
Finding early-stage funding for sports startups is easily done with the right strategies and knowing the market and your investors.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Adventure Capital: Early-Stage Funding For Sports Startups appeared first on Alejandro Cremades.
Peer-to-peer funding for early-stage ventures is a suitable option when entrepreneurs need a small amount of money to get started. Alternatively, they may need small infusions of funds to use as working capital. Or to tide them over until customers clear their accounts receivables.
Typically, angel investors and venture capitalists may not want to invest in these microloans. Applying to banks doesn’t make sense because of the hassles of getting small funding amounts. On the other hand, the amount could be too big to charge to a credit card or line of credit.
Peer-to-peer funding can bridge the gap and keep the startup running until the next funding round. You’ll sign up on peer-to-peer or P2P platforms that connect lenders and borrowers to get these loans. Lenders are usually small investors looking for viable opportunities to invest.
Although not exactly a crowdfunding strategy, P2P lending has some similarities. You might also call it debt-based crowdfunding, social lending, or crowdlending. More than 300 such platforms are operating worldwide, currently offering backing to startups at pre-seed, seed, and early stages.
Historically, these platforms emerged during economic downturns when startups found it very challenging to get funding from traditional sources. Technology and the Internet have been the driving forces that have spurred the rapid growth of this channel.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Let’s Check Out Some StatisticsExperts anticipate that the peer-to-peer lending market worldwide will likely grow at a CAGR of 28.1% from 2023 to 2032. Reports suggest that the P2P market reached a valuation of $75.8B in 2022. In the next 10 years, the figure will stand at $621.3B. By the year 2034, the value will touch $$1,709.6B.
Prosper, Funding Circle, Upstart, and Lending Club are among the market’s top players. Interest rates are typically higher than other finding options and may range from 5% to 9%. Depending on the specific platform or borrower startup and other conditions, the interest can be as high as 10%.
The maximum loan amounts can be $35K and are available without the need for collateral. This factor raises the risk, which investors offset with high interest rates.
However, these amounts are just ideal to kickstart and get the startup off the ground. Entrepreneurs can make payments once the business starts to thrive and generate revenues.
Understanding Social or Peer-to-Peer LendingStartup founders needing small capital infusions can approach peer-to-peer platforms designed for small borrowers and lenders. These platforms eliminate middlemen, banks, and financial institutions.
The platform enables them to enter into lending transactions that benefit both parties. Entrepreneurs and small business owners who typically face barriers to traditional bank loans can consider peer-to-peer funding for early-stage ventures.
Such loans don’t involve due diligence or complex screening procedures, which is a plus for founders still finding their feet. Investors can benefit from higher returns than they can expect from other investment options.
Both parties can conduct the transactions online without complicated application protocols. Loan terms are short, which makes them ideal for quick R&D or side projects that founders may want to try.
Or to cover the gap between payment due dates. Entrepreneurs can quickly repay when the clients make payments.
Although interest rates are higher than those of other conventional funding sources, they are lower than those charged by credit cards. Unsecured loans also charge higher interest rates than P2P platforms. Most importantly, founders are only accountable for the payments they must make on schedule.
Investors don’t expect compensation through stock and equity, nor can they claim voting rights or board seats. Essentially, P2P loans are short-term advances that founders can use and repay within a fixed due date.
They need not specify the purposes for requesting the loans, nor are there any conditions for the money’s use. This factor lends flexibility to the transaction. Approvals typically come in within a short time, and the application process is quicker than most banks.
You’ll see the loan amount credited to your bank account within a short time.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Book a Call
How Peer-to-Peer Funding for Early-Stage Ventures WorksIf you’re ready to explore this short-term funding option, here’s what you’ll do for peer-to-peer funding for early-stage ventures.
- Research several online platforms and understand their terms and conditions and SOPs. Also, study the kind of startups that work on them and other information. Ensure that your PII is secure and that no technical glitches will interrupt the lending process. Reliability and cybersecurity should be high on your list of priorities.
- You’ll create a profile complete with personal and financial details. Your income, credit scores, and purpose for applying for the loan are also needed. The platform conducts a hard credit pull and verifies your identity through your submitted documentation.
- Next, you’ll create a listing to inform potential investors of your requirements. Put down the loan amount you need, the expected range of interest rates, and the loan term you prefer.
- Lenders and small investors check the lists for projects that interest them and offer partial or complete funding. Founders can expect to have multiple investors accept a specific listing.
- You’ll read the transaction terms before accepting the loan. Once the transaction is complete, the lender receives monthly payments and interest after deducting the lending platform fee.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Factors to Keep in Mind Before Accessing LoansAlthough peer-to-peer funding for early-stage startups is a great solution, you’ll keep several factors in mind. Here are some of them:
- P2P loans are not secured by collateral, which raises the risk factor. You’ll only take loans that you’re confident of paying back.
- Make sure to research the platform for credibility before signing up. Check its track record and reviews posted by founders and investors.
Interest rates on P2P loans are typically high, so you’ll ensure they’re reasonable. Consider scouting other platforms and comparing interest rates before selecting an economical option. - Read the platform’s terms and conditions carefully for unfavorable nuances. Read the fine print, and don’t hesitate to ask questions to confirm you know exactly what you’re getting into.
- Work out the startup’s budget to ensure you can make monthly payments. Factor in the interest rates.
- Before signing up, check for the minimum credit scores the platform accepts. If your credit rating is low, you’ll work on building it to avail of favorable interest rates.
- Applications on crowdlending platforms are not always successful. Have a backup plan ready in case your request is rejected. Allocate the money only after you see it in the bank account.
- Crowdlending platforms levy a 5% closing cost fee, which they’ll deduct from the loan amount. Remember to calculate it by deducting it from the final amount you’ll receive. Also, ensure transparency and that no hidden charges are applicable.
- The maximum loan amount is $35K, which may not be adequate for your funding needs. Particularly if you intend to invest in heavy machinery, a large inventory, or premises.
- Transactions are not with financial institutions but between individual investors and borrowers.
Perks of Accessing Social Lending Funds for Your StartupPeer-to-peer funding for early-stage ventures has several benefits for a fledgling business getting off the ground. Here’s what you need to know.
- Loan agreements are between individual investors and founders, which eliminates middlemen and traditional institutions.
- You’ll make fixed loan payments over fixed intervals, enabling careful budgeting of your costs and expenses.
- Accessing this form of funding is typically easier and quicker than other fundraising options.
- P2P loans are a form of debt financing and don’t involve giving up equity or dilution. Founders are only liable to pay interest on the money they borrow.
- Startups with few assets to offer as collateral or not-so-great credit scores can get funding for their innovative ideas.
- Interest rates are lower than on credit cards and lines of credit.
- Even if the startup does not have an impressive track record of taking loans, it can access funding.
- Crowdlending platforms may be open to funding disruptive ideas that demonstrate potential for rich returns.
- Founders can negotiate flexible terms and conditions and repayment schedules. This factor can be a huge benefit for startups that have unpredictable revenues and cash flows.
- Social lending platforms don’t have any overhead costs, so transaction fees are affordable.
- Founders can repay the loan before due dates without the risk of incurring penalties for prepayment.
- P2P funding platforms are entirely digital, without documentation and paperwork. The entire transaction is completed via online forms and digital signatures. The loan amount is simply credited to your bank account.
- Founders can build a credit reputation on the platform. Having successfully taken and paid back a loan, accessing funding in the future is easier. You can quickly access short-term capital in an emergency with a few clicks of the button.
Risks of Tapping Social Lending Platforms for LoansAs with any other funding option, peer-to-peer funding for early-stage ventures comes with its share of downsides. Understand the possible risks carefully before accepting the loans.
- Not all states permit P2P lending, so research the regulations before signing up with a platform. You’ll confirm that it is authorized to make loans in your location.
- Borrowers should be confident of their ability to repay the loan before taking it. Non-payment comes with repercussions like asset seizure, wage garnishment, and/or even jail time.
- Interest rates could be higher if the lenders see a higher risk. Founders may want to shop around for cheaper loans before accepting offers.
- Be aware of the possibility of fraud and scams when transacting on a P2P lending platform. Always work on reputable platforms like SoFi, Street Shares, Lending Club, and Funding Circle. Also, do your research and check reviews.
- Be wary of cybersecurity issues and do whatever it takes to secure your PII and other sensitive information.
If you’re reading about P2P loans, chances are you’re scouting around for information about starting a company. Check out this video I have created explaining the next steps to take when you have a great business idea. It will help you get started in the right direction.
How to Maximize Success Rates on Peer-to-Peer Lending PlatformsIf you intend to get P2P funding for your company, use the right strategies to ensure success. You can consider it a good trial run for future fundraising initiatives when approaching investors for capital. Here’s what you need to do.
- Remember to treat this funding drive like a conventional pitch deck founders create. You’ll build a compelling profile that impresses potential investors with financials, business plan, target customer base, and sales projections. However, refrain from presenting details about the product portfolio you’re creating or any business secrets. Social lending platforms are open to the public, so be selective about the information you reveal.
- Build relationships with investors by adding social media profiles, images, and videos. Engage them by posting replies to comments and queries as soon as they appear.
- P2P lending platforms don’t require you to reveal the purpose for which you’re raising money. However, talking about your plans to start a business doesn’t hurt. Investors will be more likely to accept your pitch if you have a robust strategy for growing the business and making profits.
- Be upfront with lenders at every step. If you can’t make payments on time, be sure to inform them of a timeline for when you can make payments. Once you commit to a payment date, honor the deadline.
- Adopt lean operating methods to stretch every dollar and maximize profits from the loan.
To ConcludePeer-to-peer funding for early-stage ventures can be a good source of capital while you’re still exploring the business concept’s viability. Consider this funding source to supplement bootstrapping or advances from friends and family.
You can experiment a little with the small loan, which is easily payable in small installments if your idea is unsuccessful. You’ll also get an introduction to funding strategies, connecting with investors, and creating a compelling pitch deck.
Once the idea starts to take off, you can approach angels, VCs, family offices, or PE firms to support the venture. Reaching out to incubators and accelerators is also an option. While P2P loans are a great starting point, ensure you have the resources and capability to repay the money.
Non-payment can reflect poorly on your credit score, influencing your credibility when you start a more successful business later. Research extensively before taking on this debt.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
The post Peer-to-Peer Funding For Early-Stage Ventures: How To Get Capital From Individual Investors appeared first on Alejandro Cremades.
Leor Catalan is an innovative founder whose story embodies curiosity, resilience, and relentless innovation. Join us as we delve into his remarkable trajectory, from his formative years in Tel Aviv to the helm of a global company with over 600 employees.
In this exclusive interview, Leor talks about building his startup and scaling it by reinvesting $100M worth of revenues as against raising from external investors.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Years: Nurturing Curiosity in Tel AvivLeor’s childhood in Tel Aviv in the 80s and 80s, amidst the early age of personal computing and the internet age, laid the foundation for his insatiable curiosity.
Encouraged by supportive parents, he spent his days dismantling and rebuilding gadgets, nurturing an engineering mindset that would shape his future endeavors.
Leor remembers wanting to rethink how the gadgets were made with, perhaps, a better design. Despite his inclination towards architecture, Leor’s academic journey led him to explore business, economics, and law, keeping his options open for the diverse opportunities ahead.
Even during his academic studies, he wanted to learn as much of the world as possible and build international relationships beforehand. It seemed like the logical step to take. Eventually, after getting a degree in engineering, Leor was ready to start a career in corporate.
From Public Sector to Consulting: A Path of ImpactEmbarking on a journey through the public sector, Leor gained invaluable insights into decision-making and its profound impact on society. His two-year tenure at the Ministry of Finance honed his ability to navigate complex challenges and make informed, responsible choices.
Transitioning to the consulting world, Leor immersed himself in solving intricate problems, laying the groundwork for his entrepreneurial aspirations. He spent five years at Deloitte Israel as the Head of Financial Advisory Services, helping with valuations.
This position helped shape Leor’s thought processes around resolving and addressing problems. He also worked closely with the management to solve problems and rebuild processes to bring information and discovery into decision-making.
In Leor’s opinion, consulting is a dynamic world since you can see so many industries quickly, solve problems, and work with fantastic people.
It’s about looking into the background of problems and assembling things that align with his childhood interests. The transition to the venture world was a natural segue.
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Venturing into Entrepreneurship: The Birth of PassportCardThe genesis of PassportCard emerged from a convergence of expertise and innovation. Inspired by a novel idea from a client in international health, Alon Ketzef, Leor seized the opportunity to revolutionize the insurance industry.
Leor remembers how Alon came up with the idea to make insurance easier for people by using or combining a debit card in claims payment. Alon offered Leor the opportunity to join the founding team and completely reverse how insurance is run by building PassportCard.
The duo set out to solve the inherent conflict between an insurance company and the insurance member. As a rule, insurance is a bad industry because, from the company’s perspective, paying claims means to incur losses, which is not in their interests.
To resolve this problem, Leor and Alon put the insured member in control of the process. By intertwining fintech with insurance, PassportCard empowered individuals to regain control over their insurance claims, bridging two disparate worlds with seamless efficiency.
The duo essentially wanted to create a new ecosystem where a person could walk into any service provider worldwide. Instead of paying out-of-pocket and then getting reimbursed, they can just hand out a debit card issued to them and pay for the claim.
A lot of logistics needed to be worked out for that to happen, including the engineering aspect, without compromising the controls that are critical for the insurance space.
The PassportCard Business ModelPassportCard controls the entire insurance ecosystem from A to Z, starting with selling insurance plans to members, mostly international health and travel Insurance.
It operates the entire business in a completely seamless way for the member. Members only deal with PassportCard and can avail of its benefits regardless of where they are in the world.
As Leor recalls, the first challenge was convincing two different industries and players in distinct ecosystems to collaborate and create a seamless product. He remembers walking into offices across the US and Europe and talking to different entities.
Although they were fantastic professionals, they didn’t understand what Leor and Alon were trying to achieve. Finding stakeholders was a long process, mostly in the financial services space after the credit crunch.
Challenges and Triumphs: Forging a Unique PathAfter the recession, Leor and Alon faced doubt and pushback as they tried to change the insurance industry. They had to keep going and strongly believe in their goal to convince others to support their idea.
Instead of going down the conventional path of venture capital, PassportCard charted its course with self-reliance, reinvesting profits to fuel organic growth and innovation. As Leor describes, the business was quite unique and experienced hypergrowth.
PassportCard became well-established from a financial perspective, and this allowed Leor to start looking into different growth initiatives, including new ideas, products, and markets. The business also created significant cash flows that allowed them to invest heavily in new ventures.
Leor reveals how they ended up reinvesting more than $100M into the business. Disregarding the offers for investment, term sheets, and acquisition, Leor and Along continued to push on. Their objective was to bring value to their customers.
Leor Catalan was able to master the best strategies for funding his company. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Cultivating a Culture of Innovation: A Testament to ValuesPassportCard’s success is due to its focus on new ideas and customers. Leor’s strong dedication to creating a workplace where everyone’s ideas are heard and appreciated helped the company grow.
Even though it has grown a lot, PassportCard still acts like a small, new company with the goal of helping travelers around the world.
When training new recruits, the focus is on employees, members, shareholders, and partners. They inculcate the mindset of being dedicated to what they do and achieving the highest value for everyone involved.
As the company continued to grow, Leor and Alon started to broaden their product portfolio with car insurance and home insurance and growth into cross-border spaces.
This strategy created a methodology where they adopted a three-pronged approach: global expansion into new markets, constant building of new products, and incubator of new technologies.
That’s how PassportCard is dedicated to expanding the value proposition to its customers. The company is also focused on never taking anything for granted, which has become a part of its DNA. Leor does not believe in never taking answers from consultants or other people.
The company now has 600 employees and is constantly looking for strategies to expand its footprint, and this by itself creates a very flexible thinking that flows through the organization. They are constantly introducing new stuff, and people are constantly on their toes.
The company is all about creating a culture that goes all the way to the last and youngest person who was just recruited to join the team. They make sure their mindset, opinions, ideas, and the way they challenge what the company does is taken into account with every inch of seriousness.
Employees understand that they are partners in something bigger than each individual in the company, which makes them engaged and excited about playing the game. The vision is what keeps people rowing in the same direction.
Lessons Learned: Insights from the Entrepreneurial OdysseyReflecting on his journey, Leor imparts invaluable wisdom gleaned from years of entrepreneurial endeavor. He underscores the importance of focus, humility, and a relentless pursuit of customer feedback.
Because it’s all about the long-term relationship that they build with them, which will drive the best decisions.
In a world driven by constant change, Leor’s steadfast dedication to listening, learning, and adapting is a guiding light for aspiring entrepreneurs. This commitment makes PassportCard people’s first choice when they travel across borders.
The card is their point of confidence when they travel, and that’s what Leor and Alon are working toward. They are constantly adding more capabilities and services to fulfill that vision.
The Future Unfolds: A Vision of EmpowermentWith a steadfast commitment to innovation and customer-centricity, Leor and his team are poised to shape the future of insurance and redefine the traveler experience.
In conclusion, Leor Catalan’s entrepreneurial journey is about the essence of resilience, innovation, and unwavering determination. From humble beginnings to global impact, his story inspires us to embrace curiosity, embrace challenges, and forge our path toward a brighter future.
Listen to the full podcast episode to know more, including:
- Leor’s childhood curiosity laid the groundwork for his entrepreneurial journey, emphasizing the power of inquisitiveness in driving innovation.
- Leor’s transition from the public sector to consulting underscores the value of diverse experiences in shaping entrepreneurial vision and strategy.
- PassportCard’s approach to reinvesting profits over traditional venture capital highlights the importance of challenging conventional norms in business growth.
- Leor’s emphasis on listening to customer feedback and fostering a culture of innovation underscores the significance of customer-centricity in business success.
- PassportCard’s entrepreneurial spirit thrives on a culture of collaboration, where every team member’s voice is valued and contributes to the company’s evolution.
- Leor’s emphasis on focus, humility, and adaptability serves as a guiding principle for navigating the dynamic landscape of entrepreneurship.
- PassportCard’s vision of empowering travelers worldwide reflects Leor’s commitment to creating meaningful impact through innovation and customer empowerment.
Alejandro Cremades · EP 889 Leor Catalan On Rolling Revenues Worth $100M Back Into His Company For Insurance CoverageSUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The post This Entrepreneur Rolled Revenues Worth $100 Million Back Into His Company To Streamline Insurance Coverage appeared first on Alejandro Cremades.
Circular economy startups are fast gaining traction, and in the coming years, investor interest will shift toward this vertical. New ventures and entrepreneurs developing disruptive ideas to build a more sustainable economic model are also attracting customers.
The underlying mission statement of a startup in the circular economy sector is to minimize waste and pollution. They also develop innovative ideas to reuse products and materials for longer to lower environmental impact.
These new ventures treat waste as a valuable resource to recycle and repurpose into new products. As a result, they lower dependence on the earth’s resources to get new materials for manufacturing. That’s how they attempt to lower the human carbon footprint on the environment.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Circular Economy is Poised for Exponential GrowthResearch indicates that the worldwide circular economy market was valued at over $339B in 2022. It will likely experience a CAGR of 7.59% and reach over $526B by 2028. The market for recycling and repurposing digital products will grow at a CAGR of 24.3% from 2023 to 2028.
The sustainable approach, designed to maximize resource efficiency, can potentially lower greenhouse gas emissions by 70% by 2030. This model will also lower the waste cities generate by 80% within the same time frame.
The exponential growth in this sector is an attractive incentive for startups to come up with exciting ideas for recycling. Some sectors with the largest market share in the circular economy include food, clothing and textiles, electronics, wood, plastic, glass, and reselling products.
Read ahead for detailed information about why circular economy startups are fast gaining traction. Let’s explore why investors are keenly interested in this sector, making it easier for entrepreneurs to raise funding.
Understanding the Principles Behind the Circular EconomyReusing and RepurposingThe core principles of the circular economy are producing and consuming products that are made by reusing products. Instead of discarding products that have reached the end of their lifecycle, they are kept in circulation. The objective is to minimize reliance on the earth for fresh resources.
Instead, startups attempt to keep the existing resources in circulation for as long as possible. In this way, they attempt to minimize waste creation. The circular economy essentially views waste as a valuable resource and leverages innovations to create new revenue streams from trash.
Not just startups but established corporations are also building in-house divisions to recall and repurpose discarded products. That’s how they demonstrate responsibility and commitment to preserving the planet.
A good example is Levi’s, which collaborated with Cotton Inc.’s Blue Jeans Go Green initiative. The two companies worked to recycle unwanted jeans into insulation material for buildings.
Companies like Souface, Adidas, and H&M made waves by releasing athletic wear made using ocean plastic.
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Repairing for Extended LifecyclesAside from repurposing and recycling materials, companies are reversing the planned obsolescence manufacturing model. Products are now designed to last the consumer’s lifetime and are durable and repairable.
Spare parts are now available so customers can prolong usage by making minor repairs. This practice extends the product’s usable lifecycle and encourages customers to be responsible with their choices to minimize waste.
On their part, consumers welcome the option to save money on purchases.
Reversing Logistics to Lower WasteBy deploying reverse logistics protocols, startups can encourage customers to return products at the end of their lifecycle. Customers can get discounts on the new products they purchase, and the brand can recover some materials to produce more.
Closing the loop is a win-win solution for both consumers and manufacturers. A good example is the Apple Trade In store, which accepts not just old iPhones but also batteries and cables.
Customers can also return monitors, iPads, and watches and get credits toward their new purchases. Aside from actual products, companies also offer to accept packing materials for reuse.
Renting and LeasingCircular economy startups are fast gaining traction by leveraging the share-and-collaborate-to-use models. Consumers have the option to rent or lease products instead of purchasing them outright.
This option is easier on consumer pockets but also ensures a long-term recurring revenue stream for startups. Demonstrating a robust ARR in the pitch is always an attractive feature for investors. A good example is the car leasing business model.
Companies purchase big-ticket cars and lease them out to customers for a fixed time interval. People can lease the car, enjoy its ownership for a couple of years, and exchange it for a newer model. This strategy works out to be cheaper than owning a car. The company ensures a steady income from the rental agreement and recovers the cost of the car with a profit.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Customer Buy-Ins – Circular Economy Startups Are Fast Gaining TractionIf you are innovating new ideas for the circular economy, know that finding a market for your products is easy. Customers are committed to environmental causes and eager to support businesses that focus on sustainable practices. And whose mission statements align with their values.
This factor allows you to demonstrate a ready customer base in your pitch deck, making fundraising more streamlined. Startups that advertise using upcycled and recycled materials are in high demand thanks to eco-friendly and aesthetically appealing products.
Commitment to Protecting the PlanetCustomers are open to supporting such brands as long as they don’t compromise usability and fashion sense. In fact, going green and sustainable is catching on in a big way since buyers are conscious of the impact of their purchases on the community and planet.
On their part, brands are transparent about their ethical practices in operations throughout supply chains. Starting from sourcing materials and manufacturing products to packaging and disposing of waste.
Broadcasting information like this helps build trust, and social media is a great way to achieve this objective.
For example, the international brand UNIQLO has set up donation boxes in its stores where shoppers can drop off old clothing. The company accepts both UNIQLO and sister brand GU clothes that it later reuses or recycles to make new products.
At least 65% of shoppers prioritize sustainability when choosing their favorite brands. That’s the segment you’ll target with your marketing and advertising programs.
Substantial Cost SavingsSupporting the circular economy translates into significant savings for customers that they are sure to appreciate. For instance, fashion on rent is a great initiative that allows people to rent expensive designer clothing for all genders.
Customers need not spend thousands of dollars on apparel they’ll wear at only one event. They also eliminate the costs of maintaining and storing expensive garments. Above all, they appreciate the ability to lower reliance on fast fashion, which substantially impacts the environment.
Clothing and fashion are only the tip of the iceberg. Responsible practices can divert innumerable categories of consumer items from landfills and incinerators and potentially convert them into new products.
Many city governments have started drives and deposit return recycling programs to encourage users to bring back bottles and cans. Customers can also get back $2 for every ink cartridge they return. Then again, e-waste contains precious metals like palladium, gold, and platinum.
Are you considering starting a business in the circular economy? Check out this video, where I have explained how to come up with an investor worthy business. In it, I have outlined some ideas for a business idea that investors would want to back.
Why the Circular Economy is Attractive for InvestorsCircular economy startups are fast gaining traction also because of investor backing and capital availability. Investors recognize the potential that sustainable startups demonstrate, considering shifting consumer trends and government regulations.
Environmental damage, climate change, and resource depletion are critical issues the world is battling. Startups attempting to develop solutions to counter these issues typically have robust business plans and sustainable models that attract investors.
Long-Term Investment ReturnsCircular economy startups demonstrate the potential to yield rich returns over an extended period. The issues they are attempting to resolve will take decades. As they continue to grow and earn profits and revenues, they are sources of continued returns.
Sustainable startups are committed to lowering costs and running with maximum efficiency in keeping with their mission to minimize waste. As a result, they are adept at using resources optimally with the objective of reusing and recycling.
The lower costs translate into higher profits and rapid growth, which investors appreciate. Business models like rentals and subscription models also ensure consistent revenue streams and a proven customer base. These factors point to long-term gains in terms of returns and benefits to the planet.
Impact-driven ad ESG angels, VCs, and family offices may also specifically look for startups operating in the circular economy. You can expect not just funding but also expertise that can build the venture further.
Customer Dedication to SustainabilityRegardless of the sector where the startup or an established corporation operates, the entire system ultimately depends on demand. Industries are only as successful as their customer base and demand for products and services.
The world is going through radical shifts toward sustainability. Companies that adopt missions to minimize their carbon footprint will always be in demand. As explained in the preceding sections, shoppers are conscious of their choices and seek brands that resonate with their values.
Any brand delivering eco-friendly products, implementing green practices, and undertaking initiatives to recycle and reuse will be in demand. This is why it makes sense for investors to support startups that cater to this demand.
Government Incentives and PerksEntrepreneurs in the circular economy space can avail of a selection of incentives that federal governments worldwide are offering them. The regulatory and financial support they now receive encourages them to build sustainable companies.
Grants, tax rebates, prizes, loans, and tax credits are only some of the incentives. For instance, the Inflation Reduction Act of 2022 offers the U.S. clean vehicle tax credit. This credit is for recycling electric vehicle battery materials in North America.
Americas Trade and Investment Act provides $14B in incentives to startups in the sustainable fashion vertical. Any businesses deploying activities like fiber recycling, repairing, rental, reusing, and reselling can avail of a 15% net income tax exclusion.
The U.S. Department of Energy offers cash prizes worth $4.5M and $1.1M in technical support to innovators. Any startup attempting to ideate techniques to extend product lifecycles can qualify.
The Small Business Administration 7(a) loan program gives out loans of up to $5M to circular startups. They can purchase equipment or use the money for working capital or any other needs.
Federal incentives and support work to instill confidence in investors. They are open to supporting startups that qualify for incentives since they have accreditation from the government.
The Circular Economy is Now Transitioned to an Entire EcosystemCircular economies are fast gaining traction because the entire space has transformed into a new ecosystem. Larger corporations have started separate divisions to implement responsible practices to cut back on costs. They must adopt these practices to retain customer confidence and trust.
Alternatively, giant brands partner with small, upcoming startups to demonstrate their commitment. Smaller ventures are also open to collaborating to broaden their customer base and reach bigger markets. They get resources and capital to scale, but more importantly, validation and credibility.
Having a reputable brand backing them attracts investment from external sources. Such partnerships also benefit bigger brands since they can demonstrate responsibility to investors. Customers also benefit from cost savings and access to a greener product portfolio.
In ConclusionThe world is transitioning to new thought processes and an awareness of environmental issues and the steps that need to be taken. Consumers, producers, and regulatory organizations have swung into action to deploy the necessary measures to protect the planet.
With the circular economy taking off and making great strides, investors are entering the fray to invest capital. They are recognizing the immense potential that these startups demonstrate and are eager to support them with money and expertise.
Whether rent-and-collaborate, recall and recycle, or repurpose and reuse business models, startups that demonstrate innovation will attract investment. Ultimately, they will be the driving forces that bring in transformations with innovative and disruptive ideas.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
The post From Trash To Treasure: Why Circular Economy Startups Are Fast Gaining Investor Traction appeared first on Alejandro Cremades.
Exploring hybrid funding models for early-stage startups is crucial for their sustainability and growth. Typically, founders rely on capital sources like bootstrapping and friends and family loans for starters. Then, they move on to applying for government grants and approaching investors.
However, accessing conventional funding can be very challenging when the startup is in its initial setup stages. Non-availability of assets and low valuation could make getting large amounts of capital harder.
Further, investors could be more interested in supporting specific verticals only and unwilling to explore unusual concepts as funding candidates.
Hybrid funding models are an excellent option for founders since they combine the best of both worlds. They offer the advantages of traditional funding models with innovative financial instruments.
You can negotiate terms and conditions aligning with your startup’s needs. Investors could also be willing to accept these options over commonly offered stock and equity.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding Hybrid Funding Models for Early-Stage StartupsHybrid financial instruments include features of both equity and debt by choosing a middle ground to offer multiple advantages. These benefits work for both founders and investors by securing their interests.
Entrepreneurs needing capital for their fledgling ventures can go with equity or debt financing. Debt financing is typically a loan you’ll repay along with interest per pre-determined terms and conditions. On the other hand, equity does not carry interest, nor do you need to repay it.
This is, in essence, ownership funding and will remain invested in the company until the owner exits the company. Or sells out their shares back to you or third parties. When comparing the two options, debt financing carries low returns but has low risk.
Equity financing has the potential to yield rich returns as the startup grows and values over time. At the same time, it carries a higher risk of losses if the company fails. If that happens, investors can only reclaim assets in proportion to the money they invested.
In the case of equity financing, investors can get seats on the board and a say in the decision-making. Per their investment stake, they can have management rights. Debt financiers, however, have no voting rights in the company’s operations.
Hybrid financing models fall somewhere in between on the financial spectrum, offering an array of benefits. These pros include and are not limited to tax breaks and regulatory benefits. And extend to the cash and assets associated with the equity and debt capital investors offer to entrepreneurs.
As a rule, debt financing is unsuitable for early-stage startups because they need higher amounts. At this stage, companies are not yet stable or demonstrate impressive metrics on their pitch decks. So, exploring hybrid models is a better option.
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Hybrid Financial Instruments for Early-Stage StartupsSeveral hybrid funding models for early-stage startups are now available for founders to choose from. You’ll pick the options that best align with your funding needs. Here’s a quick look:
Compulsory Convertible Debentures (CCD)Compulsory convertible debentures combine features of equity and debt financing. Investors can provide capital via these securities on condition that the debentures must convert into equity after a predetermined interval.
These financial instruments are suitable for startups that cannot be valued using traditional methods. Investors can expect to receive interest during the holding period, and conversion ratios are outlined in the investment agreement.
However, dividend payouts to CCD are done after fixed-income holders receive payments.
Investors can claim preferential treatment if the startup liquidates before the CCD maturity. On the flip side, startups must present a valuation certificate to issue CCDs, which takes away from the benefits of deferred valuation.
Compulsory Convertible Preference Shares (CCPS)Compulsory convertible preference shares (CCPS) are a form of equity financing and one of the most popular hybrid funding models. CCPS award preference over common stock. This means that, in the event the startup liquidates, investors get back their capital on priority.
CCPS also earn dividends during their holding periods, with pre-determined maturity deadlines, similar to CCDs. Further, dividend payouts to CCPS are done before conventional stock equity.
Share WarrantsInvestors can choose to purchase warrants in the company that carry the right to purchase shares in the future. Warrants carry conditions like a pre-determined price at which investors can purchase stock.
The terms may also set a time interval within which they can complete the purchase or a specific date.
Founders leverage these hybrid funding instruments when raising money in the initial stages. Investors can convert warrants into equity shares at a 20% discount during the next funding round. That is if the rounds occur within a specific period or valuation limit.
Venture debt firms may prefer warrants since they get the right to purchase equity in the future. However, this is not an obligation and is more economical than equity shares. From the founder’s perspective, warrants carry a higher risk since not all may convert into equity.
Convertible NotesConvertible notes work similarly to compulsory convertible preference shares (CCPS), but with a key difference. The notes convert into equity at the owner’s discretion. Conversion notes are a quick and easy way to raise capital for entrepreneurs looking for hybrid funding models for early-stage startups.
Startups with low valuation can issue these notes that convert into equity shares according to certain conditions. Convertible notes are essentially low and carry interest. However, this interest adds up to the principal, and investors can purchase stock equivalent to the total amount.
However, interest rates are typically calculated per ongoing rates and are not exceptionally high. Since investors provided funding to the startup in its early stages, they can purchase equity at discounted rates. This discount covers some of the risks they took in investing in the company.
Convertible notes are issued with pre-determined conditions, such as a fixed maturity date, when the notes automatically convert into stock. Investors may also have the option of purchasing shares when the startup reaches a specific valuation limit.
These hybrid funding models come with some amount of risk for founders since investors can opt not to convert. They may choose to delay until the valuation is higher and the conversion can yield higher stock.
Simple Agreement for Future Equity (SAFE)Simple Agreement for Future Equity or SAFEs work similarly to convertible notes and are an excellent hybrid funding strategy. Investors can purchase SAFEs with the right to convert them into equity during the next funding round.
They can avail of discounted rates to offset some of the risks they took when investing in a startup. The terms and conditions can also include a cap table.
However, unlike convertible notes, SAFEs don’t have maturity dates. Investors must wait for the next funding round, which can occur at 12 months or six years.
SAFEs are not debt instruments, which means that if the startup fails, repayments are not a priority. Investors can only regain the liquidity available after distributing it to other stakeholders. Of course, they do get priority over the entrepreneur’s stake.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Why Hybrid Funding Models are Beneficial for InvestorsSince investors offer a larger quantum of funding, their risk factor is also higher. Hybrid models allow them to diversify the risk across multiple financial products and thus lower their exposure to risk. Essentially, the risk is spread out across several potential failure points.
For instance, a venture capitalist could invest in equity in one company and enter into a revenue-share agreement with another. Even if one investment option fails, the other may run up high growth and profits. As a result, the portfolio remains balanced.
Hybrid financial instruments have several terms and conditions that can secure the investment. Or, at least offset some of the risks that investors must carry.
Why Hybrid Funding is Beneficial for StartupsAs mentioned earlier, accessing capital for startups is challenging because they lack assets to offer as collateral. Their valuations are low, and many operate in capital-intensive sectors that require high initial investment before demonstrating results.
A good option is to source funding from multiple sources. For instance, startups with disruptive ideas can apply for government grants to develop the initial prototype or MVP. Next, they can run an online crowdfunding campaign to start production, a debt-based solution.
Offering samples in exchange for funding is a great solution to create hype for the product. And test it on actual consumers. Using the feedback to improve product features is another win.
Once the startup is stable and generating revenues, you can consider raising funds from VCs and angels and transitioning to equity-based financing.
Multiple hybrid funding models for early-stage startups allow founders to avoid relying on a single investor. They get access to a bigger pool of investors. Adopting this method also enables them to be agile and pivot to other investors if funding is in short supply.
The best advantage is that showing funding from multiple investors in the cap table and balance sheet is beneficial.
Companies leveraging this model will have a balance of equity and debt. They can align the structure according to the industry benchmarks and growth trajectory.
Each investor brings positives to the startup. Crowdfunding is a great option for accessing capital from small investors. But, campaigns can be time-consuming. You can issue SAFEs and CCDS in the interim.
Influence on Credibility, Growth, and ExitHybrid funding models for early-stage startups bring diversity to the cap table and balance sheet, which raises the startup’s credibility. It can demonstrate extensive backing. Like, for example, the government, the crowd, and later, VCs and angels. Raising further rounds will be easier.
A startup that has successfully landed a government grant will certainly attract attention from angels and VCs. Then again, running a successful crowdfunding campaign demonstrated an established customer base, which points to traction.
Using a blend of different funding sources promotes growth. The startup does not need to wait for a particular class of investors to inject capital for growth. Different exit terms and conditions also mean the startup will not have to deal with an unexpected investor exodus.
You’ll have a fair overview of when holding periods are expected to end. This predictability allows you to plan for further funding to replace exiting investors.
Raising funding for early-stage startups is very challenging, and hybrid models are a great option. But what to do if your investor outreach is not working? Check out this video, where I have answered your questions.
Downsides of Hybrid ModelsFrom the startup’s perspective, having multiple investors also means extensive management. You’ll maintain records and entries in the balance sheet of the different investors, interest payable, and exit terms.
This factor can lead to an investment of time and sweat equity, typically in short supply for founders.
You may also need to retain the services of accountants and legal advisors, which can drain your resources unnecessarily. The most crucial downside to consider is that different instruments have legal and regulatory compliance requirements.
You’ll have to stay on top of the complexities and manage the documentation.
Although having multiple investors can lend credibility, it can also be a downside. You may have to deal with a conflict of interest with different stakeholders making demands.
The Takeaway!When you start to research hybrid funding models for early-stage startups, you’ll come across an array of options. You can get your startup off the ground by using a blend of hybrid financial products. Don’t let a lack of funding get in the way of exploring a disruptive idea that could turn into a unicorn.
At the same time, you’ll select the funding options that align with your business needs, not just for the present but also for the future. Put together a well-designed game plan and then work the available funding options into the plan.
That’s how you can build a robust foundation for the business that will ensure stability and scalability. Weigh the pros and cons of hybrid funding models for early-stage startups carefully. Some could be advantageous for the investors; others may better serve the founders’ interests.
Whatever your choices, consider the possibility of aggressive negotiations and designing an agreement with favorable terms and conditions. However, you’ll also ensure security and profitability for investors to get their backing.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Bridging The Gap: Exploring Hybrid Funding Models For Early-Stage Startups appeared first on Alejandro Cremades.
In the fast-paced world of entrepreneurship, the journey is often as captivating as the destination. Duncan Logan, a seasoned entrepreneur with a trail of ventures behind him, sat down for an exclusive interview on the Dealmakers Show, providing a captivating narrative of his entrepreneurial odyssey.
From humble beginnings in St. Andrews, Scotland, to the bustling streets of Silicon Valley, Duncan’s story is one of resilience, innovation, and unwavering determination. He talks about his experiences with acquisitions, raising money, and navigating the due diligence process with his startups.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Origins: From Farming to FinanceBorn and raised in the scenic landscapes of St. Andrews, Scotland, Duncan’s journey began amidst the rolling greens synonymous with golf. Despite the allure of the sport, Duncan found his calling beyond the fairways.
His upbringing in a sprawling agribusiness laid the groundwork for his entrepreneurial spirit, instilling in him a pioneering drive and a thirst for innovation.
Duncan recalls that his father had an innovative streak when running his 5,000-acre farm and was always interested in growing new vegetables like broccoli and lettuce.
After pursuing a degree in agriculture in Aberdeen, Duncan ventured into the high-stakes world of finance, trading derivatives in London for industry giants like Lehman Brothers and Swiss Bank.
He did their graduate program and worked for a while before striking out on his own to be an entrepreneur.
The Entrepreneurial LeapThe turning point came when Duncan realized the limitations of a corporate career during bonus season—a wake-up call that propelled him toward entrepreneurship.
His entry into the entrepreneurial world came with the establishment of a customer relationship management business, CITYPRO International, focused on banking.
This endeavor bore fruit with a lucrative acquisition within three years when the company sold for $8M in 2020. As Duncan recalls, the acquiring company did their due diligence, but the folks at CITYPRO did not do the same despite being publicly traded.
When CITYPRO was made an offer, they were impressed by the money and accepted it. At the last minute, the company was swapped from high cash low equity to high equity low cash.
However, the owners went ahead with the deal, which wasn’t a good move. Eventually, the equity turned out to be worth zero.
Duncan recalls that he was 24 when he joined the company, and its operations were simply about receiving orders via the fax machine and deploying assets to fill them on schedule.
They made sure to keep the costs down and revenues coming in. Duncan was lucky enough to get the business to an exit.
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Lessons Learned: Acquisition and Building MessageLabsThrough the highs and lows of multiple acquisitions, Duncan gleaned invaluable lessons. From the euphoria of a successful sale to the harsh realities of due diligence oversights, each experience shaped his entrepreneurial learning.
The missteps of overlooking the acquirer’s integrity underscored the importance of thorough due diligence.
Next, Duncan connected with his co-founder, Ben White, over an idea that Ben came up with. He talked about scanning emails at the ISP instead of at the desktop. Duncan liked the idea so much that he was on board within 15 minutes of hearing about it. Together, the duo built MessageLabs.
Duncan was convinced that the idea could transform the security market and that the timing was just right for making an entry. His initial plan was to stay on for six months to a year, but they quickly grew the company to 700 people and sold it to Symantec in 2008 for $700.
Duncan stayed with the company for six years, learning about aspects like sales, product, product-market fit, and scaling, and enjoyed the experience.
MessageLabs AcquisitionDuncan talks about the acquisition as being a well-structured deal. He had learned SaaS metrics like ARR, recurring revenue, and more. Ben was a pioneer in the space, and companies were catching on to the subscription-based model and people paying per person per month.
Symantec informed Duncan and Ben that it was one of the early adopters into the majority and was poised to see exponential growth in the next four or five years.
MessageLabs, as Duncan reveals, was a much bigger company with a professional executive team. Unlike CITYPRO, this company had lots of investors.
After the sale, Duncan was ready to move to Silicon Valley and immerse himself in the startup space. He considers it the best move he could have made for his career.
RocketSpace: A Vision for Ecosystem BuildingDuncan embarked on his next venture with RocketSpace—a visionary endeavor aimed at fostering innovation in Silicon Valley. Founded in 2011 in San Francisco, RocketSpace emerged as a thriving ecosystem, nurturing tech unicorns and aspiring entrepreneurs alike.
Duncan looks back at when the world had just emerged from the financial crisis and economies were starting to rebuild. The concept of RocketSpace came from the Y Combinator, the phenomenal accelerator program.
Duncan decided to build a space or ecosystem where Y Combinator companies could stay as a kind of graduation school. The company was not affiliated with Y Combinator, but it received a tremendous response when Duncan released the idea on the Internet.
He had yet to find a workspace for the program, but people were calling, and thus, he started the first co-working space with a very focused approach toward supporting tech companies.
RocketSpace fostered unicorns like Spotify, Uber, Kabam, Mogg, Flexport, and Supercell. The ecosystem harnessed this idea of building big, fast-moving companies and created an incredible innovation and entrepreneurship environment.
Despite the wins, there were unforeseen challenges, such as the difficulty in securing funding from a Chinese entity. This serves as a warning of the unpredictable nature of international business and geopolitical challenges.
The company raised a total of three rounds of funding starting off with an initial friends and family round. Next, they raised $336M from a Chinese entity called Hainan Airline Group. Uber had been pushing into China, and the country had been growing at a different pace.
Storytelling is everything that Duncan Logan was able to master. The key is capturing the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Winding Down RocketSpaceThe Chinese had been given a sort of taste of capitalism and spending time in the country; Duncan thought of a great opportunity to connect China and the US through technology and ecosystems. With this objective in mind, he accepted funding from Hainan.
The company had already acquired Ingram Micro for $7B and bought stakes worth 10% in Deutsche Bank and 25% in Hilton. Gategroup’s Menzies Aviation and many airline service companies like Avalan and Aircraft Lease were other acquisitions.
As Duncan remembers, Hainan had a very experienced team with Western thinking. They operated out of New York, and everything seemed to be going well until the Chinese government changed policies to bring the money back to China.
This quickly became a problem since Hainan also had a board seat at RocketSpace. Souring political relationships between China and the US resulted in having to quickly look for investors to buy Hainan out. However, the company was unwilling to sell its stake.
Ultimately, Duncan and his team had to wind the company down and return money to the investors. It was an unfortunate situation, and the macro change was beyond their control. The company had made it to the end zone percentage-wise, and having to kill it was a grueling experience.
Pioneering Climate Solutions: Enter 9ZeroDuncan’s latest venture, 9Zero, seeks to revolutionize the climate tech landscape. By building ecosystems akin to Silicon Valley for climate entrepreneurs. Duncan aims to catalyze innovation and drive exponential progress toward sustainable solutions.
Duncan talks about the inspiration behind 9Zero. He and his family lived in Santa Barbara, California, a fire zone plagued by landslides and forest fires. He could see the effects of climate change all around and then started to recognize climate as a marketplace.
In his opinion, people fail to understand that the climate revolution is going to dwarf the digital revolution, which produced four mega-companies like Microsoft, Amazon, Google, and Apple. In contrast, the climate revolution needs to produce 80 or more such companies.
Duncan could see that the problem needs capitalistic solutions, and a lot more people and investors are excited about solving climate change, which we’re going to be forced to do either over the next decade or 20 years.
Duncan recognized that the world is going to spend trillions of dollars on climate change, trying to defend against the effects of climate change and putting in solutions to reverse climate change. This is going to be a multi-trillion-dollar marketplace.
And his job is to encourage more entrepreneurs and investors to get involved. In Duncan’s opinion, leveraging capitalism is the best way to fund solutions.
The 9Zero Business ModelThrough serendipitous connections and strategic partnerships, 9Zero aspires to be the epicenter of climate entrepreneurship, propelling the world towards a greener future. As Duncan explains, 9Zero is an ecosystem play. They are trying to build the ecosystem and find solutions philosophically.
9Zero is more likely to drive an exponentiation of the entire market versus a 1 in 100 exponential outcome for a single innovation. The company is trying to work out how to build a marketplace for entrepreneurs who are trying to innovate solutions for the climate.
9Zero is working on making the marketplace scale faster to drive success, and the starting point is eight cities in the US. Next, it will build a climate district in each of these cities, starting with San Francisco and then, moving on to Boston, New York, and other cities across the country.
In each city, 9Zero will build a community with event spaces, co-working spaces, and clubs with drop-in memberships. They are pulling together private equity companies, venture capital companies, and the sustainability teams of corporations.
They are also bringing in startups into an ecosystem where they can quickly make both digital and physical networks to pull this together to create a geofocus ecosystem for the Bay Area. The objective is to bring everyone working on climate in San Francisco and the Bay Area together into 9Zero.
Then, they will follow the same protocols in other cities, and once that network has been built across the US, they can start moving from the geofocus into the niche focus. Next, they can start pulling together all the people working on energy, energy storage, sustainable aviation fuel, and other products.
By moving from the geofocus to the niche focus, they can bring the community together. That’s how 9Zero will go about capitalizing the operation. It has raised capital and is building partnerships in San Francisco at 53 California Street, which is a 3,000-square-foot building.
The company is raising its friends and family funding round and will move to other rounds soon. As Duncan opines, they are building a LinkedIn for climate with their membership programs.
Key Takeaways: Navigating the Entrepreneurial SeasReflecting on his entrepreneurial journey, Duncan offers sage advice for aspiring trailblazers. He underscores the importance of specialization and continuity, advocating for a focused approach within a chosen industry vertical.
By combining knowledge, networks, and expertise, entrepreneurs can maximize their impact and pave the way for enduring success.
Looking Ahead: A Call to ActionDuncan’s message is a rallying cry for climate entrepreneurs worldwide. He believes that challenges present opportunities for those bold enough to seize them. We can all play a pivotal role in the journey towards a sustainable future with determination and collaboration.
Duncan’s story reflects our own aspirations and challenges, and his insights can guide us on our entrepreneurial journey.
Listen to the full podcast episode to know more, including:
- Specialize and stay focused within your chosen industry vertical to maximize impact and success.
- Thorough due diligence is crucial in all business dealings, especially during acquisitions.
- The entrepreneurial journey is filled with highs and lows, but resilience is key to overcoming setbacks.
- Building ecosystems fosters innovation and accelerates progress, as seen with RocketSpace and 9Zero.
- Climate change presents both challenges and opportunities for entrepreneurs to drive sustainable solutions.
- Compounding knowledge and networks within a niche industry can lead to exponential growth and impact.
- Embrace serendipity and strategic partnerships to navigate the ever-evolving landscape of entrepreneurship.
Alejandro Cremades · EP 888 Duncan Logan On Raising $336M To Support Unicorns And Now Working To Reverse Climate ChangeSUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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Your email address is 100% safe from spam!The post He Raised $336 Million To Support Unicorns And Is Now Building A Capitalism-Driven Climate Change Ecosystem appeared first on Alejandro Cremades.
The startup ecosystem is evolving rapidly, which is why you need creative strategies for capturing and retaining investor attention. You’ll need to deploy unusual methods to cut through the static, reach investors, and access early-stage fundraising.
Conventional techniques like a compelling pitch deck, an elevator pitch, an effective business plan, data, and financials have been discussed at length. That’s something your competitors are also doing. So, what can you do differently to get investors to sit up and take notice of your company?
Read ahead for some unusual guerilla tactics to get a backdoor entry into investor space. Even if you’ve read about them earlier, we’ll bring you a fresh perspective on handling investors. Let’s dive in.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Fundraising Starts from the Moment You Develop a Business IdeaThe most effective fundraising strategy starts when you develop the business idea. From this point on, create the maximum hype you can. Leverage social media sites to broadcast info and gather feedback from your targeted audience.
Get a feel for the market to understand the customer mindset, which will help you create a viable MVP. Even as you’re exploring the market, drop hints about the problem you’ve identified and the potential solutions it needs. Gauge customer reactions for tips on the product features you’re making.
Getting audience engagement at this point will go a long way when you’re ready for fundraising. The more effective your online presence is, the higher the chances of attracting investor attention. Transform your entrepreneurial journey into a compelling story that interests the audience.
However, be cautious about the information you divulge. The last thing you need is competitors catching on to the business idea and releasing products before your launch. Make sure to secure the Intellectual Property and Intangible Assets you create.
Set aside a time slot to generate and maintain hype regularly and consistently with interesting content and posts. Your social media presence is one of the best creative strategies for capturing and retaining investor attention. LinkedIn is a great place to start, as are Facebook and Instagram.
Creative Strategies for Capturing and Retaining Investor Attention – NetworkingThis strategy is not exactly unique, but it is the most effective backdoor strategy to capture investor attention. But you can get creative with relationship building. Although finding the time to network will take away from building the company, it will be well worth the effort.
Do extensive research around the business vertical where you work to identify networking events. Make it a point to attend not just armed with an elevator pitch but to gain visibility. Your focus should be on gathering information by keeping your ears open.
Soak up all the knowledge you can from conversations with investors, angels, and executives. Get a feel of how they think and assess startups for providing capital. Networking at this stage is an extension of research for the company.
You’ll not only gather valuable tips on building the business but also understand what investors are expecting to see in a compelling pitch. Since you’re not a founder pushing for their money, they could be open to sharing insider tips on the trade.
Ask lots of questions and encourage people to talk. Get business cards and project a genuine interest in what they have to say. Make sure to have a few interactions and build recall value before talking about building a startup yourself.
They will be more open to listening to your ideas when you eventually approach them for funding. Don’t overlook the possibility of introductions and referrals. Even if a particular investor is not interested in working in your sector, a referral can be highly effective in getting a foot in the door.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
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Created a Pre-Vetted List of Potential InvestorsBefore approaching investors, know they prefer to back companies within specific verticals. Since VCs and angels commit not just capital but also industry-specific expertise, they prefer sectors about which they have prior knowledge.
Investors may be open to startups cross-selling products in their preferred sphere, so that’s a tip to keep in mind. You’ll also research the projects they’ve backed previously to understand their goals and thought processes.
Dig for information into the capital they invested and terms and conditions like board seats, preferred shares, and exit options. This information will help you assess if the investor protocols align with your capital needs.
Narrowing down the list will help you target investors most likely to invest in the startup. You’ll save time by reaching out to people who could be actually interested in your ideas. This one may not be creative, but it’s one of the practical strategies for capturing and retaining investor interest.
Delivering the Perfect PitchDesigning the perfect pitch is a refined art and takes meticulous preparation. You’ll find information about the details to include, compelling layouts, and other strategies to make it appealing on reputable websites.
Expert fundraising consultants will also advise you to customize the pitch for individual investors to make the right impact.
However, even the best-designed pitches can fall short if poorly executed. Geographical constraints may result in delivering the presentation via Zoom call, a trend that caught traction during the pandemic. An in-person pitch can have a more potent impact, so make the effort to meet investors.
You’ll have the opportunity to communicate your enthusiasm and mission statement by explaining why the idea is worth backing. Body language, eye contact, and gestures can go a long way in convincing people to invest.
Refrain from sending over pitches by email since most of the impact is lost. Present your mission and core values in person and be ready to answer questions VCs and angels may have for you. Seasoned investors are likelier to invest in the founder even if their business idea is not viable.
They rely on the founder’s personality, business acumen, and dedication to the concept they present. Investors may also have questions about companies you’ve built and exited and your experiences with them. Sometimes, successful exits can prompt funding for the founder’s next projects.
Do your homework about the industry to gather relevant information. Being well-prepared will add to your confidence when delivering the presentation. If you’re taken off-guard by a question, rally by admitting ignorance and that you need to work on it.
Don’t push on with fabricated responses that can result in losing credibility. That’s one of the creative strategies for capturing and retaining investors.
Feedback is CrucialMake it a point to ask for feedback, positive or negative. Even if investors are unimpressed, don’t pass on the opportunity to ask about areas for improvement. Ask for opinions on how to improve the business concept, operational model, and business plan.
You have a roomful of seasoned players listening to the presentation, so focus on the value they can add. Remember to have the right attitude.
Your objective should be to learn how to improve and ensure success for the company. It’s not about hankering your audience to invest even after they shot down the idea.
Even if investors are non-committal, don’t hesitate to follow up on the interview. Recall value is crucial here, and sometimes, people may reconsider your project when reminded of its benefits. When calling back, don’t hesitate to talk about any tweaks you’ve made in the product design or traction you’ve achieved. Make sure to include details and statistics.
Following up also indicates that you’re serious about partnering with your targeted investors. They may also appreciate your taking their feedback and suggestions and willingness to work on them.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Trust the Investors’ JudgementThis is one of the crucial strategies for capturing and retaining investor attention. Always remember that veteran investors have a better handle on evaluating startups for viability. What may seem like an excellent business idea to a newbie founder may have too many flaws to pan out.
You may get turned down or the funding amount offered could be much lower than your ask. If that happens, don’t take it personally. Instead, focus on the feedback and try to understand their reasons. For instance, you may have overestimated the market reach of your product.
Or, investors may be aware of the radical differences in how markets respond in diverse geographical locations. Several other factors may influence the startup’s success, such as operating costs, marketing success, and logistics.
You’ll also want to rely on the investors’ judgment and their expertise in the sector where you want to build a company. For instance, a capital-intensive sector like computer hardware may need a longer runway than your pitch estimates.
The business model in the pitch and capital allocation may clearly indicate the founder’s inexperience and lack of foresight.
In that case, investors may turn down the pitch or offer a lower capital amount to test how the entrepreneur responds. They may opt to fund a startup with a short holding period and guide it toward success.
If the pitch is rejected, founders should keep an open mind and be willing to identify the flaws to improve them. The enthusiasm and dedication to learn, grow, and assimilate constructive criticism are excellent strategies for capturing and retaining investor attention.
Successful Fundraising Round? Excellent! What’s Next!Successfully raising an early-stage funding round is just the first step. You have many more to go, and retaining investor interest is key. Your post-funding activities are under scrutiny, and investors will want to see how the company progresses now that it has capital and backing. Here’s what to do.
Demonstrate ProgressIf you’ve partnered with VCs, chances are they have board seats and voting rights in the company they exercise. VCs, angels, PE firms, and other investors are vested in the startup’s success and will want to be involved.
It is advisable to start prepping for the next funding round as soon as you close a previous round. But now that you have money in the bank, you need to make it work. Dedicate your entire focus toward building the company and showing traction.
Keep in mind that 50% of investors are willing to participate in further funding rounds if the company demonstrates adequate progress. They may require added equity on a pro-rata basis, but partnering with known investors is always advantageous.
Once the company starts generating profits quickly, you’ll be in a position to ask for more favorable terms and conditions.
Investors will want to extend their holding periods, and new investors will want to offer capital out of FOMO. Everyone wants to participate in potential profits when the startup is progressing well.
Founders should primarily focus on using the funding to transform their company into an investment-worthy organization. Hire the best talent out there to develop top-quality products and deliver top-notch service to clients. Build credibility and acclaim for the company to attract funding.
Looking for more detailed information about how to stop losing investor interest during fundraising? Check out this video, where I have explained the best ways to hold their attention.
Pivoting is Good, But Transparency is CrucialPivoting is good, and investors like to see founders being flexible and agile to adapt to changing market conditions. It’s not unusual for entrepreneurs to have multiple projects running side-by-side. They may also partner with co-founders on other projects.
Investors may not see this as a favorable factor. A split focus can be disastrous for startups when their founders are unable to dedicate all their time and attention. Investors are also wary of the risk of funds getting diverted to other projects than the ones in the pitch.
Actions like this will certainly end with the entrepreneur losing credibility and the investors pulling out sooner than they intended. Raising further funding rounds will become impossible. This is why complete transparency in your operations is crucial.
Before diverting funds or executing a pivot, inform investors and rely on their expertise to help make well-thought-out decisions.
In ConclusionStartups going through early-stage fundraising should be keenly aware that they will need funding throughout their growth cycles. This is why they need strategies for capturing and retaining investor interest.
To ensure success, use these tips to build strategic partnerships with reputable VCs, PE firms, angels, and other investors.
You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.
The post Early-Stage Fundraising: Creative Strategies For Capturing And Retaining Investor Attention appeared first on Alejandro Cremades.
Syndicate investing is quickly emerging as a viable source of funding for early-stage startups. New ventures carry a high element of risk and typically don’t have many assets to offer as collateral. For this reason, traditional funding channels like bank loans are not a practical option.
The next options include venture capitalists and angel investors that offer capital in return for equity in the new company. Depending on the terms and conditions, they may also require board seats, preferred shares, and decision-making rights.
Accepting these terms may not be practical for an entrepreneur unwilling to accept potential dilution and give up stock.
Syndicate investing or approaching an investor syndicate is another source worth exploring that may involve favorable terms for the founder. Is this something you should consider?
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Understanding Syndicate InvestingA syndicate is an investment system where a group of smaller investors pool their money together to invest in startups. You might also call it an ad-hoc venture capital firm comprising investors who want to invest small amounts of funding.
Syndicate investing works well for founders and investors. Founders can connect with small investors who are looking to get their feet wet in the world of venture capital. On their part, investors can enter a syndicate to participate on a deal-by-deal basis.
The syndicate head is an organizer who makes decisions about the startups to back and works out the finer details.
Participants are typically accredited venture capitalists, high-net-worth individuals, or angel investors who pool capital as limited partners (LP). Accredited investors are entities with an annual income of $200K or a minimum net worth of $1M.
Each syndicate may have a consistent base of participant investors included in all deals across the board. However, the participants may differ from deal to deal since they always have the option to opt out of a specific deal. Deals are called Special Purpose Vehicles, which is the legal construction term.
VCs and angels interested in investment opportunities can create an account on a syndicate funding platform like AngelList or Syndicate. Alternatively, syndicate leaders may reach out to investors with an invitation to join the collaboration.
Once they sign up, the leader presents members with a list of viable startups. They can assess the startups by conducting due diligence, such as examining financials, the business plan, and the business model.
Members can also get information about the founder and the founding team before making the final decision.
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Syndicates are Headed by a Leader or Lead InvestorThe leader or lead investor directs the functioning of the syndicate investing fund. This entity is typically a seasoned founder or angel investor with extensive expertise in the startup ecosystem. Their job is to identify new and viable investment opportunities for their members.
In return, leaders receive a percentage of the profits the syndicate earns, which is called the “carry.” The syndicate leader has in-depth knowledge of the startup landscape and has likely previously worked with similar companies. They allocate funds to promising new ventures for maximum returns.
Syndicate leaders don’t levy any processing fees, and the percentage of the profits is pre-determined. Typically, they charge around 20%, which is the industry average per AngelList. The syndicate does not have any funds of its own but relies on participants to pool capital and keep transactions running.
Let’s try an example. An investor contributed funding worth $20K into a syndicate investing fund. After a successful exit, the investor earns a distribution of $175K of which they must pay 20% to the lead investor.
This amount works out to $35K, deducted from the profit. Accordingly, the investor walks away with a profit of $140K, having invested $20K to begin with.
Syndicate Investing Firms OperateSyndicate investment coalitions are also considered a form of venture capital fund created for the sole purpose of supporting businesses. Although the potential for returns is high, the risk factor is also high. At the same time, investors can participate with amounts as low as $1K to enter the fund.
Several online platforms allow small investors to sign up to be members of the coalition. Next, they receive proposals, including details of promising startups and the capital amount the targets need.
The packet also contains term sheets and other documentation on how to create an SPV. Members can choose to participate or decline the opportunity.
The syndicate investing leader manages the investment and makes the necessary decisions to keep the transaction operational. When the investment is ready for liquidation, the lead investor takes care of the exit and distributes profits proportionally. They also deduct the applicable carry.
From the startup founder’s perspective, reaching out to a syndicate is a streamlined and efficient strategy for getting funding.
They can get capital from several investors without having to enter into separate transactions with each. Maintaining entries in the cap table and investor exits costs in terms of legal fees and time allocation that is easily avoided.
Syndicate members like angel investors and VCs are typically full-time investors, though the number of full-time participants is typically low. Members can also be individual small investors who want to add value to the startup community.
Syndicates have an element of inclusion and diversification, enabling small investors to participate. Even entities with zero to limited experience in how the startup world operates can take advantage of investment opportunities. These passive investors or backers prefer to rely on more experienced lead investors to manage their money and earn profits.
How Syndicate Investing Works for StartupsStartup founders can approach syndicate coalitions via outreach programs or cold emailing. Here’s what happens next.
- You can also contact them on social media platforms to secure an allocation or participation in the funding round.
- If the lead investor expresses interest, you’ll submit the financials and other information.
- The syndicate lead conducts meticulous due diligence to vet your startup as a good candidate for investing. They will examine your pitch and ask for additional information if needed.
- Next, leaders approach accredited members of the syndicate with the offer to invest in the startup.
- Members can respond with more questions and associated check sizes called “commitment.” They are not legally bound to accept the offer and can choose to decline.
- Once the commitments come in, the lead investor creates a special purpose vehicle (SPV) https://www.fool.com/terms/s/spv/ as a legal entity.
- They also draw up the documentation and start a bank account.
- Investment allocations range from $200K to $300K on average, but can also go up to $50K to $400K.
- All through the holding period, syndicate heads manage the taxation and legal obligations.
- Once the investment is ready for an exit, the lead takes care of the distributions and profit management. They also deduct the carry before remitting returns to members.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Advantages of Syndicate Investing Capital for StartupsGetting syndicate investment for your startup can have multiple advantages not just for this round but also for future rounds. Here are the benefits of this funding option.
- Partnering with an accredited syndicate opens up a world of opportunities for founders. You’ll connect with the extensive network of founders and investors linked to the lead investor. Syndicates actively assist startups in building, scaling, and investing in them.
- Founders get access to a broad pool of investors but without the need to negotiate with them individually.
- The investment process is streamlined and hassle-free since only a single entity is at the table.
- Accessing funding from a syndicate adds credibility to the company, making it easier to raise future funding rounds.
- Angels participating in the syndicate may be open to offering larger amounts of capital to promising startups they have worked with.
- Connecting with syndicates operating within your business vertical raises your chances of quickly getting funding and closing allocations.
- Listing a large number of investors in the cap table could make it harder for startups to raise further funding rounds. That’s because investors are always wary of dilution. Partnering with a syndicate means only a single SVP will appear in the cap table.
Downsides of Syndicate Funding for StartupsAlthough syndicate investing has its share of upsides for startups, you should also be aware of potential downsides.
- Securing company secrets, data, and other classified information becomes super challenging because it is shared with multiple stakeholders.
- You’ll risk the product design and other details getting leaked to competitors, which may result in losing that edge. This factor can also be a significant risk when the company is IP-driven and has not yet acquired patents and trademark protection.
- Founders and startups lose privacy in their dealings with investors since the terms of the deal are openly discussed on the syndicate forums.
- When approaching a syndicate for an allotment, founders should be prepared for the risk of investors saying no. Convincing the lead investor does not necessarily guarantee funding.
- You may have to interact with and answer questions from multiple small investors. Many of these entities may not be familiar with the startup ecosystem, and putting your point across can be challenging.
- You may have to follow up multiple times before the actual funding comes through.
Syndicate investors are just one of the funding sources you can tap. Check out this video where I have explained how to find investors for your startup. You’re sure to find it helpful.
Why Investors Opt to Work with SyndicatesAs a startup founder considering approaching syndicates, take the time to understand the investor mindset. You should get behind the scenes for information about how syndicates work and why investors pool capital into them.
Perks of Joining Syndicates* For starters, participating in syndicates allows investors to diversify their risks. They can invest in multiple small companies instead of diverting large capital to a single startup. For instance, investing $1M in a single startup carries much higher risks than investing the same amount in 10 companies. * Small investors are typically busy people who don’t have the time, expertise, and bandwidth to focus on investing. They are happy to delegate the fund management to a dedicated expert who knows their way around the startup ecosystem. https://blog/.hubspot.com/sales/startup-ecosystem Paying the carry is preferable to navigating investments. * Setting up and running an SVP costs a lot of money in terms of legal fees, management, processing, and more. Pooling the costs results in each investor carrying only a small portion of the costs, which is a huge advantage. * Investors not open to investing large capital may find it harder to access innovative and disruptive startups with high potential. Especially when these companies are capital-intensive and need high-ticket funding. Working through syndicates opens up these channels for them.
Risks of Joining Syndicates* Syndicates operate under the guidance of the lead investor. Participants in the pool typically don’t have many decision-making rights besides accepting or rejecting the offer. Ultimately, it’s all about the leader’s expertise; if this person falls short, the risk rises exponentially. * Certain syndicates may have minimum investment amounts that participants must contribute. This is why members must select coalitions that align with the investment needs. They must also enter into deals after carefully assessing the potential risk for losses. * Not all startups are built alike, and some must undertake extensive R&D before yielding an MVP and profits. Investors looking to exit in a short time must select their investments carefully. For instance, life sciences and drug development have no fixed timelines for getting results. * Investors need to demonstrate that they are accredited before they can participate in the syndicate. However, lead investors need not be accredited.
The Takeaway!!Startup founders can add syndicate investing firms to their list of potential funding sources. Reaching out to them is easily done via social media platforms, professional networks, and meet and greets. Scout around for syndicates on sites like AngelList, where you can find investors writing small checks.
Syndicate investing works well for founders and investors, particularly small investors looking to profit from backing startups. Even if they have limited funds, they can participate in innovative and disruptive companies with the potential to earn rich profits.
A good starting point is to research the syndicate’s track record for information about the type of startups they have backed previously. You’ll also want to target firms that operate within the business vertical where you work. That will raise your chances of getting approval and funding.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Syndicate Investing: Collaborative Funding Strategies For Early-Stage Startups appeared first on Alejandro Cremades.
Decentralized Finance (DeFi) in early-stage funding is a viable option entrepreneurs should consider when raising funding. This option is suitable for innovative and industry-disruptive projects and has revolutionized venture capital functioning in the startup ecosystem.
DeFi enables small investors to enter the finance market and transforms it into a more inclusive field by leveraging blockchain technology. Essentially, DeFi is about peer-to-peer lending and opens up opportunities for small business owners to access capital.
Decentralized finance eliminates banks, financial institutions, and other intermediaries with platforms that add transparency and streamline investment processes. The concept is quickly catching on, and more and more founders are using DeFi platforms to access the funding they need.
Read ahead for detailed information about the DeFi markets and how the lending procedure works. You’ll also understand the benefits and potential pitfalls you need to look out for. Let’s start you off with a few statistics.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Decentralized Finance (DeFi) Market Has Attractive ProspectsStatistics indicate that the DeFi market worldwide will reach $46.61B in 2024. It will continue to achieve a CAGR of 10.98% between 2024 and 2029. The expected revenue the market will potentially generate is over $12.5B, with an average of $1,378 per capita.
Revenues will continue to rise quickly in the coming years, and the annual growth rate (CAGR) from 2024 to 2028 will be 9.07%. Translated into a dollar amount, that works out to $37B. By 2028, close to 22 million entrepreneurs will be using this funding source.
This strategy makes perfect sense since close to $52B worth of funding is available in the DeFi market. If you were to approach DeFi platforms, you could get access to assets worth $55.95B in value. These platforms demonstrate a 0.25% user penetration.
Understanding How Decentralized Finance (DeFi) WorksDecentralized Finance is a revolutionary system that aims to democratize the finance industry. It is essentially a digital ecosystem where applications are driven by blockchain technology.
These apps are open-source, enabling anyone to create them or participate using capital in small denominations.
By logging into the apps, users can borrow capital, lend, invest, and operate their accounts via smart contracts.
These digital agreements have the terms and conditions embedded inside the code and execute automatically under pre-determined situations. Blockchain and cryptography technology create digital contracts that don’t need intermediaries to execute, verify, or enforce.
The biggest advantage of DeFi is that it also overcomes geographical and financial barriers to investing and effectively achieves globalization. Participants on DeFi platforms can borrow or invest without going through banks and institutional investors, such as VCs or PEs.
As a result, investors and entrepreneurs can enter into transactions without incurring overhead costs. Users who have traditionally been unable to access capital or investment opportunities can now use applications to manage their finances.
DeFi platforms enable functions like:
- Yield farming, where investors can deposit tokens into a liquidity pool on the DeFi platform. They can earn rewards by way of a specific annual percentage yield (APY).
- Trading in crypto synthetic assets like cryptocurrencies, commodities, fiat currencies, and stock. People can speculate on these assets and earn profits without actually owning them.
- Cross-border payments
- Borrowing capital and investing money
- Decentralized Exchanges (DEX) or trading cryptocurrencies
- DeFi or blockchain insurance involves insurance products using smart contracts
- Asset tokenization is where real-world assets are converted to tokens using blockchain. Estimates suggest that assets worth around $16T will have been converted by 2030.
- Decentralized Autonomous Organizations (DAOs)
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Decentralized Finance (DeFi) in Early-Stage Funding – Accessing CapitalTraditionally, startups have relied on investors like venture capitalists, private equity firms, and angel investors. However, decentralized finance has transformed the way investments are executed. For starters, DeFi has opened up a broad pool of investors that founders can approach.
They can leverage smart contracts to automate agreements while cutting back on legal costs. Entering into agreements and executing time has become automated, and founders can access capital beyond borders.
Options like Initial Coin Offerings (ICOs) or Security Token Offerings (STOs) are also available as capital. Companies operating in the tech sector can raise funding quickly from investors familiar with blockchain technology.
Tech startups developing digital assets can use them as collateral on DeFi platforms. That’s how they can access cost-effective and flexible funding options. Smart contracts allow them to customize terms and conditions that work well for both participants.
Startups can also provide liquidity to decentralized exchanges (DEXs) and get token rewards in exchange. Or they can release Initial Coin Offerings (ICO) and Initial DEX offerings (IDO) on the DeFi platforms. This strategy enables them to approach a global pool of investors.
Perks of Decentralized Finance for Early-Stage StartupsDecentralized finance (DeFi) in early-stage funding has several perks for entrepreneurs. Here’s what you need to know.
Overcoming Geo-Political and Other BarriersFounders can sign up on DeFi platforms and access capital from worldwide sources without the need to comply with regulations. DeFi protocols enable a streamlined exchange of capital.
Further, since investments are executed over the platform, anyone can access capital regardless of the capital sizes they need. Underrepresented founders can also get backing without the biased screening they typically go through with traditional investors. DeFi investing eliminates barriers that founders from unconventional socio-economic classes may face.
DeFi platforms circumvent regulations and approvals from banks and financial institutions. Founders need not worry about stringent screening processes that make it harder to access capital.
Flexibility, Speed, and EfficiencyEach transaction is flexible and infuses customization per the entrepreneur’s needs. The DeFi platform enables participants to enter into smart contracts that don’t need monitoring or verification.
Further, funding processes are quick and efficient with access to a larger pool of available finance. Transactions are typically executed using smart contracts that automate and speed up the process with maximum efficiency and accuracy. Eliminating the human factor lowers the risk of costly errors.
Security Thanks to Blockchain TechnologyInvestment transactions are entirely transparent since they are recorded on the blockchain, ensuring security and accountability. The risk of fraud is minimized, which raises investor confidence. A ledger records the transactions for an added layer of security for users and borrowers.
Since the different DeFi protocols and blockchain networks are interactive, they allow for seamless, interconnected operations.
Additional PerksDeFi platforms infuse liquidity into all assets, even those that have traditionally been illiquid. This factor brings higher amounts of capital into the market, making it available to founders. Then again, transactions are more cost-effective since they don’t involve transaction fees, service charges, legal costs, and other overheads.
Decentralized autonomous organizations (DAOs) involve the community of token holders in the decision-making and governance with voting rights.
Small Investors Can Pool Their AssetsDecentralized exchanges have liquidity pools where small investors and cryptocurrency owners can add their assets. These pools enable users to conduct quick transactions and enter into deals to take advantage of price fluctuations.
Investors providing liquidity earn profits according to the percentage of assets they’ve contributed to the pool.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Risks of DeFi Funding Options for StartupsAlthough decentralized financing options for startups are viable, you’ll want to approach them with caution. This industry is still in its nascent stages, and the full scope of risks is as yet unexplored. Here are some of the pitfalls to watch out for.
Lack of Regulatory ProtectionDecentralized finance platforms operate outside conventional systems and without the restrictions of geo-political boundaries. While this factor is an advantage, it results in deals and transactions executed without regulations and monitoring.
Further, these platforms are not subject to existing regulatory compliance since they are innovative and the technology is emerging. Investors and deal participants could be at a higher risk because of the lack of federal protection.
The lack of regulations could also be a limitation since investors may be wary of entering an unregulated and unsecured market.
Need for Tech Skills to Navigate InvestmentsToken holders and small investors on DeFi platforms are not necessarily tech-savvy and knowledgeable about how cryptocurrency works. This factor can be a limitation since only a specific genre of investors can navigate the sector.
Further, non-technical users may find it challenging to understand or navigate the interface on DeFi platforms, which is usually complex.
Volatile Market ConditionsThe assets and cryptocurrency traded on DeFi platforms are highly volatile in nature, and unexpected price fluctuations are a norm. Inexperienced investors and founders stand to incur heavy losses in case assets depreciate substantially.
Security ConcernsSecurity because of blockchain technology is considered to be one of the core defining features of decentralized finance (DeFi) in early-stage funding. However, users should be aware that this technology is evolving rapidly, and the possibility of hacking incidents is very real.
The entire market is tech-driven, complete with smart contracts to manage transactions and online applications that run investments. Considering that trillions of dollars worth of assets are traded on the exchanges, the risk of cybercrime cannot be ignored.
More so, since there are no strict federal regulations and monitoring to oversee transactions, the threat of crime is even higher. Security vulnerabilities could put both investors and founders at risk. Smaller investors with limited assets are also susceptible to fraudsters and phishing attacks.
Decentralized funding is only one of the fundraising options. If you need detailed information about how to raise startup capital, check out this video I have created.
Venture Capital or DeFi Investment – The Better Choice?Traditionally, venture capitalists have been the go-to capital source for most sectors. While VCs do have their advantage, the money they offer comes with several strings that founders must accept. For starters, VCs expect voting rights in the decision-making with a board seat.
They also have conditions for offering funding, such as veto rights over future funding rounds and the right to preferred shares. VCs may also require pro-rata equity to minimize their risk of dilution. But also walk away with a higher percentage of stock during an exit.
Founders must also agree to offer a percentage of profits in exchange for funding. All of these issues are eliminated with DeFi funding. Token holders in DeFi platforms have voting rights but are rarely interested in the startup’s internal functioning.
Most importantly, unlike VCs, token holders and smart contracts are unconcerned by the founder’s location, gender, nationality, socio-economic background, or cultural ethnicity. These investments are driven by specific criteria, terms, and conditions.
In ConclusionDecentralized finance (DeFi) in early-stage funding has effectively revolutionized the startup landscape by democratizing the investment system. Leveling the playing field has eliminated barriers that small investors and underrepresented founders face.
A larger pool of capital is now available from smaller investors for founders who might find it challenging to get funding from traditional sources. Innovative blockchain technology has enabled funding opportunities via decentralized platforms and applications.
Although the technology and investment protocols are nascent and steadily evolving, they have opened up funding opportunities. The objective is to ensure transparency and security. However, the full scope and the impact it can have is yet to be explored.
DeFi platforms are exploring the applications and connotations this industry can have as it extends to prediction markets and decentralized insurance. At the same time, the threats of cyberattacks, breaches, and hacking incidents are always present.
Federal agencies and regulatory bodies must enact the necessary laws to govern this sector to protect small investors. If you are considering using DeFi platforms to raise funding, approach this option with caution and do the necessary research before diving in.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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Navigating the early-stage startup ecosystem with mentoring maximizes your chances of success. Fundraising is only one of the many benefits you can expect from teaming up with an expert.
You can look forward to support, industry-specific expertise, and exceptional guidance through every step of the entrepreneurial journey.
Is mentoring something newbie founders should consider? Absolutely. Startups with mentoring have a surprisingly higher chance of making it through their initial five years.
Statistics suggest that 70% of small businesses successfully navigate this extremely crucial period. Without mentoring, at least 45% of startups fail.
Developing a new business concept that has the potential to capture the market and scale quickly is a first step. But converting that idea into a marketable product is a whole different ball game. Once you have the preliminary data, commercializing the idea into an MVP is a long road.
Mentors can help you at every step of the way and set you up for success. Founders can use their guidance to navigate the obstacles that can overwhelm a newcomer in the industry. Mentors can help anticipate and plan for the potential pitfalls for high success rates and sustainability.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Who are Mentors and How Founders Can Leverage their Expertise?Startup mentors are typically seasoned entrepreneurs who have successfully built companies. They may have exited companies or are currently running them. Since they have tasted success in the field of entrepreneurship, they are keen on giving back to the community.
Mentors achieve this objective by supporting upcoming founders who have disruptive ideas that can change the face of the industry. These entities have extensive experience behind them and are well aware of the potential errors and pitfalls entrepreneurs can make.
Navigating the early-stage startup ecosystem with mentoring enables you to use their guidance when entering M&A deals. Whether strategic partnerships, acquiring companies, or exiting your venture, mentors can assist at every step of the way.
Aside from seasoned businessmen, mentors can also be industry experts, executives, investors, and other professionals. These entities may have expertise in business-related areas like finance, legal, marketing, product development, strategizing, technology, and product development.
You can also rely on their advice to hire top-notch talent and raise funding. Most importantly, founders can get access to valuable networking opportunities. You’ll leverage their connections to build robust relationships with venture capitalists, angels, private equity firms, and other investors.
You’ll also use these networking opportunities to acquire clients and customers and partner with vendors. These partnerships can prove invaluable when scaling the company.
Most importantly, founders can use their mentors as sounding boards to bounce off ideas and get unbiased feedback. Navigating challenges and making decisions driven by sound judgment helps build the business further.
Entrepreneurs can also get guidance when partnering with VCs, angels, PE firms, incubators, and accelerators. However, mentors offer more. They offer their time and expertise without the element of financial investment or gains entering the relationship.
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Navigating the Early-Stage Startup Ecosystem with Mentoring – Myriad BenefitsMentor-mentee relationships are catalytic in nature, with mature professionals providing valuable guidance to newcomers in the field. Starting a business can be a psychologically taxing time for a newbie founder. They can leverage the support of mentors to help them attain their business goals.
Whether it’s decision-making, navigating challenges, or needing a fresh perspective, the mentor can get them there. Mentors share their own experiences and insights gained through years of building companies to help inexperienced founders thrive.
From the mentee’s perspective, it is crucial to identify and clarify your goals and expectations from the relationship. Remember to be respectful and proactive when approaching potential mentors.
Most importantly, you’ll remember to be open and receptive to constructive criticism. Look for mentors online on social media websites, mentoring networks, and industry meetups. If you’ve signed up for an accelerator or incubator program, that’s a good starting point.
These programs offer ample opportunities to interact with their network of industry experts and investors. Use every chance you get to build relationships that can promote your startup, either with financial investment or mentoring.
Connect with other entrepreneurs, ask for referrals, or join professional sites like LinkedIn to find experts and seasoned players. You can also research mentorship websites specifically geared toward connecting aspiring entrepreneurs with industry experts.
Is mentoring really effective? Check out these statistics:* 33% of the highest-performing tech companies in New York received support from a mentor. In contrast, just 10% of other companies achieved the same success rates. * A survey conducted on 200 startups across the US indicated that having a mentor on board impacted 92% of founders. They consider the guidance invaluable for the scalability and sustainability of their companies. * 83% of startups that had mentors were able to scale revenues by 83% thanks to mentoring. Those who lost out on this opportunity had just a 16% increase in revenues. * 88% of entrepreneurs consider their relationship with expert mentors indispensable. While industry-specific expertise is a given, founders rely on them for emotional support in facing challenges. Particularly when facing rejections during fundraising.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!How Mentors Help? They Are Role ModelsWhen navigating the early-stage startup ecosystem with mentoring, founders can expect to be inspired and motivated. Listening to success stories and anecdotes on how their mentors overcame uncertainties and mistakes can instill confidence.
Newbie entrepreneurs learn to avoid common errors and stay resilient in the face of failure. Like for instance, when a product fails to capture customer interest or when potential investors shoot down pitches for funding.
Discussing ideas with someone who strategized through rough patches and came out the winner is always helpful. Mentors celebrate wins with their mentees while providing encouragement after losses.
They also push their trainees above and beyond their capabilities so they reach their full potential.
Although technical and product-related knowledge and expertise are essential for the founder to build a business, they need more. They need soft skills like critical thinking, time management, prioritizing tasks, communication, dedication, and work ethics.
Having a mentor ensures that these skills are not only inculcated in the founder but are also an integral part of the company culture.
Mentors Assist in Building the CompanyNew entrepreneurs typically enter the game with little more than a viable business idea but could be unsure if it’ll work. Partnering with a mentor will encourage them to conduct the necessary market research and test its efficacy.
Mentors will guide mentees in identifying potential risks and working out strategies to mitigate them. Rely on them to examine the business plan thoroughly and critically from an investor’s perspective. You’ll understand the flaws in the plan and how to resolve them.
When you’re ready to pitch for funding, trust the mentor to study and refine the pitch to make it compelling. You can also rehearse the presentation and field questions to prepare for the real Q&A session with actual investors.
Understanding market cycles and the ebb and flow of demand and cash flows are crucial lessons most entrepreneurs must learn. These lessons help with decision-making down the line.
Tapping into mentors’ expertise in the industry and knowledge about customer needs can help you refine your product lines. You’ll get technical assistance and include unique features to develop a competitive edge.
Among the many skills you can learn from mentors is how to find investors for your startups. Check out this video for some of the tips you’ll get.
Mentors Direct Fundraising StrategiesCapital is the lifeblood of any organization. However, raising that capital is an intricate process and an uphill task for inexperienced founders. That’s where mentors come in. When you start to research, you’ll learn of multiple sources of accessing funding. Each has its pros and cons.
Partnering with a mentor helps solopreneurs brainstorm ideas and come up with strategies to reach out to appropriate investors. You’ll get guidance on evaluating your options and selecting the sources best suited for your fledgling business needs. Consider options like:
- Bootstrapping is about sinking your personal savings, income, and assets into the startup. While this approach ensures complete control over the company’s decision-making and minimal equity dilution, it limits its growth potential. You also run a higher risk of losses.
- Funding from friends and family is a great option where you’ll retain control. But you’ll structure the investment carefully to ensure returns to loved ones.
- Approaching government agencies and foundations for grants is an option that can help cover some of the setup costs. However, the application and qualifying criteria are difficult and time-consuming.
- Running campaigns on crowdfunding platforms is another way to approach small investors. In exchange, you can offer product samples, rewards, or equity. A successful campaign yields money, credibility, and validation for your business idea. However, the process is long and time-consuming, and not all campaigns attract investor attention.
- Family offices may support your business idea, but they focus on projects demonstrating high potential for profitability and growth.
- Angel investors are ultra-high-net-worth entities looking for interesting projects to back. To attract their attention, you’ll need a disruptive, unique concept that can transform the vertical entirely.
- Venture capitalists and private equity firms provide high amounts of capital but will require equity and board seats.
Mentors Oversee Strategic AlliancesFounders must enter into strategic alliances with different categories of partners throughout the business life cycle. Navigating the early-stage startup ecosystem with mentoring enables them to vet candidates before partnering with them.
These entities can include co-founders you may have to bring in as the company matures. Then again, you’ll partner with vendors, suppliers, customers, distributors, logistics experts, and marketing teams.
Each of these entities complements the business vertically, fills gaps, and streamlines the supply and sales chains. They are crucial for the company’s smooth operations, which is why screening them carefully is important.
Mentors can help you identify your goals and outline the terms and conditions before entering into alliances. Because of their in-depth industry expertise, mentors can also connect you with the right partners to help scale quickly.
If you need to hire consultancy teams to assist in product development, mentors can help you find the right agencies. They can also direct your team-building efforts with inputs about the talent and skill sets the company needs.
Legal teams, marketing and advertising, IP protection, cybersecurity, IT and technology, and human resources are only some of the areas where you’ll need guidance. And mentors can get you there.
Mentors Provide Psychological SupportEntrepreneurship can be emotionally draining, exhausting, and even frustrating at times. Mentors can lend a sympathetic ear to listen, particularly when the company is facing crisis situations that threaten failure.
They provide emotional balance and create a supportive environment to build resilience and confidence.
Mentoring also contributes to personal growth, and entrepreneurs learn business acumen, leadership skills, determination, and resilience. This is why navigating the early-stage startup ecosystem with mentoring is advisable. It gives the company a better chance of achieving success.
How Mentoring WorksMentoring can have umpteen advantages for the newbie entrepreneur, but you need to do your part. For starters, be very clear about the goals of the relationship before you seek out the right entity for guidance.
Build open communication lines and be honest about your expectations when connecting with them.
Don’t hesitate to ask questions to ensure you’re both on the same page. Questions also indicate a genuine interest in the mentor’s skills and expertise in their chosen field.
The point behind having a mentor is undiluted criticism, so founders have to learn to accept it without taking it personally. Recognize the opportunity to learn and grow your skills.
The mentor’s job is to provide valuable guidance, but it’s for founders to accept and implement the advice. That’s how you can deploy the full value of the relationship.
Mentor-mentee relationships are rarely driven by financial gain, and the time they provide is purely for philanthropic purposes. Founders should show appreciation for their efforts by being respectful and courteous.
Even after the relationship has reached its conclusion, entrepreneurs should stay in touch. Offer updates on how the business is progressing by email, text, phone calls, or in-person meetings. Your mentor may have additional advice on how to build and scale your next venture.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Early-stage startups can secure capital during economic downturns but it can also be challenging. Particularly, when founders are reliant on investor backing to keep their small businesses running. You’re also concerned about customers accepting orders, collecting payments, and paying the team.
If you were to study historical data, an average economic downturn typically occurs every eight years. At this time, the market experiences a 20% and higher drop in the stock market. The US economy has been running with a bull market for ten consecutive years.
The S&P 500 has touched a record high of over 300% in the last decade. In the previous recession that lasted from October 2007 to March 2009, the S&P 500 lost close to 50% of its value. This “Great Recession” lasted for 17 months, with the economy showing negative GDP growth.
The COVID-19 pandemic was another unexpected downturn that left economies worldwide reeling under the impact. Experts expect another recession to come up soon. This means that startups at all stages of their growth cycle should start prepping for fundraising challenges.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks How Early-Stage Startups Can Secure Capital During Economic DownturnsJudging by historical statistics, you should be prepared for the possibility of a recession and how to navigate the challenges. However, later-stage startups are likely to be hit harder than early-stage companies.
Startups that anticipate making an exit within the next five to seven years are also at risk.
When it comes to valuations, data suggests that metrics remain steady during the initial two years of the recession. The numbers started to drop by 27% two years into the downturn. That’s because, at the start of the recession, investors have sufficient funds to continue deploying capital.
They may disregard macroeconomic conditions until the recession continues for longer, and they must balance their portfolios. Delays in responses also occur because of the lags in GDP advance numbers. These reports are released around a quarter later.
As a result, founders, investors, and other key players may not be aware of the recession up to three quarters after its onset. While venture capitalists may not roll back their investments, they do have more stringent criteria for screening startups.
Investor Criteria for Screening Early-Stage StartupsConsidering that the year 2023 has already been shaky for the startup landscape, not all companies have felt the impact.
Several factors come into play, including individual business models, existing customer base, and product niche. For instance, fast-moving consumer goods may or FMGs maintain sales despite downturns.
Other factors that influence startup stability include the runway it has in the form of funds in the bank. The business idea, mission statement, and overhead costs can also affect viability. Some companies can smoothly roll back costs while maintaining product quality and supply.
Companies that can demonstrate resilience and strength are the startups that investors are likely to back during the recession. Most VCs will continue to support businesses they have invested in previously. However, others may pull back and look for other options.
Putting a hold on fresh investments until the downturn reverses is also a strategy VCs may adopt. Their focus will be on robust business plans with a clear direction of how founders intend to use the funding.
Revenue generation strategies and experienced management teams are also high on their list of priorities. VCs may particularly look for executives with prior experience navigating similar recessions successfully.
The top priority is always the founder and their proven business acumen. Their track record with companies they have successfully founded and exited in the past is also a criterion.
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Funding for Pre-Seed, Seed, and Early-Stage StartupsEarly-stage startups can secure capital during economic downturns more easily than their more established counterparts. This rule also holds true for pre-seed and seed-stage startups.
Barring a few capital-intensive verticals, such as life sciences, medical drug development, or agritech, most ventures need less funding.
As a result, investors may be more open to offering them money as against companies looking for later-stage funding rounds. The pandemic crisis is a crucial example. Venture capitalists did not stop investing in companies totally.
Although the market conditions were changing, there was money available in the market. Further, while investors may be open to funding upcoming ventures, they also have higher risk aversion. They may have more stringent screening processes and vet each candidate more carefully.
To keep the business afloat during the downturn, founders can adopt several strategies like meticulous planning, efficient management, and cost-cutting.
These approaches will help them navigate problems like investors offering smaller amounts of capital. Inflation results in higher prices for goods and services and is another issue that can make it harder to maintain sales volumes.
As an early-stage startup, if you’re considering approaching investors now, be aware of the macroeconomic conditions.
Your pitch deck will take into account questions investors are likely to ask about how the business can survive. You’ll also be realistic about the capital you’re pitching for and how you intend to deploy it for maximizing value.
According to historical data, the pandemic hit fundraising hard across the board for Series A, Series B, and Series C rounds, which dropped by over 40%. Expect a similar situation in the coming years.
Raising Funding During Economic Downturns – Start by Understanding Investor MindsetBefore approaching investors or putting together your pitch deck, start by creating a list. Add VCs, PE firms, family offices, and angels you intend to target.
Next, research the verticals in which they invest and any other information about how they vet startups. Here are some of the other factors to note:
- Economic downturns are excellent ways to test a company’s resilience and tolerance to setbacks. This is why investors are more likely to back winners who can weather the recession. They look for smaller ticket investments and startups to invest in. At the same time, bigger and more established companies may have a higher chance of attracting funding. Specifically if the larger corporations are engaging in acquisitions to purchase smaller competitors that are struggling for funding.
- Investors typically provide funding to companies working in high-growth and high-margin sectors that are resistant to downturns. Businesses that can continue operating even with low cash infusions attract more capital. On the flip side, capital-intensive companies are lower on their list of priorities.
- Investors tend to lower their holding periods during recessions. While earlier, this period used to be three to four years, now it is compressed to 12 to 18 months. At the end of this interval, investors want to pull out and walk away with a profit. Their strategy is to invest during the downturn when valuations are low, and they can negotiate for favorable terms.
- Investors also tend to time their investments according to market cycles. They raise capital and grow their funds before the recession so they can make investments when startup valuations are low. If they are engaging in the buy-and-build strategy, they may wait for the markets to improve. That’s when they make a strategic exit and walk away with profits.
Pitch decks during economic downturns need credible information to create the right impact. Check out this video, where I have explained the interesting data and facts around pitch decks you need to infuse into your presentation.
Strategies for Effective Fundraising During DownturnsStartups can secure capital during economic downturns by demonstrating resilience in their pitch decks. Here’s what you need to do:
Prepare Your Startup for Turbulent Economic ConditionsPrepare your startup for a turbulent economy by budgeting carefully. Add up the operational expenses you absolutely cannot avoid and assume they will remain consistent. Also, assume that revenue will remain consistent, similar to the numbers over the last three quarters.
If the startup manages some amount of earnings to keep it running, that means it is default live. https://paulgraham.com/aord.html Or, it can remain operational despite the downturns, and you don’t absolutely need to raise funding.
The company will survive regardless, and you might want to hold off on expansion strategies until market conditions improve.
In addition, you should have enough money in the bank to keep the company running for the next 24 months. This should be your anticipated runway while the recession lasts. As a rule, companies hold adequate cash to continue working for the next 12 to 18 months when they start fundraising.
Founders work on the assumption that the fundraising process, starting with approaching investors to money in the bank, will take time to execute. The most crucial strategy to prep for the recession is to cut back on costs and go lean.
Refrain from hiring expensive talent or investing in R&D to develop new products. Eliminate all the non-essential cash burn operations and focus on hunkering down and surviving until conditions turn favorable again.
Design a Pitch Deck Customized for Present Market ConditionsWhen designing the pitch deck, you’ll include the essential information investors want to see. The typical elements in a compelling pitch always center around the business plan, mission statement, MVP, team, and customer base.
However, an economic downturn pitch needs to highlight the key factors that will keep the company afloat. Regardless of the amount you’re looking to raise, whether $100K or $100M, the key is to present resilience and scalability.
Every fundraising pitch needs to tell a story. Your pitch should deliver robust financials with an impressive runway, money in the bank, and lean operational strategies. You’ll talk about how you restructured the budget to prepare for the downturn. And the contingency plans you have in place.
Provide accredited statistics in the form of graphs, infographics, and pie charts with color coding. The information should be in the form of bite-sized sections that are easy to assimilate, retain, and recall. Icons are handy for highlighting important info.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Explain the Expected Allocation of FundsTalk about reallocating existing funds toward assuring consistent revenues and maintaining the customer base–instead of focusing on customer acquisition. Of course, as with any pitch deck, the most crucial slide is how you intend to use the funds.
Investors will want to see that the funds will be deployed toward not just sustaining the business, but also profitability. They want assurance that they can expect rich returns once economic conditions improve and the market picks up.
With this objective in mind, you’ll create an interim business plan for the duration of the downturn. This plan will outline the strategies you’ll deploy to ensure the company continues to grow despite stormy macroeconomic conditions.
The pitch deck should primarily talk about revenue generation approaches and why customers will continue purchases as before. Statistics derived from meticulous market research, customer reviews and feedback, and User Experience (UX) can make the right impact.
Expect to answer detailed questions during the Q&A session about the factors that ensure company stability. Shine a spotlight on the revenues the company is generating at present and is anticipated to generate in the coming months.
Be Open to Accepting Less Capital than ExpectedAlthough early-stage startups can secure capital during economic downturns, founders should be prepared to raise less than expected. Investors are cautious about the projects they can safely back; if they offer lower capital, you should be prepared to accept it.
You should also continue scouting around for alternative funding sources. Don’t hesitate to inform potential investors about the other people already backing your company. That’s validation that your project is viable and can attract capital to incentivize investors.
You can also mention the personal funding you’re sinking into the business and the money raised from friends and family. That’s another indication that you’re confident about the startup’s survival despite turbulent times.
Before We Sign Off!Recessions, economic downturns, and turbulent market conditions are normal business cycles that occur from time to time. Conditions like these test the resilience of companies; the strongest remain in business, and the weakest go out of business.
Most investors are, undoubtedly, wary of diverting money into the market. But, others are willing to take advantage of lower valuations to invest money. Their objective is to make great profits once conditions improve.
Be prepared for stringent screening processes and investor reticence. However, you can also expect that they have their criteria for selecting viable opportunities. Your startup could make the cut.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Crisis Funding: How Early-Stage Startups Can Secure Capital During Economic Downturns appeared first on Alejandro Cremades.
In the field of culinary innovation, few stories are as captivating as that of Eshchar Ben-Shitrit, the co-founder and CEO of Redefine Meat. His journey from a childhood in an Israeli kibbutz to spearheading one of the most groundbreaking companies in the meat industry is as inspiring as it is insightful.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Childhood in ParadiseGrowing up in a kibbutz, Eshchar experienced a childhood, unlike many others. For him, the kibbutz was a paradise, a country club of sorts where independence was fostered from a young age.
He recalls riding bikes at age four, dining with friends instead of family, and immersing himself in nature and animals. The kibbutz provided a unique blend of freedom and communal living, shaping Eshchar’s confidence and independence from an early age.
From Farm to Table: A Passion for FoodEshchar’s upbringing also laid the foundation for his passion for food. With parents working on a dairy farm and a turkey farm, he was exposed to the inner workings of the food industry from a young age.
His love for cooking, especially meat, began at the tender age of nine when he started experimenting with recipes for his family.
This passion eventually led him to volunteer at his uncle’s restaurant in Tel Aviv, where he honed his skills and developed a fascination with elevating meat cuisine to new heights. Eschchar remembers being keenly interested in high-level culinary art.
A Journey of Unexpected TwistsWhile Eshchar’s early interests revolved around food and cooking, his career path took unexpected turns into the fields of law and finance. Reflecting on his decision to pursue law despite his initial aversion to mathematics, Eshchar attributes it to the flexibility and lack of stringent math requirements.
He remembers writing an essay when interviewing for an internship as a lawyer and mentioning that he had initially wanted to be a chef. That wouldn’t have made sense in any other country, but in Israel, people are encouraged to experiment with different fields before choosing the right one.
This decision eventually led Eshchar to combine his legal background with an MBA, setting the stage for a diverse skill set that would serve him well in his entrepreneurial endeavors.
He was very good in law studies, got good grades, and was accepted into MBA school directly. He honed his skills by working as a law clerk for a short time.
Eshchat candidly admits that his thought processes and way of working are very scattered, recalling his interest in food, then law and math, and circling back to 3D printing meat. But each experience has contributed to his evolving vision.
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Working at Hewlett PackardEshchar recalls how a close relative had advised him to be a product manager, which is the stepping stone to becoming a potential CEO. Then, Eshchar spotted an advertisement in a paper for product managers at an industrial printing press.
When he went for the interview, he met some very smart people he wanted to emulate. He was impressed by their analytical mindset, clarity of vision, and passion for developing this technology for industrial printing presses. Since he finished his internship, Eshchar joined Hewlett Packard (HP).
The Birth of a VisionEshchar’s business idea started with his obsession with meat alternatives. He quit eating meat when he became a father after 30 years of being a carnivore. That’s when he started looking for foods that taste like meat.
Eshchar was fascinated by the concept of building a company that could solve this issue. His initial idea was to send emails to Impossible Foods with the suggestion to work on 3D-printed meat.
He also informed them that he was open to having a conversation about this idea. However, they never responded.
Determined to find solutions, Eshchar set a deadline for himself–to build a company when his second son is born. His entrepreneurial journey truly began when he serendipitously met his future co-founder, Adam Lahav, at HP.
The pivotal moment came when Eshchar made the bold decision to leave HP and pursue his dream of founding a company.
It was a leap of faith driven by a desire to make a tangible impact and a refusal to settle for anything less than his true calling. Eshchar saw that being a founder meant that he could raise funding and work with investors, boards, and customers worldwide.
He recognized that every venture is risky and has huge uncertainty. He was also well aware that to be successful, entrepreneurs have to have the guts and resilience to follow their dreams.
The initial year of entrepreneurship was very challenging and emotionally taxing for Eshchar. Giving up a successful career and facing constant failure was hard. But he was able to pull through because of sheer grit and determination.
Redefining the Future of MeatWith Redefine Meat, Eshchar set out to revolutionize the meat industry by harnessing cutting-edge technology to create plant-based alternatives that rival traditional meat in taste, texture, and nutritional composition.
The innovative approach to 3D-printed meat has garnered attention worldwide, positioning them as pioneers in the field of alternative proteins. As Eshchar explains, they are a meat company that is developing, producing, and selling new meat products in 10 different countries.
Their technology allows them to recreate an animal’s massive structure, like meat tissues and muscles that consumers eat today. They have developed plant-based tissue by engineering tissue from plants to recreate steaks and meat burgers.
Redefine Meat developed the products and technology and launched them into the market around two years ago. They are now producing new meat in Israel and in the Netherlands and sending it to restaurants, food service operators, and retailers across many countries.
Some of their customers are vegans and vegetarians, but most are flexitarians people who still eat meat but want to reduce consumption. They have usually never participated in what is called plant-based meat, like, for example, steaks.
Redefine Meat became the first company in history to launch a steak food service made from plants and not animals.
The company is working to introduce new and better products every three months to cater to more and more consumers. It is now an incredible brand that addresses what meat eaters want.
Navigating Funding Challenges and Embracing RiskEshchar looks back at the challenges he faced when fundraising for Redefine Meat. He talks about the constant rejections and the inability to progress and realize his vision. He had a viable idea, a small team, and was bootstrapping the project with his co-founder.
The duo started off by reaching out to angel investors in Israel and getting the initial $200K. Next, they went into an accelerator program and won recognition and money.
They moved their workspace out of Eshchar’s parents’ garage and hired skilled advisors with food technology expertise. This took a year to execute, which was emotionally and physically draining and an extremely difficult time.
But, almost overnight, the first shift happened. Eshchar and Adam had a lab with a 10-person-strong team; they were building machines and had investors who were bringing their friends on board.
The second shift happened when they created and tasted the first product that was simply “amazing.”
Redefine Meat has raised $190M, as Eshchar reveals. It has a lot of patents and talented people who are building factories and brands. The journey of building the company and convincing people wasn’t easy since there was no industry benchmark to meet.
The initial funding amount of $6M that they raised was possibly the most difficult money ever, as Eshchar recalls. They were working on a mission but without industry experience or expertise in the technology.
After this initial amount, they were able to show some results and then raised an added $29M from angels, small investors, family offices, and more.
Storytelling is everything, which is something that Eshchar Ben-Shitrit was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Staying GroundedDespite the company’s success, Eshchar remains grounded, acknowledging the inherent challenges of entrepreneurship. From navigating the complexities of fundraising to overcoming self-doubt, his journey has been defined by resilience, perseverance, and a willingness to embrace risk.
For Eshchar, risk isn’t just a necessary component of entrepreneurship; it’s an addiction—an inherent part of the journey toward realizing a bold vision. He reveals that Redefine Meat is growing at a massive pace, like a software company, but is essentially a food company.
Although they have amazing customers, the industry is not that trending. This makes it difficult to raise funding or find investors interested in food tech.
Looking Ahead: A Journey Without EndAs Redefine Meat continues to expand its reach and impact, Eshchar remains steadfast in his commitment to building the world’s largest meat company. Yet, for him, success isn’t just about achieving a destination—it’s about embracing the journey and embracing the unknown.
With an unwavering belief in his mission and a relentless pursuit of innovation, Eshchar Ben-Shitrit exemplifies the spirit of entrepreneurship—one fueled by passion, vision, and an insatiable appetite for change.
His mission is to transform Redefine Meat into the world’s largest meat company in the next 20 years by 2040.
Eshchar and Adam have successfully scaled the company to 10 countries and are now attempting to expand further to every place around the planet, like Tokyo, Sao Paolo, and New York.
They hope to develop more technologies and reach more consumers for a lasting impact on the planet, similar to other food companies worldwide that are more than 100 years old.
For Eshchar, success means walking on the streets of Tel Avis wearing a Redefine Meat t-shirt and having someone come up to him and talk about how his products impacted their life.
But, he looks back at the risks they took to get there and the products they experimented with before developing something consumers would buy.
As the interview rounds off, Eshchar quotes a Nelson Mandela line that resonates with him, “It always seems impossible until it’s done.” He loves to hear opinions and ideas from people who reach out and talk about the products they would like to try.
In ConclusionIn the ever-evolving landscape of food technology, Eshchar Ben-Shitrit’s story serves as a testament to the power of perseverance, innovation, and the relentless pursuit of a bold vision.
As Redefine Meat continues to redefine the future of meat, one thing is certain: the journey is far from over, and the best is yet to come.
Listen to the full podcast episode to know more, including:
- Eshchar’s upbringing in a kibbutz fostered independence from a young age, laying the foundation for his entrepreneurial journey.
- Eshchar’s early passion for cooking, especially meat, fueled his desire to push culinary boundaries and elevate meat cuisine to new heights.
- From law to finance to product management, Eshchar’s diverse career experiences contributed to his adaptability and resilience as an entrepreneur.
- Chance encounters at Hewlett Packard led to the formation of Redefine Meat, highlighting the importance of seizing unexpected opportunities.
- Eshchar’s willingness to embrace risk and navigate challenges has been essential to Redefine Meat’s success in disrupting the meat industry.
- Eshchar’s unwavering commitment to building the world’s largest meat company drives him forward, even in the face of uncertainty and adversity.
- For Eshchar, success isn’t just about reaching a destination—it’s about embracing the journey, embracing risk, and continuing to innovate and evolve.
Alejandro Cremades · EP 887 Eshchar Ben-Shitrit On Raising $190 Million To 3D-Print Plant-Based Meat ProductsSUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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In the fast-paced world of entrepreneurship, there are few stories as captivating as that of Andrew Blackmon, the co-founder and CEO of The Black Tux. From humble beginnings in LA to navigating the challenges of building a successful startup, Andrew’s journey is one of resilience, innovation, and unwavering determination.
In this exclusive interview, Andrew talks about his experiences with apps, knocking on VCs’ doors for funding and partnering with the bigger players in the industry. He also talks about the adrenaline rush of building, scaling, and financing his company, The Black Tux.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Literary StartBorn and raised in Los Angeles, Andrew’s early years were filled with a love for literature and philosophy. Despite studying English literature, a field seemingly unrelated to entrepreneurship, Andrew followed his passion and pursued his academic interests.
Instead of the typical courses in business, economics, computer science, and law, like many of his peers, Andrew chose to study English literature. Looking back, he recalls that he loved to read, and it made sense for him to follow his interests.
Little did he know that his background in the humanities would later prove invaluable in shaping his entrepreneurial endeavors.
Unexpected TurnsAfter college, Andrew found himself working in intellectual property law, a world away from his literary roots. While his initial foray into law was not what he had envisioned, it provided him with invaluable insights into the world of entrepreneurship.
Andrew remembers meeting a guy who had a connection to Pepperdine, who offered him a marketing and assistant job in his big Intellectual Property law firm in Santa Monica.
This became his first job, and he was exposed to inventors and entrepreneurs who approached the firm for legal protection for their IP.
Andrew worked on copyrights, trademarks, patents, etc., which he found very inspiring from an entrepreneurial perspective. He also sat for his LSAT exam to explore the prospect of going to law school. However, he ended up going to business school instead.
Parisian ReflectionsAlthough Andrew was keenly interested in business, entrepreneurship, and venture capital, he did not have the background, knowledge, or understanding of the concepts. Since he had spent his whole life in LA and California, Paris seemed like a great next step to do his MBA.
This decision would be pivotal since the experience would broaden his horizons and shape his approach to business.
Immersed in an international environment with people from different countries worldwide, Andrew gained a deeper understanding of global markets. He forged connections that would later prove instrumental in the growth of his startup.
The courses were challenging, and the Parisian urban landscape was very different from California, where he was used to nature and hiking. However, he met many fascinating people, which contributed to his personal growth.
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The Birth of The Black TuxDuring his time in Paris, Andrew teamed up with his co-founder, Patrick Coyne, to launch The Black Tux. Patrick was studying at NYU Business School, Stern, Andrew’s sister school. The duo threw around a bunch of ideas and realized they had complementary skill sets.
What began as a simple idea to revolutionize the tuxedo rental industry quickly gained traction, fueled by a meticulous business plan and unwavering determination.
Initial research showed that the leading player in the space was a multibillion-dollar company with a rental arm, which was really profitable.
This is a good model because you can repeatedly buy and rent the inventory. That’s how the company can generate a lot of cash from the inventory that it purchased initially.
Andrew and Patrick were convinced they could start a company that could overhaul the entire student tuxedo rental industry. They could grab a significant market share, and to achieve that goal, they began with a 50-page business plan. This plan included every little meticulous detail.
The Black Tux Business ModelAs Andrew explains, the initial business model was to conduct operations online, but they now have stores in nearly 40 locations. The concept was to cater to customers wanting to rent or buy a suit or a tuxedo for an event. This could be a prom, wedding, party, New Year’s, or other event.
Customers can visit the online or physical store to look at the style they like and use the fit algorithm to select the correct size. The company sends them the suit or tuxedo ten days before the event so they have time to try it on.
Customers can ensure the suit fits and everything looks good and send it back a couple of days after the event. The company makes money from the rental charges or sales.
The Black Tux is essentially a supply chain business since they design and manufacture the suits. It’s also a heavy logistics business because they have dry-cleaning facilities on both the East and West Coasts. The company makes sure that the apparel looks and fits nicely for customers.
Navigating ChallengesDespite initial setbacks in fundraising, The Black Tux soon captured the attention of investors and customers alike, propelling it to rapid success. Andrew reveals that the company has raised $75M in equity and that it’s a capital-intensive business.
Storytelling is everything which is something that Andrew Blackmon was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!However, the journey was not without its challenges. From the early days of struggling to secure funding to weathering the storm of the COVID-19 pandemic, Andrew and his team faced numerous obstacles along the way.
Andrew recalls how they started the business in 2013, but before the launch, they had been part of the MuckerLabs accelerator program.
Andrew and Patrick received a small amount of funding, which helped grow the business. Since the duo attracted a lot of interest, they decided to try raising money before the company launched.
They put together a pitch deck and reached out to VCs, mostly in Silicon Valley, LA, and New York. however, they didn’t get much traction, so they went ahead with funding from friends and family. Once the business launched, it got a lot of traction and coverage on GG and the Wall Street Journal.
Suddenly, The Black Tux had a long waitlist, and customers were impressed by the fit, which led to more demand than supply.
The duo went back to investors, and this time, they got funding from top-tier investors and seed-stage VCs, such as the First Round Capital Group, Menlo Ventures, Raine Ventures, and Crosscut.
The company continued to grow without marketing, and one of its insiders led a series A round and then a series B, which was funded by Stripes New York. Another group called TZP Group led the series C round.
Through perseverance and strategic decision-making, Andrew and Patrick emerged stronger than ever, poised for continued growth and success.
Innovating the IndustryCentral to The Black Tux’s success has been its commitment to innovation and customer experience.
Combining high-quality products with a seamless online platform and personalized service, the company has redefined the tuxedo rental industry, earning praise from customers and industry experts.
Andrew recalls how they opened a showroom at their Santa Monica location to overcome customer skepticism about doing this online. The massive footfall spurred the idea of scaling the showrooms.
When The Black Tux launched, it only had an online store, and customers were encouraged to visit Nordstrom to get measured because the store did it for free. Since the idea caught in a big way, the store got a cease-and-desist order against The Black Tux, preventing them from using their logo onthe website.
Around 18 months down the line, the corporate development team at Nordstrom contacted them, and eventually, they partnered with the brand. The Black Tux now has more than 30 Nordstroms with their showrooms to provide customers with an offline experience.
Navigating the PandemicThe pandemic triggered a situation where the company had to furlough many employees and temporarily close all its stores.
Andrew remembers struggling to preserve capital in that environment because of the drop in projected revenues. However, the company persevered, thanks to the team.
Once Andrew and Patrick got to the other side, in 2021, The Black Tux had way more demand than it could fulfill. The two to three years of the dip in the business trajectory had them fighting in the trenches.
Making it through was a very motivating and rewarding experience, and they are now in a position to continue growing the brand.
Looking to the FutureAndrew remains focused on the company’s long-term vision as The Black Tux continues to expand its online and offline presence. With plans to open more physical locations and expand into new markets, the future looks bright for this pioneering startup.
Andrew explains that the formalwear industry has been controlled by a couple of major retailer players for a very long time and has been very successful. However, it’s time to do a better job of meeting customer needs.
As Andrew opines, the rental business also feeds into a sales business. The company has started selling a lot of suits and tuxedos and has been successful.
Young customers who have never worn a suit or tuxedo are impressed by the high-quality garments offered at surprisingly reasonable prices.
They are open to purchasing the clothing they rent, and now The Black Tux has multiple locations where they offer both rent and buy. The company employs around 400 employees in keeping with Andrew’s strategy, which includes hiring a fantastic, highly experienced team.
Aspects like a vision, quarterly goals, culture, and proper management processes have been instrumental in the company’s success.
Andrew and Patrick believe in motivating people and building a culture that’s a reflection of their values. The company is more than just a business; it’s a family of close friends and very professional.
ConclusionAndrew’s journey from literature to law to entrepreneurship is a testament to the power of passion, perseverance, and innovation. Through his leadership, The Black Tux has not only disrupted an industry but also inspired a new generation of entrepreneurs to dream big and defy expectations.
Andrew advises aspiring founders to trust their instincts and guts and follow through with their vision. He also stresses the importance of building an emotional connection with customers that resonates with them.
As the company continues to thrive, one thing remains clear: the future is bright for Andrew Blackmon and The Black Tux.
Listen to the full podcast episode to know more, including:
- Andrew Blackmon’s journey highlights the importance of trusting your gut and staying true to your vision, even in the face of uncertainty.
- The Black Tux’s commitment to innovation and customer experience has been central to its rapid growth and industry disruption.
- From navigating fundraising challenges to weathering the COVID-19 pandemic, Andrew emphasizes the importance of adaptability in overcoming obstacles.
- Surround yourself with talented individuals who share your vision and can execute the goals of your business: Andrew’s view.
- The emotional connection with customers is crucial; investing in branding and customer experience can set your business apart from the competition.
- Setbacks are inevitable in entrepreneurship, but they can also serve as valuable learning experiences on the path to success.
- Despite the ups and downs of entrepreneurship, maintaining a focus on the long-term vision is essential for sustained growth and success.
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In the labyrinth of entrepreneurial ventures, where dreams take flight and innovation shapes destinies, few individuals stand as examples of relentless pursuit and unwavering commitment. Goutham (Gou) Rao is one such visionary whose journey from the bustling streets of Brooklyn to the innovation hub of Silicon Valley is a story of resilience, passion, and audacity.
In an exclusive interview, we delved deep into Gou’s life, tracing his trajectory from humble beginnings to soaring heights in the world of technology entrepreneurship.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Born in the US and Raised in IndiaBorn to immigrant parents, both doctors, in Brooklyn, New York, Gou’s early years were characterized by diversity and ambition. Raised in a community steeped in Indian culture, he navigated the nuances of identity while finding his path through the urban landscape.
However, fate had a different trajectory planned for Gou as he embarked on a transformative journey to India during his formative years. The transition from the bustling streets of New York to the vibrant tapestry of India’s cultural landscape wasn’t easy, and he had his share of challenges.
Amidst the chaos and camaraderie of India, Gou’s passion for technology began with engineering in Bangalore. In his opinion, the move to India was a blessing since he was tossed out of his comfort zone.
Gou grew up with two younger brothers, and since his parents were busy at work, he had to help take care of them. Dealing with the pressure was challenging but shaped Gou into who he is today.
Entering the World of ComputersThe genesis of Gou’s love affair with technology can be traced back to his father’s gesture of gifting him a computer—a catalyst that would shape his destiny. Although he had a Commodore in the US, he had to give it up when moving to India.
But, sometime in 1986, Gou’s father brought him a computer, which he assembled himself since he had always been interested in electronics. Before going to college, he picked up coding books since they didn’t have the Internet.
Gou met someone who was a bit senior and started learning basic programming code from him. This learning ignited his interest in computers, and eventually, he got into computer science.
Gou got a degree in India and developed an interest in AI, which was not a big deal then but is everywhere now.
During his first year of engineering, Gou remembers hanging out with a few friends playing chess. That’s when he was inspired to write a program that could actually beat a human being at chess. He thought of training the computer to make moves using the Minimax algorithm.
At the time, the combinatorial explosion was an unknown concept, and the program would eventually become too slow, with people beating it easily with different cognitive thinking. But, Gou’s experience inspired an interest in algorithms and program-building.
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Returning to the US and Going to CollegeUpon returning to the United States, Gou embarked on a quest for academic excellence, culminating in a Master’s in Computer Science from the prestigious University of Pennsylvania.
During this pivotal phase, Gou encountered the love of his life, his wife, intertwining his personal and professional journey in an indelible bond.
Although Gou loved the East Coast, he had enjoyed spending vacations with his family in California, Disneyland, and San Francisco as a child. He also loved motorcycling in the mountains and the Mediterranean landscape.
Armed with a formidable arsenal of knowledge and experience, Gou set his sights on the hub of innovation—Silicon Valley. He made his foray into the world of entrepreneurship, spearheading groundbreaking initiatives in the field of technology.
Gou started out working on the Linux Kernel 64-bit architecture at Intel Corp. While he enjoyed working on the Linux kernel, he felt he needed to work on something he was more passionate about – something that he himself would use on a daily basis.
Building Net6 and Acquisition by CitrixGou started working on unique and novel ways for employees to access their enterprise applications.. That was the genesis of Net6. Gou has an interesting story to tell about meeting his co-founder, Murli Thirumale, who became the CEO.
Gou recalls how he was lucky not only to have met Murli but also to have investors trust him despite having only engineering accomplishments.
Despite being a first-time entrepreneur, Gou was able to inspire confidence and faith in investors and raise capital. This faith translated into a relentless pursuit of excellence and a passion for innovation.
He enjoyed building the product and proving that he could “knock things out of the ballpark.”
As Gou explains, at Net6, they were doing secure and application access. Ultimately, the company was acquired by Citrix for a reported $50M in cash. Gou continued working at Citrix in one of their divisions for a couple of years.
Gou also learned important lessons and mistakes at Net6 that he was careful not to repeat with his further ventures, including Ocarina Networks. For starters, he learned to pick his team carefully.
Another company culture that Gou shared with his co-founders was a relentless customer-focused work ethic.
Ocarina Networks – The Next VentureOcarina Networks was Gou’s next venture, which he started with Eric Brueggeman. Once again, they instituted the same customer-focused work ethic in the company. They also put together top-notch skill sets, people to whom they could impart their vision and passion.
In around 2006, with social media platforms like Facebook taking off, storage consumption was increasing quickly. Ocarina focused on data management using algorithms in a unique way. They used compression technologies and data deduplication.
As Gou recalls, there were a lot of technologies around back then that were doing data management using approaches like archival solutions or moving data around.
He decided to come up with a better way to manage data by tackling it at an algorithmic level and eliminating redundancy in the data.
In Gou’s opinion, if you can address a major pain point, there’s no better investment of your time and money.
Since there were fewer ways of solving the data management problem, they were able to come up with elegant solutions without too much disruption compared to the other technologies out there.
Gou underscores the importance of understanding that people evolve and that any product or solution they use must be rethought every few years. Entrepreneurs need to constantly think about how existing solutions can be redone with newer technologies.
Refreshing existing products and reimplementing them with modern technologies, usabilities, and techniques are the best practices to meet the contemporary appetite of the new generation.
Portworx by Pure Storage – The Next VentureWhen building Portworx, Gou started on the premise that although storage had been around forever, the way in which people build applications certainly had changed.
He recognized that we live in the cloud-native era, and cloud-native architectures look very different from applications twenty years ago.
An entire application no longer fits into one computer but is distributed, so storage needs to be reinvented for the cloud-native era. The report works on the elegance of the solution, its usability, and how people interact with storage.
Portworx products resonated with the new-age DevOps audience and the new generation of system administrators who wanted to use storage. It’s still the number one data management platform for Kubernetes and cloud-native architectures. Eventually, the company was acquired for $370M.
When considering acquisition offers, Gou talks about his commitment to finding strategic partners who will ensure that their products flourish. He also stands by his financial responsibility to the people who invested in him.
Further, before selling, Gou works out if the deal will be financially beneficial for his employees.
He focuses on the different parameters of the transaction because while investors can get their money, employees have to stay and continue working with the company for at least another 3 to 4 years.
Gou remembers that when they sold Portworx, COVID was around the corner, and there was a lot of uncertainty about what was going to happen over the next four or five years. He considered all these factors and optimized for the best possible outcome.
His Latest Baby – NeuBirdWhen talking about his latest AI-driven venture, Gou starts by relating how they did a project on neural networks in 1995. At the time, he had built a three-layer back propagation neural network, which would take 20 minutes to train.
Although he considered the neural network an approximation of a brain, the computer power to see it in action was not available.
Fast forward to modern times, and thanks to companies like Nvidia and GPU, there are now 70 billion parameter models, which are a kind of approximation of the brain. In Gou’s opinion, in a little more than five years, every industry is going to adopt the transformative power of revolutionary gen AI.
A good example is the pharmaceutical company that is developing new recipes to make drugs because GenAI can go through and analyze clinical trials, reports, and data that human beings can’t do fast enough.
Coming from the technology space, Gou would want to be at the forefront of that innovation cycle on how things are being done. He is committed to understanding how technology works in his surroundings. He also likes to keep an eye on how things are evolving.
Gou stresses that he has spent his lifetime understanding algorithms and their applications and now wants to see how to apply GenAI to enterprise data. In his opinion, this problem is getting very big, and people need to be able to cope with the amount of data being generated.
The Flagship Product HawkeyeThe NeuBird flagship product is Hawkeye, which Gou and his team will be deploying soon. Hawkeye is about creating a digital agent, a digital workforce, and a digital IT ops engineer. Its job is to work alongside human engineers to address any kind of IT-related issue.
The IT ops manage the operations of an IT infrastructure, whether it’s cloud or on-prem, which are human-driven.
Humans are needed to respond to performance-related issues or, in case of a product outage, when something is crashing or breaking or optimization is required for which skilled talent is deployed.
Particularly, trained computer science graduates are needed to look at Telemetry Data Metrics and alert logs in real-time when a problem arises. The effectiveness of IT operations is measured in terms of the time to incident response or time to resolution when a problem occurs.
The time taken to fix the issue and the number of engineers needed are two variables that are being measured with Hawkeye. Gou has successfully raised $22M for the company from Mayfield, one of the top VCs today.
Storytelling is everything, which is something that Goutham (Gou) Rao was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!In ConclusionReflecting on past entrepreneurial experiences, Gou offers insights into lessons learned, particularly the importance of trusting one’s convictions and taking a proactive stance on critical decisions.
He advises aspiring entrepreneurs to have confidence in their vision and actively engage in shaping all aspects of their ventures, from product development to sales and marketing, based on their beliefs and insights.
Listen to the full podcast episode to know more, including:
- Gou’s journey from Brooklyn to India exemplifies how diversity fuels ambition and fosters resilience.
- Gou’s passion for technology ignited during his formative years, catalyzed by his father’s visionary gift of a computer.
- Gou’s pursuit of academic excellence at the University of Pennsylvania laid the foundation for his professional ascent.
- Gou’s entry into Silicon Valley marked the beginning of his entrepreneurial journey, where innovation thrived.
- Gou’s ventures, from Linux contributions to secure remote access initiatives, exemplify entrepreneurial resilience and innovation.
- Gou’s series of successful acquisitions underscore his acumen and vision in shaping the technology landscape.
- With NeuBird, Gou embarks on a new frontier, leveraging AI to redefine the future of technology entrepreneurship.
Alejandro Cremades · EP 885 Goutham (Gou) Rao On Selling Companies To Citrix, Dell, And PureSUBSCRIBE ON:
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In the world of scientific innovation and entrepreneurship, few names shine as brightly as David Schaffer’s. With a track record of launching and nurturing successful companies in the biomedical field, David’s journey is not just a story of academic achievement.
It is also a testament to the power of translating groundbreaking research into tangible solutions for humanity’s most pressing challenges. In an exclusive interview, we delve into the remarkable journey of David Schaffer, from his humble beginnings to his pivotal role in shaping the future of biotechnology.
David talks about building eight companies within a short time frame of just over a decade, one of which he took public. The company is now trading at around $1.2B+ at market cap. David also reveals details about the ongoing clinical trials in one of his companies, acquisitions, and incubating startups.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Growing Up in an Academically Inclined HouseholdDavid grew up in a household where his father was an academic and a basic biologist/professor, though not application-oriented. His mother had a thriving career in drug development and was sort of on the opposite end of the spectrum.
She was an MD and a physician working in pharmaceutical companies like Novartis and Sanofi, running everything from Phase I to Phase IV and clinical trials.
As David explains, “I wanted to be somewhere in between. I wanted to be more applied than my father, yet retain the academic freedom to pursue my interests.”
David went to high school and college at Stanford University, which is Berkeley’s rival, a fact that he points to wryly. After Stanford, David went to MIT for graduate school and then to Salk Institute for a postdoctorate.
Sometime in 1999, he came to UC Berkeley and started his academic career, where he has been for the last 25 years.
The Intersection of Science and InnovationDrawn to the intersection of science and innovation, David’s decision to take up engineering was motivated by his parents. He decided to pursue that route, eventually becoming a serial entrepreneur, maintaining the balance between academics and business.
As David explains, many people focus on research programs, building within their labs, just as he has throughout his career. Then, they move on to teaching or become a chair, dean, provost, or chancellor.
David was more keen on translating his technologies from his academic labs into industry at different times of his career.
For the first half of his career, he was really focused on building up his academic programs. He also researched and worked on solving what he found to be some interesting problems.
In the second half of his career, David has been focused on taking the results of that work, translating it from the public sector into the private sector, and getting it into companies that can then advance it to human clinical development.
His objective is to convert them into products that can be scaled up to help society.
The Birth of a Vision: Incubating SuccessAs David’s research flourished, so did his entrepreneurial spirit. Recognizing the transformative potential of his discoveries, David embarked on a mission to bring them out of the lab and into the marketplace.
This led to the establishment of an incubator program to nurture scientific innovation and entrepreneurship.
David had always known he wanted to play a role in forming companies and started doing that around 11 years ago.
“At the heart of academia lies education and research,” he emphasizes. “But there’s also a unique opportunity to translate these discoveries into tangible solutions that can benefit society.”
With the launch of Bakar Labs in 2006, in partnership between QB3-Berkeley and a generous donor foundation, David created a thriving ecosystem for scientific startups.
Bakar Labs stands as a beacon of innovation in the biotech landscape, boasting 31 companies collectively raising over $390 million and creating 350 jobs.
It was the first incubator in the University Of California system and, in 2008, formed the very first University Affiliated Venture Capital Fund anywhere in the country. This organization has a longstanding history of being innovative in the interface between academia and companies.
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Building Companies Out of Research LabsDavid underscores that his objective has always been to identify significant problems and leverage engineering and technology to find solutions for them. He dived into gene and cell therapy and began publishing on and patenting them.
At some point, the solution to the problem reached a critical mass where it could be the basis of a company. David’s intention was never to start spinning companies out of his lab.
He would simply put a compelling technological solution to a crucial biomedical problem, which would become a great package for starting a company.
David would onboard graduate students or post-doctorates who were involved in creating the technology. He had implicit trust and confidence in their talent and skills and that they would move mountains to to make the technology work.
Next, David would pair them with experienced leadership and mentors who would enable them to grow.
Launching companies has David investing a lot of time into them, but with some, he has stayed on as a consultant and board member. He stays involved with them and enjoys watching them grow.
The Road to Success: Navigating the Entrepreneurial TerrainDavid talks about his research with gene therapy, where you can use DNA as a medicine by delivering the correct versions of faulty genes to cure diseases. He also explains how adeno-associated viruses and bacteria can be used to deliver medicinal DNA by taking away their ability to replicate.
David has also been working extensively on engineered adenoviruses that can be much more efficient targeted versions.
Essentially, they have invented a technology that enabled them to reprogram these viruses and make them much better at carrying that DNA to a variety of cells and tissues throughout the body. David’s companies are at the forefront of biomedical advancement.
“The key is to identify big problems and develop technological solutions to address them,” David explains. “From there, it’s about assembling the right team, securing financing, and navigating the complex landscape of scientific entrepreneurship.”
Pioneering Breakthroughs: Transforming Science into Solutions – 4D MolecularAround 2012-2013, the capital market started recovering, and people were looking for things to invest in. Biotech became a big one, and there were three major areas where investors started coming into biotech: cancer immunotherapy.
As David recalls, genome editing and gene therapy suddenly came to the fore, and there was a huge amount of interest in it. People approached him since he had been publishing for 10 years about new technology to engineer and optimize viruses for delivery.
Investors and large companies that were trying to launch their own gene therapy programs and needed delivery vehicles were interested in partnering with David. That’s when he co-founded 4D Molecular Therapeutics along with Melissa Cotterman.
They decided to finance the company not through the traditional VC route initially but through business development partnerships because the companies were asking for access to novel viruses.
David entered into deals and used the capital to grow the company, and even had an acquisition offer. However, since gene therapies were still new to the industry, he wasn’t confident they could achieve synergies.
In December 2020, David decided to take the company public, staying on as CEO and chairman of the board. He remembers having 75 investor meetings over the course of a couple of months, and it ended up being a pretty successful IPO. The company is now trading at a $1.2B+ market cap.
Building Rewrite Therapeutics and Ignite ImmunotherapiesDavid talks about the founding of Rewrite Therapeutics and the journey through liquidation via an M&A deal. And the tough choice between staying private and growing the company versus an acquisition.
Rewrite is a genome editing company, the brainchild of a brilliant graduate student, Shakked Halperin. He published a paper with David that went on to become the basis of Rewrite, which was spun out of Berkeley.
While in a discussion about a partnership, the deal morphed into an M&A deal with Intellia, a larger public genome editing company.
Ignite Immunotherapy is yet another company David founded that was acquired by Pfizer for $45M upfront and $155M in milestones.
Pfizer made an initial investment in Ignite with the possibility of an eventual acquisition, though they did have the option to keep the company independent and continue to grow.
Ignite was a cancer therapy company. Cancer therapeutics is a time and capital-intensive project requiring lots of clinical expertise to advance into the clinic and ultimately to get regulatory approval.
This is why having a partner with tons of expertise and deep pockets like Pfizer was really an asset to Ignite Immunotherapies.
Storytelling is everything, which is something that David Schaffer was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Pioneering Journey ForwardDavid currently has five companies, the youngest of which is a pre-seed company and the most senior of which is a series B company led by Morningside. Yet another company they are raising funding for is a stem cell company.
As David outlines, the majority of the companies he has worked on have been gene delivery companies, and this is a stem cell therapy company.
The premise is to deliver stem cells to help rebuild and repopulate tissue. He is building a company and team around this technology while pursuing equity financing and potential BD relationships to enable the company to grow further.
The company, Axent Biosciences, has raised $100K in funding from SkyDeck Berkeley.
Lessons Learned and Future HorizonsReflecting on his journey, David offers sage advice to aspiring entrepreneurs. “Never underestimate the power of networking and learning from others,” he advises. “Surround yourself with people who challenge and inspire you, and never stop pursuing your passion for innovation.”
One thing remains certain in the ever-evolving landscape of biotechnology: the future is bright, fueled by the ingenuity and vision of trailblazers like David Schaffer.
Listen to the full podcast episode to know more, including:
- David Schaffer’s journey underscores the seamless transition from academia to entrepreneurship, blending research rigor with real-world impact.
- Through initiatives like Bakar Labs, David has cultivated a fertile ground for scientific startups, fostering collaboration and driving tangible solutions in biotechnology.
- David’s portfolio of eight companies reflects a commitment to diverse applications of biomedical research, from gene therapy pioneers to groundbreaking genome editing ventures.
- The choice between staying private or pursuing acquisition hinges on each company’s unique trajectory and strategic partnerships, showcasing David’s keen understanding of the entrepreneurial landscape.
- David’s companies are at the forefront of biomedical advancement, pioneering breakthroughs in targeted gene delivery, regenerative therapies, and beyond.
- Networking and learning from others are paramount, as David advises aspiring entrepreneurs to surround themselves with those who challenge and inspire, fueling a relentless pursuit of innovation.
- With a legacy rooted in excellence and a vision for a better tomorrow, David’s impact on the world of scientific innovation is profound, shaping the future of biotechnology for generations to come.
Alejandro Cremades · EP 884 David Schaffer On Taking An Over $1.2B Company PublicSUBSCRIBE ON:
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Getting early-stage funding in the aerospace industry is highly challenging for startups. Although this sector is quickly gaining traction because of its disruptive nature and innovations, investors may hesitate to invest.
Traditional venture capital firms have limitations because of their accountability to investors and the need to profit from their investments. Typically, the aerospace segment is capital-intensive and high-risk, making it harder for new companies to get backing.
For this reason, founders must approach angel investors and VCs that operate specifically within the vertical. These entities will have in-depth knowledge and expertise about how the industry works. As a result, they will likely be more open to funding startups.
Their familiarity with the sector also helps them recognize the immense potential these startups demonstrate because of disruptive technologies. New tech that has the potential to transform the landscape can also generate rich profits and returns down the line.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Future Prospects of the Aerospace IndustryA quick overview of the stats available about the US aerospace and defense (A&D) sectors shows a Compound Annual Growth Rate (CAGR) of 5.76% from 2024 to 2029. In dollar value, that translates into an anticipated growth from $496.56B to $$656.93B.
Within the next two years, from 2024 to 2026, you can anticipate a CAGR of 8.5%, with the market reaching the $1047.07B mark in 2026. This sector will also create jobs at the rate of 6% from 2021 through 2031, the highest in all industries. That’s because of the high demand for trained aerospace engineers.
Interestingly, in the coming years, the spotlight will be on achieving net zero in aviation by 2050. The commercial market worldwide will invest £4.6T or $4.91T from 2022 to 2050 in the aerospace sector.
The objective is to develop lower-emission aircraft and completely negate the greenhouse gases human activity generates. The market will adopt a three-dimensional approach to achieving these objectives such as:
- Building aircraft with a stress on hydrogen, battery, and fuel cell technologies will result in zero-carbon tailpipe emissions. This annual market represents 41% of the total market globally and £91B or $113.67 in 2050.
- Building super-efficient aircraft with a focus on ultra-high bypass turbofan engines. Lowering the weight of aircraft structures and systems is another stress point. By 2050, this sector will claim an annual market of around £64B or $79.94 globally or 29% of the total market worldwide.
- Building aircraft with advanced air mobility and improved structures that will enable electric vertical and conventional take-off & landing. Unmanned aircraft development is also a core area of investment. This sector will be valued at £27B or $33.73B worldwide in 2050. This stands at 12% of the total global market today.
Startups with Aerospace-Driven Core Competencies Have an EdgeAspiring founders looking to build a startup in this vertical or raise funding as an early-stage company should be inspired. The aerospace and defense sector broadly encompasses technologies like:
- Satellite constellations, electric aircraft, and urban air mobility
- Technologies that have applications for efficiency and sustainability
- Artificial Intelligence (AI) and machine learning (ML) that help improve efficiency in operations
- AI-driven equipment for military and security agencies for surveillance and monitoring
- AL and ML algorithms for sectors like mining, insurance, energy, construction, and agriculture
- Drone technology to compile data using aerial imagery and photography
- Leveraging satellite data to monitor and combat climate change and environmental issues
- Satellite data analytics to enable informed decision-making and risk mitigation approaches
- Propulsion systems that are zero-carbon and zero-emission, like electric vehicles
- 3D-printed rockets and other equipment to speed up production and minimize costs
To get early-stage funding in the aerospace industry, founders must come up with fresh, disruptive inventions and innovations. You should be open to taking risks and developing evolutions in AI and ML that can transform the world.
The approach is to focus on developing your company’s strengths and capabilities to explore current technology. Next, you’ll build a team and skill sets and invest in R&D to innovate. That’s how you’ll maintain that edge over the competition.
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Partnering with Investors Brings You More Than Just FundingWhen looking for investors to support your company, you’ll start off by putting together a list of options. Identify entities operating within the aerospace sector as seasoned entrepreneurs or firms experienced in investing in aerospace and defense.
Angel investors or high-net-worth individuals or firms are a great option. They may assist you with not just capital but also expertise. For instance, they could make available a team of technicians trained in building prototypes.
Once the MVP is ready, you’ll start production and generate profits and returns.
This early-stage support can be invaluable in getting the startup off the ground. Angel investors also support projects that interest them, either for their innovative ideas or mission statements that appeal to them.
If your company has ESG objectives, you’ll find the right investors dedicated to the cause.
Regulatory Compliance ChecksThe aerospace industry is heavily regulated, and companies must undergo extensive auditing to get certifications. The objective here is to ensure safety, high performance, reliability, and top-notch quality controls at every stage of the supply chain.
Since most products are software-driven and part of an intricate framework, cybersecurity issues also come into play here. Seasoned investors can direct you to and help you acquire the certifications to keep the company running.
For instance, ISO 45001 Certification — Occupational Health & Safety Management System (OHSMS) ensures that employees working on the premises are secure.
The ISO 14001 Environmental Management System (EMS) Standard certifies minimum wastage of scarce resources, and being environmentally responsible is mandatory.
As a new founder, you may also need guidance with safety protocols for the products you develop and navigating licensing. Assistance like this can help you avoid potential pitfalls and get the startup up and running quickly.
Minimizing Risks Through the R&D and Manufacturing CyclesSince the aerospace industry relies on R&D, getting results has no fixed timelines. Startups may need high infusions of capital before they can start to demonstrate results. It’s not uncommon for new ventures to run into technical difficulties that stall the innovation process.
At this point, founders need seasoned tech experts familiar with the product line they’re developing. Partnering with the right investors could be an advantage because of the access to expertise within their network.
Angel investors are dedicated to their investment’s success and could go the extra mile to offer support and assistance. This support can be critical since technical challenges are not the only risks aerospace startups face.
Some of the key risks include finding and retaining talented engineers with special expertise in the vertical. Supply of top talent is notoriously short in this sector. Founders must also contend with supply chain issues when it comes to sourcing inventory and components.
Other risks that can delay production and delivery include Intellectual Property ownership issues, quality management, and political instability. Experienced investors are likely to be familiar with these snags and the delays in revenues resulting from them.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Accessing Networking OpportunitiesThe right investors can ensure access to networking opportunities that are a must-have for founders. Look for connections and relationships you can build at networking events, conferences, and seminars. That’s a great first step when looking for early-stage funding in the aerospace industry.
These meets can result in strategic partnerships and collaborations that can later lead to investment opportunities or M&A deals. You can connect with angel investors, incubators, and accelerator programs to access these opportunities.
While getting into these programs is challenging because of their stringent screening processes, successful founders can leverage robust launch pads. Think connections with satellite operators, renowned airline companies, avionic companies, and more.
Some of the best networking events you can get into include the IEEE Aerospace Conference, SAE AeroTech, and Space Symposium. One of the largest seminars for aerospace engineers is The American Institute of Aeronautics and Astronautics (AIAA).
Make it a point to attend these events for the opportunity to connect with like-minded engineers looking to build startups. Partnering with the right people not only gives you access to rare talent but also opens doors for raising capital.
Don’t forget to research local events in your city and state, such as educational workshops, university projects, and community meets.
Government GrantsSeveral government grants and contracts are now available to support innovative projects within the aerospace and aviation sectors. Reach out for early-stage funding in the aerospace industry to organizations like:
- NASA’s Small Business Innovation Research (SBIR) program supports technological innovation in several industries and aerospace is one of them.
- Small Business Innovation Research program that backs small startups running high-impact research projects. If your project aligns with NASA’s mission and goals, that’s the core qualification criteria.
- The FAA’s Aviation Workforce Development (AWD) program offers capital to any projects that promote aerospace education. Like, for instance, flight simulators, aircraft pilot training, and aviation maintenance courses.
- The U.S. Department of Transportation’s (DOT) FAA has grants for the Airport Improvement Program (AIP). These grants are designed to improve airport infrastructures.
When you’re looking for capital, understand the types of investors for startups and how to align the right type with your needs. Not sure how to do that? Check out this video I have created.
Venture Capitalists Offering Early-Stage Funding in the Aerospace IndustryAlthough venture capitalists are typically more risk-averse, several big players operate in the aerospace and defense sectors. That’s because VCs also focus on projects with high growth potential and valuable Intellectual Property.
Markers indicating substantial revenues and robust market traction can also attract VC interest. In recent times, as military spending ramps up, commercial flights in space have become a viable opportunity. This prospect is encouraging higher investment in the sector.
Some of the top names to consider in 2024 include:
- Y Combinator supports startups across all verticals
- Promus Ventures
- Soma Capital
- True Ventures
- JetBlue Technology Ventures
- Airbus Ventures
- Lux Capital
- SpaceFund
- Boeing HorizonX Ventures
- Space Capital
- Acorn Growth Companies
- Khosla Ventures
Aerospace Incubators and AcceleratorsIncubators and accelerators are valuable sources of not just capital but also serve as excellent launch pads for aerospace startups.
The Y Combinator is easily the best-known organization that supports startups across the board. But, if you’re specifically looking for early-stage funding in the aerospace industry, you’ll look at Starburst Accelerator.
This organization focuses solely on the aerospace sector and operates out of locations like Montreal, San Francisco, and Los Angeles. It also has offices in Singapore, Munich, and Paris.
Starburst does not take equity. However, it might require compensation in the form of a success fee and a small percentage of the contract the startup snags.
Starburst primarily supports startups developing products to streamline air traffic management, drones, security, and software. Any specialized materials that can enhance local transport services are also of interest.
Lightspeed Innovations is another startup accelerator program that has been operating out of San Diego since 2015. This organization screens viable aerospace startups and connects them with investors. Lightspeed supports small businesses working in sectors like drones, robotics, and computer vision.
Other areas of focus include biology, virtual or augmented reality, artificial Intelligence (AI), and assisted intelligence. As for compensation, the accelerator operates similarly to Starburst and charges a success fee. Investors like Airbus, Northrop Grumman, and Boeing have partnered with Lightspeed.
The TakeawayThe aviation and defense sectors are highly lucrative, and several opportunities are arising for growth and innovation. As new startups are emerging with disruptive concepts and the potential to develop technological advancements, investors are stepping up.
Capital and funding is ramping up in these sectors. This makes 2024 the ideal time to look for early-stage funding in the aerospace industry, which is undoubtedly set to grow exponentially in the coming years.
Funding is now available not just from government grants but also from venture capitalists, angel investors, incubators, and accelerators. You can leverage the capital and additional support to grow your startup quickly.
Also, bank on networking opportunities, access to industry-specific expertise, guidance with regulatory compliance, and much more.
Start by researching their approval criteria and specific sectors they support, and start building a pitch deck.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Space, Startups, and the Final Frontier: Navigating Early-Stage Funding in the Aerospace Industry appeared first on Alejandro Cremades.
In the bustling landscape of entrepreneurship, where dreams collide with reality, and visionaries transform industries, few narratives resonate as profoundly as that of Armon Petrossian.
From his humble beginnings in Portland, Oregon, to the pulsating heart of Silicon Valley, Armon’s journey is not just a tale of success but a testament to the power of perseverance, innovation, and the pursuit of a bold vision.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks The Portland UpbringingBorn and raised in the picturesque surroundings of Portland, Oregon, Armon’s early years were steeped in the spirit of entrepreneurship. As the son of hardworking Armenian immigrants, Armon inherited a legacy of determination and resilience.
Armon’s father, a tireless and incredibly effective real estate broker, instilled in him the values of dedication and self-reliance. Armon remembers going to public schools from elementary through middle and high school and loving every bit.
Observing his father as he went about his daily tasks and how seriously he took his job inspired Armon’s passion for entrepreneurship. As a child, he was selling candy in the treehouse in his backyard to the neighborhood.
Even in high school, Armon would do informational interviews with anybody in his network that he thought was very successful in their careers. One of the interviewees he respected a lot suggested he learn a foreign language. Armon decided on Mandarin since China is a quickly emerging market.
A Global Odyssey: University, China, and EuropeArmon’s quest for knowledge and adventure led him to the University of Oregon, where he embarked on a journey that would shape his destiny.
Fuelled by a thirst for exploration, he delved into the fields of business, finance, and Mandarin Chinese, setting the stage for a transformative experience abroad.
During university, at 20-21, Armon continued expanding his world perspective with frequent travels to Amsterdam, Spain, Italy, and other European countries.
In his opinion, going to foreign countries where you have no past relationships with anyone forces you to realize who you are as a person in the first place.
His travels helped Armon understand and comprehend his own identity. That experience was one of the most illuminating things that brought him closer to himself and who he was.
It exposed him to learning how to create relationships out of thin air and connect with people with whom he didn’t have any preexisting context.
His time in Shanghai, Southern China, was a revelation, a collision of cultures that challenged his perceptions and broadened his horizons.
From the bustling streets of Shanghai to the tranquil canals of Suzhou, Armon immersed himself in a world unlike any other, confronting the complexities of language, culture, and identity.
The WhereScape Incubation: A Catalyst for ChangeUpon returning to the United States, Armon found himself at a crossroads, torn between the security of convention and the allure of innovation. He explains that he didn’t have a particular field targeted where he wanted to work. It could be software, tech, or real estate.
However, Armon was passionate about finding someone he could model his career after based on their skill sets–a mentor. And the person he found was at WhereScape.
He remembers thinking that if he could match even half their charisma, energy, thinking, communication, and skills to fill in the blank, he could be very successful in his career regardless of where he went.
Joining forces with like-minded visionaries at WhereScape, Armon delved into the intricate world of data analytics, laying the groundwork for a revolution in the industry.
He entered the company as an ETL intern, gained valuable exposure to the industry as a whole, and witnessed the business’ growth.
WhereScape blossomed into a hub of creativity and ingenuity, and Armon’s entrepreneurial spirit soared. Working at the company would prove to be a launch pad for Coalesce since Armon built many relationships during his time in the company.
Essentially, he followed an unconventional path to founding a software company driven by the desire to work for a specific person. Although Armon did not have any intention to get into data warehousing, data Analytics, or data engineering, it was the best decision he could have made.
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Founding Petrossian PropertiesArmon explains that he had always been passionate about entrepreneurship. At WhereSpace, he saw two paths unfolding for the business.
The first was where the existing organization stayed the same. Still, it ended up taking on some investment and started to move in the direction of building a next-generation product.
Alternatively, the business structure would alter as the result of an acquisition and shift gears. Since Armon wanted to build financial freedom, when the opportunity presented, he grabbed it.
He recalls finding a unique code path to circumvent the regulations associated with short-term rentals in the city of Portland, where he was living.
Armon discovered that he could buy homes, convert them into legal bed-and-breakfasts, and advertise them on Airbnb. His foray into the world of short-term rentals, a side hustle born of necessity and ambition, provided the financial freedom to pursue his dreams without compromise.
This was Armon’s first experience being a solopreneur and developing self-awareness to be in a position where he could be in a position of financial freedom.
The business allowed him to build a foundation to maintain the standard of living he wanted while pursuing something that could initially be more risky.
Ideating the Coalesce ConceptArmed with a wealth of experience and a burning passion for innovation, Armon embarked on his most ambitious venture yet: Coalesce.
Teaming up with his co-founder, Satish Jayanthi, a seasoned professional and industry veteran, he set out to redefine the landscape of data transformation and analytics.
By this time, Armon and Satish had worked together for almost a decade, gaining exposure to a large volume of massive-scale data warehouse implementations at WhereSpace. They had learned about the core concept of what could actually solve ubiquitous breaking points.
These points were identifiable on passing the threshold of some of the world’s largest, most complex data warehouses or data engineering projects. Armon and Satish came up with solutions to these problems.
As the core team, the duo had always fantasized about being able to take a concept and all the learnings they had of dealing with these massive scale implementations, starting from scratch, and building a cloud-native solution.
Armon and Satish focused on solving the problem, the biggest bottleneck in analytics today, and Coalesce serves that data transformation component. But since WhereScape was gaining more momentum, it ended up getting acquired.
It became clear to Armon and Satish that what they wanted to accomplish was not going to happen at that company. That’s when they decided to leverage their relationships with partners, customers, and the vision of what they wanted to build. They also had a go-to-market team.
Coalesce: A Vision UnveiledCoalesce was not just a company; it was a manifestation of a vision—a dream to revolutionize how data is harnessed, processed, and utilized.
Armon and his team forged ahead with unwavering determination and unparalleled expertise, defying the odds and overcoming obstacles with every step.
Armon credits their exposure to the exact space where they wanted to build a product and their relationships with the ease with which they created Coalesce. They quickly navigated the ideation and product market fit phases.
Armon recalls how they were able to shave off several years of the company journey because they had so much clarity about what they wanted to accomplish. That was the genesis of building Coalesce and the key to the phenomenal growth in a very competitive industry.
Coalesce is a software that helps data engineers be exponentially more efficient than any other alternative in the industry.
Customers buy the product as a developer solution and pay an annual or multi-year subscription to license the product. They use it daily when delivering Snowflake data projects.
The Funding Odyssey: Navigating the Venture Capital LandscapeIn the high-stakes world of venture capital, Armon’s journey was fraught with challenges and triumphs. From the early days of angel investments to the exhilarating highs of series B funding, he navigated fundraising with grace and resilience.
Armon’s encounters with investors offered valuable insights into the intricate dynamics of the venture capital landscape. With a clear vision and unwavering determination, Armon secured the funding needed to propel Coalesce to new heights of success.
Armon reveals they have raised close to $81M for Coalesce. He recalls that, being from Portland, he had no connections to the venture capital industry, financial institutions, or any type of investors that were focused on high-growth startups.
Storytelling is everything that Armon Petrossian was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Armon and Satish had to figure out these problems. Fortunately for them, they knew a lot of people who were familiar with the problem area they were trying to solve. This factor helped them raise close to $1M from close connections and people who believed in what they were going to build.
These entities had seen the problem firsthand, giving the duo a bit of fuel to build the Minimum Viable Product that they could then go and pitch to potential customers.
However, to kickstart the fundraising process from the venture capital industry, Armon had to move to San Francisco. Having no connections in the city, he had to start from scratch and figure it out.
As Armon quickly learned, there are many venture capital firms, some of which have well-known brand names that most founders are familiar with. Others may not have a strong brand associated with them but have the sharpest, most knowledgeable people managing the firms.
The Future Unveiled: A Testament to Resilience and VisionAs Coalesce continues to redefine the boundaries of data analytics and transformation, Armon remains committed to his mission—to empower organizations with the tools and technologies needed to thrive in an ever-evolving landscape.
For Armon, the journey is far from over; he explains that the biggest issue in the analytics industry today is the process of taking data, once it’s landed in its raw format, and getting it to the point that it’s consumable in a way that has proper governance.
Data needs to have proper documentation, minimal technical debt, and traceability or lineage, which are common terms in the industry, and that is a fractured approach. There’s a fractured architecture of different technologies.
There isn’t any clarity for people with varying technical skills, and, as a result, there isn’t any holistic view of what goes on in the manufacturing or assembly line of taking the parts of the data and getting it to the final product.
The Coalesce vision is for organizations that can produce data faster than the consumers of data could ever imagine. There should be visibility into how things were built and what was built with a level of modularity and standardization.
This allows them to make changes quickly in a world where analytics projects flourish, and insights are available at the snap of the finger for any decision anybody would want to make when driving their companies forward.
In ConclusionFrom Portland to Silicon Valley and beyond, Armon’s journey is a testament to the indomitable spirit of the human spirit and the boundless possibilities that await those who dare to dream.
He advises founders to be disciplined and build habits that allow them to manage all levels of their lives healthily and sustainably–mentally and physically.
These habits will lay the foundation for robust entrepreneurship and help fortify them to navigate the roller coaster journey of starting a company.
Listen to the full podcast episode to know more, including:
- Armon’s journey from Portland to Silicon Valley showcases the power of determination and resilience.
- Armon’s immersion in China and Europe broadened his horizons and fueled his entrepreneurial drive.
- Armon’s side hustle in short-term rentals provided the foundation for pursuing his entrepreneurial dreams.
- Armon’s deep understanding of data analytics paved the way for Coalesce’s revolutionary approach to data transformation.
- Armon’s journey from angel investments to series B funding underscores the importance of unwavering determination and clear vision.
- Armon emphasizes the importance of building habits and systems to sustain a healthy and sustainable entrepreneurial journey.
- Armon’s mission with Coalesce is a testament to the transformative power of perseverance, innovation, and unwavering belief in a bold vision.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
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Your email address is 100% safe from spam!The post This Founder Raised $81 Million To Make The Data Transformation Process Efficient And Accessible appeared first on Alejandro Cremades.
Non-financial metrics for evaluating startup viability are fast emerging as crucial criteria for investors and potential acquirers. Experienced investors conducting due diligence now focus on non-financial metrics to get a comprehensive overview of the company’s value.
Experts recognize that financial metrics and numerical indicators alone provide only limited assessment. They must rely on more factors to gauge the startup’s growth potential and stability over an extended time.
When it comes to redefining risks, investors and acquirers must look beyond traditional metrics in P&L statements and balance sheets. Particularly for startups that have impressive prospects but are yet to generate revenues or are still in their early stages.
Conventional metrics may include customer acquisition costs, customer churn rates, overhead costs, burn rates, runway, profit margins, and conversion rates. Then again, recurring revenues, lifetime customer revenues, and month-to-month sales and earnings also factor in investor decisions.
Non-financial metrics laser focus on the other aspects that influence the startup’s growth. Some of these include the founder’s business acumen, successful track record with building and exiting startups, and team-building experience.
From the founder’s perspective, non-financial metrics help ascertain the company’s performance and make informed decisions. These stats draw attention to the areas of improvement and potential for further growth.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Defining Non-Financial Metrics for Evaluating Startup ViabilityNon-financial metrics are also called outcome-based measures that are quantifiable but cannot be translated into monetary units or actual figures. These measures include customer satisfaction, rate of innovation, product adoption rates, and more.
Board members, executives, investors, and acquirers view the earnings, profits, revenues, customer acquisition costs, and overheads as trailing performance indicators.
If used as standalone indicators, they cannot accurately assess the company’s health and stability or its strengths and weaknesses.
Trailing or lagging key performance indicators (KPIs) are typically associated with dollar values, but non-financial metrics are leading or forward-looking measures. KPIs indicate how the startup has performed so far, while non-financial metrics indicate how it can perform moving forward.
Non-financial measures can be qualitative and quantitative and may or may not have a dollar value. For instance, soft skills, talent, and innovative capabilities cannot have a fixed metric.
Why Evaluating Startups With Non-Financial Metrics is CrucialNon-financial metrics for evaluating startup viability are crucial because they are predictive in nature. Here are some reasons why they are essential.
- Financial metrics provide data that the company has collected over a fixed interval. For instance, reports on actual performance, such as the total sales in Q1, Q2, and Q3. You also have revenues generated within these time intervals and the number of customers acquired. However, these numbers don’t specify why sales were lower in Q1 and Q3 but spiked in Q2. Or why revenues plunged even though customer acquisition is rising steadily.
- Checking the non-financial numbers gives a more comprehensive overview and fills in the gaps in the reports. For instance, higher customer acquisition can indicate that revenues and demand could rise in the coming months. This means that the company should ramp up production to fulfill orders. The company can also allocate resources toward R&D since it will have money left over, thanks to higher revenues.
- Expressing non-financial company mission and vision in monetary terms is not possible, and metrics won’t work here. For instance, the mission is to infuse a robust company culture where employees take ownership of the company. The founder may have intentions to allocate stock options that have not yet appeared in the financial statements. The commitment will eventually result in higher employee satisfaction and low attrition rates, adding non-financial value to the company.
Objectives for Measuring Predictive Non-Financial MetricsInfluence on the Company’s Bottom LineEvaluating a startup on the basis of conventional KPIs is a crucial step for investors and acquirers. However, they should also account for the outcome-based measures because they influence the company’s underperformance and overperformance. That will, in turn, affect the bottom line.
For instance, high customer churn rates indicate customer dissatisfaction with the products in terms of design or performance. Quantifying satisfaction is vital since it will influence the bottom line with lower sales and, ultimately, revenues.
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Identifying Areas for ImprovementNon-financial metrics are a valuable tool to identify the areas where the company excels and falls short. To go with the earlier example of customer satisfaction, which is currently translating into higher sales.
A quick analysis of social media trends may indicate that customers are more appreciative of the after-sales service a competitor offers. This metric is non-financial but predicts that sales could fall because of this downside. That’s an area where the company needs to work harder.
Comprehensive View of the VerticalPredictive metrics include macroeconomic factors that influence business across the vertical. For instance, the Ukraine-Russia war that impacted inventory availability, recession, earthquakes, storms, and other natural disasters. The COVID was another situation that impacted commerce worldwide.
Financial metrics during these times would project that the company was performing poorly. However, when reviewing non-financial metrics, you might note steady customer satisfaction because of the remote services your team was providing.
Or, as in the case of SaaS companies and other cloud computing services, sales may have spiked during the pandemic.
Concrete Plan of ActionNon-financial metrics are performance-based and deliver a concrete plan of action to help the company achieve its goals. Accurately identifying the areas to work on helps outline the next steps.
To expand on the earlier examples, these steps could mean a better product design or improved features.
Dedicated customer service to improve satisfaction, compliance with environmental and social issues, and cost efficiency could improve brand value. Having a strategy in place helps build the connection with actionable decisions.
Non-Financial Metrics for Evaluating Startup Viability – Core ProductProduct manufacturing costs, inventory, operations, and labor are some of the basic financial metrics you might add up. These costs help calculate the final pricing structure after considering the profit the company should make.
However, several other metrics also influence how the product performs and how customers perceive it. For instance, the effectiveness of solving the customer’s problem, comparing it with competing brands, and features that will improve acceptance.
You’ll also factor in metrics like abandoned carts, customers not following through on an inquiry with an actual purchase, and feedback. Measuring customer engagement with the website, like taking actions, click-through rates, activating freebies, and browsing through products, is also crucial.
Another non-financial metric is return customers and brand loyalty. Tracking customer behavior and analyzing retention rates helps identify buying trends and behavior across seasons, locations, and age demographics.
Designing products and advertising strategies, along with launch timings, can influence sales success rates.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Brand Value and ReputationBrand value and customer loyalty is another of the crucial non-financial metrics for evaluating startup viability. Investors, founders, and acquirers cannot assign a dollar value to brand awareness and customers’ perceptions of the brand.
However, this metric can make or break the company’s success.
Brand recognition and loyalty are about whether the company is easy to discern among competing brands. And if customers would prefer it above its competitors. Even if other options have better features and pricing structure. In other words, the brand’s USP that sets it apart.
Founders should be aware that investors are likely to conduct extensive research into how well the brand stacks up against the competition. And if it can retain the market share it has captured over an extended time.
Their study will also indicate the market share that the brand can snag with new products.
This metric will influence whether or not the company is a good candidate for investing. Or for buying with an M&A deal.
Customer Experience (CX) or User Experience (UX)Expressing customer churn rate and retention rate in numbers is easily done because research can indicate returning customers. However, measuring customer satisfaction and experience with the company’s products and services is a whole different ball game.
Founders must dig deeper to understand these metrics since they directly influence repeat sales. Ensuring exceptional User Experience (UX) with the brand’s digital storefront is also crucial when dealing with cutthroat competition.
Leveraging website analytics, potential investors gauge bounce rates, click-through rates, time spent on the site, and more. These numbers will give an overview of how website visitors are interacting with the site. To learn more about their experience with the product, rely on customer feedback.
Use social media platforms to stay on top of reviews and surveys to understand how customers think and feel. Providing after-sales service and maintaining detailed records of the complaints registered on customer care are also valuable.
These approaches help company owners identify areas where they can improve customer experience for higher sales. From the investors’ perspective, poor customer interaction will indicate that the brand may be unable to maintain its market presence.
Innovations in the PipelineThe human resources and talent aspect is the most dynamic for any startup. Potential investors pay careful attention to this slide since it predicts the company’s viability. A great team with a successful track record can drive the company forward with innovative ideas.
However, the pipeline innovations and ongoing research and development activities cannot have a definite value. Verticals like life sciences, drug testing and formulation, and software development have time-consuming and capital-intensive R&D processes.
Investors must be prepared to wait years before the startup can convert ideas into market-ready products. Further, there’s never any surety that the R&D will yield results. Levying a monetary value on the different stages of development is impossible.
For this reason, investors and acquirers must rely on evaluating the startup’s core talent. They also focus on employee efficiency, productivity, and dedication to the company’s mission. All of these are, again, non-financial metrics for evaluating startup viability.
If you’ve been looking for information about how to present financials for a startup with no revenue, check out this video I have created. I have outlined some added approaches you can use aside from the ones you’re reading about in this post.
Market Response RateThe market response rate is also expressed as the take rate or the product adoption rate. The market response is how quickly customers respond to a new advertising campaign or product launch—for instance, a customer feedback survey accompanied by freebies.
Quick response rates indicate a high brand awareness and customer engagement. Strategies like email blasts with offers for free downloads or early bird discounts should have high responses. A high number of subscribers snapping up the offers points to the startup’s viability.
Similarly, quick response to a new product and increasing sales indicate effective market penetration and the startup’s brand value. Investing capital in the company or purchasing it is a profitable option for potential acquirers.
ComplianceCertain verticals operate under extensive federal, state, and local regulations. Companies must abide by legal guidelines and industry standards. While not exactly a financial metric, startups complying with the rules and having the necessary permits and licensing are viable.
Then again, companies that include ESG or environment, social, and governance compliance in their mission statement are more consumer-friendly.
Moving forward, customers are more likely to support brands that demonstrate their commitment to protecting the environment. Or support community welfare and development.
Startups built by underrepresented and diverse founders attract attention not just from consumers but also from government agencies. They may enjoy incentives and find it easier to get funding and support. Investors are also open to funding them since they have customer confidence.
Identifying Appropriate Non-Financial Metrics for Evaluating Startup ViabilityThe valuation process could become more complicated even as investors, potential acquirers, and founders focus on taking a comprehensive overview of a startup’s health.
Picking out appropriate benchmarks for evaluating a startup can become more complex because of the sheer number of valuation metrics.
More so, most of these benchmarks cannot be expressed in dollar value or concrete statistics. Even if the data is available, getting expert analysts to study that information and draw conclusive results can be more challenging.
To counter these problems, selecting metrics relevant to the startup under consideration is advisable. Or the specific vertical where it operates. Founders should also focus on high-impact metrics that deliver actionable results they can use to make data-driven decisions.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Redefining Risk: Exploring Non-Financial Metrics For Evaluating Startup Viability appeared first on Alejandro Cremades.
In the bustling landscape of entrepreneurship, where dreams are forged amid the crucible of challenges, one man’s odyssey stands out—a tale of resilience, vision, and unwavering commitment to change the way we eat.
Meet Luke Saunders, the founder of Farmer’s Fridge, whose journey from humble beginnings to transforming the food industry is nothing short of inspiring. In this exclusive interview, Luke talks about scaling his company and the challenges he faced during the COVID to get the company back on track.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Humble Beginnings to University and EntrepreneurshipLuke’s story begins in New Jersey amidst the chaos of a household teeming with seven siblings. Raised in an entrepreneurial family where lemonade stands, and business ventures were the norm, he imbibed the spirit of innovation and risk-taking from an early age.
Luke’s journey took him to St. Louis for university, where he delved into Chinese studies and international affairs, only to find his true passion lying in entrepreneurship and a side gig of running a bike rental company.
His original plan was to move to China, and he spent six to nine months living there during college before returning to the US.
The TurnaroundBut fate had other plans for Luke. A pivotal moment arrived when he joined his father’s struggling grease lubricant manufacturing business, only to discover that mismanagement and financial woes were pushing it to the brink of collapse. The company only had a couple of months of runway left.
His dad had been running the business for 30 years, with $0.5M in revenues and a workforce of just one full-time employee and two part-time employees.
Armed with determination and a knack for problem-solving, Luke embarked on a journey of turnaround, slashing costs, and rebuilding the business from the ground up.
Luke had always been under the impression that the business was profitable, so he set about redoing the books and taking charge of the accounts. On rebuilding the P&L statements, they realized that the company was losing 30%.
Luke’s cost-cutting measures included changing phone subscription plans from AT&T to VoIP systems and removing the fax machine and postage mailer that cost them $1K a month. Essentially, the company was a 30-year-old startup with long-term customers.
Yet another drastic approach was to move the manufacturing operations from New York to New Jersey to save money and hope that the working capital didn’t get so low that the company couldn’t buy new inventory.
His efforts were successful, and Luke was able to turn the company around, which was a valuable learning experience.
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Inspiration StrikesLuke’s entrepreneurial instincts truly awakened during his stint in sales, driving a thousand miles a week. In his opinion, it was the best experience he had that prepared him to be an entrepreneur.
Luke learned to articulate the value proposition that your business has and how not to get too comfortable with getting too many rejections.
Skills like cold outreach, building relationships, and solving problems with people would prove invaluable down the line. Luke also honed his skills at getting someone to invest in him. He also leveraged his thousand miles a week driving to listen to podcasts and take courses online.
During his travels, Luke covered Michigan, Ohio, Indiana, and Kentucky, and he noticed that most places only had a gas station and a fast food restaurant serving lunch.
Faced with the scarcity of healthy food options on the road, he envisioned a solution—a vending machine that would dispense fresh, restaurant-quality meals accessible to all. Thus, the seed of Farmer’s Fridge was planted.
At the time, Luke was already working with big CPG manufacturing companies that made granola bars, cereal, and cookies. He was visiting factories to see how the manufacturing processes worked, which was interesting.
Luke recalls watching whole grains or whole chocolate chips coming in one end and leaving the other in a box. Employees were walking out the front with the boxes of granola bars under their arms.
However, the boxes loading on the truck weren’t going to get to the gas station down the street for about two months because of the really long supply chain optimized around shelf-to-table products.
Understanding Restaurant Business ModelsReturning to restaurants, the oldest businesses worldwide, they operated on the same business model that they have for over 1,000+ years. Customers walk in and talk to the sales team in the front, and then the manufacturing team makes it to order in the back.
Next, accounting shows up and takes the check. Everything the business does is under one roof at every location, which is very inefficient. Luke’s idea was to make restaurant-quality food in a CPG manufacturing setting, which could be much cheaper and more consistent.
The final challenge was getting it to people quickly. The solution presented itself in the form of vending machines that can go places restaurants can’t and are actually the number one form of food service.
Close to 100 million people buy products at vending machines. Using them, Luke could control inventory and understand customer relationships. Converging the insights and developing a business model were the next steps.
Luke started to work out the economics and how to scale the idea and finally wrote out the business plan over seven to eight pages. He also started to think about executing it, discussing ideas with his wife. They figured that they would have to work 24×7 to make the food and drop it off overnight.
To test the idea, Luke went to a popular local cafe that had some good grab-and-go options and offered the owner $15 an hour to let him work there. His basic request was to be allowed to ask a ton of questions and choose his work hours.
Navigating ChallengesThe road to realizing this vision was fraught with challenges. From retrofitting vending machines in his garage to securing a foothold in the market,
Luke’s journey was a testament to perseverance and innovation. Farmer’s Fridge wasn’t just about selling food but revolutionizing an industry entrenched in fast food and convenience.
For starters, Luke had to figure out the mechanisms of vending machines since typically refrigerated machines are designed for beverages like Coke and Pepsi and wouldn’t work well for food. Then again, he wanted to create the right appeal to customers who would be paying $8, $9, or $10.
The food would have to be cheaper than going to a fast-casual restaurant where a salad might cost $15 or $20. However, Luke’s food was also going to be a lot more expensive than a dollar candy bar. The vending machine would have to look and feel more like a restaurant than a vending machine.
On connecting with an industrial designer, Luke got a quote for $0.5M to develop a prototype design. So, he instead went to a vending show in Las Vegas and retrofitted a machine in his garage. Luke got the machine up and running, but finding a good location to set it up was another challenge.
Ultimately, Luke found a spot in a food court in Chicago. The initial six months were spent preparing the menu, food, and machine. He rented a shared kitchen since he was able to afford to rent only one table for an hour. By October 2013, Luke had opened the first Farmer’s Fridge.
The Farmer’s Fridge Business ModelLuke and his team make the food in a centralized kitchen in Chicago and then execute the last-mile delivery to individual locations. They put the food in the fridge, and customers purchase food from the machine. That’s how the company makes money.
The core model is an integrated manufacturing, distribution, and retail setup. Since it’s essentially three businesses in one, it is very expensive upfront. The fixed costs are high, but the variable costs are very low.
As Luke explains, when he started to research, he found that healthy fruits and vegetables were the cheapest foods in grocery stores. It didn’t make sense that there weren’t many nutritious food choices in restaurants.
Luke’s objective is to centralize the production to keep it safe and consistent, and scaling is the key to making money in the business. The company has a good unit economic model at the fridge level, and it has great traction with customers. However, to make money, 2000 locations were needed.
Capital Raises and PartnershipsBuilding the infrastructure was challenging since they had to add overheads and support future growth, and vending machines were not exactly available online. As a Farmers Fridge board member commented, they had a blessing and a curse.
The unit economics of the machines were great, but they needed thousands of them to make it work. This meant that the business was capital-intensive, and they would have to capitalize on every lifecycle of the business. So, Luke successfully raised $121M for the company.
Storytelling is everything, which is something that Luke Saunders was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!As Luke advises aspiring founders, one of the biggest learning curves for him as an entrepreneur over the last ten years has been to think through key milestones. He suggests sitting down, focusing on what the exit will look like, and working backward from there.
Luke also advises them to plan their capital needs, dilution, and returns. Having money in the bank and being profitable is crucial, as is having an adequate positive runway. Luke warns against letting the runway become negative because it can influence fundraising efforts.
At the onset, Luke remembers thinking he could set up the first location and roll back the profits to set up a second, considering that vending machines cost just $10K. However, he quickly realized that the infrastructure needed to support the business was more than setting up a restaurant.
Luke had to raise money and first learn how to go about it. He had to estimate the capital he needed to reach the next significant milestone. He had to find partners and went from venture to strategic over time as the company scaled.
Luke’s Vision for Farmer’s FridgeEach funding round was a step towards realizing his vision of making fresh, healthy food as accessible as a candy bar. Essentially, Farmer’s Fridge operates on a scale equivalent to that of the biggest CPG products or GSR restaurants.
Luke envisions catering to 40 to 50 million people in the US, buying food at a McDonald’s restaurant, and offering them wholesome food. Currently, the company employs more than 500 contractors and full-time employees.
Another lesson Luke quickly learned was that he would need a team of people to make the food. Although they do leverage automation to prep ingredients, Farmer’s Fridge is primarily run by people working on an hourly basis and has a unique company culture.
As Luke explains, the company has engineering, salespeople, and hourly employees who are now salaried supervisors making more than $100K per year.
He recognizes that the business relies on high-quality, committed people who come in daily to make and deliver the food. And that’s what makes the business work.
Getting volunteers to get down into operations to help when the facility is short-staffed is a cultural element that keeps the company functional. Luke also believes in maintaining a balance and avoiding micromanagement, giving the team room to grow and learn from their mistakes.
Facing Adversity: COVID-19Then came the ultimate test—COVID-19. Like a storm on the horizon, the pandemic threatened to derail Farmer’s Fridge, causing an 85% loss in revenue virtually overnight. Yet, Luke and his team refused to yield.
They pivoted swiftly, launching a home delivery program and catering to the needs of hospitals and essential workers. As Luke recalls, the sales team recommended buying 100 mini-fridges, which is something he accepted.
In the face of adversity, Farmer’s Fridge emerged stronger, more resilient, and more adaptable than ever. Their attitude of decisiveness and creativity got them there.
Continued Growth and VisionToday, as Farmer’s Fridge celebrates its decade-long journey, it stands as a beacon of hope in a world grappling with health crises and dietary woes. Luke’s advice to aspiring entrepreneurs echoes wisdom forged in the crucible of experience—plan meticulously, understand your capital needs, and never lose sight of your vision.
Listen to the full podcast episode to know more, including:
- Luke Saunders’ journey with Farmer’s Fridge underscores the importance of resilience in navigating challenges and setbacks.
- From retrofitting vending machines to launching home delivery during COVID-19, Farmer’s Fridge epitomizes the power of innovation in revolutionizing the food industry.
- Luke’s leadership shines through as he transforms a simple idea into a thriving business, driven by a vision of making healthy food as accessible as a candy bar.
- Farmer’s Fridge’s success hinges on strategic capital raises and partnerships, emphasizing the importance of financial planning and resource allocation in entrepreneurship.
- The COVID-19 pandemic posed unprecedented challenges, yet Farmer’s Fridge’s swift pivot to home delivery and catering showcased the importance of adaptability in times of crisis.
- Building a strong organizational culture grounded in shared values and behaviors is pivotal for Farmer’s Fridge’s success, fostering unity and dedication among employees.
- Luke Saunders’ entrepreneurial journey serves as an enduring source of inspiration, highlighting the transformative power of perseverance, innovation, and unwavering commitment to a vision.
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Your email address is 100% safe from spam!The post He Raised ~$120 Million To Revolutionize Access To Fresh, Healthy Meals Through A Network Of 1,200+ Smart Fridges appeared first on Alejandro Cremades.
In the bustling landscape of entrepreneurship, where every success story seems like a triumph against all odds, Lieza Danan’s journey stands out as a beacon of resilience, vision, and unwavering determination.
From her humble beginnings in the Philippines to scaling the heights of the biotech industry in the United States, Lieza’s story is a testament to the power of perseverance and the importance of staying true to one’s vision.
In this interview, she talks about the importance of vision in building businesses and how the startup ecosystem in the Philippines works.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Childhood in Manila: Nurtured by Love and SupportBorn and raised in Manila, Lieza’s childhood was marked by love, support, and a passion for science. A full scholarship to a science high school paved the way for her academic success, eventually leading to a bachelor’s degree in chemistry from Ateneo De Manila University.
During her college years Lieza fell in love with the intricacies of the sciences, particularly chemistry, fueling her desire to pursue a career in research. While at the Ateneo De Manila University, she got to work with the only mass spectrometer instrument in the country.
Lieza recalls that it felt like she was working with her favorite Lego toys. They were like puzzles that she needed to piece together to figure out the structure of the molecule, which was utterly fascinating.
Her post-graduate degree involved working at the National Chemistry Instrumentation Center and getting mentoring from her professors. They inspired Lieza to become a better scientist and aspire for a more advanced degree outside the Philippines.
After completing her education, she became both a professor and an analytical chemist at the university.
Falling in Love with Science: The Journey to Academic SuccessLieza’s journey took a pivotal turn when she was offered a full scholarship for a Ph.D. program in the United States.
Despite the challenges of uprooting her life, Lieza remained focused on her dream of becoming a mass spectrometrist and delving into the world of drug development, biochemistry, biology, and biomolecules.
Lieza’s determination and passion propelled her through the rigors of academia, leading to opportunities in prestigious institutions and biotech companies. At the time, a lot of innovative technology was emerging in the space.
Lieza kept learning and following her passion, which, along with her experience in the Philippines, became her leverage to get into the drug development industry.
She also got an introduction to the whole corporate and business side of things and an understanding of the stages and cycles of building companies.
A Turning Point: Stemcentrx and the Birth of an Entrepreneurial SpiritLieza worked for mid-sized companies like Lancaster Laboratories, Inc. and Sutro Biopharma, Inc. She recalls enjoying the innovation, learning, and opportunity to grow, which made her gravitate toward it. Her career continued to take off with other biotech startups recruiting her.
However, her time at Stemcentrx proved to be a turning point in Lieza’s entrepreneurial journey, where she got her dream job as head of mass spectrometry.
The folks at Sutro tried to convince her to stay with incentives like more stocks, a higher salary, a new instrument, and a luxury car. However, Lieza opted to sign up for something really groundbreaking at Stemcentrx.
Surrounded by visionaries and inspired by the culture of innovation, Lieza realized the untapped potential of glycobiology in drug discovery. This realization would lay the groundwork for her future endeavors.
Lieza remembers feeling like she was woken up from operating like a robot and having her awareness elevated on many different levels over the three and a half years she spent in Stemcentrx. The experience and exposure helped her understand the drug development process at the molecular level.
From the target discovery to developing drugs, scaling development, and manufacturing and from research grade to midsize scale all the way to hundreds of liters supporting clinical trials, Lieza was there every step of the way using the mass spec instrument.
Not only did she learn the science aspect, but Lieza was also exposed to the behavior and mindsets of her colleagues, mentors, and bosses. This exposure ignited her entrepreneurial spirit, as did listening to inspirational speakers like Peter Thiel and Jimmy Chin at their quarterly meetings.
During Lieza’s time in the company, it was acquired for $6B. She credits Brian Slingerland, the former CEO; Scott Dila, the former CSO; Dan Reiner, the President; and the management team for inspiring her to become an entrepreneur.
As Lieza reveals, at least 15 startups resulted from 150 employees at the Stemcentrx community. In the last two weeks, two were acquired as unicorns by big pharma.
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Founding Intervenn: Revolutionizing Drug Discovery & Diagnostics Through GlycobiologyIn collaboration with esteemed professors and entrepreneurs, Lieza co-founded InterVenn Biosciences, a biotech company focused on leveraging glycobiology for drug discovery and diagnostics.
Lieza talked about how the biopharma industry was running out of drug targets, and then she remembered interactions with multiple professors in graduate school. She knew that glycobiology was undervalued, and the glycoproteome was an untapped field that could be used to identify targets.
Lieza started to think about exploring the glycoproteome to identify drug targets and why it was not experimented with at the industry level, like academia.
She reached out to her former UC Davis mass spectrometry professor, Prof Carlito B. Lebrilla, Ph.D., and collaborator, Nobel Laureate Prof Carolyn Bertozzi, Ph.D., at Stanford University, to start the company.
Together with Carolyn and Carlito, they started working on the premise that glycobiology is ideal for clinical diagnostics and target discovery.
It needs to be explored at the industry level so that there can be more successful drugs out there and more accurate tools for early diagnosis of illnesses such as cancer.
Scaling New Heights: The Success Story of IntervennUnder Lieza’s leadership, InterVenn flourished with recognition within the health tech startup ecosystem, eventually attracting investment worth $250M+ even after Lieza’s departure. The company’s innovative approach to glycobiology garnered praise and paved the way for its success.
Storytelling is everything, which is something that Lieza Danan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Building LiVeritas BiosciencesLieza reveals that to start LiVeritas, she leveraged her experience in drug development and building an AI-based glycoproteomics company at InterVenn. They streamline one of the most tedious aspects of drug development: analytical testing of drugs for quality, safety, and efficacy.
Typically, a mass spectrometer is used for this purpose. However, software available for mass spec data crunching is fragmented and most of the complex data curation had no tools for it.
To deal with the problem, Lieza came up with LiVeritas®, which connects all the fragmented data curation tools through an integration platform called LiLii™.
Next, it is spiced up with different AI tools to speed up the testing process, much like automation. It is an operation efficiency play with multiple business models, including a service business model, which Lieza has called her Trojan horse for over four years while building the technology.
They cater to all aspects of drug development, drug quality, safety, and efficacy testing. This year, they were able to present more about their AI platform.
As Lieza explains, LiLii stands for Laboratory Integration and Intelligence and has multiple functions for digital transformation, testing workflow integration, predictive analytics, and automation.
LiLii is borne of Lieza’s experiences with multiple biopharma advisers, team members, consultants, and friends from the industry.
Although Lieza is the face of the company, LiVeritas’ team members in the US, Europe, and the Philippines leverage the Internet to collaborate and create the LiLii AI brain.
Their objective is to automate and streamline the entire testing process so that drug developers and biopharma scientists are equipped with high-quality mass spec data in a timely manner instead of waiting for two weeks, one month, or three months.
The tool turns the data around within days, and the goal is to make it available within two days from when samples are ready for testing.
Confronting Adversity: A Cancer Diagnosis and the Power of CommunityHowever, amidst the triumphs of entrepreneurship, Lieza faced a formidable challenge—cancer. Diagnosed with classical Hodgkin’s lymphoma, she confronted this adversity with the same resilience and determination that defined her entrepreneurial journey.
Lieza expresses her appreciation for her co-founders and co-founding team members who stepped up and took the reins from her. She is personally grateful to even her investors from the biopharma and mass spec industries, who were caring and supportive.
Lieza dealt with the challenge just as she faced every project head-on. She reached out to her personal friends from the biopharma space, college, high school, and the Bay Area. She surrounded herself with cancer survivors and Hematology & Oncology experts from her science high school.
She also connected with a family friend who is a professor at Stanford University and was the President of the American Society of Hematology. Interacting with the right people helped guide her through the process and identify the best treatment for her illness.
The treatment included antibody-drug conjugates, the class of smart drugs Lieza developed. It has minimal side effects and high efficacy, Lieza explains.
Today, as a cancer survivor and successful entrepreneur, Lieza Danan continues to inspire others with her story of triumph over adversity. Her advice to fellow founders echoes her own journey—ensure that your heart, mind, and body are aligned, and let passion be your guiding light.
Conclusion: Lieza Danan’s Legacy of Triumph and InspirationLieza’s journey reminds us that despite seemingly insurmountable obstacles, resilience, vision, and unwavering determination can lead to extraordinary achievements.
Celebrating her accomplishments reminds us that the human spirit can transcend adversity and turn challenges into triumphs.
Listen to the full podcast episode to know more, including:
- Lieza Danan’s journey exemplifies the transformative power of resilience and unwavering determination to overcome life’s challenges.
- From her childhood in Manila to her groundbreaking work in the biotech industry, Lieza’s story underscores the importance of staying true to one’s passion and vision.
- Pursuing excellence in academia and navigating the complexities of the biotech landscape, Lieza’s journey is a testament to the power of perseverance.
- Stemcentrx ignited Lieza’s entrepreneurial spirit and inspired her to revolutionize drug discovery through glycobiology.
- Co-founding LiVeritas, Lieza embarked on a mission to streamline drug development processes and pave the way for innovative solutions in the biotech industry.
- Despite facing the formidable challenge of cancer, Lieza’s resilience and the support of her community propelled her through adversity, reinforcing the importance of love, support, and passion.
- Lieza’s journey offers valuable lessons on resilience, vision, and the alignment of heart, mind, and body, inspiring aspiring entrepreneurs to pursue their dreams with unwavering determination.
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Your email address is 100% safe from spam!The post She Raised Millions For Diagnostics And Has Now Built An AI Software Company To Streamline Drug Testing For Quality, Efficacy And Safety appeared first on Alejandro Cremades.
Welcome to the captivating narrative of Jorge Myszne, an entrepreneur whose journey traverses continents, technological frontiers, and entrepreneurial landscapes. Buckle up as we embark on an exhilarating ride through the highs, lows, and pivotal moments that shaped his entrepreneurial voyage.
In this exclusive interview, Jorge talks about the companies he has built, including one he exited for a reported $400M. He also reveals his thoughts on being the first to market a product, raising funding from the industry’s big players, and building a new team.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Beginnings: From Uruguay to Silicon ValleyBorn and raised in the vibrant city of Montevideo, Uruguay, Jorge’s journey commenced against the backdrop of a burgeoning passion for engineering and technology. Montevideo is the capital city with around 1.5 million people with lovely weather similar to Silicon Valley, California.
Jorge remembers always wanting to be an engineer and taking a computer course using the Sinclair ZX Spectrum and the Commodore 64 to hone his skills. He recalls crafting soccer World Cup championship programs in 1986 to keep scores.
Jorge’s fascination with computers ignited a lifelong pursuit of innovation. It inspired him to go into electrical engineering. Since the only place to research his chosen field was University, he signed up for courses. Soon after, he got recruited into Intel Corp in Israel and packed his bags to move.
Jorge had the option to join the processor scene or a new group that was working on Wi-Fi. This was around 1999 when a small team of 30 people was working on building Centrino, a transformative chipset that revolutionized wireless connectivity.
Together, they created four generations of chipsets on the Wi-Fi side. Sometime in 2007, along with three coworkers, Jorge left the company to start a new company, Wilocity.
Wilocity: Navigating Uncharted WatersWilocity’s inception marked the dawn of a groundbreaking era in wireless technology. Their audacious endeavor to develop 60 GHz chipsets, a precursor to 5G millimeter wave, encountered formidable challenges.
Securing seed funding amidst the tumultuous landscape of 2007 was akin to navigating a tempest, yet their perseverance bore fruit with strategic investments from renowned VCs like Benchmark and Sequoia.
Up until that time, the chipsets designed were only up to 5GHz to 6GHz. Any fab that manufactured chips would only offer models of up to 10GHz. That’s what users would use to model their designs.
However, to simulate designs, Jorge and his team needed 60GHz, meaning there were no models, and they had to build their own models.
They just fabricated a chip with basic structures and then had to measure and build models, which required a lot of R&D to get there. This process also meant that Jorge and his team were raising money for 6 months before delivering any real results.
Luckily for them, they were able to land heavy hitters like Sequoia and Benchmark. In a kind of validation, they liked the team of four founders, who were very experienced in the field. Even so, Jorge and his team had to work hard to explain the product they were building.
Once they got people around the idea of what they were trying to do, VCs stepped up with funding worth $100M. This round was the first and was executed in 2007, a little before the 2008 crisis.
Storytelling is everything, which is something that Jorge Myszne was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Since they had money in the bank, Wilocity was able to weather the storm, though Jorge did have to slow down some of their plans. The company also had to let go of some employees. However, by 2010, things started to turn around, and the company started to accelerate.
The Entrepreneurial Rollercoaster: Trials and TriumphsAs Wilocity soared, they encountered the inevitable hurdles of entrepreneurship. Racing against time and competition, Jorge and his team grappled with the realities of being first to market. Intel’s foray into a similar domain served as both a validation and a formidable challenge.
It proved that Jorge and his team were on the right path. They tried to speed up development and build the best products they could. However, explaining to customers what the product was all about was easy since Intel was marketing the same products.
However, their unwavering commitment to innovation and customer-centricity propelled them forward. Eventually, Qualcomm’s acquisition of Wilocity for $400M became proof of their technological prowess and market vision.
Before Qualcomm, Atheros, a Wi-Fi semiconductor company, had invested in Wilocity in the second funding round.
Later, Atheros was acquired by Qualcomm, which continued to invest in Wilocity in the subsequent rounds. This factor meant that Jorge and his co-founders had been working very closely with their acquirers.
As Jorge recalls, they started the company with PC products in 2007, well before the iPhone. In 2010-2011, they started transitioning to mobile-centric solutions and working with companies like Samsung and Apple.
These brands also expressed interest in the products Wilocity was developing.
The American Dream: Beyond AcquisitionThe acquisition heralded a new chapter in Jorge’s journey, epitomizing the quintessential American dream. Yet, amidst the euphoria, Jorge remained grounded, shouldering the responsibility of integrating his team into Qualcomm’s ecosystem.
The allure of entrepreneurship beckoned once more, leading Jorge to helm Kameleon, where he navigated uncharted territories in hardware security solutions.
As he explains, when he moved to the US, he had started the gradual transition from the technical side to the customer engagement and the product world.
Building KameleonHowever, Jorge took on the CEO role at Kameleon. He underscores the importance of sometimes stepping back despite being a technical person and letting other technical people do their thing even though you know better.
At the same time, it’s crucial to ask the team the right questions, understand the challenges, and, basically, work on facilitating operations. At Kameleon, they built hardware security solutions for servers, mainly protecting servers when they were booting or secure booting.
They made sure that nothing was changed, and when you turn on a server, all the software that is loaded before the operating system is loaded, and the authenticity hasn’t been touched. These processes cannot be done in software because this happens at the application or operating system level loads.
The Kameleon product was tailored for cloud providers and server OEMs. Jorge managed to leverage his connections with people he had worked with before in Wilocity and Qualcomm. He also started building an engineering team, though most of it was in Israel, and his partners were in the US.
When COVID hit, everybody moved to the cloud, and the need for the cloud accelerated exponentially.
The cloud providers Jorge and his team were working with had to delay the next-generation projects because they didn’t have enough servers to support the demand that they had now. At the same time, they didn’t have the parts because of the supply shortage.
They couldn’t get the parts to build more servers to support that demand so they had to redesign the servers with whatever parts were available to work and support that demand.
This meant that all the next-generation projects just got delayed. At the same time, it was very clear that there would be a drop after that spike in demand and that the spike was not real.
Soon after, there will just be too much supply and not enough demand, so that’s where Jorge and his team started to get proactive.
They started to plan the right approach for Kameleon and were working with another company. That’s when they made the decision to join forces and merge. Soon after, Jorge decided to take some time off and went back to working as an advisor at a Silicon Accelerator in the Bay Area.
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Reimagining the Future: From Kameleon to Niobium MicrosystemsJorge’s entrepreneurial spirit continued to thrive as he embarked on a transformative journey with Niobium Microsystems. Spearheading the development of innovative encryption technologies, Jorge found himself at the forefront of a paradigm shift in data security.
His unwavering resolve to embrace challenges and pioneer groundbreaking solutions underscored his entrepreneurial ethos.
As Jorge explains, Niobium basically computes on encrypted data. It’s a new type of encryption that allows users to basically compute on data that is encrypted without needing to decrypt the data.
Jorge ended up talking to them and deploying a very small team of about 18 people. The company got a grant from Darpa to build an accelerator for fully homomorphic encryption. Jorge enjoyed the challenge of starting from scratch to understand where to take that product and how to work the go-to-market version.
He was also excited about how to build the company and steer it in the right direction.
Lessons Learned and Future HorizonsFrom humble beginnings in Uruguay to trailblazing ventures in Silicon Valley, Jorge’s journey embodies the spirit of relentless pursuit and audacious ambition.
Through triumphs and tribulations, Jorge’s unwavering belief in the transformative power of technology and the entrepreneurial spirit inspires aspiring innovators worldwide.
In conclusion, Jorge Myszne’s entrepreneurial saga is a beacon of hope and inspiration, lighting the path for future innovators to tread boldly. He has had a remarkable journey, seized opportunities, embraced challenges, and dared to dream beyond the confines of convention.
Listen to the full podcast episode to know more, including:
- Jorge’s journey reminds us to embrace opportunities and take the plunge, even into uncharted waters.
- Through funding challenges and market competition, Jorge’s resilience paved the way for success.
- Jorge’s story from Uruguay to Silicon Valley underscores the global reach of entrepreneurial vision.
- Wilocity’s focus on solving real-world problems propelled them to the forefront of technological innovation.
- Jorge exemplifies the importance of flexibility in entrepreneurship by navigating mergers, acquisitions, and market shifts.
- Jorge’s ability to lead diverse teams across continents highlights the universal language of vision and collaboration.
- Jorge’s unwavering resolve to pursue his entrepreneurial dreams shines as a beacon of inspiration through every setback and triumph.
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Your email address is 100% safe from spam!The post This Entrepreneur Sold A Company For $400 Million And Is Now Building Solutions To Manage Critical Data Securely appeared first on Alejandro Cremades.
In the bustling world of entrepreneurship, stories of resilience, determination, and innovation often emerge as guiding lights for aspiring founders. One such narrative is that of Ricardo Pero, a Brazilian-born entrepreneur who embarked on a transformative journey from the corporate world to building a multimillion-dollar empire in the heart of the United States.
In an exclusive interview on the Dealmakers Show, Ricardo shares the intricacies of his immigrant experience, the challenges he faced, and the triumphs that defined his path to success. He also talks about the factors that motivate him and his fundraising journey, where he raised funds worth $400M in equity and debt.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Childhood Rooted in TraditionRicardo Pero’s story begins in the serene landscapes of Brazil, where he spent his formative years on a family farm in the south. Despite the comfort of tradition, Ricardo felt a calling to carve out a different destiny for himself.
Armed with a degree in economics, he embarked on a journey that would lead him far beyond the familiar horizons of his homeland. The sudden loss of his father in his early twenties marked a pivotal moment for Ricardo, propelling him into a path of self-reliance and determination.
Ricardo changed his classes to the night and started studying at night while working full-time. At 21, he became an international treasurer of a Brazilian multinational company, which marked the beginning of his career.
Three years down the line, Ricardo got a job offer from Citibank, New York City. Someone at the trading desk had resigned, and he was asked to fill in for them on a temporary basis, which extended to 20 years.
Ricardo seized the opportunity to redefine his trajectory, setting his sights on the vibrant landscape of the United States.
In retrospect, on losing his father, Ricardo faced up to the fact that he would not have the emotional and financial support most kids enjoyed in Latin America. Without this luxury, he couldn’t wait for someone to tell him what he should do.
A Fateful Encounter with OpportunityArriving in the US in 1994, Ricardo found himself immersed in a world of endless possibilities, surrounded by like-minded individuals driven by ambition and innovation. The experience proved to be a revelation, igniting Ricardo’s conviction that his future lay beyond the borders of his native land.
Ricardo recalls how working two months in the trainee program in different departments of the bank was like a life-changing experience. He quickly realized that this was where he belonged. It was inspiring because most foreign college kids were studying and building careers.
But Ricardo was simultaneously studying and building a career out of Brazil. He would have been the first executive to have his MBS sponsored by the Brazilian company. Instead, Ricardo decided to take an offer from Citi. He completed his MBA just as he had done his education. He studied at night and worked full-time during the day.
Balancing work and studies was highly challenging. Ricardo remembers neglecting his health and surviving on coffee and ice cream to stay awake through the long nights to study. However, the experience changed his perceptions of the world and businesses.
Being an immigrant in the US shaped Ricardo’s thought processes to plan things differently and understand business dynamics better. He also saw how operations in other companies had a tremendous impact on the business he was building.
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From Corporate Ladders to Entrepreneurial HeightsEmbarking on a distinguished corporate career spanning institutions like Citi, Morgan Stanley, Merrill Lynch, and J.P. Morgan, Ricardo honed his expertise in sales and trading, navigating the complexities of global finance with finesse. He started in sales, trading effects, rates, and multi-asset classes.
Ricardo was also managing a joint venture with Morgan Stanley Smith Barney and Citi, covering midmark institutions in Latin America, doing an amazing job. As Ricardo reveals, prior to the 2008 crisis, Citi was a strong business in LatAm with robust ties in the country, but it all quickly fell apart.
Transitioning to J.P. Morgan, Ricardo had to deal with different challenges since he wasn’t only managing relationships with some LatAm clients but also bringing investment opportunities from the region to the US.
Working in the US, Europe, and Asia each exposed him to different environments, and he also gained extra experience in these foreign markets.
However, after nearly two decades in the corporate world, Ricardo felt had a yearning for something more—a desire to chart his course and leave a lasting legacy of his own making.
The Genesis of a VisionThe transition from the corporate world to entrepreneurship was not without its challenges. Ricardo’s journey toward founding his venture began with meticulous research and introspection.
Drawing upon his background in finance and a keen eye for opportunity, he identified a niche in the burgeoning e-commerce landscape—an opportunity that would ultimately redefine the trajectory of his career.
Ricardo realized that the business was capital-intensive and that he would need to secure resources beyond what he’d already saved and put aside to build it. His first thought was how to make it scalable and competitive.
Ricardo’s first two hires were data scientists, which was a big change because he was applying a lot of his knowledge in areas where he had no expertise–data science and machine learning models, now called AI.
Coming from a trading desk environment that was very fast-paced and needed his entire brain power, attention, and long hours, this was very new for Ricardo.
They started off as a lending platform to Amazon sellers but quickly realized that staying with Amazon alone would probably offer little to no differentiation to customers and no value added to their shareholders.
Ricardo then started integrating with other platforms. Now, it has connectivity with almost 10 platforms, including all e-commerce platforms.
The second wave of evolution was building a banking infrastructure to mitigate operational risk and create another layer of incentives for customers to stay with the company for longer.
The SellersFi Business ModelSellersFi has a node banking model that allows users to borrow money at the cheapest rates and maximize their capital allocation. It makes money by providing working capital solutions to its clients.
It also earns revenues by offering a banking platform where users can pay their vendors in dollars or any other global currency to execute cross-border payments. Ricardo sees e-commerce as a global industry, so they need to have a global mindset to cover their target industry and clients.
Ricardo does not believe in the conventional milestones entrepreneurs should follow, such as the first $1M or $10M in revenues. SellersFi got to $1M in revenues within its first year and saw great traction. Initially, the company was Sellers Funding and had a high organic search engine.
When people went on Google and looked for Amazon sellers’ funding alternatives, SellersFi was one of the first results to pop up. There was high demand for the product, and the company was securely positioned in the industry.
The pandemic spurred growth, and the numbers they hoped to achieve in 10 years actually happened within a year or two. By 2020, SellersFi had surpassed the $10M revenue mark. In the same year, it had a 100% to 150% growth and has been growing consistently over 100% year-over-year.
Fundraising and RebrandingAs for funding, the company raised $400M in funding in equity and debt. As Ricardo explains, they have been using a different approach and have been proving that their technology, credit, and writing models work.
Storytelling is everything, which is something that Ricardo Pero was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!SellersFi is valued at more than $1B and has written off less than 2.5% at this time. The performance itself tells the story from an equity point of view.
Ricardo points out that they need to highlight not only the milestones and the growth trajectory they face but also the plans they have for the future and when they see the company moving forward.
There is a big shift happening right now. And it started with the company rebranding from Sellers Funding to SellersFi. The idea is to change the mindset of the team, starting with the team and going to what customers think of the company as a working capital provider.
Ricardo is ready to change this mindset and have customers think of the company as a financial platform that has a strong working capital solution. In addition, SellersFi offers assured bank accounts, which is just the beginning of a much more robust financial platform.
Being an immigrant, Ricardo understands how to navigate the journey of building a network and making sure they can go through the funding cycles.
A Vision for the FutureRicardo talks about attending the first trade show with his business partner and being asked about the inspiration behind two Brazilians building an e-commerce lending platform for e-commerce sellers. He explained that he had been working for US financial institutions for more than 20 years.
When they examine pitches and presentations, they always focus on the slide that depicts the competitive landscape. They always point out that although founders have an amazing track record, they haven’t scaled yet. Next, lenders ask founders to reach $100M in origination.
However, once founders reach that point, they are asked if they have faced a negative credit cycle. SellersFi has been successfully running for the last six years.
And has faced every conceivable challenge. Ricardo is confident that they are doing something meaningful and have secured a relationship with Amazon this year.
As SellerFi continues to scale new heights, Ricardo remains steadfast in his commitment to innovation and excellence. He sees the company as a neobank for e-commerce sellers with strong embedded solutions for marketplaces.
With a vision to evolve into a multibillion-dollar enterprise and expand its global footprint, SellersFi is poised to redefine the landscape of e-commerce financing, empowering sellers worldwide to realize their full potential.
Ricardo sees SellersFi going public in the next two to three years and partnering with 5000 SMEs, predominantly in the US. He also wants to expand to global locations and underserved industries that traditional financial institutions don’t support.
Lessons Learned and Looking AheadReflecting on his entrepreneurial journey, Ricardo emphasizes the importance of building a strong foundation rooted in teamwork, diversity, and a sense of ownership thanks to stock options.
While challenges abound, he believes that any obstacle can be overcome with the right mindset and unwavering determination.
ConclusionIn the annals of entrepreneurship, Ricardo Pero’s story stands as a testament to the transformative power of resilience, vision, and unwavering determination.
From humble beginnings in Brazil to the helm of a multimillion-dollar enterprise in the United States, Ricardo’s journey embodies the spirit of the American Dream—an inspiring narrative of triumph over adversity and the limitless potential of the human spirit.
As SellersFi continues to chart new territories and redefine industry standards, Ricardo’s legacy serves as a beacon of hope and inspiration for aspiring entrepreneurs around the globe.
Listen to the full podcast episode to know more, including:
- Ricardo Pero’s journey from Brazil to the U.S. exemplifies the transformative power of determination in overcoming adversity.
- Ricardo’s transition from a successful corporate career to founding SellersFi underscores the boundless possibilities of pursuing one’s passion.
- Ricardo’s vision for revolutionizing e-commerce lending led to the creation of SellersFi, a pioneering platform shaping the future of online commerce.
- Amidst global upheavals like the pandemic, SellersFi’s resilience and adaptability propelled it toward unprecedented growth and success.
- SellersFi’s expansion beyond borders reflects Ricardo’s vision of empowering e-commerce sellers worldwide, transcending geographical constraints.
- Ricardo emphasizes the importance of fostering a diverse and inclusive team culture, recognizing it as a cornerstone of SellersFi’s success.
- Ricardo’s journey offers valuable lessons in perseverance, strategic planning, and unwavering commitment to realizing one’s entrepreneurial vision.
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Your email address is 100% safe from spam!The post He Raised $400 Million To Provide Working Capital To E-Commerce Merchants To Help Them Grow appeared first on Alejandro Cremades.
In the realm of entrepreneurship, there are tales of resilience, innovation, and the relentless pursuit of turning dreams into reality. Jemuel Joseph’s journey embodies all these elements and more, from his humble beginnings in Ethiopia to co-founding Cover, a revolutionary company reshaping the future of housing.
In an exclusive interview, Jemuel shared insights into his upbringing, the challenges he faced, and the remarkable evolution of Cover. He also talks about the challenges he faced with acquiring funding for his company and the rejections he faced.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Childhood Shaped by Nature and CuriosityA blend of simplicity and curiosity marked Jemuel’s childhood in Ethiopia. Growing up amidst nature, he found himself enchanted by the world beyond.
Jemuel’s childhood was essentially a great experience with the ideal blend of watching TV and reading books–not too exposed to technology but having an awareness of what was going on.
Despite the slower pace of technological advancement in Ethiopia, Jemuel’s innate curiosity ignited a desire to explore broader horizons beyond his homeland. He remembers wondering why dial-up internet was so slow and the bandwidth so limited.
A Leap of Faith to the Land of OpportunityWhen his parents made the pivotal decision to move to the United States, it marked a new chapter in Jemuel’s life. The transition to a new country brought its own set of challenges, but it also opened doors to a world of possibilities.
Jemuel did his high schooling and college in the US and had a whole new life with new friends. Moving to the US, one of the first things that fascinated him was access to knowledge, the Internet, and information.
With a solid foundation in English and a thirst for knowledge, Jemuel embraced the opportunities that awaited him in his new homeland.
Nurturing Creativity Through ArchitectureChoosing a path in architecture was a serendipitous decision for Jemuel, driven by his passion for technology, design, and building websites from a very young age. Even in Ethiopia, he has started to think about his future profession.
Although software engineering in 2006-2007 wasn’t as clear of a path as it is now, Jemuel had always known he wanted to work in the field of technology.
So, he picked a career that would give him the maximum chance to do something in the design field or build things virtually on computers.
Initially, he thought this would be web development or 3D animation. Still, he found architecture that merged building things virtually and physically, with at the same time a solid basis in liberal arts education and humanist views.
During his journey in architecture school, Jemuel met his future co-founder, Alexis Rivas, laying the groundwork for what would eventually become Cover. The convergence of their shared observations and aspirations sparked the inception of a groundbreaking idea.
As the duo went through school, they started to realize that the pace of architecture wasn’t even close to the pace of technology.
As a 20-year-old thinking about the next 10 years, he noticed that there were engineers pushing code to millions of people and raising capital to make their vision a reality.
In contrast, people graduating from architecture spent the next two decades working through the corporate ladder and not having agency and autonomy. Jemuel quickly decided that this wasn’t something he wanted to do.
He also started paying a lot of attention to what was happening in the venture world, particularly when Y Combinator and companies like Stripe, Airbnb, and Dropbox were taking off. Jemuel started exploring a similar thing but with a different dimension.
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The Birth of Cover: Redefining Home ConstructionThe genesis of Cover stemmed from a shared vision to revolutionize the way homes were built. Recognizing the inefficiencies and limitations inherent in traditional construction methods, Jemuel and his co-founder embarked on a mission to reimagine the entire process.
Their approach, centered on mass production, customization, and streamlined operations, laid the foundation for Cover’s innovative business model. Jemuel and his co-founder wanted to find solutions for the limiting factors in architectural projects.
For instance, they noticed that the consultants coordinated efforts to build one-off very expensive homes. All they needed to do was to design a product and build it over and over again.
This simple strategy could eliminate a lot of those coordination costs and probably make housing much cheaper.
Alexis went to work for a prefab company over the summer and shared their observations. For Jemuel, it was about the pace of progress and technology, and for Alexis, it was about the core issues he was identifying.
After discussing the limitations that were stalling the progress of architecture and construction, the duo came to the conclusion that they could tie three aspects that hadn’t been tried before. If they could accomplish that, they would have the best chance of offering high-quality housing at scale.
These aspects became the cornerstones of Cover. Ultimately, Jemuel and Alexis build homes for people. Instead of going the conventional way and approaching a general contractor, people can come to Cover.
The Cover Business ModelCover builds homes like cars but redesigns and reengineers the product for mass production at scale. In the future, house-building factories will look very much like car factories where there’s automation and an assembly line.
The factories will build components like panels and other pieces that can be rapidly assembled into various layouts. Next, Cover would let homeowners customize the layouts so that even though they’re getting their home built in a factory, they can still configure the layouts and finishes.
At Cover, they streamline the entire process by building the software internally. A typical architecture firm has people managing every element of the process, such as drawing plans, getting permits, creating construction drawings, and other documentation.
These operational processes drive up the building costs, which are eliminated. At Cover, even if it is a custom layout project, they can automatically generate permit sets and do the structural calculations instantaneously.
This simple approach lowers costs for customers who need not pay for overheads.
Timelines are shorter, and now it’s possible to build homes like cars by using panels that can be reconfigured and software to streamline other aspects of the process like pricing, permitting, and structural engineering.
The YC FellowshipJemuel talks about his experiences with the YC Fellowship, which is different from the Y Combinator, the accelerator program. He applied for the Y Combinator but wasn’t a good fit since they had yet to build their first home.
Instead, Jemuel and Alexis got into the more minor program in which they’d give entrepreneurs $20K. They duo was allowed to build over the summer while also meeting with partners and accessing the networks. They also had a demo day where they met their first institutional investors
Although Jemuel and Alexis didn’t get into YC core, they used the money to move to the West Coast and live in a house. They built their first Cover concept in a parking lot along with two other people.
Navigating the Venture Capital LandscapeRaising capital for a hardware startup posed its own set of challenges, particularly in an ecosystem dominated by software-focused investors.
However, Jemuel’s perseverance and strategic approach garnered the attention of visionary investors who shared his belief in Cover’s transformative potential.
With each funding round, Cover gained momentum, attracting top-tier investors who recognized the company’s disruptive impact on the housing industry. Jemuel goes over the entire fundraising journey that started while they were still in New York City.
Even while in college, Jemuel and Alexis noticed that the venture community on the East Coast wasn’t interested in hardware or hard tech at that time. Instead they were investing in software or consumer products. They knew soon enough that they would have to raise capital in the Bay Area.
Even after their first $20K, there weren’t a lot of venture capital firms investing in housing startups or hardware.
These verticals were considered risky since they were capital-intensive. But the initial funding helped them build the first prototype that people could see, touch, feel, and understand what it could be.
Soon after, Jemuel and Alexis attracted funding from Niko Bonatsos at General Catalyst and Vinod Khosla at Khosla Ventures. These investors understood the ultimate potential and the importance of solving the problem.
Later, Cover ended up raising a $10M Series A, which they used to sell houses to their first customers. They showed that they could deliver and that the houses could be installed and were of excellent quality.
From that point on, Jemuel and Alexis continued raising further rounds of capital, sometimes meeting with and pitching to investors over weekends.
Storytelling is everything, which is something that Jemuel Joseph was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Overcoming Obstacles with Strategic Problem-SolvingIn the face of unexpected obstacles, Jemuel’s approach to problem-solving is methodical yet pragmatic. Rather than rushing to find quick fixes, he emphasizes the importance of understanding the root causes and collaborating with the right stakeholders.
This deliberate approach has proven effective in addressing challenges and driving continuous improvement within Cover’s operations. A lot of Cover’s investors have also invested in companies like Tesla and SpaceX and followed the journey from the very first institutional round.
A Vision for the Future: Building Communities with CoverLooking ahead, Jemuel envisions Cover not just as a home construction company but as a catalyst for building communities and even cities.
By leveraging technology, scalability, and a commitment to quality, Cover aims to empower individuals worldwide to realize their dream of homeownership.
From customizable homes to innovative living experiences, Cover’s vision extends far beyond traditional boundaries, shaping the future of urban living.
Jemuel looks forward to a time when people can go online to find and purchase a property, build a house on it, and move into it within a fixed timeline, complete with a fixed cost and great quality.
Cover can take care of the manufacturing, permitting, and installation and have the house ready to move in within eight months. Owners only need to bring their furniture. Solving the manufacturing problem is the initial step toward creating all kinds of living experiences.
Fostering Dynamic Relationships for GrowthCentral to Cover’s success is its dynamic relationship with investors who share a deep understanding of the challenges and opportunities inherent in the company’s mission.
By fostering open communication and alignment of vision, Cover leverages the expertise and networks of its investors to fuel its growth trajectory.
Lessons Learned and Future EndeavorsReflecting on Cover’s journey, Jemuel acknowledges the importance of staying focused on solving the core problems at hand. As the company continues to evolve, he remains committed to tackling challenges with resilience, innovation, and a relentless pursuit of excellence.
In conclusion, Jemuel Joseph’s story is a testament to the transformative power of entrepreneurship and the pursuit of a bold vision.
From humble beginnings to the forefront of innovation, his journey exemplifies the spirit of perseverance, creativity, and unwavering determination to make a difference in the world.
As Cover continues redefining the future of housing, Jemuel’s story inspires aspiring entrepreneurs everywhere, reminding us that anything is possible with passion and persistence.
Listen to the full podcast episode to know more, including:
- From Ethiopia to Silicon Valley, Jemuel Joseph’s journey embodies resilience and innovation in pursuit of the American Dream.
- Cover’s inception stemmed from a shared vision to revolutionize home construction through mass production, customization, and streamlined operations.
- Overcoming obstacles in the venture capital landscape, Cover attracted visionary investors who recognized its transformative potential.
- Strategic problem-solving guided Cover through unexpected challenges, emphasizing understanding root causes and collaboration for effective solutions.
- Cover’s future vision extends beyond home construction, aiming to build communities and cities by empowering individuals worldwide.
- Dynamic relationships with investors fuel Cover’s growth, leveraging expertise and networks to drive innovation and scalability.
- Jemuel Joseph’s story inspires aspiring entrepreneurs, highlighting the importance of perseverance, creativity, and unwavering commitment to making a difference.
SUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The post This Entrepreneur Raised $70 Million To Automate Home Building For Maximum Cost Efficiency And Value appeared first on Alejandro Cremades.
In the annals of entrepreneurship, few stories rival the extraordinary journey of Payam Zamani. Born into adversity in Iran, Payam’s path to success was not paved with gold but with resilience, determination, and a relentless pursuit of excellence.
From fleeing his homeland as a refugee with only $75 in his pocket to launching an IPO worth over a billion dollars, Payam’s story is one of triumph over adversity and a testament to the indomitable human spirit.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Escaping AdversityGrowing up as a member of the Baha’i community in Iran, the largest minority group, Payam faced persecution and discrimination from a young age.
The aftermath of the Iranian Revolution in 1979 brought further challenges, with the government targeting Baha’is and stripping them of their rights. Many Baha’is were killed in the 1980s.
At the tender age of eleven, Payam was expelled from school for his religious beliefs, setting the stage for a tumultuous journey ahead. He reveals how, even today, 45 years later, Baha’is don’t have the right to attend universities in Iran.
Crossing the DesertThe defining moment in Payam’s life came at sixteen when his parents made the agonizing decision to send him out of Iran for a chance at a better future.
With nothing but uncertainty ahead, Payam embarked on a perilous journey across the desert, guided only by hope and the promise of a new beginning.
Payam’s parents worked out an arrangement with some people who could smuggle him out of the country. His recollection of that fateful goodbye to his mother, their eyes locking in silent understanding, epitomizes the sacrifices made in pursuit of a dream.
Without cell phones, staying in touch was not easy. Payam remembers being taken to a safe house where he stayed from 8 am to 10 pm along with five other refugees. The Jewish girls in the group were asked to lay flat in the back of a Cherokee truck and covered with a tarp.
Payam sat in the truck cabin with another boy and the driver. Seated on a bench seat in the front of the truck, they drove out into the moonlit desert.
Under the threat of Rocket-propelled grenades, the truck sped through the desert, staying away from the highway and the border guards in the distance.
Describing the JourneyThey continued their journey of many days by car, motorcycle rides, and hiking through the desert. Payam describes this journey in his book Crossing the Desert. In the book, he talks about his experiences growing up in Iran and his determination to embrace life’s difficulties.
As Payam says, they make us better prepared for a future that we don’t even know what we should anticipate. He talks about becoming stateless and then coming to the US, building a company, and taking it public with a $1B valuation.
His successes did not give Payam the satisfaction and joy he wanted; instead, they took him to the beginning of capitalism without faith and spirituality. He has spent a lot of time building businesses in the last 20 years while trying to understand how they can make the world a better place.
Payam’s core objective is the idea of service to humanity through our professional engagements and how that can fundamentally change the trajectory of a business but also bring true joy to the professionals involved in a business–a truly commendable thought process.
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The Land of OpportunityArriving in San Francisco, United States, in 1988 with his brother and little more than a dream and $75, Payam immersed himself in a vastly different culture. Yet, the warmth and openness of the American people left an indelible impression on him.
Payam remembers a cousin picking him and his brother and taking them to Modesto in Central Valley in California.
Their first meal was an ultimate cheeseburger at Jack In The Box, and Payam was alarmed that it cost $14 when all they had was $75. He recalls being worried about running out of money quickly.
Despite the initial challenges of adapting to a new country and culture, Payam embraced the opportunities that lay before him, seizing every chance to carve out a brighter future. He wonders how people often focus on obstacles and view them as roadblocks.
However, Payam opines that the name of the game is to focus on the opportunities. The most exciting thing he realized was that he could get an education without worrying about getting beaten up for being a Baha’i.
Although they had to work to pay for books and school, Payam was appreciative of being able to go to High School and junior college by paying so little. He wasn’t denied access because of his religion, and he wanted to take full advantage of the opportunities.
Within 48 hours of reaching the US, Payam and his brother got jobs, and after 20 days, they got their own apartment. They paid for it, went to school, and connected with their parents and sister. Two years later, their parents joined them in the US.
Payam credits President Ronald Reagan and his US human rights policies with giving him and his family a second chance at life.
Entrepreneurial Triumphs and TribulationsPayam’s entrepreneurial journey began with AutoWeb, the first online car-buying service he co-founded with his brother. He relates an interesting story about the inception of the company. After landing his first job at Microsoft, his brother was ready to buy a new Honda.
However, as he revealed when talking to Payam, Honda did not have a website. After signing up on the CompuServe platform, Payam started to explore the internet and was inspired to start a website with his brother. His brother was a technology guy, and Payam had experience with sales.
Pooling their skills, in November 1994, the duo started AutoWeb, which became the first online car-buying service. Payam would go door to door to car dealers in the US and offer them the chance to put their business on AutoWeb. At the time, most people did not know anything about the Internet.
Payam motivated himself to sound excited and energetic to sell the concept. He remembers approaching over 150 dealerships and presenting the opportunity but hearing nos every time. They transformed a nascent idea into a thriving business through sheer grit and determination.
Once they snagged the first sign-up, their idea quickly accelerated to 5,000 car dealers by 1999. One out of every four in the US had signed up with AutoWeb, and ultimately, they took it public in 1999.
He looks back again with appreciation for all the help he got from the many people he met along the way.
The memorable moment was when a child from Iran who came to the country with $75 rang the bell for a $1.2B company. However, success was not without its share of setbacks.
Storytelling is everything, which is something that Payam Zamani was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Dot-Com Bubble BurstThe dot-com bubble burst, and his subsequent ventures faced challenges. Yet, each experience served as a crucible for growth and learning. Payam remembers how it opened his eyes to the problems with capitalism in the US.
He could see how the stock market is often manipulated or rigged, as it is also called. Bankers typically set up IPOs and often stretch the rules as far as they can. Many continue to believe that unethical is not illegal.
Stock prices are often manipulated to the maximum value. Note that true wealth in this country, which brings about millionaires, is made from the stock, not cash flow.
Bankers and others involved often do everything they can to maximize that stock price for as long as they can until they sell the shares.
It bothered Payam that many were not into company building but stock price maximization, which are two different things. He left that IPO process filing disenfranchised, saying that this is not the right way to build businesses, which is too often driven by greed.
Payam left the company; he had given up his CEO role a few months prior to the IPO. Although he had started a company after leaving, that business did not survive the dot-com bust.
He ended up losing most of the $200M he had made as part of the AutoWeb IPO. Payam was 28 at the time.
One Planet GroupAmidst the highs and lows of entrepreneurship, Payam’s guiding principle remained steadfast: to build businesses that thrive and positively impact the world.
This ethos culminated in the formation of One Planet Group, a conglomerate of companies dedicated to not only being great businesses but also committed to contributing to the betterment of the world.
From performance-based marketing ventures to ventures in entertainment like West Wind Pictures, Payam’s vision transcends mere profit to encompass a broader mission of societal betterment.
However, he warns aspiring founders to be prepared for the different business cycles. A company going up will certainly go down at one point, so they should be prepared for that.
Entrepreneurs should never think that the slumps won’t happen to them because they are smarter and better than other entrepreneurs and executives or that their business is better.
Payam advises them to navigate crises as growth periods that they can take advantage of to build a better foundation for the next growth stage. That’s how the cycle of life proceeds.
He reveals how AutoWeb did not perform well post-IPO partly because the board had rushed into changing leadership and hiring folks not ready for the challenge.
Payam’s own investments didn’t do so well. However, he used the setbacks to build a new company in June 2001.
Today, it has evolved into a business that brings him true joy, and the way it’s built contributes to what he thinks is building good businesses that also contribute to the betterment of the world.
Through One Planet Group, Payam has invested in around 50 companies. One of the companies he owns is Buyerlink, which is now earning revenues worth $70M.
Buying Back AutoWebInterestingly, around a year and a half ago, Payam bought AutoWeb, which they took public in 1999. He went ahead and took the company private.
As Payam reveals, 24 years down the line, it’s not the same company, and not a single employee has remained. Since he left, AutoWeb had lost over $350M and was losing around $1M a month.
Payam bought the company, closing the deal on 1st September 2022. A month later, in October 2022, the company became profitable and has been growing ever since. Payam recalls how he was determined to bring his baby home and take care of it.
As Payam reveals, the businesses he owns are primarily focused on performance-based marketing. Basically, technology-driven advertising is done on the Internet. Many of their clients include blue chip businesses like car makers on their platforms.
Since Payam wanted to create a bigger impact, he recently took a controlling position in a company called West Wind Pictures. This company makes movies and TV shows, which Payam wants to leverage to tell stories that he thinks will bring light into the world to make it a better place.
Payam’s Vision for the WorldComing back to One Planet Group, Payam views it as a beautiful brand that makes sense out of his chaotic world. He is committed to being an entrepreneur who builds businesses.
He loves to work with other founders and help them, somehow contributing to the betterment of the world–that’s the legacy he wishes to leave behind.
In Payam’s opinion, anyone having a personal worth of billions of dollars is far from acceptable. Our money and wealth should be spent on our needs, our families and the betterment of the world. Accumulation of wealth and an ever thirst to consume more will certainly not bring us joy and will negatively impact the world at large.
In Payam’s mind, every decision you make has a consequence, and the intention behind our decisions and considering the consequences of our decisions is of utmost importance.
He is not this independent entity put on this planet to maximize the amount he can consume and the amount of waste he can create as a human being.
Payam believes humans, as noble creations, should take care of themselves but also contribute to everyone else’s well-being.
He hopes that companies like Amazon, as they march ever more rapidly to become massive global dominators, will consider how the small businesses on the main street are getting affected.
Payam hopes they will consider the consumers who will no longer have a choice.
He thinks that it is essential to consider how much wealth is truly necessary to be accumulated and at what point should you just give it away or simply not earn it as you offer profit share to your employees and change the way you choose to measure success by going beyond financial targets.
Lessons Learned and SharedThrough it all, Payam imparts invaluable lessons garnered from a lifetime of experiences. He underscores the importance of embracing challenges, recognizing that every crisis is an opportunity in disguise.
Payam advocates for finding mentors who can offer candid advice and guidance, steering one through the tumultuous waters of entrepreneurship and life.
The ideal mentor is one who is willing to criticize and deliver hard-hitting lessons on spending money, investing, raising funding, and structuring deals.
Above all, Payam emphasizes the need to lead with intention, with a focus on creating value not just for oneself but for humanity at large.
A Beacon of HopePayam Zamani’s story is more than just a tale of triumph; it’s a beacon of hope for those navigating the treacherous waters of adversity. It’s a testament to the transformative power of resilience, determination, and unwavering belief in one’s ability to defy the odds.
As he continues to chart new territories and build businesses that leave a lasting legacy, Payam inspires us all to dream big, persevere in the face of adversity, and strive for a better tomorrow.
In Payam’s words, “Embrace life’s difficulties, for they prepare us for a future we cannot yet anticipate.” And in doing so, we all find the courage to embark on our own remarkable journeys of discovery, growth, and fulfillment.
Listen to the full podcast episode to know more, including:
- Embrace adversity as a catalyst for growth and resilience; every crisis holds the seeds of opportunity.
- Seek mentors who offer candid advice and guidance, steering you through the complexities of entrepreneurship and life.
- Lead with intention, focusing on creating value not just for oneself but for the betterment of humanity.
- Success is not a straight path; it’s a journey filled with triumphs and tribulations, each shaping us into who we are meant to become.
- Find solace in the midst of uncertainty, knowing that every challenge is a stepping stone towards a brighter future.
- Never underestimate the power of perseverance, for it is the fuel that propels us forward in the face of adversity.
- Leave a legacy of impact and significance, building businesses that thrive and make the world a better place for generations to come.
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Your email address is 100% safe from spam!The post He Took A $1.2 Billion Company Public And Now Supports Startups To Impact The World Positively appeared first on Alejandro Cremades.
Micro investment for early-stage startups is quickly emerging as a transformative option for founders seeking capital. This upcoming trend in the venture capital industry is making startups available for investing to a larger pool of small investors.
On the flip side, small founders with disruptive business ideas can get funding from small investors open to supporting them. As a rule, venture capitalists and private equity firms look for early-stage startups to back that demonstrate high growth potential.
Their objective is significant returns in terms of a strategic sale or IPO. VC funding is crucial for the startup ecosystem because of the funding, guidance, and industry-specific expertise it offers.
Micro-investors, or micro VCs, as they are also called, invest smaller denominations of capital in early-stage companies. But also take on higher risks. Their backing allows entrepreneurs to transform their ideas into marketable products.
Micro VC capital is typically geared toward upcoming startups that need low amounts of capital at the onset. They enable founders to avoid diluting equity and utilize their resources more efficiently.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Micro Investment for Early-Stage Startups is Rising in Recent YearsMicro VC firms are accelerating their impact on the startup ecosystem and emerging as major players affecting change. These investors manage smaller funds than conventional VCs. Micro VCs funding is worth an average of $25M against VCs operating funds worth $100M and above.
While VCs invest funding worth several million dollars, Micro VCs are open to making small loans of around $100K and $500K to $1M. Essentially, they fill the large gap that VCs leave.
Micro investors are growing rapidly over the last decade or so. Statistics indicate a rise of 291% in deals from 2010 to 2020.
In contrast, VC investment deals indicated a 200% increase, while angel investor deals increased by 256%. In 2022, close to 70% of micro-investments were directed toward seed and early-stage startups and upcoming founders.
The worldwide micro-investing platform added a revenue of $392.1M in 2021. By 2032, it should reach $ 3,187.2M, which translates into a CAGR of 21.1% within the same interval. At present, the market represents around 20.9% of the aggregate online investment market.
Founders looking for investment and support for early-stage startups but in small denominations should look into this option. They need not worry about dilution or ceding equity and can partner with small investor funds.
Several other advantages come with these partnerships. Read ahead to know more.
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Micro Investment for Early-Stage Startups – What You Need to KnowMicro investments are the process of investing small or micro amounts of capital into early-stage companies or startups. These firms manage smaller funds that can be as low as a few hundred dollars.
Technology, digital platforms, the Internet, and regulations have helped in bridging the gap between small investors and startups. These facilities have effectively eliminated the barriers to entry into the startup ecosystem, enabling new entrants with disruptive ideas.
Micro VCs have more similarities with traditional VCs than angel investors, but both firms have crucial differences in their structures. Micro VCs deploy a more partnership-driven approach to their funding.
MVCs are primarily high-net-worth individuals, family offices, and foundations other than institutional investors.
Traditional VCs are usually private and public pension funds with sophisticated investment strategies and approval processes. They also have much more substantial funds at their disposal. In contrast, micro VCs operate smaller funds. Their top executives have been founders themselves.
Although conventional VCs also have seasoned entrepreneurs running the funds, they typically have impressive success track records. This factor influences their screening processes, raising their probability of backing startups that demonstrate the potential for rich returns.
Micro VCs are more open to spreading their funds out over a larger number of smaller startups. Their approach is to diversify the risk and include a higher number of startups in their portfolio that can grow quickly. In this way, they also raise their chances of maximizing returns.
Features of Micro Investment FirmsMicro investment for early-stage startups has added an element of inclusivity and diversity to the startup ecosystem. More innovative, mission-driven, and underrepresented founders can successfully approach investors for backing.
From the investors’ perspectives, they can support ideas in which they are personally invested and that align with their values. Such investors need not have large sums of money available, but are open to investing what they have.
Early-stage startups that typically don’t attract VC attention can now apply to micro VCs to get the funding they need. This new surge in funding availability has sparked exponential growth in the startup ecosystem, with many founders grabbing opportunities.
Similar to traditional VCs, micro VCs also offer industry-specific mentoring and guidance along with the capital they offer. Here’s some additional information:
- Micro VCs focus on geographical criteria and are more likely to invest in startups closer to their home grounds.
- Founders need not demonstrate successful track records to attract micro-investment.
- Micro VCs are not interested in replacing CEOs or require a board seat as a condition for investing.
- Micro investment rounds are smaller, and they prefer to participate in syndicates.
- Micro VC firms have lower overhead costs, which allows them to allocate a higher portion of their capital to investing. The minimal operational costs free up more available capital.
- Founders can expect in-depth support, mentoring, and guidance in running their companies. They can also leverage expertise from CEOs and their management teams.
- Founders can access networking opportunities that can be indispensable assets for upcoming entrepreneurs. This advantage is not just for their current startup but also for any other businesses they want to build moving forward.
- Micro-investment funds may not conduct extensive due diligence when screening candidates.
- Term sheets and shareholder agreements include flexibility and are founder-friendly.
Micro Investment Firms StructureMicroinvestment firms operate as limited partnerships in which the fund managers work as limited partners. Typically, partners are seasoned entrepreneurs and founders with extensive experience in building startups.
They leverage this experience and expertise to screen candidates and select startups that have value and potential. The firm raises capital from investors interested in supporting innovative and disruptive companies but also making substantial returns.
These investors can include family offices, high-net-worth individuals, angel investors, and others. Typical micro-investments range from $100k and $500K to $1M. However, the fund value can be anywhere from $10M to $50M.
Similar to most traditional VCs, their approval criteria can include specific geographical locations and high-growth sectors. Micro VCs stay invested for shorter time frames of five to seven years and require a small equity stake.
Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Typical Sectors Micro Investment Firms TargetMicro investment for early-stage startups is typically geared toward disruptive sectors. One of the most renowned examples of a micro VC-funded unicorn is Lyft. The company launched in 2012 with early-stage backing from Mayfield Fund. Currently, it is one of the most popular ride-sharing services.
Other notable examples include Flexport, backed by Anorak Ventures, Robinhood by Elefund, and Monzo by Passion Capital. As for the targeted sectors, 60% of micro VC capital is diverted to banking and Software as a Service (SaaS).
Healthcare, life sciences, eCommerce, Artificial Intelligence (AI), consumer applications and platforms, insurance, and finance are also verticals attracting interest.
Micro Investment for Startups’ Screening CriteriaAs a rule, micro-investor firms operate with lower amounts of capital and non-financial resources. This factor makes extensive due diligence and screening processes cost-prohibitive. Nor do they have the resources to monitor their investments post-funding. Even so, here are the basic criteria they use.
- Micro VCs prefer to invest in early-stage startups.
- The company should have a Minimum Viable Product (MVP). The firm follows up the initial investment with small contributions over fixed intervals. The staggered approach could be over months or quarters.
- The business vertical they support depends on the fund manager’s area of expertise and experience in that vertical.
- The number of deals micro VCs enter annually can be between 50 and 100.
- Capital amounts are a maximum of $1M.
- Stress is on diversity, inclusion, underrepresented founders and sectors, and startups that can have a positive social and environmental impact.
Micro investors are just one of the diverse funding options you can approach for your startup. For more details about how to build a targeted list of investors for your startup, check out this video below.
Why Micro Investment for Early-Stage Startups is RisingIn the last decade, micro VCs have been mushrooming worldwide, and experts estimate this trend will continue.
The sectors that will likely note more micro-investment include manufacturing, retail, FMCG or Fast-Moving Consumer Goods, and information technology. Several reasons have contributed to this, such as:
- The primary reason for more micro-investment players coming into the market is demand. Close to 4.7 million businesses are started each year across different verticals needing capital and support. The year 2023 was a record year, marking 5.5 million startups. Micro VCs provide the funding to get them off the ground.
- Many states have instituted regulations to promote a startup environment conducive to their growth. Entrepreneurs with innovative ideas have more federal support as well.
- Micro investment for early-stage companies is less risk-averse. They are open to supporting fresh ideas that may seem impossible to execute. Startups that find it more challenging to get support from other investors opt to rely on them for capital.
- Traditional VCs often struggle with the issue of lack of agility because of their size. And the need for accountability to their investors. Micro VCs don’t worry about such restrictions and can pivot quickly according to changing market conditions. If they come across promising startups, they will grab the opportunity quickly.
- Technological advancements, the Internet, and digital platforms have enabled investors and founders to connect and eliminate the gap. Smaller investors are willing to jump into the market to make profits.
- Microfunding has opened to door to diversity and innovative thinking, adding dynamism and substance to the startup ecosystem.
Since micro-investment funds operate within specific geographical locations, they effectively support local economies and founders. This factor has helped create economic hubs in previously unexplored regions and territories by tapping into their unique resources.
Downsides to Micro Investment VCsFounders relying on micro VCs for funding should be aware of the potential downsides. While small capital is an excellent tool for getting startups off the ground, that’s all they can expect. The stringent screening procedures that traditional VCs deploy add credibility to the startup.
When founders need further funding rounds, they may have to go through these processes. That’s because startups that micro VCs fund are less likely to get financing from conventional VCs and angel investors. Entrepreneurs must demonstrate exceptional profitability and traction to access support.
Since micro VCs have fewer resources, they may not be able to offer top-notch guidance comparable to traditional VCs. The potential for making a strategic exit and selling the company is low after micro VC funding.
Although the small amounts of capital are helpful, founders will have to work very hard to stabilize the company before they can take it to the next level. However, the initial funding can be a massive advantage for a startup that cannot attract interest from the big players.
The Takeaway–Leverage Micro Investment as a Stepping Stone for More OpportunitiesFounders who haven’t been able to secure funding from conventional venture capitalists, banks, angel investors, and sources can consider micro VCs. Precisely when they need small amounts of capital to get the startup off the ground.
Micro investment for early-stage startups is more accessible and approachable than VCs, allowing founders to test their ideas. But with low liability. Innovative ideas that are disruptive and inclusive may not align with the investment policies of larger VCs.
That’s where micro VCs come in–to fill the gap and promote ideas that can potentially become unicorns. Founders can leverage a bespoke approach that allows them to test their ideas with just the basic amount of funding. And grassroots level guidance and mentoring to propel the company.
If the initial prototype works, they can consider taking the startup to the next level with funding from more sophisticated investors.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Micro Investment For Early-Stage Startups – Accessing Capital From A Diverse Pool Of Investors appeared first on Alejandro Cremades.
Fundraising strategies for solopreneurs can be more intricate than if you had a co-founder on board. However, more founders now focus on the benefits of building a startup on their own. Freedom with decision-making, avoiding conflicting missions, and accelerated growth are only some of the upsides.
Statistics indicate that 65% of startups fail because of discord and disagreements between founders. On the flip side, you’ll single-handedly navigate the challenges and multiple aspects of the startup. This factor can have its positives when raising capital for the company, but it also has downsides.
As a rule, investors are more likely to back a startup with two or more co-founders than a solopreneur. They tend to perceive the company as lacking adequate skill sets, resources, and accountability.
A single founder bootstrapping can only take the company so far. More than one entrepreneur ensures productivity, lower risk-taking, and high levels of diligence that lower the possibility of errors.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Successful Solopreneurs Who Made It BigIf you look at the success track records of these entrepreneurs, their resilience and determination will impress you.
- Josh Hix had to face rejections 200 times before getting his first funding check. He appeared on Shark Tank and participated in several events to get introductions. However, his closing rate was only 50%. Even so, he managed to raise $90M for this venture and eventually sold it for $300M. He advises upcoming founders to stay dedicated to their mission and vision and rely on data to back the decisions they need to make.
- Anthemos Georgiades got many introductions when establishing his startup. Although he was successful with networking, connecting with investors continued to be challenging; most days, investors would make decisions to pass on his pitch deck within 10 minutes. Today, his startup has raised $90M from top-tier investors.
- Eugenio Pace’s first startup was unsuccessful, but he was determined to start his own venture. The first seed round raised just $25K, but the series D round raised $60M in capital. In all, the company raised $110M from investors like Sapphire Ventures and Bessemer. Eugenio talks about taking rejection in his stride and just appreciating the time investors spent meeting him.
- Eric Ryan took his company from $0 to $100M in sales in just two years, raising $34M for two startups. He started off selling products door to door, and today, Target and other major retail stores are stocking his merchandise.
These success stories point to the fact that fundraising strategies for solopreneurs can be successful with careful implementation. Read ahead for detailed information about how to impress investors and get backing for your new venture.
Fundraising Strategies for Solopreneurs – Set the Stage to Impress InvestorsThe most fundamental of fundraising strategies for solopreneurs is to think like investors and their kind of concept worth backing. For starters, they’ll want to see a recognizable brand name backed by a robust mission statement and vision.
Leverage Free Social MediaA great way to leverage free social media platforms that are ideal for the bootstrapping solopreneur. Build your brand authority even if you have yet to create a product prototype or make your first sale. An authoritative digital presence successfully conveys your business acumen and business goals.
You’ll broadcast the company’s name and mission with robust content to attract consumer interest. Start engaging potential customers, which is a great move for when you start the actual marketing. You’ll also impress investors with social media metrics.
Register the Business Domain NameAcquiring and registering the business domain name is like readying the digital storefront for the startup. The domain is how customers will associate with the business and build brand recognition and trust. Startups typically don’t have a lot of assets that can act as collateral.
However, digital assets like brand and domain names, trademarks, logos, and slogans are IPs and resources that add value. These assets also indicate your dedication to building the business. Even if the startup fails, liquidating the assets can always help investors recover some of their capital.
Further, subdomains are like digital real estate that you can lease for additional revenue streams. This can be a huge advantage when the business is faltering, and an infusion of cash flow can cover the loss.
Even if you have yet to start manufacturing real products, building a potential revenue source is a great feature. Use it to highlight your pitch deck and attract investor attention.
When picking out a domain name, make sure it describes and gives information about what the business does. The right domain name can build authority and presence within your chosen vertical. It also helps identify the company as a reliable entity.
Domain names have an additional advantage. They impress investors that you’ve taken the time, energy, and effort to build an online presence. Having a digital address along with a slogan, tagline, and keywords raises the founder’s chances of investors as a serious solopreneur. Since domain names come with an email address, communication is streamlined.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Book a Call
Prepare to Face Multiple RejectionsOne of the main lessons that stands out from the success stories above is the possibility of rejection. Solopreneurs should be mentally prepared to hear the word “No!” before walking into an investor meeting.
Instead of focusing on what went wrong with the presentation, it makes sense to focus on the next one.
Of course, learning from past errors is always a smart move. Don’t be afraid to ask for feedback from the investors on what you could have done better. Seasoned investors can be excellent mentors to guide you on the mistakes for in-depth evaluation.
Take the time to go over the questions that came up, the interactions you had, and the areas where you faltered.
Each experience should be a lesson to inspire you to get better, and in time, investors will be sure to recognize your determination and dedication. You’ll also build confidence with practice.
Never take the rejection personally; it’s just the pitch or business concept that needs more work. Being prepared for rejection is a good thing. But you should also present the pitch deck with the objective of winning the check. Eyes on the prize always.
Gather All the Information You CanResearch and information are the single most important assets you can gather before starting your fundraising efforts. Be very aware that the capital you raise is the most crucial resource to get the venture off the ground. You’ll also continue raising money to scale the company and ensure its long-term success.
So, start by gaining all the possible data about every aspect of your business idea. Since you’ll make all the decisions, this data will not only guide you in the right direction. But also help fortify the pitch deck. Investors need to see actual numbers for the pitch to be credible.
While on the subject of gathering information, put together a list of targeted investors. You’ll have a higher success rate if you concentrate your energies on a dedicated group of investors. Do your due diligence and find investors that operate within your particular vertical.
Also, research the projects they have backed previously. Look for their approval criteria and usual terms and conditions, crucial–fundraising strategies for solopreneurs. For instance, if yours is a mission-driven startup, you could reach out to family offices with philanthropic objectives.
Then again, if you’re building a tech-based company, you might want to look for angel investors who are also veteran founders. Entrepreneurs who have successfully built and exited companies could be willing to not only back your startup. But also provide valuable mentoring and industry-specific expertise.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Demonstrate Traction with StatisticsBeing a solopreneur of a new startup already indicates two downsides before you start presenting the pitch deck. You’ll need to make up with impressive statistics that demonstrate traction quickly.
The objective is to indicate market interest in your brand. And that customers need the product or service.
Gather these numbers by giving customers the first few products or MVPs and recording their reactions and feedback. This feedback will help you test, refine, and approve the product before you start adding other features.
Customer reviews also indicate that the products have a real market. Interest in the MVP indicates the potential for substantial sales once you start adding peripherals and advertising them aggressively. Don’t forget to build a social presence side-by-side.
Followers and likes on social media platforms are also traction indicators that can impress investors. You’ll need these numbers if you’re pitching for seed funding and have yet to build the prototype.
Partner with Credible MentorsPartnering with credible and authoritative mentors is one of the critical fundraising strategies for solopreneurs. Look for entrepreneurs, professionals, executives, and advisors with successful track records. These individuals can provide you with valuable insights into building the startup.
Most importantly, you can get tips for raising funding and building an extensive network of potential investors. Leverage their experience when making difficult decisions in the initial days as a budding solopreneur. Partnering with reputable figures in the industry can prove to be a crucial advantage.
Investors are likely to view your pitch more favorably because of the company’s association with the renowned entity.
Even as you’re reading about how solopreneurs can raise funding, you’ll also want to learn about some essential dos and don’ts when creating a pitch deck. Check out this video, where I have explained in detail all the information you should have.
Key Considerations When Fundraising for SolopreneursSolopreneurs setting out to look for investor backing should keep these crucial considerations in mind.
- Be cautious when sharing information with investors. Make sure to secure the Intellectual Property and business secrets in the pitch. While demonstrating the concept is critical for attracting investor interest, you also risk it getting shared with competitors. You’ll use virtual data rooms to share statistics and vital information since getting viewers to sign NDAs might not work well.
- Building a company typically involves compliance with several regulatory authorities. Before you dive into raising capital, it’s advisable to research the regulations pertaining to your startup and vertical. Get started with licensing and permits early on and display them in the pitch. This documentation adds federal credibility that investors will appreciate.
- Always remember that each fundraising event is not going to be the last. Sometimes, you may have to settle for a few unfavorable terms just to get money in the bank. While accepting them may seem like a good idea at that point, focus on the long-term impact on the company. Future fundraising drives and how potential investors may view the terms as an impediment.
- Solopreneurs managing every aspect of company management should be aware that raising funding is a time-intensive task. You may find that reaching out to investors is taking up all your energy and bandwidth. Running the day-to-day operations could become challenging. So, work out a game plan in advance on how to maintain a balance with time management.
- Hiring a team is a good strategy, even if you wish to be a solopreneur. You can delegate tasks to free up your time for other important aspects. It also indicates your willingness to invest in top-notch talent and skill sets to drive the company forward. Investors are sure to appreciate that.
Post-Fundraising Strategies for SolopreneursBefore accepting the term sheet, you’ll consult a legal expert working in the startup sphere. Make sure you understand the terms and conditions before signing the deal. Once the money is in the bank, leverage advisor expertise to manage the resources and money you now have available.
It’s advisable to track your spending with efficient management and documentation. That’s how you’ll indicate business acumen to current and future investors.
You’ll also demonstrate the effective use of the resources placed at your disposal. Being responsible and grounded will set the stage for funding drives down the line.
Building a business from the ground up as a solopreneur will come with multiple challenges. The primary challenge is always the lack of resources, financial and non-financial. Preparing to meet the challenges of building trust among investors is a good starting point.
The tips above will help you with crucial information about what to expect and how to gain credibility for the venture.
You may find our free library of business templates interesting as well. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Fundraising Strategies For Solopreneurs: Navigating Challenges and Building Trust appeared first on Alejandro Cremades.
In the world of business, there are individuals whose journeys exemplify resilience, innovation, and an unwavering commitment to turning ideas into reality. Simon Litsyn, a seasoned entrepreneur with a background rooted in academia, is one such individual whose story is as inspiring as it is insightful.
In this interview, Simon talks about the relationship between business and academic activities and the transition between the two fields. He also reveals his experiences making deals worth $1B and raising funding for his company XtraLit.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Early Life and EducationBorn in the former Soviet Union, Simon’s early life journey laid the foundation for his future endeavors. Raised in Ukraine and later moving to Russia, he pursued his education at St. Petersburg, Leningrad, where his academic pursuits set the stage for future innovations.
In 1990, Simon moved to Israel, holding the position of a professor at Tel Aviv University. Side-by-side, he was pretty active in industrial activities as a consultant and then as an entrepreneur, founding and executing companies.
Building USB Memory Cards at M-SystemsSimon’s transition from academia to entrepreneurship began with his involvement in M-Systems, a company that would later be acquired by SanDisk for a staggering $1.5 billion.
As one of the chief scientists at M-Systems, Simon played a pivotal role in developing technologies that revolutionized flash memory storage.
After the acquisition, Simon stayed on at SanDisk for another six years as part of the integration process. He considers it an interesting experience since he was a purely academic guy with some experience in writing papers.
However, he had almost zero experience in having the results of his papers implemented.
Simon recalls how he simply had an idea that eventually became very productive. He had been working on ideas related to increasing the density of memories from the beginning.
The flash memories were much more expensive at the onset. To be competitive, it became necessary to increase the density of the memory.
Simon had actually come up with an idea that was difficult to grasp, even for his colleagues at M-Systems. He had to overcome people’s resistance since they were not convinced this technology would work.
More so, they were not convinced that a small startup could compete with giants like Toshiba, SanDisk, Samsung, and others. However, Simon and his team drastically increased the voltage levels and density in the memories.
Their technology made flash memories and storage much cheaper and affordable, ultimately leading to the widespread adoption of USB sticks. Simon relates how the journey was challenging because he had zero experience making his scientific ideas work in electronics.
He had to present a lot of things to relay that the rules are quite different, but he was eventually very successful. This technology has become ubiquitous; now, all devices use flash memories or USBs as they are more commonly known.
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Challenges of Working in a Large CorporationWorking at SanDisk made Simon realize that working as the leading scientist in the field in a relatively small company is very different from working in a very big corporation.
Implementation and testing in a small company are easier since he could directly interact with the people responsible for testing.
In larger corporations, the process becomes quite bureaucratic and difficult. While SanDisk was a good place for innovation, implementation and risk-taking were challenging.
After a time, Simon decided that his thought processes were not a good fit for the large company. That’s when he considered transitioning to entrepreneurship.
Transition to Entrepreneurship – Founding StoreDotSimon embarked on a new journey, co-founding StoreDot in 2012. StoreDot aimed to address the critical issue of battery charging time, particularly in the electric vehicle industry.
Simon’s research showed that each battery being charged may store one, and mean discharge may store 0, or you may have some intermediate value of the voltage.
Simon also realized that no one had thought about the concept and saw the potential for further developing the ideas even while he was working in the field of storage. He started thinking about extending the field and developing ideas of how to charge batteries faster than existing ones.
Simon also realized that the issue of fast-charging batteries was the critical bottleneck for electric vehicles. In 2012, the charger would take a lot of time and caused range and anxiety in the vehicles.
People were afraid to find themselves without juice in the car. The possibility of having and charging similar to gas feeding into a car would be a fantastic feature that will make electric vehicles much more appreciated.
Leadership and Fundraising for StoreDotSimon faced many challenges with the idea catching on and remembers pushing through for eight years with his co-founders. Through innovative research and strategic financing, StoreDot garnered significant attention, raising over $200M at a valuation exceeding $1B.
That’s how they were able to capitalize on the business and growth because the concept was too capital-intensive to go in parallel with the business. As Simon explains, such ideas, by definition, are knowledge-intensive and require effort and a lot of time for implementation.
Proving that the technology works is not sufficient in the field of electric vehicles when you know that the design of the new vehicles will take five years. Simon explains how he knew he would see the product in the next generation since it will be a long time before the car goes on the road.
This is why it’s a complicated, financially intensive field, but eventually, it worked, and they managed to raise a significant sum of money. The company is still struggling to make it to the final products, But Simon believes that users will soon have this feature in every electric vehicle.
He is hopeful that the company StoreDot will be the first to promote and propose a solution for fast-changing batteries.
Venturing into XtraLitAs StoreDot continues to push the boundaries of battery technology, Simon has set his sights on his latest venture, XtraLit. Building on his expertise in materials science and lithium extraction, XtraLit aims to revolutionize the process of lithium extraction, a critical component in battery production.
Simon recalls how he was fascinated with lithium while working on batteries. He was involved with material studies for a long time and often posed the question of why lithium was the main and critical material involved in battery production.
Simon was curious about how it was produced and manufactured. He started to explore how other materials can mimic the same reaction as lithium. Interacting and working with other scientists in different fields, Simon came up with XtraLit, the material that is able to absorb lithium.
Simon reveals how he raised $30M for the company, and his extensive experience navigating the funding landscape helped him get there. Even though he is traditionally the technological guide, he has successfully organized the company’s business.
Storytelling is everything, which is something that Simon Litsyn was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Simon reveals how, in just two years, they have managed to arrive at a rare working solution that is now being tested on the upscaled pilot level in several locations in the world. However, investments have significantly decreased, especially at the last stages.
Even so, Simon has persevered and convinced lithium source owners and oil and gas companies working on extractive minerals in the Deal Sea, Great Salt Lake in the US, and Salt Flats in South America.
ConclusionIn a landscape marked by uncertainty and rapid change, Simon’s story offers valuable lessons for aspiring entrepreneurs. From his humble beginnings in academia to his groundbreaking contributions to the technology sector, Simon’s journey embodies the spirit of innovation and resilience.
As he continues to chart new territory with XtraLit, one thing remains clear: Simon Litsyn’s entrepreneurial journey is far from over. With his unwavering determination and visionary mindset, Simon is poised to leave an indelible mark on the world of technology and beyond.
Listen to the full podcast episode to know more, Including:
- Simon Litsyn’s journey from academia to entrepreneurship highlights the power of bridging theoretical knowledge with practical innovation.
- His pivotal role in companies like M-Systems and StoreDot underscores the transformative impact of technological advancements in flash memory storage and battery technology.
- Simon’s ability to secure significant financing for StoreDot reflects his strategic acumen and leadership in navigating the complexities of the startup landscape.
- Through ventures like StoreDot and now XtraLit, Simon continues to push the boundaries of innovation, particularly in the fields of battery technology and lithium extraction.
- His transition from technical specialist to CEO exemplifies the importance of adaptability and visionary leadership in driving entrepreneurial success.
- Simon’s journey serves as a testament to the power of perseverance and resilience in overcoming challenges and achieving breakthroughs.
- As he continues to chart new territory with XtraLit, Simon’s entrepreneurial spirit and commitment to innovation inspire aspiring entrepreneurs worldwide.
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In the heart of every great entrepreneur lies a melody of resilience, innovation, and unwavering determination. Paul Wiltshire, a visionary hailing from the land down under, has orchestrated an awe-inspiring journey that harmonizes the fields of business and creativity.
In a captivating interview, Paul walks through the corridors of his past, unveiling the symphony of experiences that have shaped his remarkable career. He talks about his multiple acquisitions and how humility and confidence have been key to success.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks A Prelude to Innovation: From Musician to MogulBorn in New York, Paul’s journey started in the picturesque landscapes of Australia, where the seeds of his passion for music were sown. As a young prodigy, he found solace in the enchanting notes of a piano, igniting a lifelong affair with music.
From learning the trumpet to unraveling the mysteries of synthesizers in his school years, Paul’s 20-year professional musical career traversed through diverse fields. He recalls how he couldn’t stay away from instruments, and at 16, he got his first synthesizer, changing his life forever.
Eventually, this led Paul to the pulsating heart of the music industry. His foray into music production and songwriting marked the inception of a glorious era where he sculpted sounds for icons like the Backstreet Boys.
Yet, amidst the crescendo of success, Paul was ready to experiment with entrepreneurship. His music production and songwriting career began in the mid-90s when he spent many years in the recording studio working with artists.
Paul had a very hands-on technological approach and would do everything from recording artists to creating sounds, recording every instrument, as well as mixing it.
Paul enjoyed the sense of completion that came from creating a product, finishing it, seeing it released, and enjoying it. As he explains, building a business is never complete; it’s a long journey compared to the euphoria of finishing a recorded music project.
Identifying the Gap in the Supply and Demand Sides of the Music IndustryIn 2014, Paul made a pivotal shift from the comforts of familiarity and ventured into uncharted territories. He was always interested in business, and although he wore a creative hat day to day as a record producer and songwriter, he was always thinking about the music business he studied.
Paul also started to realize just how fragmented the music industry was.
The music industry started out selling physical products (vinyl, CDs, and cassettes) and was very regionalized. When the digital age came, it instantly became global, but the ecosystem and infrastructure were not ready for it.
Paul identified a big problem that needed to be solved in the music industry, recognizing the transition that was happening and the inevitable reality the digital world would have.
More and more musicians were getting access to tools to create music, increasing supply, and music was being used in more and more environments, increasing demand. With the objective of connecting the marketplace, Paul made the decision to move from Melbourne, Australia, to Los Angeles.
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Conducting the Symphony of Business: The Birth of SongtradrWith a vision to revolutionize the music industry, Paul combined creativity with commerce, birthing Songtradr—a pioneering platform that harmonizes artists, labels, publishers, and music consumers in a digital symphony.
Explaining the Songtradr business model, Paul reveals that they license music and technology, and thanks to their latest acquisition, they also sell music products directly to consumers.
Songtradr charges licensing and SaaS fees to its B2B customers and takes a small share of the revenue from music product sales to consumers, supporting revenues for artists, labels, and publishers.
Songtradr provides technology and solutions for both the B2B and B2C markets. B2B music users include advertisers, film, TV, games, apps, platforms, and anyone who uses music in a commercial or digital business environment.
The company also has an enormous consumer audience of over 50 million on the platform Bandcamp, which it recently acquired. The audience uses the platform to support their favorite artists, discover new artists and their music, and purchase products, merchandise, vinyl, t-shirts, and digital music.
Paul recalls how, in the early days of launching Songtradr, they successfully advertised on social media platforms like Facebook, where they saw artists sign up every few minutes. It felt like the company was getting traction in building a two-sided marketplace.
However, that also came with the challenges of balancing demand and supply. By 2016, the company had tens of thousands of artists signing up for the platform.
Raising Capital for SongtradrThrough meticulous strategic maneuvers and a cautious approach to capitalization, Paul steered Songtradr to never-seen-before heights.
With an impressive portfolio boasting nine acquisitions and a staggering $180 million in funding, his journey is a testament to his vision’s transformative power.
Paul looks back at his fundraising strategies, one of which was to raise only what they absolutely needed. Songtradr gained a very supportive investor base, with many of its investors investing multiple times.
Storytelling is everything, which is something that Paul Wiltshire was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!Paul also expanded their strategy to include M&A not as any kind of roll-up but to solve the fragmentation that exists in the music business, where there are a number of mature but somewhat isolated businesses.
Combined with the Songtradr core platform and business model, it created a valuable accretive effect.
Paul saw that the industry was moving faster and faster, and in order to be a key industry leader, the company needed to accelerate its efforts using investment capital. With this goal in mind, Paul has executed 9 M&A transactions since 2019.
Songtradr has acquired key pieces of what they see as solving the broader jigsaw puzzle to get where it is today. Paul still sees a lot of opportunities ahead and bigger challenges that they must overcome while also having the momentum to support these opportunities and growth.
Navigating the Harmonies of Acquisition and IntegrationAs Paul steers Songtradr toward growth, he talks about the intricacies of acquisition and integration—a combination of strategic prowess and cultural alignment.
With a focus on the combination of humility and confidence, he navigated the dynamic landscapes of mergers, ensuring a fusion of cultures and capabilities.
Through integration and a relentless pursuit of cultural synergy, Paul achieved integration across distributed offices, fostering an environment where creativity thrives and innovation flourishes. He believes in avoiding micromanagement and providing teams with a healthy level of autonomy.
The company’s global teams use the same technology, communications, and reporting, working together toward a shared mission, focus, and core values.
Embracing a global ensemble united by a shared vision, Songtradr transcends geographical boundaries, resonating with audiences worldwide.
Essentially, Songtradr is building the music industry infrastructure to streamline and improve the industry, expand the value of music, and create a healthy and transparent marketplace. Paul believes in being humble enough to identify areas where there’s room for self-improvement.
He fosters an environment where there is open, honest, two-way feedback between managers and employees.
The company’s goal is for all employees to feel confident enough to speak up without anyone dominating the space. This culture results in increased innovation and creativity and a productive and collaborative atmosphere that results in better products.
As Paul sees it, people are the most crucial component of any business. Selecting people based on their ability, enthusiasm, and dedication rather than just their resumes is a winning strategy. The company has an extensive hiring screening process that involves multiple interviews.
The Overture of Vision: Transforming Dreams into RealityAt the heart of Paul’s symphony lies a resounding vision—a vision where the cacophony of fragmentation and subsequent data inefficiencies in the music industry is transformed into a transparent and efficient ecosystem.
Through Songtradr’s transformative journey, he envisions a future where every artist receives their rightful dues, creativity reigns supreme, and innovation orchestrates a world of boundless possibilities.
In the world of entrepreneurship, Paul Wiltshire’s journey stands as a magnum opus—a testament to the enduring power of passion, resilience, and unwavering conviction. As his symphony continues to echo across the corridors of innovation, one thing remains abundantly clear—where there is a melody of ambition, a much larger work is waiting to be composed.
Listen to the full podcast episode to know more, including:
- Paul Wiltshire’s journey from musician to mogul epitomizes the fusion of creativity and entrepreneurship.
- Songtradr’s success underscores the transformative power of visionary leadership and strategic acumen.
- Acquisitions and integrations orchestrated by Paul exemplify the delicate balance between humility and confidence in business.
- Cultural alignment across distributed offices fosters a global ensemble where creativity thrives, and innovation flourishes.
- The visionary vision of Songtradr heralds a future where transparency and efficiency harmonize the music industry.
- Paul’s emphasis on feedback, self-belief, and healthy routines underscores the importance of mental and physical well-being in entrepreneurship.
- Lessons learned in hiring underscore the necessity of patience, rigorous processes, and cultural fit in building a successful team.
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Your email address is 100% safe from spam!The post This Entrepreneur Raised $180 Million To Bridge The Gap Between Music Makers And Music Consumers appeared first on Alejandro Cremades.
Sebastian Kreis has an inspiring story about his experiences building an incredible platform. While many people are talking about using machine learning and AI, Sebastian was one of the trendsetters in the field.
In his interview on the Dealmakers Podcast, Sebastian talks about winning a series B funding round for his company and what it meant to have large players come in to back his startup. His story centers around team building and customer support and truly delivers valuable lessons.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Growing Up in ChileSebastian’s upbringing in Santiago de Chile, born to German immigrants, instilled in him a mindset that viewed challenges as opportunities. As he recalls, Chile is a developed country in Latin America and has been advancing but has retained its natural beauty.
Sebastian considers himself fortunate to have lived in the country and to have data points and the experience of a German family. With exposure to entrepreneurship from a young age, Sebastian developed a global perspective that would shape his future endeavors.
Engineering: A Path to Problem-SolvingDriven by a passion for mathematics and physics, Sebastian pursued engineering, recognizing its potential to address large-scale challenges. Engineering provided not only the tools to tackle complex problems but also the ability to simplify them for impactful solutions.
Sebastian was keenly interested in how engineers solve various problems of all scales worldwide using software and data.
He saw how engineering enables individuals to tackle significant challenges by breaking them down into smaller components, thereby simplifying complex issues and making a big impact.
This experience resonated with Sebastian in a big way, and he enjoyed his exposure to engineers working at big tech companies in the US and Chile. He points out how the startup ecosystem is evolving in Chile with upcoming founders thinking bigger about how to impact the startup world.
After graduating from engineering school, Sebastian went into investment banking. Although he could have worked for tech companies, he opted for banking partially because of pressure from close family and friends.
However, Sebastian talks about how this trend is changing, with more people preferring to work with startups instead of large companies.
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Banking and Beyond: Identifying Unmet NeedsDespite success in investment banking, Sebastian recognized the unmet needs of Latin America’s small and medium-sized enterprises (SMEs). He reveals how he participated in and structured products and deals worth $10B for the top 0% to 1% of companies.
Most banks prefer to back the most prominent companies, but Sebastian wanted to expand and extend services to companies that need access to more than just financial services.
He saw a gap in access to financial services and operational tools, prompting him to embark on a mission to democratize resources for businesses of all sizes.
When a big company hires an investment bank, it pays high fees to get the perfect advisor for direction on making progress and making the best decisions.
However, SMEs don’t have the resources, so they need a product to help them with similar facilities. They need a financial services manager to answer questions about their cash flows.
Sebastian realized that just being a banker or an engineer was not the solution. This is why he went into startup engineering because he can now build companies that have the ability to envision the future and the necessary tools to build it.
Incubating Innovation: The Birth of SafecardSebastian’s vision crystallized with the inception of Safecard, a platform aimed at revolutionizing how companies manage their finances, operations, and relationships. Combining cutting-edge technology with market insights, Safecard offers solutions to streamline operations and drive efficiency.
Sebastian talks about how he developed the concept. He recalls visiting the Bay Area and witnessing the early days of Uber and its technology. He noted that the tech was available not for building social media platforms but to really help people by solving important problems in the region.
Sebastian also recalls how having worked with some of the biggest companies in Chile and South America, he had gained valuable experience. Not only did he develop an understanding of how businesses work, but he also learned how people made decisions.
Sebastian quickly realized that nobody has certainty in making decisions but based them on being bold and having some data to base it on. The most crucial factor was a clear vision of what you want to build and execution capabilities.
Builders must combine these superpowers and assemble teams to develop pattern recognition. Next, they must share their vision with the teams and start building. Sebastian identifies collaboration between team members as the core factor that can actually impact customers and the business.
Identifying Problems in the Real Estate SectorSebastian recalls how there was an arbitrage since many real estate managers were developing condominiums and buildings, but there was no software for them. He saw the lack of control and access to tools to manage the projects.
Along with his team, Sebastian started off by building a few software tools, which were entrance solutions for entering condominiums and buildings. Customers saw that the solutions were not just for them but also for the entire ecosystem where they work.
Managing a property or building involves a good relationship with the ecosystem, including the tenants and rent payments. That’s what Safecard provided. Sebastian remembers how second-generation businessmen wanted to invest in the business, and entrepreneurs wanted to build on the big opportunity in the market.
These factors enabled them to raise funding for Safecard, a product that has had a significant impact on the economy.
Strategic Vision: From MBA to EntrepreneurshipSebastian’s decision to pursue an MBA in the US was a strategic move to deepen his understanding of business dynamics and lay the groundwork for Safecard’s growth. Leveraging his experience, he incubated the idea while gaining valuable insights through consulting projects.
By this time, Safecard had a robust customer base and had signed 36 months’ contracts. The company was growing quickly thanks to backing from financial institutions and financial products in the market.
Sebastian saw an opportunity to help the 98% or more companies he couldn’t help while working as an investment banker. These companies were generating all the labor and the GP in several B2B verticals.
He wanted to bring financial technology, a new software access experience, to these B2B companies in Latin America.
Sebastian looks back at how he got obsessed with the problem and how no one solved it in a scalable way. Instead of going right ahead and incubating and executing Xepelin, he opted to do his MBA. His focus was on the final project that he would be doing with a bunch of classmates.
Sebastian learned how to do detailed transformations for banks in the 18 months he spent there. For a time, he also worked with the Boston Consulting group, which was a strategic move to build Xepelin eventually.
The Concept Behind XepelinAs Sebastian explains, he realized that to build big companies and solve big problems in the economy, you need to have pattern recognition. He had extensive experience working as an investment banker and knew how to build a bank.
Sebastian would be building a financial service from the ground up, which was a great experience.
He also understood that a lot of companies were looking for deal transformation, and he had already built tech companies. When living in the Bay Area, machine learning and AI were great opportunities for him.
In 2016-2017, people adopted technology for efficiency and the opportunity to tackle a bigger issue. “You need less people because with software, you can do that but you can be smarter than your competition and actually add value to your customer,” Sebastian explains.
Understanding AI and machine learning early on allowed him to think big and implement many things for banks. Instead of building slides and developing some strategies, he went there to build stuff for other companies.
Fundraising Success: Equity and Debt StrategiesFor Sebastian, building companies is like a life-changing event. He was ready to take on the 10/20/30-year challenge.
He also saw that the VC market was evolving, and founders could build relationships with them. He noted that these investors were willing to help entrepreneurs build big companies from Latin America, Chile, and Mexico.
Sebastian recognized this as a tipping point. The market was ready to support a concept like Xepelin, disrupt access, and build financial tools. That’s how they could help small companies achieve success.
With a clear vision and strategic roadmap, Sebastian successfully raised significant capital worth $150M from equity and $400M from debt sources. His approach underscored a commitment to long-term success and sustainability.
Sebastian also reveals how international heavy hitters like PayPal and Battery are keen on jumping into Latin America.
Storytelling is everything, which is something that Sebastian Kreis was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplateUnlock the pitch deck template used by founders to raise millions. Just enter your email below.
Your email address is 100% safe from spam!The Xepelin Business ModelXepelin software is offered free to companies to organize information and comes embedded with three revenue-generating aspects. The first aspect encompasses their financial services related to accounts receivables, managing clients, and financial service accounts.
The second is managing information that can be leveraged to make better decisions for the company and for its relationship with clients and suppliers. Lastly, Xepelin also makes money through partnerships with platforms and finance institutions.
The Xepelin business model allows the company to have more cash at the end of the month so it can grow faster and pay less interest. At the same time, it has a team prepared to manage their challenges.
Sebastian underscores that Xepelin is not in the business of raising money but is focused on building long-term relationships with partners.
The objective is to build trust and relationships where partners complement each other. Thanks to pattern recognition, investors have specific experience and are keen on helping founders be successful.
Impact and Future: Redefining Business OperationsAccording to Sebastian, founders should have a clear vision of the impact on the customer and the problem they’re trying to solve. They should also design the future vision for the company and a robust team.
They should also focus on the capabilities that will open up in the short and middle term to get to that vision.
Conclusion: Inspiring a New Era of EntrepreneurshipIn Sebastian Kreis, Latin America has found a visionary leader determined to propel the region’s startup ecosystem to new heights.
As Xepelin continues to scale, Sebastian’s story serves as a beacon of inspiration for entrepreneurs worldwide, demonstrating that with passion, perseverance, and a clear vision, anything is possible in the world of startups.
Listen to the full podcast episode to know more, including:
- Sebastian Kreis’s journey from Chilean roots to founding Safecard exemplifies innovation and perseverance in Latin America’s startup landscape.
- Engineering provided Sebastian with the tools to tackle large-scale challenges, laying the foundation for his entrepreneurial endeavors.
- Xepelin’s inception stemmed from Sebastian’s vision to democratize access to financial services and operational tools for businesses of all sizes.
- Strategic decision-making, including pursuing an MBA and incubating the idea of Xepelin, enabled Sebastian to lay the groundwork for success.
- Sebastian’s fundraising success, leveraging equity and debt strategies, underscores his commitment to long-term growth and sustainability.
- Xepelin stands as a testament to Sebastian’s vision, which is poised to redefine business operations in Latin America and beyond.
- Sebastian’s journey inspires aspiring entrepreneurs, emphasizing the importance of trust, perseverance, and a clear vision in navigating the startup ecosystem.
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iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
FREE DOWNLOADThe Ultimate Guide To Pitch Decks Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The post He Raised $550 Million To Help SMEs Leverage AI Organize Their Financial Information In Real Time appeared first on Alejandro Cremades.
In a recent episode of the Dealmakers' Podcast, Daniel Theobald, the visionary entrepreneur and founder of Vecna Technologies and Mecable, shared his remarkable journey from growing up in Silicon Valley to pioneering autonomous forklifts and revolutionizing the robotics industry. His insights, experiences, and invaluable advice have inspired countless entrepreneurs. In this blog post, we delve into the transcript of the podcast to highlight the key takeaways and lessons from Daniel Theobald's journey.
The post This Entrepreneur Raised $128 Million To Have Robots Do The Dirty Work For You appeared first on Alejandro Cremades.
Navigating risk in startups to secure investor buy-in is one of the most crucial skills entrepreneurs must learn. Setting up, scaling, and sustaining a new business is super challenging.
Recognizing the key risk factors and instituting effective risk management solutions could make the ultimate difference between success and failure. Should you read any blog or article referring to startups across all industries, there’s one underlying factor standing out.
Only 50% of new ventures are likely to make it beyond the initial five years. And, 90% of new ventures will eventually fail for several reasons. The high failure risk percentage is hardly a deterrent to new ideas emerging and entrepreneurs being enthusiastic about starting businesses.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksStatistics indicate that 543,000 startups made their debut in the USA in the first two quarters of 2023. At least 78% of founders report that their business is generating profits. Interestingly, despite the high failure percentage, venture capitalists and angel investors continue to back them. And their buy-ins continued all through the pandemic.
At least 75% of venture capital-funded businesses never return the investment. Even so, investors are open to funding new business concepts but will conduct due diligence and examine the risk factors.
This is why entrepreneurs should understand how navigating risk in startups to secure investor buy-in works. Identify the main pitfalls your business is likely to face and devise a detailed risk management strategy to overcome them.
Navigating Risk in Startups to Secure Investor Buy-InWhatever the sector in which you’re establishing a business, make sure to address these risks in your pitch deck. Demonstrate that you’re aware of the potential snags in the venture’s success and that you’re on top of them. Here are more details about the core areas to focus on with risk planning.
Non-Viable Product or ServiceThe cornerstone of every new startup is a viable business idea. But transforming ideas into a product design that customers will want to pay for is a whole different ball game. Remember that misreading customer needs and demand leads to 14% of startups going under.
Being able to create a product design that actually works is one of the biggest risks the startup faces. Address this risk by conducting detailed research into the potential buyers. Identify the particular problem the product can solve and ensure that it is economical enough to make sense to customers.
Describe these details in your pitch deck. Demonstrate the target customer base with compelling statistics to show how the product is likely to perform. Also, talk about how you intend to minimize churn rates with efficient after-sales customer service.
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Poor Product-Market FitThe inability to identify the correct product-market fit is a significant pitfall for startups. At least 42% of them fold because of not being able to predict the market, demand, and future buying trends.
Study the market carefully and compile statistics that indicate whether the market is growing or likely to decline in the next few years. Understand the potential barriers you’re likely to encounter and how you intend to break through.
Your pitch deck should include metrics that denote market demand, estimated Customer Acquisition Costs (CAC), and go-to-market strategy. Also, offer information about the advertising channels you’ll target and the budget allocated toward harnessing them. Don’t forget that inefficient marketing strategies result in 22% of businesses failing.
Prudent founders factor in the time lag between when they initiate advertising and the time when the actual revenues start to roll in. They also plan for natural disasters similar to the global pandemic.
Factor in unexpected or macro risks like tech innovations that can render the product redundant. If you have contingency plans for a strategic pivot, the product-market fit slide is where you’ll mention it.
Viewers like to see how well-prepped you are for navigating risks in startups to secure investor buy-in.
Competition – Saturation With Similar ProductsIn an intensely competitive business landscape, founders should be prepared for the possibility of the industry crowded with similar products. Before taking the dive, you’ll study existing products and services available in the industry.
Understand how well they solve the existing problems or if there are underserved niches you can target. If multinational corporations dominate the sector, carving out a spot for your venture might not be that easy.
If you think you can take on the competition, work out your product’s USP and why customers will prefer your brand over others.
You’ll also want to explore acquiring patents and copyrights to secure the business concept before releasing it in the market. That’s how you’ll maintain your edge. Remember that patents, copyrights, and secure Intellectual Property are valuable draws for attracting investors.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Human Resources ConcernsThe core talent and top-notch skills are the dynamic resources that ultimately drive the business. Without it, close to 18% of startups eventually close their doors. The team slide is of special interest to potential investors because experienced human resources can determine the startup’s success.
Relying on expert mentors and advisors to assist you with recruiting and onboarding is a smart move. You’ll ensure that you avoid overlapping but with the ideal blend of essential skills. Institute a robust vision, goals, mission, and startup culture that new employees know to follow.
If needed, hire an HR consultancy to direct your hiring procedures at the minimum cost. Build a core team that is enthusiastic about your project and willing to go the extra mile. You’ll design appropriate compensation packages that include equity and salary packages that offer just the right amount of motivation to perform well.
Don’t hesitate to outline how you plan to minimize dilution even after offering equity to your investors to pay for funding. Aside from efficient screening processes, you’ll talk about the failsafe measures you have in place for dealing with employee lawsuits. Also, outline the agreements you have with engineers for securing the IP they develop for the startup.
Financial Issues Like Sluggish Cash FlowsFinancial problems like sluggish cash flow and running out of money too soon result in 16% of new ventures closing doors. Small businesses typically get seed funding from bootstrapping or advances from friends and family.
This factor does not leave much room for errors, and entrepreneurs need to be diligent about every penny they spend. At this point, they need efficient financial management and, preferably, an expert professional to record their expenses and revenues.
Although acquiring investment can resolve cash crunches, investors providing funding need to see that you’ve budgeted finances efficiently. You’ll demonstrate the asking amount and how you intend to allocate the resources.
Also, indicate the potential returns you can earn and your planning for the next funding round. The money you raise should not just resolve cash flow issues but streamline the way for incoming profits and revenues.
The risks we’ve talked about above are the most common pitfalls facing industries across the board. However, the rapidly evolving business landscape that now technology and the internet has additional risks founders should be aware of. Here’s some detailed information you should have.
Investors evaluating your startup are likely to have several questions centered around the potential risks. Here’s a video explaining more in detail what to expect during the Q&A.
Cybersecurity ConcernsOrganizations need to integrate technology into their operations to stay relevant to the tech-savvy audience. By 2040, 95% of customer purchases will be made on eCommerce sites. However, offering conveniences like eCommerce and online payments also opens them up to cybersecurity risks.
Without taking the necessary measures to protect customers’ Personally Identifiable Information (PII), you risk cybercrimes, data breaches, and hacking incidents. These hazards can damage the company’s reputation irreparably.
You risk heavy fines because of regulatory non-compliance that can wreck the startup’s finances. You could also end up paying heavy compensation packages to customers who have been affected. Not to mention the costs of managing lawsuits.
Malware, phishing scams, data leaks, and the costs of restoring and reinstating hacked security systems can be devastating enough. Investors examining your business model and pitch deck will want to know more about how you intend to secure the startup from such risks.
You’ll prep the startup carefully for such setbacks with cybersecurity policies that employees must follow. These may include password and device security and firewall protocols. Also, establish a robust cybersecurity infrastructure by allocating the necessary budget.
If needed, retain external agencies to keep your networks and systems protected. Investing in adequate insurance to secure cyber security liability is also a smart move. Make sure to include clauses that provide coverage for legal costs, forensics, managing complaints from affected entities, and more.
You’ll also need coverage for expenses related to notifying customers and vendors and assisting them with damage control. Be aware that 6% of new ventures fail because of cybersecurity issues.
Founders who are efficient in navigating risk in startups to secure investor buy-in have a higher chance of being successful.
Lawsuits and ClaimsLawsuits have the potential to destroy a small business with limited resources. New ventures face close to 12 million contract lawsuits every year. Among the many claim categories are accidents and injuries because of negligence and contract breaches.
Employees bringing lawsuits is also common for issues such as harassment and discrimination. This can be on the basis of gender, race, pregnancy, religion, and even age. Workers not happy with their salary and compensation or perceived unfair termination can also sue.
Almost every sector is at risk of being taken to court, including real estate agents, accountants, lawyers, insurance brokers, and consultants. Professionals providing services onsite or offsite from remote locations may also face lawsuits if customers are not satisfied.
Entrepreneurs should prepare for such risks by acquiring the necessary insurance coverage. You’ll buy insurance to protect the company against worker injuries in the workplace. Insurance will cover costs related to medical treatment, rehab, lost wages, emotional distress, and any other.
Entering into binding contracts with employees is an excellent strategy to prevent discontent later. Clearly mention the expected compensation and option pool, job descriptions, and any other clauses. If you work with Intellectual Property, don’t forget to get NDAs signed by any entities with whom you share the information. These entities can include employees and third-party consultants you hire.
Founders running a conventional brick-and-mortar establishment should invest in insurance for protection against slip-and-injuries on their premises. And the potential lawsuits arising from them.
Include this information in the data you provide to investors for their due diligence. Also, outline the agreements and contracts you have with employees and business partners. Investors will appreciate your commitment to securing your startup.
Legal IssuesSurprisingly, at least 2% of new ventures go under because of legal hassles. You’ll want to hire expert legal assistance to navigate regulations relevant to licensing for the business. For example, cafes and restaurants need different kinds of permits like a Food Service License, Building Health Permit, Sign permit, and more.
You’ll also need help with determining the startup’s legal structure, such as a sole proprietorship or partnership and company registration. Incorporating the business involves several legal processes and intricacies. Not addressing them can result in legal issues you absolutely want to avoid.
Startups should be ready with accountants to manage their finances and bookkeeping tasks to avoid the possibility of tax audits.
Secure Your Fledgling Company By Being Aware of RisksStartups face several risks at every step of their founding, scaling, and funding. Staying on top of potential pitfalls is not just a prudent move for founders. But it also indicates the company’s stability to its stakeholders.
Employees, customers, vendors, and, most of all, investors are likely to do their due diligence before entering into partnerships. Your risk management planning is an incentive to build long-term collaborations.
Investors see that their money is secure with the potential for getting rich returns. They also estimate the equity appreciating without any possible pitfalls, making the startup an attractive investment opportunity.
For all these reasons, navigating risk in startups to secure investor buy-in is an excellent skill for founders to learn. Tick off the boxes and prep your venture for long-term stability and funding.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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In this episode of the Dealmakers’ Podcast, we had the pleasure of sitting down with Carl Hartmann, an Australian entrepreneur who has taken his innovative ideas and turned them into two successful businesses.
Carl’s story is one of inspiration and resilience, and in this blog post, we’ll dive into his journey, from his early days growing up in Brisbane, Australia, to his experiences in the world of startups and entrepreneurship.
Join us as we explore Carl’s path to success and the valuable lessons he’s learned along the way.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGrowing Up in AustraliaCarl begins his story by painting a picture of his upbringing in Australia. He describes it as warm, wonderful, and safe—a typical Australian childhood.
He grew up in Brisbane and attended the University of Queensland, one of Australia’s largest universities, with a sprawling campus of around 60,000 people. This laid the foundation for his future endeavors.
After completing his university education, Carl entered the world of media. He worked for Newscorp and Fairfax, two prominent media companies in Australia. These early experiences in the corporate world would eventually shape his entrepreneurial journey.
The Spark of InnovationCarl’s first startup idea was inspired by his university job at JB Hi-Fi, a well-known Australian electronics retailer. He noticed that customers would come into the store, attempting to purchase big-ticket items like Plasma TVs.
However, accurately predicting shipping costs for such large items was a challenge, leading to incorrect estimations. He also noted how free shipping resulted in companies incurring huge logistics costs. This dilemma sparked the idea for his first startup.
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Navigating the Startup LandscapeCarl’s journey into entrepreneurship wasn’t smooth sailing from the start. He shared that his initial idea took shape around 2005 to 2007, but the global financial crisis (GFC) put a halt to potential investments.
He had to put his entrepreneurial dreams on hold but continued to work on his concept, eventually bootstrapping it to $1 million in revenue. One of the key takeaways from Carl’s early career was the value of seeking advice and building relationships.
He emphasized the importance of networking and the willingness of experienced individuals to provide guidance and support. Many of his early successes can be attributed to the advice he received from seasoned entrepreneurs.
Revolutionizing eCommerce LogisticsCarl’s first successful venture was in the realm of eCommerce logistics. His company developed a middleware layer that facilitated the integration of various retailers with different courier services.
This technology allowed customers to choose from a range of delivery options during online checkout—a pioneering concept in the industry at the time.
As his startup grew, Carl faced the challenges of raising capital and securing partnerships. He emphasized the importance of setting goals, achieving them, and building trust with investors.
Over time, the company secured significant institutional investments, including a $35 million series A round.
Expanding GloballyCarl’s innovative technology attracted global brands and allowed the company to expand its presence internationally. He mentioned the pivotal role of moving to the Bay Area to build a team and forge partnerships with key players in the industry.
In the world of startups, acquisitions and mergers play a significant role. Carl shared that, in his case, his company’s technology and potential disruption in the market made them an attractive target for acquisition.
After years of building and scaling his startup in the United States, Carl decided to return to Australia. He emphasized the importance of factors such as weather, healthcare, and security when making such decisions.
A New Venture: Solving the Skill Shortage:Carl’s journey didn’t end with his first exit. He co-founded a second company, Compono, which focuses on solving the skill shortage issue. The company offers a suite of solutions, including a talent-matching platform and micro-credentialing for upskilling talent.
Carl discussed the challenges and rewards of balancing multiple ventures. He stressed the importance of focusing on areas where he could deliver the most value and letting others handle day-to-day operations.
Car’s next venture was Lyre’s Spirit Co, which tapped into the new and upcoming vertical of non-alcoholic drinks for adults. Along with this co-founder Mark, Carl came up with a series of popular alcoholic beverages in their non-alcoholic avatars.
The concept caught on in a big way, with Carl raising an incredible $11.5 million in seed funding, which was the highest-ever material investment in the alcohol-free sector.
Storytelling is everything, which is something that Carl Hartmann was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Prioritizing Health and Work-Life BalanceA key lesson from Carl’s entrepreneurial journey was the importance of prioritizing health and maintaining a work-life balance. He shared his own experiences with maintaining fitness and the value of disconnecting from work to recharge.
Carl Hartmann’s journey from Brisbane, Australia, to global entrepreneurship is a testament to the power of innovation, perseverance, and continuous learning.
His story serves as an inspiration for aspiring entrepreneurs, highlighting the importance of seeking advice, building relationships, and prioritizing well-being on the path to success.
Carl’s entrepreneurial spirit and commitment to making a positive impact continue to drive his ventures forward, leaving an indelible mark on the business world.
Carl’s journey is a reminder that with the right mindset, determination, and willingness to adapt, anyone can turn their innovative ideas into successful ventures that leave a lasting legacy in their respective industries.
Listen in to the full podcast episode to find out more, including:
- Prioritizing health and work-life balance as a founder to prevent burnout and maintain peak performance.
- Focusing on your strengths and delegating operational tasks to others to free you to tackle complex deals and strategic challenges.
- Embracing the “return on effort” concept, where you concentrate your energy on areas where you can deliver the most value to your business.
- Leveraging your experience and knowledge to build a successful family office portfolio, balancing active involvement with passive investments.
- Recognizing the significance of the better-for-you trend as health-conscious consumers seek alternatives to traditional products, opening new entrepreneurial opportunities.
- Staying adaptable and preparing to pivot your business strategy, as the COVID-19 pandemic showcased the potential for unexpected shifts in consumer behavior.
- Learning from past experiences and continually refining your skill set to evolve as an entrepreneur and leader.
Alejandro Cremades · EP 718 Carl Hartmann On Raising The Highest-Ever Seed Round For No-Alcohol SpiritsSUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify The post This Entrepreneur Raised The Highest-Ever Seed Round For No-Alcohol Spirits With $11.5 Million In Funding appeared first on Alejandro Cremades.
In this episode of the Dealmakers' Podcast, we had the pleasure of sitting down with Carl Hartmann, an Australian entrepreneur who has taken his innovative ideas and turned them into two successful businesses. His latest venture, Lyre's Spirit Co has attracted funding from top-tier investors like Futurecraft Ventures, VRD Investment, Doehler Ventures, DLF Venture, and DLF Venture.
The post Carl Hartmann On Raising The Highest-Ever Seed Round For No-Alcohol Spirits With $11.5 Million In Funding appeared first on Alejandro Cremades.
Entrepreneurs looking to dive into the cryptocurrency industry should look into the traditional routes to fund blockchain ventures. The infancy stage and extreme volatility of this business vertical are not deterrents to conventional investors.
Venture capitalists, angel investors, crowdfunding platforms, and banks are keenly interested in exploring the possibility of earning rich returns. Mainstream adoption by institutional investors has also resulted in the blockchain sector attracting interest as a less risky investment opportunity.
The blockchain and cloud applications market worldwide was valued at $17.57B in 2023, with projections of a CAGR of 59.9%. By the year 20230, it will have touched the $469.49 billion mark.
Several accelerator and incubator programs are emerging to support and invest in upcoming startups. They offer not just training and assistance with product and business development. But also access to funding sources that entrepreneurs can tap.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTo name a few examples, Mastercard has a global accelerator program that invites and trains crypto and blockchain startups. If you’re seeking out VCs, consider options like Shima Capital, Orange DAO, and CoinFund, which have invested millions.
Wellfound, previously known as AngelList Talent, has an impressive list of blockchain startups it has backed. Some of the top names include Futureswap, RabbitHole, Injective Labs, CoinAlpha, and Ox.
Founders typically consider industry-specific crypto capital as funding sources, including Initial Coin Offerings (ICO) and security token offerings (STO). Initial DEX offerings (IDO) and initial exchange offerings (IEO) are also preferred options for Distributed Ledger Technology (DLT) startups.
But don’t pass up on traditional routes to fund blockchain ventures. Read ahead to learn more.
Exploring Traditional Routes to Fund Blockchain VenturesWhen exploring appropriate funding sources, you’ll consider several criteria, including the startup’s stage and short-term and long-term goals. Also, work out the degree of control you want to retain over the company’s decision-making and the resources you need.
You’ll want access to investor networks to fund future rounds. So, work out the equity you’re willing to cede to the investors. Most importantly, your core funding needs must balance expected rewards, risk factors, and the venture’s projected growth.
Accordingly, you’ll approach venture capitalists, accelerators, incubators, or angel investors. Also, explore network-supported funds, crowdfunding platforms, government grants, and bank loans. Weigh their pros and cons before making the final decision for this particular funding round.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Acquiring Venture Capital for Blockchain StartupsVenture capital has significant contribution to entrepreneurial and intrapreneurial blockchain projects, even if the startups have low valuation. Although ICOs have been the preferred fundraising strategy, this option is now subject to more regulations because of the risk.
Essentially, venture capital funds are a group of investors who pool their money and spread their investments across several startups. But, they tend to invest according to a specific specialization strategy rather than diversify across various sectors.
Interestingly, traditional VCs and crypto-focused VCs occupy almost the same funding market share at 25.5% and 24.5%, respectively. Further, several blockchain networks support and fund upcoming startups to expand the sector’s reach.
As a rule, VCs are careful investors, with managers methodically reviewing applications before picking out viable projects to back. VCs are also short-term funding options, and their focus is on selling their equity, making quick profits, and exiting quickly.
However, VCs are now recognizing the potential presented by blockchain startups, not necessarily crypto unicorns. This is why you can consider reaching out to venture capitalists to secure funding.
VCs are open to investing in crypto-related companies that provide supporting services to blockchain ventures. Like, for instance, cryptocurrency charting software, crypto tax reporting startups, crypto mining, crypto consultancy, and crypto courses.
Whatever may be the stage your business is at, you can approach VCs for funding. They provide pre-seed and seed capital and are open to funding startup capital and early-stage startups. Growing ventures poised for rapid expansion right up to the IPO stage can rely on VCs for support.
Advantages of Acquiring VC SupportTraditional routes to fund blockchain ventures like venture capital come with a broad range of pros for startups:
- Having attracted venture capital funding, startups gain credibility in the market. Further funding rounds are likely to be far more successful, with retail investors also offering money.
- To get funding by launching ICOs, startups only need to release a white paper. However, VCs tend to do their due diligence to evaluate the viability of the project before investing in it. They also research the community and marketplace to assess its profitability. Getting their support reassures founders that they have a winning business concept on their hands.
- VC funds employ expert managers who have technical knowledge about the particular sector. It’s their job to screen applications for suitability.
- In case the company were to fold, the founders would not be liable to repay the investment amount. This factor alleviates some of the pressures they face when scaling the business.
- VCs are open to taking carefully measured risks, indicating that the startup has value.
Crowdfunding as a Traditional Method for Crypto FundingEntrepreneurs looking for funding for their startups can consider crowdfunding as an option. The key difference here is that, as opposed to funding from other sectors, blockchain investors receive an equity stake. This is why crypto startups apply for and acquire equity crowdfunding.
Advantages of Raising Equity CrowdfundingRaising equity crowdfunding from accredited funds brings you a range of advantages, such as:
- Startups get access to a broader range of backers, including venture capitalists and angel investors. Should you sign up with funding platforms like SeedInvest and Wefunder, you’ll reach high annual income and net worth investors. Think entities with an annual income of $200,000 and above or a net worth of $1M or higher.
- Once your campaign is live on the crowdfunding platform, its information is available to any person searching for viable investment opportunities. Having a presence on the platform gives you added visibility and higher chances of getting funding.
- The most important pro of getting equity crowdfunding is the validation you acquire. Investors are likely to view the startup as a viable opportunity, which makes future funding rounds more successful. And easily executed.
- While you do have to give up some amount of equity, the final amount is likely to be far lower than with other investors. This factor ensures that you retain complete control over the startup and decision-making. Investors won’t have a seat on the board of directors, nor will you be accountable for how you run the company.
See How I Can Help You With Your Fundraising Efforts
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- Investor Access : connect with the right investors for your business and close them
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Reward-Based CrowdfundingFounders who prefer not to give up equity can instead go for rewards-based crowdfunding. This option allows you to raise funding for the venture without ceding equity or taking loans or debt. Here’s what you need to know:
- Since you aren’t offering equity, the rewards should be compelling to have enough value to compensate investors for the risk. Work out the pricing accordingly.
- Run promotional campaigns to raise awareness for your project on platforms like social media and email marketing. Also, consider placing banner ads on reputable crypto publications.
- Pick out an appropriate crowdfunding platform relevant to your niche. Also, read up on their terms and conditions and expected fees before signing up.
- Calculate a realistic funding amount you hope to raise. Work out the expected fundraising costs like overheads, fees, and rewards you’re offering and factor them into the final amount you’ll receive. Make sure you don’t end up ceding equity or taking on debt.
- Provide updated information to your backers about the campaign’s progress and the funding you get. Strategies like these build investor engagement and trust.
Approaching Angel Investors for Crypto FundingIf you are not approaching high-net-worth entities via crowdfunding platforms, you can also reach out to them directly. Angel investors typically look for exciting concepts to back, and their focus is more on the founder and their mission.
Angel investors may not necessarily require equity in the startup, nor are they looking for quick exits. However, they are looking to profit from their investments even if the risk factor is high.
Strategies for contacting angel investors start with identifying entities that are specifically interested in blockchain technology. Check their portfolios for similar projects they have backed in the past. Next, you’ll use networking channels to connect with them and build a close relationship.
Be ready with an elevator pitch and communicate your intentions without wasting their time. Answer questions honestly and be clear about the asking amount and the anticipated returns you can provide.
You’ll also check with them for the involvement they’re expecting in their investment and the timeline for maintaining their funding before wanting to exit. Acquiring investment from angel investors is unlike any other of the traditional routes to fund blockchain ventures.
Your success rate primarily depends on the impression you can create and your ability to convince the investors.
Accelerators & Incubators for Blockchain StartupsIncubators and accelerators play a crucial role in nurturing upcoming startups in the blockchain ecosystem. They help bridge the gap between innovative, industry-disruptive ideas and the resources needed to transform them into marketable products.
Their efforts lead to strategic collaborations between founders, industry experts, veteran executives, investors, and other stakeholders. In this way, they help support the rapid growth in this business landscape.
More so because getting backing from an accelerator or incubator program adds credibility to the startup. This validation opens up doors for future funding rounds and effective marketing. Customers are more likely to be impressed by the products they develop and market.
A critical advantage of signing up with a great program is the legal and regulatory training you can access. Since the blockchain is a rapidly evolving vertical, regulations can be complex.
Founders get information about how to secure the Intellectual Property they ideate and the regulatory frameworks they must comply with. Addressing these issues early in the startup phase ensures more streamlined fundraising, thanks to the company passing due diligence checks by investors.
Check out these leading incubator and accelerator programs supporting DLT startups in the US.
- Y Combinator
- Techstars
- XRC Labs
- Boost VC
- Wavemaker Labs
- Blockchain Founders Fund
- Alchemist Accelerator
- dlab Programmatic Venture Capital
IncubatorsIncubators are typically sponsored by government organizations, academic institutions, and other agencies committed to community development and progress. Corporate entities looking to promote their sector by supporting new ideas and innovations also fund incubators.
Although incubators don’t provide much funding, they more than make up for the industry-specific expertise they make available. Founders with exciting business blockchain concepts can rely on them for assistance in developing Minimum Viable Products (MVP).
Expert mentoring, guidance, well-equipped workshops, and access to investor networks are only some of the advantages of incubators. Founders can also collaborate with like-minded entrepreneurs and build foundations for profitable partnerships down the line.
Finding the right funding sources for your fledgling company can be a long and difficult road. Check out this video where I have addressed your concerns about how to find investors for your startup.
AcceleratorsSimilar to incubators, founders must look for accelerator programs specific to their industry. These programs focus on offering strategic support to startups wanting to accelerate growth quickly.
Similar to incubators, they offer founders opportunities like training sessions, seminars, lectures, and workshops where they learn more about blockchains. Business strategies, marketing, education, and funding opportunities specific to DLT startups are part of their program
Blockchain Grants As Funding SourcesSeveral organizations back blockchain startups with grants. Blockchain Association is one example that offers grants of up to $50,000. You could also consider contacting The Ethereum Foundation, which supports ventures with grants of up to $100,000.
The TakeawayConsidering the rapid growth of the crypto sector, more traditional routes to fund blockchain startups are opening up. Investors are interested in the potential for attractive profits, which can offset the risk of investing in this nascent industry.
Although cryptocurrencies are the go-to funding option, founders must explore conventional sources that offer a lot more than just money. You can access training, technical expertise, veteran executive training, and guidance with navigating regulations and compliance.
Leveraging these advantages can give your startup that critical edge that ensures its long-term success, scalability, and sustainability.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Raising The Blocks: Traditional Routes To Fund Blockchain Ventures appeared first on Alejandro Cremades.
What are the common pitfalls to watch for when securing funding for IP-backed startups? Technology and the internet have led to the business landscape evolving drastically. Entrepreneurs now have formal and informal intangible assets to base their ventures on.
These intangible assets or Intellectual Property (IP) arising from innovation add to the startup’s value. Their industry-disruptive concepts and technology ultimately lead to robust business models and saleable products. This is why IP is of specific interest to investors.
With entire startups built using Intellectual Property as cornerstone assets, securing them is super critical for the businesses’ survival. Without the ability to efficiently manage IP issues, you risk losing your rights on the intangible assets and expensive litigation.
Founders must also secure appropriate legal protection for their IP to ensure streamlined business transactions and effective seed funding drives. When you’re ready to exit from the venture, IP assets should enhance its value and status as an attractive acquisition target.
Getting into strategic partnerships to scale your company quickly is also easily done. Especially when you bring secured intangible assets to the negotiation table.
As of August 2023, the US had 1,016 intangible-intensive unicorns, with companies like Red Point, Fracttal, Questel, and Tiko occupying the top positions. In 2022, the global IP industry was valued at $4533.36M. Experts estimate the sector to grow by a CAGR of 58.38% to reach $71552.09M by 2028.
Investors are keen on backing IP-driven ventures that have the potential to earn them rich returns. This is the ideal time for you to pitch for funding and launch your company on its growth trajectory.
Before you do that, check out the typical pitfalls to watch for when securing funding for IP-backed startups. Make sure you understand how to avoid them.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksUnderstanding Intellectual Property AssetsThe terms Intellectual Property (IP) or Intangible Assets (IA) encompass ideas, innovations, and creations of the human mind. If these assets have economic value, founders can acquire legal rights to safeguard them and claim them as exclusive property.
You’ll apply for and acquire patents, copyrights, and trademarks to secure your competitive advantage and the right to monetize them. Aside from standard patents, you should also look into non-patent IP assets and describe them in detail in your portfolio. Trade secrets and service marks are also forms of IA that you should get legal protection for.
Let’s dive into the potential pitfalls you could face when fundraising and how to avoid them.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Not Having a Detailed Intellectual Property Plan and Management StrategyEntrepreneurs developing Intellectual Property that they intend to monetize should start by creating a detailed IP plan. This plan is similar to a standard business plan since it determines how IA drives the company. Prioritize this step right up there with other strategies like recruiting top talent, advertising, search engine optimization, and more.
A well-structured IP strategy identifies the assets that back their business model even before the company launches. This move is critical when the upcoming venture only has Intellectual Property as its cornerstone asset.
Accordingly, you’ll work out effective strategies for maintaining and protecting not just your current IA. But also any future concepts your company develops. Next, you’ll establish a budget and capital allocation for managing and supporting these intangible assets.
Most importantly, you’ll integrate regular freedom-to-operate (FTO) searches to evaluate the patent landscape for technology with legal protection.
Ensuring that your inventions don’t infringe on existing patents helps you avoid litigation. Any future business and product development you initiate should reference this information to secure the IP assets you ideate.
Founders should set up in-house procedures for protecting any intangible assets and trade secrets the company owns. These may include storage in secure facilities or limited-access data rooms or restricting unauthorized access to the assets.
Check-in and check-out procedures and watermarks on documents are other effective strategies. Having separate networks exclusively for managing IP assets also works.
Your IP strategy will include protocols for reviewing the contracts and agreements your company enters into. These contracts can be with employees, developers, consultants, and freelance techs you hire. Ensure that the documents include well-enforced NDAs and other legal safeguards.
How This Influences FundingAs your company scales and evolves, review the IP strategy and plan and revise as needed. A good time to do that would be when you’re formulating the next fundraising initiative. You’ll want to include an updated IP plan in the pitch deck to demonstrate complete IP security to investors.
Investors conducting their due diligence are likely to review your business and IP plan carefully. Every aspect indicates the venture’s stability and ability to generate returns and profits. Above all, an ideal IP plan demonstrates the risk mitigation steps you’re taking to ensure the long-term sustainability of the company.
Not having a robust IP plan in your pitch deck is a setback. It’s one of the most important pitfalls to watch for when securing funding for IP-backed startups.
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Not Having the Proper DocumentationWhen it comes to securing your IA, having the right documentation complete with legal terminology is critical. You would want to hire expert legal counsel and advisors to review the forms and paperwork you receive or dispatch.
Incurring the costs of retaining professional services is preferable, even if the startup has limited funding. Or it is bootstrapping its initial setup.
A good starting point is NDAs or non-disclosure agreements. Entering into pro-forma agreements can be a dangerous mistake. Such forms include only standardized terms and conditions and may fail to include specifics pertinent to the company’s intellectual property.
To get appropriate legal protection, your agreements and contracts should define the confidential information’s complete scope. You’ll also clearly outline what the agreement excludes and the tenure for which it is enforceable or its duration.
Expect to create new NDAs for every project and include provisions and conditions to limit the use of the IP you’re sharing. Also, talk about any “implied licensing” you disallow. And how the assets will be returned to the company or destroyed after use.
The tenure for which the IP can be legally used by the recipient is yet another important clause. Be very cautious about the assets you share with contractors. For instance, you might share technology or cloud applications that need debugging or upgrading.
In that case, your NDA will include provisions to own the enhanced product. And prevent contractors from using or replicating the IP in part or full.
Startups may choose to license their IA in part or full to monetize them for revenues that can fuel growth. Draft any agreements carefully so you have complete control over how third parties develop and commercialize the IP. Adding termination clauses is also effective for maintaining ownership.
How This Influences FundingThe security culture you institute in the company will also extend to the virtual data rooms you create to share information with investors. Having them sign NDAs before revealing business and IP plans indicates that you’re on top of the relevant legal implications.
However, expect that some investors may not be open to signing NDAs since they work with multiple startups. Such agreements could limit their ability to enter into funding deals with other companies.
You can get around this problem by filing for provisional patents that award you the same rights. But protect the IA you might accidentally discuss during negotiations.
Not taking steps like these may result in investors doubting your dedication to securing your assets. Or your capability of understanding the value of your assets. These pitfalls could get in the way of securing funding.
Not Establishing Clear IP Ownership RightsIf your startup is entirely dependent on the Intellectual Property you’ve ideated, securing ownership rights is a critical first step. Make sure you apply for patents, copyrights, and trademarks with the United States Patent & Trademark Office.
Acquiring patents and trademarks can involve significant expenses. Entrepreneurs should prepare to make this investment in terms of money and time to secure their claim on the intangible assets.
Follow the procedures for registering the patents as soon as you develop the idea. Provisional patents allow you to secure the idea even before you develop the Minimum Viable Product (MVP). Or, formally incorporate the company.
In this way, you’ll also prevent competitors from catching on to the idea and releasing products. Or acquire their patents and market products before yours. Establishing exclusive ownership rights restricts others from using the idea or its variants.
Investors are likely to evaluate the startup’s IP portfolio during the due diligence process, and their focus is on clear ownership titles. They’ll need assurance that any returns on their investment won’t be hampered by IP-related conflicts and legal issues.
Exclusive ownership also adds to the valuation of the startup and the funding amount you can raise. Not projecting the company’s assets effectively can influence negotiations and the investment terms and conditions you’re offered.
Even as you’re reading up on the typical pitfalls of funding IP startups, take a look at this video. I have described the most common mistakes entrepreneurs make when fundraising. You’ll find it helpful.
Not Maintaining Confidentiality of the IP AssetsEntrepreneurs need to be extremely cautious about revealing confidential and sensitive IP data before they are ready with legal protection. Refrain from talking about your intangible assets publicly, like at investor networking events, trade shows, social media sites, and press releases.
Develop pitch decks for funding and official websites to create your startup’s digital storefront with caution to avoid IP leaks. Disclosing any trade secrets and information can hamper your ability to acquire patents for them later.
Before giving rights to third-party publications to publish materials about your startup, request to review the information. This step will help you prevent disclosing information before time.
Hiring third-party developers and independent contractors to ideate Intellectual Property is standard industry practice. If this is your business strategy, you’ll need to enter into well-crafted agreements that prevent them from revealing the information.
Have them sign confidentiality and invention assignment agreements where they transfer all their rights on the IP to you. Get your legal counsel to draft clauses around employee obligations and IP transfer.
Also, add non-compete declarations to prevent them from creating similar IPs for other companies or clients they may work for in the future.
Not Following Standard IP Protection Protocols Before MarketingThe tech industry and cloud applications development is a rapidly evolving vertical. Understandably, founders want to push for developing time-sensitive products and releasing them before competing startups catch on. Not taking the necessary steps can be an expensive trade-off against the profits you could make.
Before commercializing your products in the US, you must take physical and technical measures to protect the IP behind them. Also, remember to obtain foreign patent rights on the invention in case you want to expand to off-shore markets in the future.
Applying for trademarks typically involves checking for similar or confusing marks that are already in use in the market. Eliminating this step can result in limited rights on the IP. Or worse, infringement that you absolutely don’t want to risk.
Not identifying and securing your IP assets beforehand is one of the pitfalls to watch for when securing funding for IP-backed startups. That’s because accredited investors want assurance that you have followed the mandatory protocols and have legitimate rights on the IPs.
Pratices like these indicate good business acumen. Presenting these measures in the pitch deck indicates that founders are also committed to due diligence with their assets.
In ConclusionEntrepreneurs developing intangible-intensive startups focusing on innovative new products tend to overlook the necessary steps to secure their IP. Without well-crafted protection strategies, they may fail to effectively monetize their assets and the products they create from IP.
You may also fail to build value for the startup, long-term revenues, and profitability. Most importantly, acquiring funding for the startup can get super challenging without protecting confidential and sensitive IA.
Understanding the typical pitfalls to watch for when securing funding for IP-backed startups can help you develop effective workarounds. Develop a robust IP-protection strategy and business plan to demonstrate to investors that you’re on top of the legal implications.
Acquire funding and set the startup on its growth trajectory.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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In this episode of the Dealmakers’ Podcast, Ramin Shirani, a seasoned entrepreneur with a remarkable journey, shares his inspiring story of going from a young immigrant delivering pizzas to becoming a successful technology innovator in Silicon Valley.
Ramin’s story is a testament to the American dream, resilience, and entrepreneurial spirit.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksA Journey Begins: Leaving Iran in Search of EducationRamin Shirani’s story begins in the 1970s in Iran, where he was pursuing an education at top schools. Life was good, and his love for his family and country was undeniable.
However, everything changed when they decided to immigrate to the United States just before the Iranian Revolution. Ramin initially planned to return to Iran to complete his high school education but had to adjust his plans due to the revolution.
The family embarked on a journey to build a new life in the United States, starting from scratch in the late ’70s.
Struggles and Determination: Pizza Delivery and Teaching MathUpon their arrival in the United States, Ramin’s family faced financial challenges. To make ends meet, Ramin started delivering pizzas, earning a mere $4.95 per hour, which was considered minimum wage at the time.
Despite the hardships, he was always passionate about math, eventually becoming a math teacher, earning $95 per hour. Ramin, along with his family, worked tirelessly in various businesses and restaurants to support themselves and pursue their American dream.
They were determined to rebuild their lives from the ground up. Ramin and his siblings paid for their education themselves, with Ramin pursuing engineering while his younger brother became a dentist.
The Shirani family’s journey from having little money in their pockets to achieving their educational and entrepreneurial dreams is a true embodiment of the American dream. Ramin’s story reflects the determination to succeed against all odds and the power of education as a pathway to a brighter future.
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Choosing a Different Path: From Dentist to EngineerGrowing up in an environment where becoming a doctor or engineer was the norm, Ramin’s family had high hopes for his future. His mother wanted him to become a dentist, but Ramin’s passion lay elsewhere—in electronics and engineering.
He decided to pursue engineering, a decision that would shape his future profoundly. His journey was about going against the grain and following his true passion, eventually leading him to excel in his chosen field.
Ramin’s educational journey took him to the University of California, San Diego (UCSD). Beyond the academic excellence, he was drawn to the campus environment, where he pursued his interests in sports like soccer and weightlifting.
Initially, he enrolled in a Ph.D. program but later decided to put it on hold to gain real-world experience in Silicon Valley.
Silicon Valley’s Influence: The Entrepreneurial Ecosystem and Ethernet RevolutionRamin highlights the significance of being in Silicon Valley for an entrepreneur. He initially didn’t fully realize the advantages, but over time, he recognized the tremendous opportunities the region offered.
The proximity to venture capitalists, resources, and like-minded individuals made Silicon Valley the ideal place for pursuing entrepreneurial ventures.
Ramin’s career path took an unexpected turn when he became involved in the early days of Ethernet’s growth. He embraced the opportunity to learn and contribute, eventually leading him to become a key player in the development of National Semiconductor’s Ethernet controller products.
His story exemplifies how seizing opportunities and continuously learning can lead to remarkable success.
Mastering Multiple Disciplines: Digital and Analog DesignRamin’s dedication and hard work led him to master both digital and analog design, a rare feat in the field. He became the lead for National Semiconductor’s Ethernet controller products, showcasing his ability to excel in diverse aspects of technology.
Ramin’s journey demonstrates the importance of continuous learning and pushing boundaries to achieve excellence. He played a pivotal role in leading the development of the next generation of Ethernet, transitioning from 10 Meg to 100 Meg.
He and his team’s efforts resulted in significant market success, with National Semiconductor achieving a 95% market share in the 100 Meg Ethernet sector. This accomplishment showcased Ramin’s entrepreneurial spirit and leadership in the technology industry.
From Employee to Entrepreneur: Navigating the Path to StartupsRamin’s family had always encouraged him to pursue a career as a doctor or engineer. However, his passion for electronics and innovation ultimately led him to explore the world of startups.
He approached his then-boss, Edwin De Soza, with a proposal to start their venture, but the timing wasn’t right. Ramin’s desire to create something new and make a significant impact pushed him to embark on his entrepreneurial journey independently.
Ramin co-founded Enable Semiconductor, a company focused on the next generation of Ethernet technology. They tackled the challenge of transitioning from 100 Meg to 1 Gig Ethernet, achieving substantial market success. Eventually, the company was acquired for $100 million.
Ramin’s story underscores the importance of seizing opportunities, taking calculated risks, and persevering in the face of adversity.
The Power of Vision: Pursuing a Vision Beyond FundingDuring the dot-com crash, Ramin faced numerous challenges in securing funding for his ambitious projects. He had a vision for the next generation of Ethernet and was determined to make it a reality.
Despite hearing “no” from potential investors more than 50 times, he remained resolute in his pursuit. Ramin’s experience highlights the significance of unwavering determination and the ability to weather tough times on the entrepreneurial journey.
Eventually, he took his next company Aquantia, public and eventually, the company got acquired for $452 million.
Ramin emphasizes the critical role fundraising plays in the success of a startup. He encourages entrepreneurs to align themselves with investors who share their vision and have the patience to support long-term goals.
Ramin’s insights underscore the need for founders to have a say in the company’s direction and maintain their commitment to innovation.
The Compass in Your Heart: Building a Successful CompanyIn Ramin’s view, successful companies are driven by founders with a compass in their hearts—a deep sense of purpose and vision. He stresses the importance of founders possessing not only technical expertise but also a comprehensive understanding of the business, management, and market dynamics.
Ramin’s journey serves as a testament to the value of innovation and unwavering dedication to building transformative companies.
The Future of Ethernovia: Transforming the Nervous System of the CarRamin’s current venture, Ethernovia, aims to revolutionize the automotive industry by introducing Ethernet-based communication systems within vehicles.
Recognizing the outdated nature of existing automotive networks, Inovaia seeks to bring the efficiency and reliability of Ethernet to the core of the automotive nervous system. Ramin successfully raised a total of $64M for this venture.
Storytelling is everything, which is something that Ramin Shirani was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Ramin’s commitment to solving complex industry challenges reflects his passion for innovation and his drive to impact the world positively.
His experiences offer valuable lessons for aspiring entrepreneurs, emphasizing the importance of pursuing one’s passion, embracing challenges, and staying committed.
Listen in to the full podcast episode to find out more, including:
- Embarking on a life-changing move to the USA before the Iranian revolution, starting from scratch in a new country.
- Choosing engineering over his family’s wish for him to become a dentist, following a passion for electronics, ultimately shaping his career in the tech industry.
- Understanding the invaluable advantages of being in Silicon Valley, emphasizing its unique ecosystem, access to resources, and proximity to investors.
- Involvement in ethernet technology at its early stages with a blend of luck and dedication leading to his central role in its evolution over the years.
- Latest venture, Ethernovia, that aims to revolutionize automotive communication systems, emphasizing the importance of understanding and solving customer problems holistically.
- Valuable advice on fundraising, emphasizing the need for aligning objectives with investors, creatively raising seed funding, and retaining ownership control.
- The significance of persistence, patience, and maintaining a founder’s compass to navigate the entrepreneurial landscape successfully.
Alejandro Cremades · EP 717 Ramin Shirani On Selling His Last Company For $452 MillionSUBSCRIBE ON:
iTunesGoogle PlayStitcherTuneInRSSSoundCloudSpotify The post He Sold His Last Company For $452 Million And Now Raised $64 Million To Revolutionize Communication Systems For Cars appeared first on Alejandro Cremades.
How to secure your spot on a notable accelerator program? This is a question many entrepreneurs face when looking for effective strategies to launch their new ventures on their growth trajectories.
Ideating an innovative business idea and establishing a startup are only the first steps. Founders need a springboard to achieve their next milestones quickly. The right accelerator program can assist them with the appropriate training for building an infrastructure.
Close to 900 companies have achieved the valuation mark of $1B and above. Many have acquired unicorn status thanks to business accelerators that helped them scale their companies quickly. Some notable examples include Dropbox, Airbnb, Twitch, Coinbase, and Stripe.
As of 2023, there are more than 200 renowned accelerators in the US, with Y Combinator and SVB’s partner, Techstars, topping the list. Aside from these programs, AngelPad, Google for Startups, 500 Startups, and Plug and Play are the most sought-after.
Getting into a great program helps you resolve many of the pain points entrepreneurs typically face. You’ll select the right support group relevant to your industry and get access to expert mentoring, advice, and investor networks.
The most critical factor is training under veteran executives who have successfully navigated the entrepreneurship landscape. Tap into their wealth of knowledge and learn how to avoid the common pitfalls that might get in the way of sustaining the startup beyond its critical initial years.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksApplying for and Getting into Accelerator Programs is ChallengingGetting into an accelerator program is not that easy since success rates are extremely low. The Y Combinator accepts startups once every six months and receives more than 10,000 applications. The acceptance rate is just 1.5% to 2%.
Let’s try another. Techstars organizes accelerator programs every 12 months and has an acceptance rate of just 1%. On the upside, 90% of ventures that successfully pass through the program get funding with an average investment of $2M.
Getting into a credentialed agency is, undoubtedly, extremely difficult. This is why we’ve put together a detailed tutorial to help you put together a winning application. Read ahead for more information about how to secure your spot on a notable accelerator program.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Let’s Talk About How Accelerators WorkBusiness accelerators are organizations that have training programs for startup founders. Each program lasts for a fixed tenure and aims to compress years’ worth of experience and training in that time.
The program is intensive and comprises lectures, seminars, and workshops where entrepreneurs learn how to scale the company quickly. They also interact with networks of investors, pitching their ideas to attract funding and interest.
Although the option to relocate to their premises is available, organizers may also allow founders to train out of their own locations. Some amount of funding is made available to you, and founders commit a portion of the startup’s equity in exchange for this support.
At the end of the program, you’ll have the opportunity to present your pitch at the “demo” event. The organizers invite investors and industry experts so you can talk about your business idea, its USP, and other details. The opportunity to build strategic partnerships with like-minded entrepreneurs is also available.
The most critical advantage of getting your application accepted is that it awards credibility to your brand. Investors see your company as a project worth backing since it has acquired top-notch training and support.
Making it to the accelerator portfolio gives you added exposure. Investors looking for viable projects to back often check through their website pages for opportunities. Yours could be the one they pick.
Start by Putting Together the Business PlanBefore you apply to an accelerator program, be ready with the upsides of the startup that will entice administrators. Here’s how to secure your spot on a notable accelerator program:
- A critical element of a compelling application is the business plan, which outlines the business idea and how you intend to execute it.
- Accelerator programs typically prefer to support startups that are ready with the Minimum Viable Product (MVP) and have some traction.
- An established customer base and some amount of revenue are added pluses.
- You’ll include details about the founding team driving the startup, the LinkedIn profiles, and successful track records.
- Be ready with a working product prototype so you can provide a demo during the interview process if needed. If you can demonstrate how it works and the problem it solves, that factor could work in your favor.
- Most early-stage startups have yet to attract funding. But, if you have, even if it is a small amount, add information about any investors who have provided money to indicate your startup is worth backing.
- If your venture is IP-backed, that’s an attractive feature that may entice administrators to consider the application. Make sure you connect with your legal team for assistance with securing a copyright, trademark, trade secrets, or patent. Put down the complete details of the IP, how you’ve secured it, and the products you can develop using it.
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Research Suitable Accelerator ProgramsNot all accelerator organizations are built alike. They can be industry-specific, serving a particular business vertical, or have specific goals. Their scope, the investor network they work with, and location can also vary.
Founders should spend time identifying the stakeholders in the program and their acceptance criteria. Make sure your startup fits the bill before applying. Reading up about the ventures that have passed through the program successfully is also a strategic move.
Be very clear and focused on why the program is a good fit for your company. Interviewers may ask you about your objectives behind applying for their program in particular. Reaching out to multiple programs is a smart strategy that will raise your chances of getting through.
Before applying, make sure you can commit to the program in terms of time to attend workshops and seminars. Expect to set aside hours each week to train under mentors and advisors. And attend events where investors are present. You’ll also cede equity, so work that into your intended outcomes from the program.
Most importantly, founders should be realistic about what the program can do for them. While accelerator programs can help build the necessary infrastructure, gain traction, and acquire funding, they cannot guarantee success.
Don’t Hesitate to NetworkThe startup ecosystem is all about networking and the contacts you can make. All through the entrepreneurship journey, your focus should be on the strategic partnerships you can get into.
Whether you’re looking for funding sources, incubators, angels, venture capitalists, potential investors, or any other influential entities. Knowing the right people can open more doors. Make an effort to attend conferences, seminars, meets, and any other events organized in your business community.
Interact with people, and don’t hesitate to give out business cards. Ask for introductions or introduce yourself and ask for contact information. Always be armed with an elevator pitch.
Networking is especially critical when applying to an accelerator program. Research into their key decision-makers and any other top-ranking board members–anyone you can connect with. Meeting up with them even before you apply can help you get a foot in the door.
And that’s how to secure your spot on a notable accelerator program.
Crafting a Compelling ApplicationRaise your chances of getting accepted into the program by creating customized applications for each organization. Take the time to check their website for their requirements and prep the paperwork carefully.
Be ready with a compelling story that describes your passion and objective for starting this business. Let your enthusiasm and dedication shine through since, more than the business idea, people back the face behind it.
Create an elevator pitch that crams everything about your business into a 30 to 60-second pitch. Focus on the core points about what the startup does, the problem you’ll solve, and the funding you need. Start by being real and carefully avoid standard and uninteresting marketing lines.
Use simple-to-understand terms, quick outlines of the team, and an anecdote that will stay with the interviewer. The objective here is to create a lasting impression that cuts through the thousands of competing applications. Use metrics because real numbers always impress.
End the pitch with a concrete call to action that specifies the potential returns and benefits of backing your startup. Avoiding industry jargon is always preferable. Don’t assume the interviewer knows what you’re talking about, even if you’re pitching to a program from the industry.
Provide Validation for Your StartupYour application should include validation that the startup has what it takes to succeed. Include verifiable information, such as market reports that indicate the brand has a presence and sells products.
If the company is generating revenues, add reports. If you have an established customer base, you’ll include email server lists. Traction on social media is another metric interviewers may be interested in.
Ventures that have yet to build their market presence or revenue can present projections. Attach estimates of the market share you hope to capture based on industry valuations. Talk about the product’s USP and why customers may want to purchase your brand.
If your company has received mention in leading industry papers or news channels, make sure to include that information. Customer reviews and results of beta testing are also excellent validation.
Are you looking for more detailed information about how startup accelerators work? Check out this video, where I have explained everything you need to know. This information will prove handy when you’re looking for the right program to apply to.
Practice for the InterviewAccelerator programs typically have an interview as part of their recruitment procedure. Prep for it carefully by practicing with mock interviews. Get trusted family members and friends to throw a barrage of questions at you. If you have co-founders, practice together so your answers coordinate.
Expect the interview to be fast-paced, scarcely giving you time to think about an appropriate answer. Keep your responses short and concise, directed only at the query before you. Make sure you understand the question. Ask again if you have to.
Let your enthusiasm for the project and energy show through—also, prep for unexpected questions designed to disconcert you. Maintain presence of mind and remember not to run down competing products.
Instead, be positive and focus on why you’re better. Face up to your shortcomings and explain what you’re doing to overcome them. Your objective is to walk away with the interviewer impressed about the potential of the unicorn you’re presenting.
As the interview draws to an end, you’ll have time to ask questions of your own. Have a list of queries about the mentors, expected funding and resources, and any other information you should have.
Be aware that you’re entrusting the future of your startup into their hands. You’ll also offer equity as compensation. So, getting all the relevant details could help you determine if the accelerator program is a good fit.
Be open to the possibility of having to pull out. That aspect is also critical to knowing how to secure your spot on a notable accelerator program.
Get Business Operations OrganizedWhen building a startup from the ground up, taking a break for even a few months could be a setback. This factor is especially true in the case of tech, cloud applications, and blockchain ventures.
Consider the possibility that the founders may need to relocate to the accelerator’s premises for the duration of the program. In that case, get the business operations organized so that work continues to operate in your absence.
You should also lay the groundwork for the possibility that the original business concept is not worth pursuing. Keep the startup flexible so you can pivot and shift to a different product range without any issues.
On a Final Note!Knowing how to secure your spot on a notable accelerator program can be a valuable asset. You can leverage the many benefits when you’re ready to scale operations quickly and set the business on its growth trajectory.
Make sure to research the value and perks the program offers and align it with your goals. Find out about the investment opportunities that you can avail. And, get into the appropriate program after assessing whether its a good fit.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post The Insider’s Guide to Accelerator Programs: How to Secure Your Spot appeared first on Alejandro Cremades.
Nathan Harding’s journey into the world of innovation began with a simple childhood curiosity. From his early years in Houston, he found himself captivated by the art of deconstructing and fixing things.
Little did he know that this innate curiosity would pave the way for a groundbreaking career that would span the realms of mechanical engineering, robotics, and even the beauty industry.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBridging Gaps Through Education: From Houston to BerkeleyLeaving his Midland days behind, Nathan’s upbringing in Houston shaped his early experiences. As he spent his time exploring the suburbs and playing near Buffalo Bayou, he developed a natural inclination towards mechanical tinkering.
This fascination with mechanics led him to pursue mechanical engineering as a natural progression. Graduating from Carnegie Mellon was a significant milestone for Nathan, yet he felt a sense of unfinished business.
Driven by his relentless pursuit of knowledge, he recognized that there were missing pieces in his education. This realization prompted him to seek further studies at Berkeley, where he honed his expertise and deepened his passion for mechanical engineering.
Navigating Industry Shifts: Lessons from Berkeley Process ControlNathan’s journey took an unexpected turn when he joined Berkeley Process Control, a company renowned for assembling an extraordinary team of brilliant minds.
This experience introduced him to the realm of machine controllers and designing intricate machines. However, the dynamic nature of the capital equipment industry became apparent as unforeseen market shifts shook the foundation of the business.
Lessons learned during this period emphasized the unpredictability of demand and the importance of adaptability in the face of market changes. Nathan’s experience at Berkeley Process Control reinforced the notion that innovation requires the flexibility to pivot and embrace new challenges head-on.
One of the main challenges Nathan faced was when the bottom fell out of the optical fiber market. This was quite a setback since 80% of his company was mainly about optical fiber manufacturing equipment.
At the lowest point, he realized that he couldn’t even sell the spare parts of the machinery they owned.
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Empowering Innovation: From Exoskeletons to BreakthroughsWith a tenacious spirit and a thirst for progress, Nathan ventured into the world of exoskeletons. His involvement in groundbreaking research at UC Berkeley led to a breakthrough that would revolutionize power consumption in exoskeleton technology, bringing it to market with Ekso Bionics.
This achievement demonstrated the transformative impact of innovation and the potential to reshape industries. The newfound possibilities with exoskeletons sparked Nathan’s journey into creating a business around them. He started by experimenting with 3D printing machines he acquired from a colleague.
Leveraging grants from government organizations, he embarked on a mission to bridge the gap between human capability and technological advancement, shaping the future of human augmentation.
An interesting development was Nathan’s licensing deal early on with Lockheed Martin to develop the military’s access to exoskeletons. He acquired funding worth $40M, which included non-dilutive capital for his project before taking it public.
Although they experimented with the idea of soldiers using the equipment, the real breakthrough came when they found that their exoskeletons could help in the medical sphere. Strapping on the suits allowed paralyzed and partially paralyzed patients to get up and start walking again.
Eventually, they brought Ekso Bionics public and peaked with a market cap of $600 million.
Hardware Ventures and Entrepreneurship: Balancing Patience and PotentialNavigating the realm of hardware startups presented unique challenges, given the longer timelines and the ever-present demand for rapid returns.
Nathan acknowledges the allure of software unicorns but highlights the potential for hardware-focused venture capitalists to identify promising opportunities. His story underlines the need to recognize the value of patient investment in industries that require more time to flourish.
Crossing Boundaries: The Convergence of Beauty and TechnologyNathan’s entrepreneurial journey took an unexpected turn when a casual conversation led him to the beauty industry.
Curiosity sparked his exploration of integrating robotics with beauty services, ultimately leading to the creation of LUUM. This innovative beauty tech company aimed to enhance lash extensions through automation, reshaping traditional practices, and introducing technology to a new realm.
Augmenting Human Abilities: LUUM’s Vision for Ethical InnovationLUUM’s approach to robotics reflects Nathan’s commitment to ethical innovation. With a focus on safety and precision, Loom’s machines augment the capabilities of beauty professionals rather than replace them.
By prioritizing client well-being and the enhancement of human skills, LUUM sets a precedent for responsible technology integration. The machines incorporate technology like robotics, image processing, and AI to ensure maximum safety and excellent results.
Nathan has successfully raised $15M for his company, attracting the interest and attention of venture capitalists, angel investors, and crowdfunding platforms.
Storytelling is everything, which is something that Nathan Harding was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Nathan Harding’s remarkable journey is a testament to the power of embracing curiosity, continuous learning, and adapting to change.
Listen in to the full podcast episode to find out more, including:
- A childhood fascination with deconstructing and fixing things set the stage for a journey into mechanical engineering and innovation.
- Recognition of the gaps in education leading to the pursuit of further studies at Berkeley, which exemplifies commitment to continuous learning for personal and professional growth.
- Experience with Berkeley Process Control revealed the unpredictable nature of capital equipment demand and the need for adaptability in the face of market changes.
- The discovery of power-saving breakthroughs in exoskeleton technology highlights the potential for innovation to reshape industries and create new possibilities.
- Showcasing the potential and challenges of hardware startups and demonstrating the value of patient investment despite the allure of rapid returns in software.
- Pivot into the beauty industry, exemplifying the power of cross-industry innovation and the potential of technology to revolutionize traditional sectors.
- Focus on safety, precision, and augmenting human capabilities, offering a blueprint for ethical and impactful robotics applications.
Alejandro Cremades · EP 716 Nathan Harding On Building A $600 Million Business And Raising $15 MillionSUBSCRIBE ON:
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Strategies for raising funds for blockchain startups need more than traditional investment channels like venture capitalists and angel investors. Identifying key players that support this business vertical is not challenging, and you’ll likely find several reputable investors.
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In the fast-paced world of entrepreneurship, where innovation and perseverance are the keys to success, few stories are as inspiring as that of Courtney Guertin. In a recent episode of The Dealmakers’ Podcast, Guertin shared his remarkable journey from a curious college student to a successful entrepreneur.
His story embodies the spirit of determination, growth, and adaptation that characterizes the modern startup landscape. Let’s dive into the podcast transcript to uncover the valuable lessons and insights Courtney has to offer.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksEmbracing Curiosity and DiscoveryBorn and raised in Minneapolis, Minnesota, Courtney’s journey began with a search for his true calling. After exploring various educational paths, he found himself drawn to computer science during a study-abroad trip to Japan.
Courtney recalls how he had always been into reading the Wired magazine and various programming books. But his travels opened up new worlds of possibilities in the tech field.
Inspired by tech-forward cultures and fascinated by the possibilities of the internet, Courtney decided to pursue computer science as a major at the University of Minnesota.
Courtney’s early career included working for a small company that developed vertical CRMs for different industries, including finance, real estate, and healthcare. His experience with healthcare technology left a lasting impact and eventually became the foundation for his future ventures.
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Venture into Silicon ValleyDespite initial hesitation, Courtney was enticed by the allure of Silicon Valley. In 2008, he made the bold move to San Francisco to immerse himself in the heart of the tech industry.
He joined a promising company, Dig, which allowed him to expand his network and learn the ropes of scaling a tech business.
Courtney’s entrepreneurial journey truly took off in the following years. He embarked on various projects, including a curation platform before Pinterest, a mobile game that reimagined advertising, and a successful employee benefits platform called Ease.
Courtney’s ventures showcased the power of innovation, adaptation, and persistence. He talked about experimenting with mobile advertising and looking for better alternatives to small banner ads that people were putting everywhere.
Understanding how customer engagement works in mobile advertising and game-playing was an exciting discovery. Courtney found that giving away virtual currency, rewards, and coupons that gamers could redeem at actual stores had a huge draw among the audience.
He ended up raising $32M between 2010 and 2016.
Navigating the Funding LandscapeThroughout his journey, Courtney faced the challenges of securing funding. From initial seed rounds to larger investments, he learned that different stages of a startup require distinct approaches to fundraising.
He emphasized the importance of finding investors aligned with your vision and understanding the unique needs of your business.
Leadership LessonsCourtney’s leadership principles emphasized the power of simplicity, repetition, and setting a clear example. He advocated for keeping your business model, values, and goals straightforward and consistently communicating them to your team.
He also emphasized the balance between leading by example and delegating effectively.
Courtney highlighted the benefits of embracing constraints and doing more with less. He shared that some of his most successful periods occurred when his ventures faced financial limitations, which forced them to innovate and prioritize efficiently.
The Value of RepetitionThroughout his entrepreneurial journey, Courtney stressed the importance of repetition. Whether it’s communicating your company’s mission or your team’s goals, consistently reinforcing key messages helps ensure alignment and clarity.
Courtney’s journey came full circle with his employee benefits platform, Ease, which he bootstrapped into success. The venture was already earning a million in revenue.
But when the opportunity to scale quickly arose thanks to incredible demand for the platform and its services, he successfully raised $68M for the company. As the company grew, Courtney raised $19M for the Series B round and another $41M for the Series C round.
Storytelling is everything, which is something that Courtney Guertin was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Eventually, Ease merged with Employee Navigator. This partnership allowed for enhanced market reach, growth, and shared capabilities. The merger demonstrated how opportunities can arise unexpectedly and transform the trajectory of your business.
Reflecting on the JourneyAs Courtney reflected on his entrepreneurial journey, he offered valuable insights to fellow entrepreneurs. He highlighted the balance between ambition and thoughtful decision-making, the power of adapting to changing circumstances, and the long-term nature of building a successful business.
Courtney Guertin’s journey from a college student with a curious mind to a successful entrepreneur illustrates the power of passion, persistence, and adaptability in the ever-evolving world of startups.
His experiences and insights offer a roadmap for those seeking to navigate the challenges and triumphs of entrepreneurship.
Listen in to the full episode for more details, including:
- Embracing new experiences and following your curiosity, as they can lead you to unexpected opportunities and passions, and seizing opportunities to gain experience in different industries and domains that can shape your entrepreneurial journey down the line.
- Not being afraid to take risks and stepping out of your comfort zone to pursue opportunities that can accelerate your growth and learning.
- Embracing innovation that often involves trying different ideas, learning from failures, and leveraging emerging trends to create successful ventures.
- Tailoring fundraising efforts to the business’s growth stage, and seeking investors who share your mission and values.
- Effectively communicating your vision, setting clear expectations, nurturing a motivated team, and accepting that constraints can foster creativity, efficiency, and resourcefulness, leading to innovative solutions and outcomes.
- Understanding how repetition helps ingrain important messages within your team, customers, and stakeholders, leading to greater understanding and alignment, and remaining open to unexpected opportunities, partnerships, and acquisitions that can elevate your business to new heights.
- Entrepreneurship is a journey filled with twists and turns, and success often requires a blend of ambition, adaptability, and patience.
Alejandro Cremades · EP 715 Courtney Guertin On Raising $128 Million To Streamline Human Resource ManagementSUBSCRIBE ON:
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Strategies for Intellectual Property-backed startups need not be super complicated. Having acquired copyrights, patents, or trademarks for your intangible assets, you can quickly attract investor interest. Intellectual Property (IP), particularly patents, are of significant interest to venture capitalists. It will interest you to know that post COVID, the Intangible Asset Market Value is accelerating and gaining new heights.
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As an entrepreneur developing a cutting-edge business idea, you must understand how a robust Minimum Viable Product lures inventors. Having an MVP gives your pitch deck that extra edge and evokes interest in funding the venture.
Startups have a notoriously high failure rate that can go up to 90% in the initial few years. At least 34% of new companies fold because their founders did not get the product-market fit right.
Investors are understandably wary of backing untested products. However, they might be interested in funding a tangible concept that can potentially sell in the market.
Statistics also point to an 8% failure rate because of poor product design. Another 10% of companies go under because the market is not ready for the disruptive idea. These numbers indicate how critical it is to develop the right product at an opportune time when markets are receptive.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksUnderstanding the Concept of Minimum Viable Product (MVP)A Minimum Viable Product (MVP) is often confused with a product prototype or demo version. On the contrary, the MVP is a functional solution that users can test for suitability for their problem. This version has basic features and limited functionality.
Founders can build on their business concept and transform it into a usable design without investing too many resources. However, they must focus on ensuring optimum product quality and great user experience. Typically, an MVP takes a month to build and allows its developer to test it for usability.
Once the product hypothesis is proven, developers can use the insights and findings to expand the design. They can move on to enhance and improve the product with new features and elements. As the improvements continue, the product converts into a fully refined, market-ready model.
Let’s try a few examples. The eCommerce giant Amazon started off in the early 1990s as an online bookstore, which was its MVP. At the onset, its founder, Jeff Bezos, experimented with a selection of different products he could sell.
Jeff started off with compact disks, videos, books, computers, and software, finally zeroing in on books. And the rest is history.
Let’s try another. Established on February 4, 2004, Facebook’s MVP was a platform to connect alumni at Harvard University via a social network. It started off with basic features like Photo Album, Friend Request, and User Profile, to name a few.
The objective behind developing a functional model is to introduce the concept as a marketable product customers want to buy. And that’s how a robust Minimum Viable Product lures investors.
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How a Robust Minimum Viable Product Lures Investors – What Backers Look ForThe MVP is a crucial step in the product development process that uses the minimum of resources. With this version, founders can implement a successful product launch and attract funding for the next steps.
Ensuring Product-Market FitInvestors need assurance that the startup has an interesting concept that can potentially capture the market. Founders can test MVPs on actual customers to ascertain if they are willing to pay for them. Beta versions of new software are an excellent example.
MVPs invite users to test them for functionality and offer feedback and comments. Incorporating the feedback and improving the design ensures that the product will sell when presented to the market.
At this point, entrepreneurs can build on the product design or scrap the project entirely without the risk of losses. A successful launch indicates that the startup has a high success probability and is worth backing.
Checking Product FunctionalityAs long as the project is in the ideation stage, it can be hard for founders to convince investors of its value. The MVP shows that the idea can transform into an actual solution to a real problem users face. At the same time, it should be effective in solving the problem, engaging, and easy to use.
By developing a Minimum Viable Product, entrepreneurs indicate their belief and commitment to the project. And their interest in building a product per customer specifications.
Testing the Founding TeamThe success of any startup depends on the founding team and the expertise behind the product. Testing the MVP allows investors to evaluate the skills and experience driving the startup. If they like what they see, financiers are more likely to back the project.
Checking the team’s profiles on professional platforms like LinkedIn for their track records may also assure investors of product viability. When you pitch for funding, your efforts are more likely to be successful.
More importantly, hiring and retaining top-notch talent can cost the startup in terms of expensive salaries and stock options. Testing the MVP ensures that you can divert your human resources to developing better products if the initial model doesn’t pan out.
Testing Market Research and AwarenessMinimum Viable Product demonstrates that the founder has done the necessary market analysis and is aware of the ongoing demand. It also indicates that the team has studied competing brands and is capable of developing a product with a USP.
Understanding the competition is a crucial factor since 20% of startups fail because other products in the market perform better. As a result, they are unable to capture the market.
Building an MVP requires an in-depth analysis that shows that the product is versatile and adapts to changing market conditions and customer needs. It convinces investors that you’ll deploy valuable resources into its creation only after a deep understanding of customer psychology.
Conducting market research with surveys and questionnaires to get into the user mindset can only take you so far. But if you can present an actual product that they can test, it adds validation if it is received well.
The MVP assists in bringing together the problem hypotheses, project requirements, market analysis, and projected revenues and profitability. Presenting these findings in the pitch deck is how a robust Minimum Viable Product lures investors.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Testing the Business ModelThe MVP is the perfect tool to test the different aspects of the founder’s business model. You can use the initial version to test if you have the optimum success strategy. You’ll address issues like the ideal pricing structure and whether your marketing and advertising approaches have the desired impact.
Keep in mind that 15% of startups fail because of out-pricing by the competition. Another 22% have ineffective marketing, which is why they are unable to sustain beyond the initial few years.
Building and testing the MVP demonstrates that you’ve tested the business model and are ready for a pivot if necessary. At this stage, you can work out if the product design is worth pursuing. Or if it’s feasible to switch to an entirely different product range that has a better chance of success.
Minimizing Costs and RisksSince creating the MVP uses the least amount of resources, you can avoid investing in building a full-scale product. As a result, you can test it on actual users without risking funds and sweat equity with no potential for returns.
Think of the MVP as a safety net that allows you to build a basic version. Next, you’ll enhance it gradually after checking with customers for their needs. If the project is not viable, you can pivot the startup in a different direction. Like, for instance, choosing an entirely new business vertical.
Investors will appreciate respect for their money and your dedication to risk mitigation. They may even be interested in backing the next project you propose.
Time Sensitivity in Product ReleaseWhen founders come up with a disruptive business idea, they may want to capture the market quickly before the competition catches on. Having identified a customer need or problem, you’d want to focus on accelerated product development and delivery.
Accordingly, you’ll create a version with core features and test it without advanced features. This strategy will allow you to reach the market before the competition. You might also be able to generate and secure valuable Intellectual property, which is a crucial asset for attracting funding.
Building Customer Engagement and a Market PresenceThe long-term success of any brand is largely reliant on developing user engagement and minimizing Customer Acquisition Costs (CAC). Offering trial and beta versions and free giveaways builds brand recognition and acceptance.
When you contact customers for feedback to evaluate customer satisfaction, they feel seen and heard. Not only will you acquire first-hand information about the product’s performance, but you also identify the flaws.
You’ll use this information to improve the product and its value for customers. Yet another positive is that you learn about the features and specifications that don’t resonate with the audience. As a result, you can make the necessary changes in the development stages.
Founders can also use performance metrics to ideate complimentary product lines once they develop an in-depth understanding of what customers want to see. Projecting this product-driven growth is an excellent way to attract funding.
Lower customer churn rate, brand loyalty, profits, and consistent revenues are other factors that look good on your pitch deck. And that’s one of the ways how a robust Minimum Viable Product lures investors.
Projecting TractionInvestors viewing your pitch deck presentation or data stored virtually are interested in the startup’s traction. When developing an MVP, most founders have an overview of how they intend to monetize the product.
Once you have a product that is tried and tested by real customers, chances are that the orders start to roll in quickly. As you rack up sales and revenues and start to show profits, that’s an attractive proposition for venture capitalists and accelerators.
Building the MVP is an excellent first step for how to validate your business idea. If you need more information about how to secure your idea before moving forward, check out this video I have created.
What’s Next After the MVP?Although you’ll tick off all the important boxes after building the MVP, that’s just the beginning of your fundraising journey. The next steps involve developing compelling financials to convince investors you have the other aspects of business building in place.
Even if the company has yet to bring in revenues, you’ll talk about projected profits according to industry benchmarks. Also, add statistics like expected cash flows, profit and losses, balance sheet, turnover, and assets.
You should also be upfront about the expected risks and the asking amount. This is the approximate funding you hope to raise from the pitch. Also, talk about how the funds will be allocated and the milestones to be achieved.
To ConcludeThe objective behind creating a Minimum Viable Product is to demonstrate value proposition to customers. This basic version will have only must-have features and is designed to give users a preview of its functionality.
Founders are focused on getting a step ahead of the competition and quickly developing a model to present to customers. In that scenario, an MVP is the ideal solution that they can put together with the minimum of resources–more specifically, time.
Startups prepping for their seed funding round are likely to be more successful since they have an MVP. Investors are likely to appreciate that the venture has proof of traction and a ready-paying customer base.
Performance metrics, market analytics, a core team, lower churn rates, and CAC all look good on a pitch deck. Venture capitalists and other investors are keenly interested in backing startups with compelling pitches. And that’s how a robust Minimum Viable Product lures investors.
You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.
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In a recent episode of The Dealmakers’ Podcast, we had the privilege of speaking with the visionary leader behind Vishaal ‘V8’ Hariprasad, a groundbreaking cybersecurity company that is transforming the landscape of digital protection.
This conversation delved deep into V8’s journey, from its inception to remarkable accomplishments.
Join us as we explore the inspiring narrative of a leader who is driving change, innovation, and resilience in the realm of cybersecurity.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksRoots of Resilience: A Journey of Community and PassionAt the heart of every success story lies a foundation built upon experiences and influences that shape an individual’s trajectory. Resilience’s founder, V8’s founder, shared how the strength of community and culture from his upbringing in the South Bronx profoundly impacted his outlook.
Growing up surrounded by diverse Caribbean cultures, the importance of unity, shared survival, and mutual appreciation were instilled in him. This sense of community translated into a profound awareness of service and a fascination with aviation.
Inspired by planes flying overhead in his hometown, his journey led him to embrace the concept of not just flying high but also delving deep into cybersecurity.
With the advent of the digital age and the events of 9/11, his calling took on a new dimension, that of defending against cyber threats, a mission to protect the digital skies.
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From Confrontation to Collaboration: A Dual InsightThe episode highlighted the pivotal moment when V8 shifted from a focus solely on flying to a broader view of security and service. The events of 9/11 served as a catalyst that led him to realize the importance of more than just technical proficiency.
It became evident that innovation, lean practices, and a nuanced understanding of adversaries were vital for success. These lessons were magnified during his tenure at the National Security Agency (NSA), where he witnessed the intersection of leadership, innovation, and technology in the fight against cyber threats.
Here, he gleaned valuable insights on driving innovation while navigating complex missions and respecting adversaries’ perspectives.
Evolution of Cybersecurity: Navigating the Digital RevolutionThe digital revolution has reshaped the landscape of businesses across industries, accelerating due to the recent global pandemic. Every entity, directly or indirectly, now faces cyber risks.
V8 emphasized the shift from viewing cybersecurity as a peripheral tool to its integration into our daily lives and operations. This shift, much like the industrial revolution of the past, has given birth to a new digital economy—one where cyber is central.
The Birth of Resilience: A Shift in ApproachThe birth of V8, initially known as Arceo AI, was rooted in the ambition to connect technical security layers, processes, and personnel to enhance cyber hygiene.
While the original model targeted the insurance industry, the realization that innovation could be driven more effectively in-house led to a transformative pivot.
V8 embraced its current mission—to shift the economics of cybersecurity—by quantifying and aligning risk, technology, and insurance. He successfully raised $37M for his startup, with Lightspeed Venture Partners leading the round.
Navigating the Ecosystem: Lessons in Growth and InvestmentThe episode offered valuable insights into V8’s journey in terms of investment and growth.
Our guest emphasized the importance of aligning investor expectations with realistic projections and valuations, a delicate balancing act that requires transparency, credibility, and a shared vision.
As a globally distributed team, V8 faces the challenges of remote work and diverse time zones. Communication, empathy, and intentional human connections are pivotal in bridging the gap and maintaining team cohesion.
Frequent gatherings and clear communication were highlighted as key practices in sustaining unity and clarity within a geographically dispersed workforce.
Eventually, Arseo AI was rebranded as Resilience Insurance and has raised more than $225M.
Storytelling is everything, which is something that V8 was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!A Future Realized: A World Without Cyber FearThe episode concluded with a glimpse into the future—a future where cyber threats are no longer sensationalized headlines. Instead, cybersecurity is an integrated part of daily life, as commonplace as insuring against physical property risks.
This vision is grounded in the certainty and clarity that comes from having a comprehensive cybersecurity strategy, making the world harder for malicious actors, and creating a safer digital environment.
In essence, the conversation with V8 illuminated a journey from roots to Resilience, from transformative pivots to a vision of a future free from the specter of cybercrime.
V8 stands as a testament to the power of innovation, collaboration, and purpose in reshaping the cybersecurity landscape and empowering businesses for a secure digital tomorrow.
Listen to the full episode for more details, including:
- Growing up in a culturally diverse community that laid the foundation for understanding unity, reliance, and mutual support as essential elements in cybersecurity and innovation
- The turning point of 9/11 highlighting the need for innovative cybersecurity strategies that combine technical excellence with an empathetic understanding of adversaries.
- Understanding how the digital revolution has integrated cybersecurity into daily life
- Marking a paradigm shift where cyber risks are an intrinsic aspect of our interconnected world.
- A journey showcasing the power of adaptability, as a shift from selling technology to underwriting cyber insurance, leading to a transformative pivot and the creation of a holistic approach to cyber resilience.
- Aligning investor expectations with realistic projections and valuations forms the cornerstone of successful growth, requiring transparency, credibility, and a shared vision.
- Navigating a global workforce necessitating intentional communication, empathy, and frequent gatherings to foster unity and clarity across geographically dispersed teams.
- Future of Cybersecurity in a world where cyber threats are no longer sensationalized headlines envisioning a future where comprehensive cybersecurity strategies make malicious activities less viable, creating a safer digital environment for all.
Alejandro Cremades · EP 714 Vishaal ‘V8’ Hariprasad On Raising $225 Million To Rewrite The Rules Around Cyber RisksSUBSCRIBE ON:
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Having ideated an innovative business idea, entrepreneurs need to make the choice--incubators vs. accelerators. Which is the better source of funding and assistance to build and scale a startup? Although these terms are often used interchangeably, the two programs have some fundamental distinctions. Before signing up for a suitable option, you’ll take the time to explore how they work.
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In the captivating episode of The Dealmakers' Podcast, Amar Goel, a seasoned entrepreneur and visionary who currently serves as a co-founder and CEO of Bito, shares his inspiring journey through the ever-evolving landscape of entrepreneurship. With roots deeply intertwined with Silicon Valley's tech culture, Amar's trajectory unveils a story of innovation, persistence, and the power of adaptability.
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Budding entrepreneurs with innovative ideas must take the time to understand how incubators shape the startup landscape. Having a disruptive concept, top-notch talent, and the drive to make it big is a great starting point. However, these aspects may not be enough to ensure success for the startup. It’s a proven fact that 90% of new ventures will fail across all industries. An even more worrying statistic is that 20% will fail right off the bat.
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In a recent episode of The Dealmakers' Podcast, we had the pleasure of hosting Jonathan Winer, a seasoned entrepreneur and investor with a wealth of experience spanning across multiple industries. From his humble beginnings as a philosophy student to his pivotal roles in founding startups and shaping innovative infrastructure projects, Jonathan's journey is a testament to the power of unexpected opportunities and the impact of strategic decision-making.
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Startup founders should have a clear view of when and how to consider venture debt. This form of alternative funding is an integral part of any entrepreneur’s journey and is a great complement to equity. When setting up a new business, accelerators, incubators, and venture capitalists are typically the initial sources of capital. You can use venture debt as the next financing tool, which is non-convertible and designed for early-stage, hyper-growth startups.
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Entrepreneurs starting a SaaS venture must learn funding strategies specific to Software-as-a-Service early-stage startups. The cloud application space is unlike other sectors, and founding a startup comes with unique challenges. The biggest of which is SaaS funding.
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In the latest episode of the Dealmakers' Podcast, we had the privilege of speaking with Janis Zech. As the founder and CEO of various successful startups, including Fyber and Weflow, Janis has demonstrated a remarkable ability to identify opportunities, solve complex problems, and create lasting value.
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Why startup founders should plan for a profitable exit? Founder exit strategies are indispensable for the long-term growth and sustainability of any new venture. As entrepreneurs exit their businesses and move on to ideating new concepts, they sustain the startup ecosystem. Statistics indicate that 30% of founders who have built successful companies are likely to be equally successful with their next projects.
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In the latest episode of the Dealmakers' Podcast, we had the privilege of speaking with Joydeep Sen Sarma, a trailblazing entrepreneur who has left an indelible mark on the tech landscape. He is the founder of both Qubole and ClearFeed. From his humble beginnings in Delhi to co-founding successful startups and driving innovation in the world of big data, Joydeep's journey is a testament to the power of passion, perseverance, and entrepreneurial spirit.
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Angel investment in early-stage startups is responsible for dynamic changes in the US business landscape. Angels are trending toward diversity in 2023 with a strong focus on entrepreneurs who have disproportionately low representation. Statistics indicate that in the first quarter of 2023, angel investors provided seed investments worth $3.18 billion. Interestingly, female angels are entering the startup ecosystem in a big way, bringing valuable experience and skill sets to the table.
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In a world where artistry, academia, and entrepreneurship intertwine, Zev Eigen, the visionary founder of Syndio, embarked on a journey that would redefine workplace equity. In a recent podcast, The Dealmakers' Podcast, Zev shared his unique path from his origins in Costa Rica to the bustling artist-loft life in Soho, New York, where creativity and innovation shaped his formative years.
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Mastering startup investment strategies is a critical skill entrepreneurs must learn. Achieving success in a new venture is challenging as it is, with about 90% of them failing eventually. However, statistics also indicate that at least 29% go under because of a lack of funding. Have you developed a groundbreaking new concept that can disrupt the industry? Don’t let financial shortfalls get in the way of capturing the market and investor interest. One of the first steps you’ll take is to devise effective strategies to get the funding you need.
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Leveraging collaborations for startup financing is one of the most critical skills founders must learn. Building a new company from the ground up and raising funding is super challenging, but getting the right partnerships helps. Whether you collaborate with established brands or upcoming startups, you’ll find that they not only contribute to long-term success. But you’ll also find it easier to acquire funding from investors.
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In a recent episode of The Dealmakers' Podcast, Robert Krayn, the visionary founder behind Talkiatry, shared his inspiring journey from a middle-class upbringing in New Jersey to revolutionizing the world of behavioral healthcare. Despite facing numerous challenges, Krayn's determination and innovative thinking led him to build a unique healthcare model that empowers both providers and patients.
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In a recent episode of “The Dealmakers’ Podcast,” Alexander Izydorczyk shared his remarkable journey from an academic upbringing in Winnipeg, Canada, to becoming a pioneering force in the data science field. His company, Cybersyn, has successfully created a data-rich ecosystem and raised $62.5M to empower businesses, governments, and individuals. Alexander’s journey serves as a testament […]
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Embarking on an enchanting expedition through the corridors of business acumen, we unveil the extraordinary journey of Ben Boyer, a seasoned venture capitalist whose path took him from the sun-soaked streets of Los Angeles to the thriving heart of the tech realm.
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Why is effective financial planning for startup company financing a critical exercise for founders? Without a detailed financial model, you’ll find it impossible to create a roadmap for your company’s success. Most importantly, investors conducting their due diligence when you pitch for funding will want to examine your company’s financials.
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What is the impact of early-stage financing on startups when it comes to accelerating growth? Funding the fledgling company at this stage acts like a boost that propels it forward and launches it into the market. Whatever may be the stage of the startup, it needs capital. From the time entrepreneurs develop a robust business idea with the potential to become a corporate giant, they need money.
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The visionary story of dbt Labs, formerly known as Fishtown Analytics, is a tale of remarkable innovation, growth, and adaptability. Founded by Drew Banin with a passion for data and a desire to make data teams an essential part of every organization, dbt Labs has been leading the charge in data transformation.
The post He Built A $4 Billion Business By Helping Analysts Create And Disseminate Organizational Knowledge appeared first on Alejandro Cremades.
Before embarking on the journey of becoming a small business owner, entrepreneurs must start by building a strong network of startup advisors and mentors. Several aspects go into starting a new company, such as a robust business idea, a great team, and a ready customer base. But, inexperience often plagues first-time founders, regardless of the resources they have. That’s where expert support comes in, and hiring a professional for guidance could be the key to long-term success.
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In this captivating episode of the Dealmakers' Podcast, we embark on an extraordinary voyage with Tony Pan, a visionary entrepreneur determined to combat climate change through groundbreaking technology. From his early days growing up as the son of a Taiwan Navy officer to founding Modern Hydrogen, Tony's journey has been nothing short of inspiring.
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Having a brilliant business idea is only the first step in building a startup. The next most crucial decisions involve bootstrapping vs. seeking external funding. Entrepreneurs need money to get their new companies off the ground. The question arises--where to get it? Founders can either invest their personal savings and earnings into the venture. Or use credit cards and open lines of credit where they are personally liable. Alternatively, they can acquire that funding from external sources. These sources can include crowdfunding, incubators, venture capitalists, accelerators, bank loans, or angel investors, to name a few.
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Henry Asseily, a tech entrepreneur, co-founder of Bizrate, which he sold for $525 million, and active investor, boasts an inspiring journey from his early years in Lebanon to leading innovative tech ventures. His passion for technology and unwavering determination make him a key figure in the global tech landscape.
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In this enthralling episode of the Dealmakers' Podcast, we delve into the life and times of Philipp Roesch-Schlanderer, the ingenious force behind EGYM, where he has raised close to $400 million from top-tier investors. His trajectory - spanning from his roots in Germany to the creation of a game-changing fitness technology company in the hustle of New York City - is a testament to his unyielding drive to redefine norms and catalyze transformative shifts in the world.
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Nelson Chu, the co-founder and CEO of Percent, is a testament to the power of resilience, determination, and visionary thinking. His journey from New Jersey to the helm of a multimillion-dollar fintech startup underscores his inherent entrepreneurial spirit and his ability to harness past experiences for future successes.
The post This Entrepreneur Raised $50 Million To Make Alternative Investments More Transparent And Accessible appeared first on Alejandro Cremades.
For a visionary entrepreneur with a disruptive business idea, funding is critical for making that vision a reality. And crowdfunding success can be pivotal to attaining the first milestone. You’ll need effective strategies for acquiring early-stage startup financing, and microloans are the ideal option.
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The art of bootstrapping involves launching and growing your startup without external funding. Entrepreneurs entering the American business landscape face the significant challenge of setting up a new business without financial support. But this challenge is not impossible to surmount. Statistics indicate that the United States has the largest number of startups worldwide, with the tally standing at 75,056. Of these, at least 78% use their personal funding to launch the business. And 58% start off with a capital of less than $25,000.
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Matias Serebrinsky, the co-founder of Cookunity and PsyMed Ventures, has had an intriguing journey from his birthplace in Argentina to leading two successful ventures in the United States. His experiences as a founder and venture capitalist, coupled with his passion for mental health, have shaped him into a dynamic and innovative leader.
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When reading about the success stories of entrepreneurs and startup founders, one key underlying factor stands out. That they developed effective investor networking strategies. Startups working with accelerators and incubators get off on the right foot because they get access to investor networks.
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Gabe Dominocielo, the co-founder of Umbra, has charted an impressive course from his humble beginnings to spearheading a groundbreaking aerospace and defense technology venture which now has the largest constellation on American radar imaging satellites, including the highest resolution commercial satellites in history, raised over $100 million and built a company valued at nearly a billion dollars.
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Alex Furman, the co-founder and CEO of Performica and co-founder of Invitae, has had an intriguing journey from his birthplace in the Soviet Union to leading two successful tech-based ventures and a nonprofit supporting Ukrainian refugees. His early struggles, self-taught path to software engineering, and empathetic approach to leading HR at a hyper-growth startup have fostered a unique blend of resilience, vision, and innovative thinking.
The post He Built A $12 Billion Company And Now Raised Millions To Help You Maximize Talent appeared first on Alejandro Cremades.
Sir Martin Sorrell, is the mastermind behind the success of WPP and S4 Capital. He has charted an exceptional journey from his birthplace in London to establishing two thriving advertising and marketing services firms. His tenure in the advertising industry, earning degrees from esteemed universities, and serving in various advisory roles have cultivated in him a distinctive blend of resilience, foresight, and inventive thinking.
The post The Advertising Titan: How This Entrepreneur Built The Largest Advertising Conglomerates With Over 100,000 Employees appeared first on Alejandro Cremades.
How to respond to investor emails? As a startup founder, what’s the right way to respond to investor emails? For many, reaching out and connecting with investors appears to be the big hurdle. That takes up a lot of focus. Then what do you do once you actually get investors responding to you? What should you not do? How do you achieve the optimal outcome from these opportunities?
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How to show how you make money in a pitch deck? The whole purpose of creating, pitching, funding, and scaling a business is to make money. This makes being able to convey this to those who see your pitch deck very important. Perhaps even far more important than your specific product or solution.
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Ian Shepherd's journey from a car enthusiast growing up in the UK to the co-founder of Electrify, a company that invests in and scales established YouTube channels, is nothing short of remarkable. His passion for media and the evolving creator economy has led him to venture into unique territories, creating opportunities for content creators and shaping the future of media consumption.
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Pitching to startup company incubators and getting accepted into their programs is a challenging road. The application process is not only highly competitive, but the selection protocols are equally tough. Organizers have rigorous screening criteria, which is why the success rate is between just 1% to 3%.
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Nico Simko is the co-founder and CEO of Clair, a fintech startup rewriting the rulebook on how paychecks are managed and accessed. His unique multicultural background and international education have lent an extraordinary perspective to his innovative approach to the finance industry.
The post This Entrepreneur Raised $195 Million To Disrupt Wage Accessibility And Pioneer Financial Freedom appeared first on Alejandro Cremades.
Thomaz Srougi, the founder and former CEO of Dr. Consulta, has an inspiring story that stretches from the swimming lanes of Sao Paulo, Brazil, to the boardrooms of one of Brazil's leading healthcare providers. His journey is an amalgamation of competitive sports, public policy education, successful entrepreneurship, and an unwavering desire to solve social problems.
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Paul Johnson, a successful entrepreneur with a passion for transforming traditional industries with technology, shares his remarkable journey just crystallized on a $400 million acquisition in a recent interview for the DealMakers podcast. The co-founder of Lemonaid Health, Paul's inspiring narrative reveals the resilience, grit, and innovation needed to transform the healthcare industry.
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The trajectory of Barrett Comiskey's career, from his early days at MIT to pioneering the world of electronic paper technology, is a beacon of innovation and entrepreneurship. In our recent episode of the Innovators' Odyssey podcast, we delve into Comiskey's incredible journey, tracing his path from an aspiring mathematician to a game-changing tech entrepreneur.
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Ralf Wenzel, a serial entrepreneur and visionary investor, is a force to be reckoned with in the global tech industry. His latest venture, Jokr isthe third unicorn company under his accomplished leadership.
The post He Built 3 Unicorns, Raised Hundreds Of Millions In Financing, And His Latest Business Aims To Revolutionize Ecommerce appeared first on Alejandro Cremades.
Vishal Sunak, CEO and co-founder of LinkSquares has raised over $160 million for his thriving startup. In a recent interview for the DealMakers podcast, he delves into the world of entrepreneurship, shedding light on overcoming obstacles, understanding the power of sales, mastering fundraising, and cultivating a robust company culture.
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How to forecast personnel costs for your startup? Personnel costs can be one of the most substantial expenses for all businesses. It can be a major factor for startups who are trying to get off the ground, push growth, and hit key milestones.
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Ronni Zehavi's path to becoming a prominent tech entrepreneur is a testament to the power of passion, perseverance, and seizing opportunities. Starting his career in human resources, Zehavi took a leap of faith and ventured into the tech industry, ultimately co-founding successful companies and making significant contributions to the field. In a recent interview for the DealMakers podcast, we dive into Zehavi's remarkable journey, tracing his evolution from an HR professional to a tech innovator, and exploring the key milestones that shaped his trajectory.
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While growing up in Boston and attending Stanford University, Anders Jones never imagined that his career path would veer away from traditional finance roles towards entrepreneurship. Jones, the co-founder, and CEO of Facet, shared his journey on the DealMakers podcast recently.
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Jonathan Matus, the founder and CEO of Fairmatic and co-founder of Zendrive, has had a fascinating journey from his birthplace in New York to leading two successful tech-based ventures. His time in the tech industry, studying at prestigious institutions, and serving in the Israeli military have instilled a unique blend of tenacity, vision, and innovative thinking in him.
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In a riveting conversation with the seasoned entrepreneur, Christian Gaiser, we unravel his journey from a quaint, family-owned hotel in Germany's Black Forest to a world of high-stakes entrepreneurship. On a recent episode for the DealMakers podcast, Gaiser's journey unveils his roots in the hospitality industry, a fascinating run in the world of iPhones, the exciting sphere of investment banking, and his current endeavor in the world of short-term rentals.
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How to think about startup salaries? Hiring well and getting the compensation right is one of the areas in which many startup founders have the least experience, and often struggle with. So, as an entrepreneur embracing launching your own startup, or needing to grow one and take it to the next level, what’s the best way to think about startup salaries?
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Christopher Golec is a seasoned entrepreneur with a demonstrated record of fostering innovation and leading successful start-ups. Golec's journey spans from his early days as a chemical engineer to becoming a key figure in the world of fintech, with his co-founding of Demandbase, a pioneering B2B marketing platform, serving as a remarkable testament to his visionary leadership.
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In a recent podcast interview for DealMakers, Todd McDonald, Co-founder of R3, sat down to recount his journey from a bucolic childhood in Connecticut to becoming a key player in the world of fintech. He took us through his journey in the financial industry, transitioning from a trader in Wall Street to co-founding R3, a fintech startup at the forefront of enterprise distributed ledger technology (DLT).
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With his latest company valued at over $2.5 billion, Sweden's very own, Mattias Hjelmstedt, has an impressive record in the tech and gaming world. He's contributed significantly to the global e-sports industry, built a myriad of successful digital platforms, and made lasting impacts on the lives of millions of online users. From an ardent computer geek to a seasoned entrepreneur, Mattias’s journey is an inspiration to tech enthusiasts and budding entrepreneurs worldwide.
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Kevin Frechette brought his sales experience to the startup world, and has built a highly successful venture in a massive industry. On the Dealmakers Show, Frechette shared his journey of building a fast growing tech startup as a non-technical founder, how sales is instrumental in entrepreneurship, the mindset of embracing rejection as a founder, building a sales team, and the fundraising process.
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Diego Caicedo championed his third industry in Latin America. He took his latest startup through an acquisition, but also bought it back.
The post This Entrepreneur Raised $100 Million To Build A Scalable Credit System For Companies Of All Sizes appeared first on Alejandro Cremades.
Amar Sawhney has built up an impressive record of startup exits. He’s created billion-dollar companies, sold some, and has taken others public. Now he’s heading up three startups at once. On the Dealmakers Show, Sawhney talked about technology, and creating the foundation for 3D printing 35 years ago. Plus, his first IPO at just 27 years old, using holding companies, choosing bankers to help with his exits, public versus private capital, timing the sale of his business, and his mission to serve 10M patients with his therapies.
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Bob van Luijt has gone from building websites in middle school to raising tens of millions of dollars for his tech startup. On the Dealmakers Show, Bob van Luijt talked about combining creativity and business, organic startup fundraising, operating a 100% remote team even before COVID lockdows, AI, and the pre versus post ChatGPT eras.
The post This Entrepreneur Raised $70 Million To Unleash AI’s Full Potential By Revolutionizing Generative Models With A Vector Database appeared first on Alejandro Cremades.
BJ Johnson went from academia to launching a clean energy startup that has already raised $50M for its mission. On the Dealmakers Show, Johnson talks about the need for energy, and negating its ugly consequences, alternative fuels, business models and adapting to create real change, securing product market fit, fundraising, and pitching investors as a technical founder or engineer.
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Jon Sabes is a serial entrepreneur who has built and scaled successful businesses by going public. Now he’s charting a new venture that could be much bigger. On the Dealmakers Podcast, Sabes talked about the benefits of law school for entrepreneurs, life insurance as an alternative asset, molecular biomarkers of health and aging, SPACS versus traditional IPOs, getting fired from your own startup, and active recovery.
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Doug Brien has gone from success in the NFL to kicking his first business through a billion-dollar IPO. Now he’s working on an even bigger vision to bring peace of mind to others, for which he’s already raised $200M. On the Dealmakers Show, Brien talked about the NFL as the ultimate training ground for being an entrepreneur, being a student of the game, fundraising, and the experience of taking a company public. Finding a way forward when banks go bust, the Fed raises interest rates, and his mission to buy a million homes.
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Alexander Asseily has gone from being born in a war zone to creating breakthrough technologies that we use every day. The companies he’s been involved in have raised over $1B in capital, and he’s not done yet.
On the Dealmakers Podcast, Asseily talked about his youth giving him a sense of urgency to fix the world, how engineering thinking and design thinking became tools for entrepreneurship, raising hundreds of millions of dollars for startups, investing, the one thing that defines breakthrough companies and products, what you must have to build anything of substance, and the most important hires early hires your startup should be making.
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Chase Garbarino has built, sold, and invested in startups since he was in fifth grade. Now he’s taking on the world’s largest asset class. On the Dealmakers Show, Garbarino talked about flexing his entrepreneurial talents in school, selling companies, how investors think about funding startups, office culture, how to manage your board, and the future of smart cities.
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Amar Kendale has already raised $70M for his latest venture. A health tech startup focusing on a sizable, yet underserved niche, with big potential for impact. On the Dealmakers Show, Kendale talked about innovating and being disciplined in building a new prototype every week, when failing competitors can be a bad thing, refusing to take no for an answer versus knowing when to quit, recognizing when investment cycles change, $18B acquisitions, and trends in customized healthcare.
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Lluís Cañadell chose to look a crisis in the face and turn it into a huge opportunity to leap into business as an entrepreneur. On the Dealmakers Podcast, Canadell talked about communication, cultures that foster entrepreneurship or suffocate it, quickly grabbing a 10% market share, and how the fundraising environment today is extremely different than it was months ago.
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Now on his third startup, Yannis Niebelschuetz has already raised tens of millions of dollars to scale his global mission of making coaching more accessible for entrepreneurs and their employees. On the Dealmakers Show, Niebelschuetz talked about the benefits of travel in entrepreneurship, acquisitions, cofounder dynamics, focusing on what you can control in your business, the power, and value of coaching, and how he and his brother have created the world's leading digital coaching platform.
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Steven Wongsoredjo chose a path and market that everyone else has been overlooking. A $200B TAM that he has already been making great headway in. On the Dealmakers Show, Wongsoredjo talked about becoming the third company from Indonesia to be accepted into the startup accelerator, YCombinator, social capital effects, picking an offline marketing approach first, and fundraising.
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Marcelo Lebre has engineered his way from being turned down for a $20k investment from a startup accelerator to raising half a billion dollars for his growing remote work platform. On the Dealmakers Podcast, Lebre talked about building engineering teams, going remote and remote first companies, interviewing and performing due diligence on your investors, and never trading in your intensity for any misguided promises of stability.
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Rishi Mandal knows how to take a startup all the way from being birthed in the garage to being acquired for billions of dollars. On the Dealmakers Podcast, Mandal talks about running towards the challenges, the broken healthcare system, investing in human augmentation, fundraising, and becoming the largest full-time employer of coaches in America today.
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What role does an investor data room play in fundraising for startups? A data room is one of the key components of a fundraising campaign, as well as for M&A. While the styles and tools may have changed over the years, along with best practices, this is still core to you securing the financial fuel your venture needs.
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L.D. Salmanson is a repeat entrepreneur who has been through spinoffs, acquisitions, and is now building his biggest company yet. On the Dealmakers Show Salmanson talked about starting his first company at 13 years old, spinoffs, the three boxes you need to check to raise capital from VCs, the number one differentiator between founders and others, real estate data, and crashing the New York Stock Exchange.
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Yanda Erlich has now cofounded four venture-backed startups. He’s been an angel investor, and a partner at a venture capital firm. Now he’s going at it again with a company that provides the best development tools for creating the next generation of software. On the Dealmakers Show, Erlich talked about going from operator to investor and back again. Including different types of acquisitions, raising hundreds of millions for startups, what investors are looking for in a fundable company, and how he’s helping empower developers in the AI and machine learning space.
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Matthew Roberts has brought about one of the biggest revolutions in the coffee and beverage space that we’ve seen since the birth of Starbucks and the frappuccino. On the Dealmakers Podcast, Roberts talked about reinventing coffee, how travel can provide the inspiration for great startups, the fundraising journey, and how early you need to begin raising for your next round. Plus, improving the lives of those throughout the supply chain, and the future of the beverage industry.
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Tanis Jorge seems to have come up with a magical recipe for consistently starting and selling businesses rapidly. Her last company raised over half a billion dollars through a Series D round. Now, she’s going even bigger with her latest company, which aims to give back to the founder community and equip others to scale successful businesses.
The post She Built A $2 Billion Company By Helping You Know Who You Are Doing Business With appeared first on Alejandro Cremades.
Nick Tuzenko has now raised $170M for his startup, which is acquiring eCommerce brands. On the Dealmakers Show, Tuzenko shared his insights on valuation trends for eCommerce businesses, what they look for when acquiring companies, what investors look for in the fundraising process, and more.
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Vicente Zavarce has already raised tens of millions of dollars for his LA based startup that is expanding in Latin America, beyond the usual suspects of just Mexico and Brazil. On the Dealmakers Show, Zavarce talks about the most important skills in startups, the true customer and most vital side of marketplace businesses, bootstrapping and fundraising, company culture and international business.
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Svilen Rangelov and his brother have already raised tens of millions of dollars for their tech startup that has reinvented the supply chain. On the Dealmakers Show, Rangelov talked about finding gaps in markets, using SPVs for fundraising, managing 1,500 investors, what’s next for the supply chain, and the advantages of starting up your business outside of the US.
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Gaurav Sharma has already started and sold multiple businesses. His latest venture is shaping up to be his largest venture so far. On the Dealmakers Podcast, Sharma talked about bootstrapping, and his contrarian approach to building businesses, what will make everything easier as you launch your own venture, selling businesses, and integrating acquisitions. Plus, why he finally chose to accept outside capital for his latest company.
The post He Sold His First Two Companies For Millions And Now Raised $56 Million To Automate Your Business appeared first on Alejandro Cremades.
Kishor Patil has dedicated his career to building a lasting company that has gone through an IPO and is now worth over a billion dollars. On the Dealmakers Show, Patil talked about growing his business, evolving your company for longevity, focusing on the right niches and markets, the three things to make acquisitions successful, and employee retention.
The post This Entrepreneur Built A $3.6 Billion Business In India By Disrupting The Future Of Auto Tech appeared first on Alejandro Cremades.
Luka Ivicevic is now on his third startup. After having his highly successful fintech company acquired, he’s now on a mission to help this generation to live to 150 years old. During his special appearance on the Dealmakers Podcast, Ivicevic talked about going from selling sneakers in NYC to creating one of the biggest banks in Europe. The importance of market over the team, fundraising for fintech, cofounder and board dynamics, how to get product market fit, and functional medicine.
The post He Built One Of Europe’s Biggest Online Banks And Now Raised Millions To Personalize Medical Treatments appeared first on Alejandro Cremades.
Jonathan Steinberg has built one of the world’s largest financial services companies, which is also the fourth-largest gold manager in the world. On the Dealmakers Show, Steinberg talks about taking your company public, evolving to create a lasting company, tokenization and the future of financial services, and who to hire.
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Why financials matter in a pitch deck? What is the importance and role of financials in a startup pitch deck? Financials are a key part of fundraising and pitch decks. In fact, these can be some of your most important slides. Why do they matter so much? What should they show? What digits are investors looking for in a fundable startup? How might your numbers impact what investors will be interested in funding you, and the terms they are likely to offer?
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Elad Gil has now launched two startups of his own. He sold one to Twitter and has raised almost half a billion dollars for a second. That’s along with investing in some of today’s most successful companies, like Stripe, Airbnb, and Coinbase.
The post He Went From Selling His First Company To Twitter To Becoming The Biggest Solo Venture Capitalist appeared first on Alejandro Cremades.
Michelle He has already raised hundreds of millions of dollars for her fintech startup that is increasing access to credit and affordable loans, beyond just relying on credit scores. On the Dealmakers Show, she talked about going from corporate to startup, the problems with credit scores and traditional lending, turning your disadvantages into advantages, fundraising, and more.
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Arik Shtilman bootstrapped his first venture all the way through a $100M acquisition. Now he’s raised hundreds of millions of dollars to build the infrastructure for the future of the financial services space. On the Dealmakers Show Shtilman talked about bootstrapping versus raising capital, how to sell your company for 5x more, fintech as a service, going global from the start, and taglines in fundraising.
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JP Errico has developed an incredible amount of IP in the medical space. On the way, he has built, financed, sold, and taken companies public.
On the Dealmakers Podcast, JP talked about going from being a patent attorney to an entrepreneur, negotiating acquisitions, how IPOs are different, the pros and cons of developing relationships with strategics, and managing fight or flight mode.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom Patent Attorney To EntrepreneurJP Errico was born in Massachusetts, but grew up in New Jersey. His father was a physician, and his mother had a law degree. Both of which ended up being very influential in his career.
Having always been good in math and science, JP asked his fifth-grade teacher where great students in those subjects should go to college. She told him about MIT. He set his sights on that and eventually ended up studying engineering there. Then went on to get his law degree as well.
That led him to write a book on international patent law. However, after only a few months of practicing, his uncle got in touch, and they ended up venturing into entrepreneurship together.
JP’s uncle and godfather, a world-renowned spine surgeon who ran the service at NYU for 30 years, was thinking about his own products and innovations that would forge the future of his field.
Together they ended up creating 30 to 40 patents. Then formed their own companies that would license this intellectual property and see it through to being used in the real world.
Over the years, Errico says that turned into many powerful moments in which he met patients who had received the benefit of their inventions, and whose lives had literally been transformed as a result of them.
Those patents have now created $20B in sales.
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AcquisitionsFor one of these companies, they raised some friends and family funding, then some venture capital and private equity. In just a couple of years, they were working with the FDA for approval of a study for one of their products.
Over the course of three years, they had raised $15M. Then one of the companies that had been licensing their IP made an offer to buy them. It was for $360M. Around 24x the amount they had put into it. A calculation that the CEO of the acquiring company figured was how much more it costs large companies to develop new products, compared to small startups.
Storytelling is everything which is something that JP Errico was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!While they successfully closed the deal, with a strong outcome, JP learned two big lessons through this acquisition process. These were the importance of alignment with your investors, and the nuances of structuring the sale of your business.
In this transaction, they received an upfront payment of just $120M. A third of the total offer price. The balance was contingent on them achieving certain milestones during the following years.
Lessons In How Acquisitions WorkThis is very common in M&A. What’s really important is that you have structured the deal to retain the ability to control the performance after closing so that you can achieve those milestones or performance metrics. Especially that you are not faced with other parties who have the ability to interfere and derail your efforts.
In this case, they also faced pushback from their own investors, who did not want to sell. Some of their investors wanted to keep driving the business to become a billion-dollar company.
However, that would have shrunk the founders’ ownership from around 70% of the company to just 25%. It would have made little financial difference to the founders, even if it gave the investors $750M, instead of $120M. Yet, it would also require a huge amount of risk and another five to 10 years of hard work.
Fortunately, they were able to agree on selling, and JP was able to move on to his next venture.
IPOs Versus AcquisitionsErrico was able to take two following companies through IPOs. One for $1.4B, and another for $90M.
Shifting his role from active executive to board member really helped him free up his time to work on these deals. He says that putting another CEO in place to run the day-to-day of the business enabled him to spend his time talking to investors, lawyers, and bankers, to make the most of the opportunity.
One thing JP really wants to convey to other entrepreneurs is that going public is not an exit. This is in contrast with an acquisition, where you sell your company, and can cash out your shares. Depending on the terms and any earn-out clauses, you are effectively done with the company. At least within a couple of years.
Instead, an IPO is just a milestone. A new beginning and chapter of the journey for your company. Though, one which should certainly be celebrated.
You Can Do It TooFor others thinking about their own inventions, products, and startups, JP says that everything is possible, as long as you are not trying to break the laws of physics.
It just requires energy. The only question is if you are willing to put in enough energy, for long enough to make it successful. He says that there is no telling how much it will take until you jump in. Yet, if you are dedicated and willing to make the sacrifices, it will come back to you in a positive way.
Listen in to the full podcast episode to find out more, including:
- The pros and cons of taking investments from strategics
- How Electrocore is targeting the vagus nerve to improve and enhance our lives
- How to think about IP
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Aviv Leibovici took a different route than many of his peers. Yearning to have a real world impact with his work he dove into a big industry that has been begging for modernization.
On the Dealmakers Show Leibovici talked about embracing new industries, having conviction about your startup idea, raising $106M in capital, the most important thing in building your business, and why 20% of your time should be free for this one thing.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTraining For EntrepreneurshipAviv Leibovici was born in Israel, the ‘Startup Nation’. From an early age he picked up the love for computers that his parents shared.
Israel has mandatory military service for everyone. It was an experience he really enjoyed. You typically go in at 18 for three years. Aviv was accepted to a program that employed him there for an additional six years.
It is not a large program. Yet, one which has churned out a very high number of notable startup founders. Which is also where he met his two future cofounders.
It wasn’t just work. Leibovici saw it as a great education and training opportunity. You get to study and obtain a university degree, learn new technologies, and build all types of leadership and presentation skills. Including how to manage and motivate others. You are forged to be able to lead technological efforts for the Israeli defense industry. Great preparation to also be able to have everything it takes to venture into a startup.
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Finding & Holding Onto Conviction About Your Startup IdeaOnce out of the service Aviv found himself spending his time living in the French Alps. Skiing as much as he could around some remote consulting work.
After his two friends from the military came out to visit, they convinced him to go back and work on something together. Initially, they didn’t know what that would be. Not the industry or product. They just knew that they wanted to do something together, and they wanted it to have a big real world impact.
They began looking into all kinds of various industries. They went out and spoke to a lot of other entrepreneurs, and learned as much as they could from them.
Eventually, through an introduction they met someone who was adamant that they apply themselves to the construction industry. That it was ripe for innovation, and wanted it.
So, they gave themselves two months to explore the space and see if there was really something there. During this time they went to see what construction companies were doing. How their project sites worked, and what their meetings were like. During one of these meetings they were struck by these experts not only struggling to decide what to do next, but what had been done and completed on the project already.
Fundraising ChallengesThey talked to investors. With one of them saying he would never get involved in funding a construction company, but would give them a $4M seed check if they agreed to do something in cybersecurity, and they could just figure out what it was afterwards. Still, they stuck to their guns on wanting to do something concrete.
They kept interacting with construction companies. Aviv says he found one that would allow him to tail them around all day and ask as many questions as he liked if he brought them coffee and pastries in the morning. So he did, and began building relationships.
Together they built some AI algorithms, and early prototypes on a non-existent budget.
Once they began landing customers in the UK and Israel, then they were able to start raising capital from investors.
BuildotsToday, Leibovici’s startup is Buildots.
Buildots has now raised $106M, with offices in Tel Aviv, London, and remote team members in Germany and beyond. With a total of 150 employees.
Storytelling is everything which is something that Aviv Leibovici was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Put simply, they capture videos of construction projects, analyze them, and help construction companies understand what’s been done, what needs fixing, and is still to do, and empower them to make decisions. All on a SaaS basis.
Looking forward, Aviv sees a world in which construction projects are completed much faster. With 30% to 50% time savings compared to what most have been used. While also seeing building costs greatly reduced.
This is a huge shift, in an industry which hasn’t seen an enormous amount of change over the past 50 years, and which is one of the largest in the world, and potential beyond.
It is a world in which he sees construction companies becoming more profitable, with better margins, and less stress and risk for operators.
Entrepreneurs Should Save 20% Of Their Time For This…Aviv recalls one of the best pieces of advice he received from their first investor and board member as needing to preserve 20% of your time as free time.
That is time you can spend thinking, strategizing the bigger picture, and enabling bigger leaps. Rather than just being bogged down in the minutia of running a business.
It is something he says he has gotten better at over the years. Though highly recommends it to other founders who are starting out.
Listen in to the full podcast episode to find out more, including:
- Company culture
- The fundraising journey
- Proving your business idea
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Troy Helming has a fantastic resume of starting and exiting companies. Many of them are in the renewable energy space. On the Dealmakers Show Helming talked about alternative energy, the midas touch versus the wolf, raising hundreds of millions of dollars in financing, the $27B joint venture, time management, handling the dark days, and validating your business ideas.
The post This Entrepreneur Is The Mastermind Behind $40 Billion In Green Energy: The Untold Story Of A Unicorn Founder appeared first on Alejandro Cremades.
Dee Choubey has taken his venture from zero to over half a billion dollars in funding, as well as facilitating billions of dollars in transactions through his fintech platform. On the Dealmakers Show Choubey talks about when to start your business, what makes a company successful in the long run, business roadmaps, what do you do when you see massive shocks in the economy, managing a public company, and more.
The post He Took His Company Public For Close To $3 Billion By Rewiring The American Banking System appeared first on Alejandro Cremades.
After raising $200M in funding, Jonathan Chen took his first startup through a big IPO. Now he is working on transforming an even larger market.
On the Dealmakers Podcast Chen talked about conquering fear, business battle scars and kissing frogs when fundraising and finding product market fit, the Amazon of healthcare, running out of money and how it applies to who you hire in your startup. Plus, the mindset that will help you be a better founder.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksConquering Your FearsJonathan Chen was born and grew up in Maryland. He still loves the snow, and has a lot of family on the East Coast.
He says that unlike many Asian parents, his mother wasn’t fixated on him becoming a doctor or lawyer. Instead, she saw technology was the future, and she signed him up for computer science in high school. It turned out that he loved it, and has never stopped working in this space since.
In college he not only obtained his computer science degree, but went on to get his Master’s in science too. Even more importantly, he overcame one of his greatest fears and challenges. Eventually becoming the valedictorian.
Chen says that he suffered from serious stage fright up through high school, and going into college. Yet, he wanted to deliver the commencement speech. It was a goal that required him to conquer a major fear he had.
Still, he knew that public speaking would be a major asset later in life, and certainly as a startup founder. So, he practiced and got coaching, and achieved that goal, after being nominated by the deans.
During college he and his soon to be first cofounder Tim were always exploring business and project ideas. Including several apps that failed.
Today, some of this top advice for others considering launching a business is just to get to the point of being numb to rejection as quickly as possible. Something he wishes he could have mastered a little earlier on.
When you master this mindset, you will save yourself an enormous amount of stress and frustration. You’ll be able to navigate uncertainty better, and be able to execute more quickly, and progress faster.
As the CEO of a startup you are essentially just putting out fires all day every day. It’s just one challenge after another. Whether you are trying to sell to customers, or pitch investors, there will be a lot of rejection involved in that on a daily basis.
You have to be ready to meet the barrage of incoming problems each day, and to be able to be told no by 99 investors to be able to push through to that one yes.
Being able to numb yourself to the emotional rollercoaster this could all send you on, will help you just plow through the battlefield that doing a startup presents.
Worrying will just slow you down, make the journey miserable, and scare your team members.
To get to this point, you just have to keep on challenging yourself. No matter what role you are in now, whether employee or CTO, put yourself in more challenging situations to build up this mental muscle, and develop it before you leap into your first venture.
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Taking Your First Startup Public For Over $1B Together Tim and Jonathan ended up striking on the idea for FiscalNote. A SaaS startup helping businesses make sense of all the new regulations and laws being passed. To ensure they remained in compliance and created workflows that helped them navigate changes.
They took that idea through startup accelerator Plug And Play. A choice he says is great for brand new entrepreneurs. Which can help you structure your startup, build your network, find hires, and meet investors. Which he says can be true of any accelerator program. Even if you just join something locally.
After nine years of battling plenty of ups and downs, and raising $200M, Chen took that company public for $1.3B on the New York Stock Exchange.
Product Design & Product Market FitNailing your product design and product market fit is a big and pressing challenge as a startup. You might refer to this process as developing a lot of battle scars and kissing a lot of frogs.
Chen says it is a lot about the velocity at which you can pump out new features and test them. Get out 10, and three of them might stick. So, the faster you add and iterate, the quicker you can get that fit, and then be able to scale.
However, rather than starting out designing a product for a massive amount of customers Jonathan says that the secret is actually to design for just your one or two initial clients. That’s faster, and will get you business. Work on wowing those early adopters. Then you’ll already have 80% of what you need to build in terms of features to go much broader and scale.
Those early customers will inform you of the additional features they want. They may only be right half the time, but the faster you build and test, the sooner you’ll find out.
Transforming Finance In The Healthcare IndustryAs with all true entrepreneurs, Jonathan Chen was already cooking up ideas for his next startup before he took his first public.
He saw the timing was right to help drag the healthcare industry into the future with better and more efficient financing solutions.
So far they’ve already raised $60M on their way to being the financial stack solution for the healthcare industry.
Storytelling is everything which is something that Jonathan Chen was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- The ideal number of founders, and make up of your cofounding team
- The advantage of being a second time founder in fundraising
- How to handle running out of money
- Who you should be hiring at your startup
- Spotting opportunities, and timing your start
Alejandro Cremades · EP 649 Jonathan Chen On Taking His First Company Public For $1.3B And Now Raising $61MSUBSCRIBE ON:
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Now on his second startup, Aidan Rushby raised over $100M to help transform the experience of financing your next car with Carmoola.
The post This Entrepreneur Raised $110 Million To Shape The Future Of Car Financing appeared first on Alejandro Cremades.
Nick Cromydas, CEO of Hunt Club, has raised tens of millions of dollars to help companies secure the best talent.
On the Dealmakers Show, Cromydas talked about founder market fit, recruiting startup talent, building teams, fundraising, and network effects.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTurning a Lifelong Passion Into a CareerNick Cromydas grew up in a suburb on the north side of Chicago—not far from where he lives today, and where he first started playing tennis at around five years old. By ten years old, he left other sports behind and began focusing his entire life on tennis, practicing four to five days a week.
This dedication eventually took him into college in Nashville where he continued to play. However, a career-defining match actually helped him realize that perhaps professional tennis wouldn’t be his lifelong career.
Still, Cromydas knew he’d always loved tennis, and went back to the drawing board wanting a career near the courts..
Having graduated in 2009 (the pit of the Great Recession) meant that there weren’t many jobs. Fortunately, Cromydas recalled his passion and decades-long experience in tennis and realized the sport was somewhat recession-proof. This was how he took his lifelong love of the sport into becoming a successful college tennis coach.
As a tennis coach and leader, Cromydas quickly understood the importance and value of a team. His new role required putting himself out there and recruiting all summer to build the best possible team. He did this for over a decade.
Having built decorated teams and giving his all to developing champions,, he was ready to take it to the next level and take on a new challenge..
Inspired by a college course he had once taken, Cromydas knew he had an interest in business consulting. With a new goal in sight, he leveraged his own personal network land an exciting role in a small manufacturing business, where he eventually became the Chief of Staff and learned the ins and outs of running a small business. During this time, he also built his first software business and shortly after, took a role as an associate at KPMG.
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Founder Market FitAfter spending two years in corporate America, Nick was ready to build again.
Those he looked up to and aspired to be like were all entrepreneurs. Those that bucked the system, and took the risk to build and create something, inspired him..
Having learned a few tough lessons the first time around in building from the ground up, he was motivated by the experience. He says it is amazing what you can do if you are just really excited about learning something. Whatever you can imagine, you can go create, and you can do it with limited funds.
With his knowledge and experience, however, he still advises that starting a business is a decade-long game.. So, “Be patient and great things happen.”
Over the last 12 years, Cromydas has built different businesses, invested in startups, and advised and served them as customers. And throughout this time and within various industries, he’s always noticed a clear reason behind those that create something really special. It’s the concept of founder market fit.
He describes this as first: building something you’re meant to build to solve an acute problem that you’re passionate about, and second: something that has a good chance of being successful one day.
When a founder is solving a problem that clearly needs a solution, it still may not work in the end for a wide variety of reasons. However, when there’s passion rooting the cause, founders are still willing to run through walls. They’re still willing to keep going when they lose that big customer, or when they lose that big pitch, or even when 100 VCs say no.
There are countless problems and issues and obstacles that present themselves on the startup journey, making it really easy just to quit. Yet, when you have a strong founder market fit, every challenge or every obstacle doesn’t feel like an existential threat. It’s simply something to overcome.
Storytelling is everything which is something that Nick was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Modern Hiring For Startups & The New WorkforceNick Cromydas’s current venture is Hunt Club. A new search firm connecting businesses to the talent they need, and vice versa.
Seeing huge inefficiencies and a lack of modernization in the recruiting space, he and his co-founders decided to do something about it themselves. By leveraging technology and network effects to more effectively create matches designed for today’s businesses, Hunt Club partners with growth-stage companies and enterprise organizations to source and place the best talent for the role.
Listen in to the full podcast episode to find out more, including:
- How Hunt Club can help you
- How roles and talent needs have and are changing
- His top advice when starting a business
- Fundraising and picking the right investors
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Joey Levy is now on his third startup. A venture with boxer and influencer Jake Paul that went right into raising a $50M Series A round to take over the sports betting space.
On the Dealmakers Show, Levy talked about dropping out of college to start his first venture, licensing your technology, customer acquisition and content creation, and the three most important things for an entrepreneur to have an opportunity to be successful.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDropping Out Of The Ivy League To Launch A StartupJoey Levy was born and grew up in Broward County, Florida.
Growing up to be a tech entrepreneur in Miami wasn’t really much of a thing back then. Though we’ve all seen the tremendous growth of South Florida as an emerging entrepreneurial hub.
Levy says his grandfather was a very entrepreneurial businessman and an inspiration to him from a young age. He says that he always craved that independence, and to make his own money.
Starting work at 14 or 15 years old, Joey tried everything from tutoring to working in sandwich shops, to other small side gigs.
When it came to college, he followed his interest in studying history. Having read up on other successful people, he saw some common threads of going to top universities.
So, he charted a path to get into an Ivy League school, get the best grades possible, and then expected to start out with a nice six-figure salary at Goldman Sachs, while figuring out what was next.
He got into Columbia and moved to NY. Everything was going according to plan until he saw the rise of FanDuel and DraftKings. He had long been into fantasy sports as a hobby.
Though, while he saw these companies doing a lot of things well, he felt the experiences were just too intimidating and complicated for casual sports fans.
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DraftpotSo, in his sophomore year, he began working on his own project, which became his first company, Draftpot.
He soon found the business of marketing, gaining customers, and building revenue addictive. Eventually, he missed a final exam in favor of meeting with investors for this venture. Which led to him dropping out of college to pursue it full-time.
They launched in early 2015. Things appeared to be going well. Customers were being acquired, and things were growing. They were investing in ramping up ahead of the coming football season when the New York Attorney General shut the industry down.
An insider trading scandal between FanDuel and DraftKings led to cease and desist letters for everyone in the category. The space was temporarily deemed illegal gambling.
It was crippling. Their $2M seed round money just wasn’t enough to see them through it. He managed to achieve an exit for the business. Though three years later, that legal ruling would be repealed, leaving individual states to pick their own laws around sports betting. Of which 30 states already have.
Innovating In A Space With Big CompetitorsDuring the break, Joey Levy discovered traditional sports betting. Again finding it was complicated and unfriendly to the casual sports fan or new players. It was all spreadsheets and confusing numbers.
At the same time, he had seen what Robinhood had done in the stock market and investing, and what others had done in making complex markets accessible, with better customer experiences, which brought in a whole lot more new people to their industries.
He saw how big the sports betting market was. With DraftKings worth around $10B, and $20B for Fanduel, with 3M active users, and $3B in annual revenue. While still each representing maybe 2% to 3% of the market share.
Joey saw the opportunity of building a better product experience. One for a wider crowd, which would provide entertainment value and enhance their consumption of sports.
SimpleBetWith this vision, he launched his second venture, Simple Bet, in 2018.
They started with direct-to-consumer micro-betting and play-by-play bets. Then saw the opportunity to provide their technology to other large entities through licensing.
Unfortunately, licensing technology as a backend supplier meant that he was back to not being in control of the front-end user experience.
That led to the decision to split the business. Then going on a new venture with Jake Paul, now known as Betr.
There seemed to be great synergy between Jake Paul as an athlete and content creator, and what they could do in terms of customer acquisition.
With such a big space, with so many dollars in it, they skipped the seed round and went right to raising a $50M Series A. They also recently acquired another company out of Canada for over $7M in cash and stock.
Storytelling is everything which is something that Joey Levy was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The 3 Factors That Enable An Entrepreneur To Be SuccessfulIf you want to be successful as an entrepreneur yourself, these are the three ingredients Joey Levy says are essential.
- Being smart enough to identify opportunities before they become obvious to others
- Being humble enough to admit and learn from your mistakes, and make adjustments
- Being determined enough to push through all of the challenges that will come your way
Listen in to the full podcast episode to find out more, including:
- Customer acquisition and product experience
- Taking market share in a big space, with well-funded incumbents
- Joey’s own $15M investment fund
Alejandro Cremades · EP 646 Joey Levy On Raising A $50 Million By Creating The Robinhood Of The Gambling IndustrySUBSCRIBE ON:
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Stuart Lombard has built and sold several companies, as well as having been a VC on the other side of the table.
During his appearance on the Dealmakers Podcast Lombard talks about finding opportunity in chaos, IPOs and acquisitions, being rejected by investors 170 times, the best thing that you can do to reduce your environmental impact, and his top tips on branding, culture, and strategy.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSerendipityStuart Lombard was born in Richmond, VA. His father’s work took them on the road, moving every couple of years, including spending time living in Brazil.
While that constant change isn’t always comfortable as a kid, getting comfortable with being thrown into new cultures and environments, having to integrate yourself, and even learn new languages ends up minting a lot of entrepreneurs. While providing a lot of confidence in being able to accomplish hard things.
Growing up in a small lumber town in the wake of the Great Depression, his father was very keen on self-reliance and self-sufficiency. They spent a lot of weekends building things together, instead of spending the money on them at Walmart. That embedded an interest in tinkering with things, and the belief you can build things in Stuart, as well as more of an appreciation for the environment.
Lombard says that he had no plans to become an entrepreneur. He went out to work and got a job at a great company. Though he had a terrible boss that made working there pretty unpleasant.
Without a plan for what was next he let his boss know what he thought one day, and quit in 1994. On his way out the door one of his colleagues suggested he check out this new internet thing. Back when there were no web browsers and the internet still relied on a dial up connection.
Looking back, choosing to leave, and that recommendation was really a serendipitous moment that set his life on a whole new trajectory.
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IPOs & AcquisitionsHaving left his job, and with free time on his hands, Lombard drew up a business plan for an internet service provider company.
He says that he had saved enough money to go back to school for an MBA. Yet, figured going into business for himself, and betting that money on himself would be just as good of an education.
That turned into one of the largest ISPs in the country, and then, after merging in two other companies, one of the largest tech IPOs in Canada at the time.
Stuart largely credits the timing and being able to ride the wave of the internet with their rapid success. Though they also used the strategy of providing better customer service to the next group of adopters to gain market share. Even at a higher price point they were able to win most of the major national accounts in Canada, including big banks.
Unfortunately, the hands they put their company into just didn’t manage things well. Leaving him to watch in agony as they made a mess of all his previous efforts.
Not wasting any time, he jumped into a new venture. This time building one of the first VPNs. That business was quickly acquired by a public company. Though, again, he wasn’t sure that it really went into the hands of well aligned partners to continue the business.
The Other Side Of The TableNext, Stuart took a role as a partner at a venture capital firm.
He describes it as a very eye opening experience that really broadened his perspectives. It was the opportunity to see inside hundreds of businesses and the minds of their founders. To see many different approaches to building a business, business models, and getting product market fit.
It was an eight year ride, of having a beautiful office, an assistant, reserved parking spot, and a pretty cush job. Though eventually he just missed building things, and decided it wasn’t what he wanted to do for the rest of his life. So, he quit.
What may be surprising is that even having been a VC himself, he went through 170 investor rejections to get his next startup funded.
ecoBeeAfter leaving his job in the venture capital world, he set about trying to reduce his footprint on the environment.
He splurged $26,000 on solar panels for their home, and was on his way to buy a Prius, when his wife stopped him. She was wondering if all this going green was going to bankrupt them. Especially as he no longer had a job.
He sat down and began to think about practical solutions for people to reduce their environmental impact, and save energy, and money. It turns out that heating and cooling is 40% to 60% of your energy use. Making better managing your heating and cooling is the best thing that you can do to reduce your environmental impact.
So, they invented a smart thermostat, before Nest. It was a hard sell to investors, but they’ve since scaled ecobee to being acquired for $770M. He has stayed on with their acquirer, Generac, as they continue to grow their impact and push their mission which is to improve everyday life and create a more sustainable world.
Looking back, the curiosity that led Stuart Lombard to dive into new technologies and the determination to keep going in spite of challenges faced along the way were two key ingredients to Stuart’s success.
Plus, Stuart was able to master the art of storytelling. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Startup fundraising
- Stuart’s tips on branding, culture, and strategy
- The three core energy trends changing our impact on the environment
- Why he doesn’t like to think about acquisitions as exits or transactions
Alejandro Cremades · EP 645 Stuart Lombard On Selling His Company For $770MSUBSCRIBE ON:
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Karl Jacob has now started and sold several companies. Including a $300M acquisition by AT&T. His latest venture has already raised $50M to disrupt and multiple trillion dollar market, thanks to the backing of investors like Richard Branson.
On the Dealmakers Show Jacob talked about when to sell your company, knowing when to walk away, investing in over 35 companies as an angel investor himself, raising 23 rounds of funding for his own companies, and his top tips for other entrepreneurs.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhen To Start & Sell Your Own CompanyKarl Jacob was originally born in Missouri. He found his first gig shoveling manure on a farm. Which no doubt gave him some of the underlying motivation he continues to have today in building highly successful companies.
After starting out in the public school system his parents moved him to the same private school that Sam Altman attended. Then when he thought he was going to study arts and sciences in college his father dragged him into meet the dean of the engineering campus, who converted him to picking computer science in about 30 seconds.
Jacob then pursued internships at both Sun Microsystems and Apple. These eye opening experiences, including working with the team that created Java, showed him just how much was possible. It set a high bar for his future.
Still, one of his top pieces of advice for those considering starting a business today, that he got from Steve Jobs is to go for it, and don’t stop. Which he hasn’t.
Jobs told him that you’re only young, dumb, and poor enough once in your life to really go for it. Before you have a mortgage, a car payment, and a family.
So, Karl did leave to start his own thing. Even though his mother cried when he called to tell her the news. Though it’s a decision he still doesn’t regret.
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Launching His First CompanyHe got his landlord to install a T1 line in his apartment in San Francisco, and launched his first company from there.
Ron Conway became his first angel investor, and ultimately helped him navigate the exit when Microsoft acquired them.
Ron drew him a curve on the whiteboard. It showed where he and the company, as well as their team and shareholders were at the moment. Then, how that was contrasted with if they raised more money, dilute the ownership, and then had to spend the next five years building more in order to get back to the same amount of value.
From his time at Microsoft his big takeaway was that big companies started out as small ones at some point. It all comes from an idea, a few people working on it as a team, and then grows from there.
Next he was recruited to become an Entrepreneur In Residence with Benchmark. He thought learning about the VC aspect of things would be smart. There he was encouraged to just come up with ideas.
He brought one, and was told to put it in a drawer and go think of another. To just keep coming up with ideas, until he was sure it was the right one.
The point was that your first idea isn’t always the right one. That if you are going to spend so many years and so much effort building something, that you ought to really be sure you’ve explored plenty of options.
That was the segue into his next venture. A company that was acquired by AT&T for $300M.
Storytelling is everything which is something that Karl Jacob was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Importance Of ProfitabilityWhat Karl Jacob says that he did right on those first ventures was getting them to profitability. Even when it wasn’t trendy. In contrast, failing to have those strong unit economics ended up being the downfall of one of his later startups.
Sticking to his guns, and going for cash flow when others were giving it all away on freemium models, and getting profitable, was what he credits with getting them through the first dot com implosion.
He says that months or years of runway isn’t important. Your goal as a business is to build a profitable company.
When you do, then you control your own destiny. You can chart your own course, and make your own decisions, and are not at the mercy of investors.
After becoming CEO of another company, and taking them through to a successful exit as well, we joined Facebook as an advisor after the insistence of Sean Parker.
Then after another successful exit, Karl co-founded a company with Allan Carrol, who he works with to this day, where they found they were struggling to get the revenue. Then, when Facebook changed things on them, it was really the final nail in their coffin.
They had received a couple of inbound acquisitions offers. Though turned down both, following which those companies ended up performing very poorly. Ultimately, they ended up making the painful decision just to close that company down. The lessons being to be careful about relying on other companies for your business to work, and knowing when to pull the plug when the numbers just aren’t going to work.
Disrupting Big MarketsOver the years Karl has not only raised 23 rounds of funding for his own companies, but has also invested in more than 35 others as an angel.
With the individuals on the founding team, and the size of the market being two of the most important factors he saw in the successful ventures.
So, when he saw that the mortgage industry was a $13T industry that really hadn’t been disrupted yet, he had to leap at it with another startup.
That company is now Loansnap. A startup on a mission to change the mortgage industry, and give borrowers more clarity and savings.
Listen in to the full podcast episode to find out more, including:
- Fundraising for Facebook
- Picking your investors
- The future of the mortgage market
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Keith Peiris became the CEO of his first company at a very young age. His latest venture has already raised $81M on its mission to help us communicate and understand each other better.
On the Dealmakers Show, Peiris talked about getting started in tech early, working at Facebook, incubating your business ideas, fundraising and finding the right investors – plus, the future of communicating with AI.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksYoung EntrepreneurshipKeith Peiris was born in Ontario, Canada. His parents had immigrated there in the 80s, during the civil war in their home country of Sri Lanka.
He picked up playing ice hockey, though not being the biggest kid on the ice, he soon gravitated to spending more time on computers.
Keith’s father went from getting a job delivering pizzas when he first arrived in Canada to managing sales at an IT company. That meant he was able to bring home computers, when PCs still cost thousands of dollars.
When he was eight years old, his father brought home a new computer and a book on how to use Adobe Photoshop, which was really the event which set him on the trajectory he has ridden through to today.
He would come home after school and play around with editing images and making websites. He began engaging in different online forums, which is where he started receiving his first requests to build things for others. He opened a PayPal account and started charging customers just enough to pay for video games and toys.
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Starting His First Company At 11 YearsOne day his dad came home and wanted to know what in the world he was up to. Once his father took a moment to look into it, he decided Keith should really be charging a lot more for his work and that he was onto something.
His dad decided that Keith should be CEO, and his father would run sales and marketing. So, they renovated the basement to become their office, brought in more computers, and Keith was heading up his own company at just 11 years old.
This first business experience taught him a lot about sales and pitching, like how to not try and win on price and the race to the bottom. Instead, he learned how to wow and dazzle prospects with his pitch in 30 minutes, and hook them.
Together they leveraged the novelty of Keith’s age to generate some buzz and visibility,using press releases to get out in the media and get noticed – all tactics he says that he still uses in his business today.
The Pros & Cons Of Working At FacebookEventually, Peiris grew frustrated with the lack of speed and computing power available to him as a small business. He decided he needed to go learn about silicon and semiconductors, so that he could do more, faster.
After graduating with a degree in nanotechnology engineering from the University of Waterloo, he looked for internships and roles at tech companies. Because he had always been consumed with working on side projects during school he didn’t end up with the best grades. While that meant Microsoft and Google turned him down, Facebook was still young and growing fast, and brought him in. They just cared that he had the ability to solve the problems that they were working on.
There, he saw how things worked at an incredible scale. On one hand, anything Facebook did worked. When you have a network of a billion people, some of them are going to buy whatever you put out there. Whether it was a dating app, tools to discover local restaurants, or a new marketplace, there were always buyers.
The downside of that, he says, was that it can make you a little lazy. When everything works, you aren’t as driven to dive deep into what people care about the most.
He ended up working on Instagram as Facebook began reinventing it, and they were trying to fend off the migration of their younger users to Snapchat.
There, he learned a lot about how people communicate, namely, that we all communicate differently, and rarely in the way we expect or want them to.
His big takeaway was that the tools that are the most flexible, the highest fidelity, and most expressive, end up being the ones that survive. That got him thinking about building a really powerful, open-ended communication tool for ideas.
Incubating Startup IdeasLooking for a change and chance to experience a smaller startup environment again, Keith packed his bags and moved to NY.
While working at another startup, he continued to think about his own product ideas, and saw the challenges of making a business profitable. Then, COVID lockdowns happened, and vividly underscored the challenge of communicating complex ideas with others. The pandemic thrust this gap into focus.
On one hand, there was the vast social media bubble, which people were locked into. But the formats used for idea sharing were all falling short. Long-form white papers were too long to read. Yet, tweets and Stories were too limited and short.
Keith ended up joining a friend working at VC firm Greylock while working from Johnny Depp’s old apartment. There, he began conversing with his former Facebook teammate Seth Rosenberg and Greylock General Partner Reid Hoffman about his ideas. During this time, he also connected with his cofounder Henri, who was also from Facebook, and they started concepting.
Eventually Reid advised them to stop just thinking about this new format for ideas, and go build it. Since officially starting their company in 2020, the cofounders have raised $81M to fuel the venture and hire industry-leading developers, AI experts, and designers.
Storytelling is everything which is something that Keith Peiris was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!TomeTheir startup is Tome. an AI-powered storytelling format for work and ideas that makes great looking narratives and pitches. Tome has invented a new format for idea expression that is live, interactive, mobile responsive, and supercharged with AI.
Since launching publicly in September 2022, the company has set new growth records for productivity tools and has more than 6 million users worldwide. The company has a deep and very ambitious product roadmap, as well as some of the best machine learning scientists and design minds in Silicon Valley to see it through.
Listen in to the full podcast episode to find out more, including:
- Differentiating between co-founders and team members in the hiring process.
- Presenting your business idea to potential investors.
- Establishing shared goals and values with your financial partners.
- Utilizing AI technology to enhance pitch presentations and exchange of ideas.
Alejandro Cremades · EP 643 Keith Peiris On Raised $81 Million To Turn Your Ideas Into Compelling Stories Using AISUBSCRIBE ON:
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Adam Nathan went from working in the White House to launching a tech startup that has raised sizable seed and Series A funding rounds.
During his appearance on the Dealmakers Show, Nathan talked about whether or not you should become an entrepreneur, skiing, and competitiveness, managing your fundraising process for oversubscribed rounds, productivity, and solving big problems.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTaking The Leap Into EntrepreneurshipAdam Nathan was born and raised in NYC. A city he loves for its diverse culture and endless stimulation.
His parents were entrepreneurs that ran their own small business together. They taught Adam and his brother the values of persistence and hard work. How to really put your all into something, as well as the responsibility of giving back and improving the world.
Adam recalls watching his mother stay up late doing the accounting for the company, while they ate candy and watched TV. From a young age, he was inspired by the self-sufficiency entrepreneurship could provide, and how it enabled you to control your own destiny.
Although he took the scenic route to becoming an entrepreneur, by first going to work for other companies, he credits those work experiences with helping him find his way to what he is doing now.
Still, some of his top advice for others considering starting their own businesses today is to put off the fear, knowing that no matter what you do it is going to be hard, and just jump in sooner anyway.
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Entrepreneurship vs. Middle Management – The ChallengesWith that said, Nathan doesn’t believe that entrepreneurship is for everybody. Despite how it is portrayed as being sexy, glamorous, and full of riches, he says that it is extreme exercise and persistence, and grit. There is a lot of difficulty, self-doubt, and pain involved.
Of course, being stuck in middle management, and dealing with all of the corporate politics and inefficiencies there can be hell too. In a startup, it is finding product market fit, scaling, team building, and fundraising. It’s all about what type of pain you want to deal with every day.
Adam says that he feels he was definitely built to be a founder. He believes waiting any longer to take the leap would have certainly limited the potential of his career.
Yet, he says it is only something you should do if there is nothing else you can do. Or if you have a nagging idea that keeps you awake at night, every night.
Skiing & CompetitionAdam Nathan’s father was a big skier. Growing up, they spent many winters skiing together. Adam specifically took to racing on skis.
It’s an individual, highly competitive sport. One that requires moving very fast, and balancing a lot of risk with precision. One which clearly carries a lot of similarities to founding a startup.
Though after competing on the junior national ski team, he left the sport behind for college. Today, he gets on the slopes for fun with friends, and fulfills his competitive nature in his business, working as a team instead.
Experiences which he says come with a lot more purpose, than just trying to get empty awards for doing things that please other people.
Internships: From The White House To Apple, And LyftDuring his senior year studying at Duke, Nathan received a call from an anonymous phone number. It was the White House, asking him to come and intern there.
It was early in Obama’s time in office when he was working on Obamacare and the Dodd-Frank Act.
At just 21 years old, and never having had a full-time job before, he was thrust into doing a lot of work on these projects. Managing people, scheduling meetings, and engaging with bank CEOs and advisors to the president.
There he says he learned that you can have a big impact and that working hard does make a difference.
Next, he did some consulting, got his MBA at Harvard, worked for a couple of other companies, and also did internships with Apple and Lyft.
Adam told the Dealmakers Show audience that he was always interested in complex system design, and ways to change the world.
After seeing the inefficiencies in big corporations like airlines, as well as in nonprofits, and federal government agencies, he saw technology as the tool to make that happen.
Finally, in early 2019 he and a cofounder saw instant traction with one of their ideas and decided to quit their jobs and jump into their own startup, Almanac.
Productivity & Solving Big ProblemsToday, Almanac has really evolved into a productivity tool, enabling faster work, and speedier decisions, in the new world of remote work. Without all of the cringeworthy, inefficient meetings.
He sees this as a way to empower people to spend time on real work and work they thrive doing. While accelerating the ability to solve the world’s biggest and most pressing problems.
On the journey, they’ve already raised a $9M seed round and $40M Series A.
Storytelling is everything which is something that Adam Nathan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Managing your fundraising process
- Oversubscribed funding rounds
- Productivity
- How Almanac is making a difference
Alejandro Cremades · EP 642 Adam Nathan On Raising $49 Million To Help You Skyrocket Your ProductivitySUBSCRIBE ON:
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Kurtis Lin has been involved with several successful startups that have had great exits. His latest venture aims to disrupt the way our credit and borrowing power is valued, by using more data.
On the Dealmakers Show, Lin talks about how the best lessons from school are not taught in the classroom, the difference between how first and second time founders think, fundraising and storytelling, how to get your company acquired, and the problem with FICO scores. Plus, the most important skill you need to continuously build as a founding CEO, and what makes a really good founder.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe $15,000 School LunchKurtis Lin was born in the San Francisco Bay Area to immigrant parents. That perspective growing up really gave him a chip on his shoulder, and gave him a drive to try and prove himself. A common thread which he says has stayed with him through to today.
He strived to get the latest clothes and new Jordans, and to stay up to date on all the TV shows that his friends were watching.
His parents were tough and frugal, but good parents. Today, he feels badly for all the hell he put them through early in life. Including setting the school’s new record for most detention. Of which he racked up 150 hours in fifth grade.
He just had this energy that didn’t want to let him just sit in a classroom. It’s certainly like the trait that he says he finds he shares with many other founders in the world of work. Which he calls being “constitutionally unemployable.” Meaning you don’t usually get along well having a boss. You have your own view of how things should be done, and how the world should work. You are just compelled to see that happen.
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Trading Prized Pokemon CardsThe Pokemon card craze was raging while he was in school. His parents certainly wouldn’t fork out the money to buy cards. So, he started using his lunch money to buy them. Then began trading cards, and trading up to get the prized holographic Charizard card everyone wanted.
He eventually got it. It remains on his wall today, and is worth an estimated $15,000.
He did still get the A grades his parents wanted. Even if they still wished they were even higher than that.
They got him into college. Yet, he still couldn’t stomach being in a classroom all day. So, he and two confounding friends started a company of their own.
It was a hardware device that was used to prevent bikes from being stolen. He learned a lot about running a business during that process. Which led them to selling some of their IP to Verizon.
That full cycle experience of taking a company from zero to something got him hooked on startups, and he hasn’t quit building them since.
The Difference Between How First & Second-Time Founders ThinkWhen novice entrepreneurs venture out to launch their first startup they are often consumed with focusing on their product.
Kurtis says that it is great and essential to have vision on how you want the world to look with your product in it. Yet, what you learn by the time you get to your next startup is that distribution is far more important, valuable, and critical to success than your product.
In fact, we have all seen companies that didn’t really have the best product in the space, but did have the best distribution succeed.
In order to get funding, to get and keep a great team, and to see your vision become reality, you have to get it out in the world. You need a lot of people to decide to use it, and share it.
Learning The Art Of SellingSome of his other insights into what’s most important for founding CEOs include the need to continually build your sales skills. It is the most important thing.
Everything you do, no matter what type of company or product you have, in any industry, will require selling all day. You are selling investors on participating. You are selling team members on joining. As well as cofounders and advisors. Then you are selling to customers.
The other thing which Kurtis Lin says separates the good and successful founders is the ability to set aside their desire for perfection and to be able to execute and just launch.
A perfect product rarely ever gets to market. By the time it is perfect, it is already too late to be viable and successful. You missed the window of opportunity. It is better to get something out there, get feedback, and keep on iterating with that.
Something which he himself has certainly done. Even completely switching product and business model after getting one going.
How To Sell Your CompanyOn the Dealmakers Show, Lin reiterated that companies are bought, not sold.
Meaning when you go out to intentionally try and promote your company for sale, you will rarely find an attractive outcome. You’ll almost always be on the wrong foot. You’ll also be missing critical elements like trust, proven relationships, and proof of value and the ability to work together.
A perfect example of this was his last company, Luxe, which is an on-demand valet parking and car services app that believes that commuting and the car ownership experience doesn’t need to be expensive.
With his team they sold the company to Volvo, and he says you want to work on building relationships and partnerships all along the way. Prove the value of working together. Then let them see the value and advantage of acquiring your company, and make you the offer.
PinwheelAfter completing the integration with Luxe and Volvo, Kurtis went on to launch his latest company, Pinwheel.
Ultimately they have developed the market-leading payroll data connectivity platform. Fintechs and financial institutions alike trust Pinwheel to access the data and controls within traditional and non-traditional payroll platforms to update direct deposits, streamline income and employment verification, improve underwriting, power earned wage access, and build innovative new products.
So far the company has raised $77 million from top tier investors such as GGV Capital, Coatue, Upfront Ventures, or First Round Capital to name a few.
Storytelling is everything which is something that Kurtis Lin was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- 11-star experiences
- Making fundraising easy
- Pinwheel, and the fourth credit bureau
Alejandro Cremades · EP 641 Kurtis Lin On Selling His Last Company To Volvo And Raising $77M To Redefine Credit ScoringSUBSCRIBE ON:
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Even with dyslexia, Peter Majeranowski has invested in building companies all over the world, worked with the Pentagon, and has gone on to raise tens of millions of dollars for his clothing tech startup.
During his appearance on the Dealmakers Show, Majeranowski talked about raising money in tough times, the waste-to-value business model, resetting your company culture, board observers, rebranding, and the future of clothing.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBuilding Economies With Businesses & InvestingBuilding Economies With Businesses & Investing
Majeranowski was a first generation American, born to two Polish immigrants, in a smaller town of just 5,000 people.
In spite of his dyslexia, his parents put a significant emphasis on education which ultimately took him to study applied economics at Cornell, the Navy, and eventually his MBA.
Peter says that he appreciated being an only child, and the tight knit support system that his parents provided, knowing they would sacrifice everything for him first.
Having been good at science and math in school, everyone thought he should be an engineer. He didn’t find it to be a good fit for his personality or interests, whereas applied economics let him work more on strategy and vision instead of the deep details. He found that his talent for math served him very well in economics and for moving into finance.
Peter’s father was a veteran of Polish military units organized under the French and later British army and encouraged his son to explore the military as well. He did and leveraged the Navy’s ROTC program to fund his college which ultimately took him to working with the Pentagon during the reconstruction of Iraq.
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Working At The PentagonThis is where he was struck with how business can be used as a force for good. As well as how policy can be aligned with the “invisible hands” of supply and demand to rebuild societies. There were not only new businesses being formed there, but those that had lasted for generations from all the way back to the Ottoman Empire, before Iraq was even Iraq.
Next, he joined an international firm investing in businesses and infrastructure globally including working in Romania as they were joining NATO and the EU. It was a time where new laws and regulations were being implemented which provided tremendous room for companies to grow. Many opportunities often put him in an active role, wearing many hats like a founder as they helped the businesses that they invested in.
His big takeaway from this period is to “just never give up and surround yourself with good people.”
Clean TechAfter returning to the US to get his MBA at Duke University, Peter received an introduction that would set him on a new trajectory.
Over dinner, he met with Dr. Hilary Koprowski, the Polish immunologist who created the Polio vaccine that saved at least hundreds of thousands of people.
At the time, Koprowski was working with his plant sciences foundation where they were making plant-based vaccines. Though, in spite of his earlier successes, he still found the world taking too long to adopt them.
At the same time, he was working on a non-smoking tobacco plant, which he had just patented for use for biofuel and was interested in commercializing.
At the same time, Peter reconnected with a former business school classmate who had been working in biotech, with a startup from being the fourth employee all the way through their IPO.
Together they decided to join forces as co-founders.
They started out working on oils and sugars for biofuel. However, it seemed like the first push into cleantech was over for the world. Fortunately, someone else asked them to apply their technology to old t-shirts.
They did, and it became the basis for resetting their business. Today, Circ is applying their waste to value model to the textiles industry.
They take old clothes, separate the fibers by type, purify them, and put them back into the supply chain to become new clothes.
Looking forward, Majeranowski sees a world where we have a new relationship with clothing. He believes that we’ll move from buying stuff that mostly just sits in our closets unused to effectively leasing the molecules that clothes are made from. They just keep on getting recycled into new outfits.
Startup FundraisingCirc got started in the wake of the Great Recession. Which, unlike now, was not an easy time to raise early stage startup capital.
Still, to date they have raised over $60M in equity, and another $10M in non-dilutive funding.
Storytelling is everything which is something that Peter Majeranowski was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Of course, fundraising and keeping your company funded is never easy. It doesn’t always wait for your personal life either.
During one round, Peter was heading off on his honeymoon when a funding deal fell apart. A board observer had spooked their investor just days before, and the term sheet got yanked back.
The company was running out of money. They had a credit card which he had personally guaranteed, and it was maxed out. His wedding was the same day that payroll was due, and he had to wire the company money and bail it out just so they could pay their employees.
When he eventually got up the courage to tell his wife what was going on during their honeymoon, she was very supportive. Fast forward to today–Circ has been able to grow their team to 50, and attract investors including Breakthrough Energy Ventures, which was started by Bill Gates.
Listen in to the full podcast episode to find out more, including:
- The role of board observers
- Company culture
- Identifying toxic people in your organization
- Peter’s top advice when launching a business
Alejandro Cremades · EP 640 Peter Majeranowski: The Dyslexic Visionary Turning Waste Into GoldSUBSCRIBE ON:
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Andre Glezer and Alan Glezer brought their take on fintech to support and fuel a massive market that is responsible for 30% of Brazil’s national GDP.
On the Dealmakers Show, Alan and Andre shared how they created a new digital bank at the intersection of credit and agriculture, what they’ve learned from operations in high-interest rate and high volatility environments, how they’ve raised $43M for their startup, their approach to mitigating risks, and the most important metric for a bank.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksOperating In High-Interest Rate & Highly Volatile MarketsAndre and Alan Glezer were born and grew up around Sao Paulo, Brazil. One of the largest agricultural markets in the world.
Their parents were entrepreneurs themselves, working in the clothing manufacturing space. It was a time, not unlike now, when there was extreme inflation, high-interest rates, political volatility, and even the chance your money wasn’t available at the bank.
Even today, businesses can expect to pay 23% interest for financing and working capital there.
Still, they saw their father able to operate under these stressful conditions and be able to remain calm and be nice.
Alan went into engineering school, then began working in the financial markets with hedge funds. First locally in Brazil, and then in Asia. Specifically working in the structured credit space. Then returning to Brazil, he worked in commodities on both the buy and sell side, before working in more startup-style funds.
Andre also went into financial services, working in private equity and investment banking. He saw many deals being done. One of his big takeaways from seeing those that succeeded versus failed, and who you would want to invest in to build a durable company was the importance of a good team of founders, with complementary skills.
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Building Your Founding TeamWhen the Glezer brothers decided to start up their own venture, they brought in three others, for a team of five cofounders.
Each of whom is an expert in their field. Including credit and banking, legal and compliance, and technology.
While they may have multi-disciplinary skills, they say that covering all of these bases with real expertise in each role has really helped them disrupt and grow. It is all about respecting each other’s domain expertise and taking on specific parts of the business.
Solving Inefficiencies At ScaleAlan credits his brother for first seeing the opportunity and problem that become the basis of their fintech startup.
During his work in private equity, there was a thesis that there would be consolidation among retailers in the agricultural space. Digging into it, they determined the real problem in the space was the lack of a dedicated banking service for the industry.
It is an industry that makes up around 30% of the GDP of Brazil’s massive economy. They didn’t want to invest directly in being farmers but could find no other bank to help them.
One of the big issues they saw was that the farmers’ suppliers were having to finance them. They needed money each year to buy all the seeds, fertilizers, and more, until harvest. These retailers would have to provide that financing to sell their products. So, even though their businesses may have been growing nicely, they didn’t have much free cash flow. It was all out there on credit.
Through his private equity firm, he could not find a bank to invest in to get involved in this sector, so they decided they would just have to create their own. Which became their own digital banking startup, Agrolend.
They spent about six months to really get going. Initially, trying to begin part-time, while keeping their day jobs, to try and mitigate the risk. However, looking back, some of Andre’s top advice for others today is just to get started earlier, and go all in. Even though they are doing extremely well now, they could be six months further ahead if they had leaped in right away.
AgrolendToday, Agrolend helps finance Brazil’s huge and important agricultural industry by providing working capital and financing in this space.
They’ve managed to do that by raising $43M in capital through a recent Series B round over the past two years. Being able to take in deposits as a bank enables them to, in turn, lend capital in this space for very high gross margins, and be profitable.
Storytelling is everything which is something that Alan Glezer and Andre Glezer were able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Looking forward, they expect to close a new Series C round of funding later this year to fuel their growth further.
Ultimately, they expect to continue to build out their suite of banking and finance products to provide the farming industry with a convenient partner for all of their financial needs.
When it comes to success in their own fundraising efforts, they credit a lot to simply doing what they tell investors they are going to do, and proving that trust. Of course, as well as being able to paint the big vision, and the steps to get there, in addition to being out there a good six or seven months before they plan to raise, sowing the seeds with prospective capital partners.
Listen in to the full podcast episode to find out more, including:
- Lending in the agricultural space
- How they’ve managed to secure great partnerships for customer acquisition
- Financial arbitrage in lending
- Andre Glezer’s top advice for starting a company of your own
Alejandro Cremades · EP 639 Andre Glezer And Alan Glezer On Their $43 Million Fintech RevolutionSUBSCRIBE ON:
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Jack Greco built one of the first unicorn startups in a tier-two city. After taking that venture public, he has gone on to become an angel investor and VC fund manager.
On the Dealmakers Show, Greco talks about being on both sides of the table, auctions and marketplace businesses, getting out of the way of your success, angel investors versus VCs, and what he’s investing in now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBuilding Marketplace BusinessesJack Greco was born in Rochester, NY. Though his family soon moved to a small rural farm town.
His father was an entrepreneur. He opened his own store and began dealing in antiques. From a young age, Jack got to see the contrasts between the city and rural life. Including what it was like to do daily chores on a dairy farm. As well as watching the ins and outs of life as a solo entrepreneur.
He knew how good of a year they had by how many presents were under the tree at Christmas. Some were lean, and some were flush. As well as how much time his father got to spend being a dad versus working away.
Later Jack would choose to bring on cofounders to share the burden of the journey. As well as to eventually make the leap from operating to investing to gain more of that work-life balance for himself.
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Working The Family Antique BusinessJack ended up working with his father. Which certainly gave him a headstart on creating and being involved in marketplace businesses himself.
The antique business required a lot of hustle. Effectively being your own marketplace, going to acquire inventory from other sellers, and then bringing it to the buyers. A dynamic that relies heavily on networking and building relationships of one type or another.
In fact, Greco describes the process as really building three businesses at the same time. One with the sellers, one with the buyers, and then your own platform in the middle.
Jack originally signed up to study architecture in college. Though still spending a lot of time working with his dad, he ended up studying economics and quantitative finance. Then continuing on to get his MBA.
He saw academics as a way to build his toolset, and to understand how the money moved. Which is really the lifeblood of every business.
This led him to begin working with a regional venture capital firm. He began to say yes to all the opportunities that came his way. Including helping to build an international portfolio, which took him traveling around the world. Seeing a wide variety of industries, from optics to biotech, and beyond.
Starting His Entrepreneurship JourneyHowever, after 11 years of this broad experience, Jack says he was ready to focus on one thing, as a startup founder himself.
Along with two cofounders, this first venture became ACV Auctions. Which, of course, ended up being a marketplace business.
Specifically designed for the automotive industry, as a B2B platform enabling dealers to bid on and trade vehicles online. A leap in technological efficiency that enables dealers to spend more time selling than having to leave their locations to go find inventory in person.
They managed the marketplace dynamic by beginning locally in Buffalo. Then branching out to neighboring cities and states as they built up the supply and demand sides.
That turned out incredibly well. Growing to 2,000 employees in just five years, going public on the NASDAQ, and boasting a market cap of $2.5B at the time of publishing this.
Storytelling is everything which is something that Jack Greco was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Eventually, wanting more work-life balance, time to spend with his seven-year-old son, and realizing he needed to get out of his own way to allow the company to continue to succeed on his own, he turned over the recruiting process, and they found a CFO and CEO to take the company forward.
Angel Investors & Venture Capital FirmsNext, Jack went out to tackle some of the issues he had encountered as a founder. Specifically when it came to finding valuable investors and capital in secondary markets.
He saw the way he could help was by investing as an angel and providing startups with the benefit of his full cycle experience as an operator.
He began investing and advice, often taking an active role. So far, he has written over 200 checks as an angel investor, in 100 industries, across 51 different geographic areas.
He found many advantages as an angel investor. It offers great flexibility and freedom. You can write a check quickly for just about anything. You can just go with your gut.
For example, the time he ended up meeting an entrepreneur on a flight, and wound up giving him a six-figure check by the time they landed.
However, to balance this freedom, he also began investing in other funds. Then decided to make the leap to the more formal institutional side as a general partner with a venture capital fund, Far Out Ventures.
While they are still funding startups, and are helping those outside of the most famous old startup hubs, this structure provides a committee and a more analytical and disciplined approach to investing.
When you are investing others’ money, it is essential that you are more prudent about your picks, and can back up your decisions with facts and due diligence.
Listen in to the full podcast episode to find out more, including:
- Jack Greco’s top advice when launching a business
- Growing marketplace startups
- What he’s looking to invest in now
Alejandro Cremades · EP 638 Jack Greco On Building A $2.7B Company That Went PublicSUBSCRIBE ON:
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Pushkar Mukewar is helping small and medium sized businesses on three continents survive and scale with his growing fintech platform.
On the Dealmakers Show, Mukewar talked about launching and operating an international business, working capital solutions for SMEs, and raising substantial amounts of funding for your startup.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTaking The Plunge Into EntrepreneurshipPushkar Mukewar was born and grew up in a small town in the center of India. It was a community that had a lot of small businesses. Providing him early insights into the challenges that those companies and their owners faced. Whether consciously or not, this was an influence which ended up guiding his career, through building a global company that is solving that problem today.
Education was big in India. There is a lot of pressure to either become a doctor or engineer. Pushkar particularly loved math. Which, along with his foresight that technology was going to be an integral part of everything in the future, led him to study computer science.
Wanting to further his studies and gain more exposure to cultures outside of his own, he ventured to the US for college. Then ultimately pursuing his MBA at Wharton.
Wanting to build more skills and knowledge before venturing out into his own business, he ended up joining Capital One.
Then when the economy was lean and there seemed few opportunities, he returned to India. First, tipping his toes into the water by working with a venture capital firm.
By that time India had really developed in terms of financial services, and a startup ecosystem that was being supported by international investors coming in.
He was still interested in starting and operating a company of his own but felt inhibited by a lack of a cofounder, or a clear idea that was begging to be chased.
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Top Lessons In EntrepreneurshipToday, his top advice is just to start sooner. He says that he spent too much time procrastinating on the decision to launch. Then several years just thinking about the idea. It would have been better to get going with a startup while he was back in college.
He says the most important thing to do when you want to launch something is to get out and talk to your potential users. Too many founders coming from academia spend too much time reading research reports and preparing materials. Ultimately, all that matters is if you are making something that people will pay money for. You’re only going to find that out if you talk to them, and launch things fast. Everything else doesn’t matter very much.
Eventually, Pushkar reconnected with one of his contacts from Wharton who had been working with Cisco, and in the credit space with Blackrock. Together they began kicking around ideas about the fintech space.
They determined that if they were ever going to make something happen they just needed to quit their jobs and just go find a business to start. Which they did.
Drip CapitalMukewar’s startup is Drip Capital. A fintech company on a mission to enable small and medium sized businesses to reach their full potential by assisting with their financing needs.
Their main products so far have been working capital credit, including receivables and payables financing, which enable users to access money to grow faster, and to be able to gain more time on paying invoices while maintaining strong relationships with their suppliers.
More recently they have added forex services, with other products in the works.
Today, they operate in India, Mexico, and the US, with their eyes on expanding through LATAM and Asia.
Financing Your BusinessTo date, Drip Capital has already raised $525 million which includes equity and debt. Equity capital is used to finance operations. While debt financing becomes the product which they sell to others.
Storytelling is everything which is something that Pushkar Mukewar was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Pushkar told the Dealmakers Show audience that they have been very strategic in stacking up their investors on both sides.
They went through startup accelerator Y Combinator, followed by raising from Sequoia and Excel. Then some strategic investors. All whom he says have been valuable sounding boards as they’ve plotted their next steps of growth.
On the debt financing side they have worked with high net worth individuals, family offices, and both Eastwest Bank and Barclays. They’ve also intentionally taken money in from funding sources in the regions they’ve been moving into, in order to further unlock opportunities for growing their customer base.
He says that what really helped them nail it with investors was firstly having such a large potential market. The whole world of small and medium business clients. Then combining that with their domain experience, and already having a background in the credit space.
Listen in to the full podcast episode to find out more, including:
- Finding product market fit and scalability
- How Drip Capital’s financing products work
- Having cofounders in different countries
Alejandro Cremades · EP 637 Pushkar Mukewar On Raising $375 Million To Transform SME Growth And Trade Financing WorldwideSUBSCRIBE ON:
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Greg Bailey has now been involved in an almost dizzying number of startups. Now with his latest venture he is aiming to help you live healthier, and for longer.
On the Dealmakers Show Bailey talks about the problem with taking VC money, biotech investing, ketosis, and essential supplements for living longer.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Inspiration To Get Involved In HealthcareGreg Bailey was born in Toronto, Canada. That cold country that he says has a great education system.
From an early age he was inspired to get into healthcare and medicine. Firstly, his mother had always wanted to be a doctor. Though being a child prodigy in music sent her down a different path.
Then a neighbor girl died from meningitis when she was just six years old. They took her to the hospital, but she was allergic to the antibiotics required to heal her.
That drove him into studying medicine, and going to medical school. Then to become an emergency room doctor.
He spent 10 years in the ER. Treating everything from heart attacks to car accident injuries. However, eventually he found that he was losing his empathy.
Mostly thanks to a large percentage of patients just coming in because they’d hurt themselves while being drunk, and were just obnoxious.
This sent him into the business side of things, and eventually his current mission to help people at scale with his latest startup.
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The Downside Of Venture Capital InvestorsWhile he was actively practicing medicine he already began to dip his toes into business and investing.
That started with syndicating medical real estate deals. They would acquire buildings that they could convert into medical facilities. Then syndicate the investment opportunity among doctors. Then ultimately sold off the entire portfolio that they had built up.
The first business he founded after that discovered a very profitable venture in buying equipment hospitals were throwing away for pennies on the dollar. They would fix them up, and sell them back to the hospitals.
It worked well, though he quickly learned the importance of businesses that have higher versus lower barriers to entry, as well as the pains of accepting venture capital investments.
He managed to sell that company for $521M. Unfortunately, the structure of the VC investment meant that he only got $1M of that. The VC got the rest.
Biotech InvestingGreg’s next venture was acquiring different technologies, and licensing them. Which led to them suing Microsoft, and winning $200M from them.
They still have a pending suit against Apple, which ought to give them a percentage of the sale of every iPad and IPhone sold in the world. Which works out to be around $300k a day.
Bailey then moved back towards medicine, by starting and investing in biotech. So far his biotech companies have amassed $25B in market cap value.
This included one company that created the number one drug in the world for prostate cancer.
His big learning from biotech investing was to treat it like building a portfolio. Various phases of clinical trials, and the length of time it takes to get new products approved can be challenging
So, he says you ought to be betting on 10 different projects, and hope to nail one. He says that if you do it right, you’ve got a 10x upside potential.
After some very successful biotech companies Bailey also dipped into the insurance and reinsurance side of the industry. With a company that leveraged their own software for managing risk.
How To Live Longer & HealthierMany people aspire to live longer and to halt the aging process. Greg Bailey believes it is critical to not only live longer, as many are doing, but to live healthily up until the point we die. Which is certainly living for another decade in poor health.
His latest startup is tackling this by focusing on how to halt and even reverse the aging process.
Juvenescence already has 11 products in the works. Ranging from their ketosis product which is already out, to technologies that have proven to regrow limbs in frogs.
Juvenescence has already raised $249M. Ranging from early funding from high net worth individuals interested in their own health and longevity, to biotech funds, insurance companies, and most recently more institutional investors as they map their way to an IPO.
Storytelling is everything which is something that Greg Bailey was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!In addition to their own Metabolic Switch Ketone Ester, he recommends regular fitness, a healthy diet, and supplements like omega 3, vitamin D3, and metformin.
Applying some of these tips can also reportedly greatly reduce cancer risk, prevent cells from aging, and certainly make you feel better too.
Listen in to the full podcast episode to find out more, including:
- What Juvenescence is working on
- Tips for living longer and healthier
- The advantages of ketosis
- His top advice when considering launching a business
Alejandro Cremades · EP 636 Greg Bailey On Creating $28 Billion In Shareholder ValueSUBSCRIBE ON:
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Federico Travella went from turning his childhood hobbies into businesses, to joining the early team behind e-commerce behemoth Lazada, and eventually launching his own fintech that has transacted over $1.5 billion .
On the Dealmakers Show Travella talked about the impact of childhood influences on success, exploration, fundraising and working capital, and startups as a career.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksEscaping the Middle Class TrapFederico Travella grew up in Bruges, Belgium. As the Venice of the North, Bruges attracts 100x more tourists each year than it has local residents.
He explains that ‘the open air museum’ stood in stark contrast to modern tech hubs like Silicon Valley – Entrepreneurs and internet businesses just weren’t a thing.
It was an environment which believed success relied on staying in academia for many years, and then going to work for a big company with a stable job for the rest of your life.
Of course such a traditional career path may no longer be a sustainable or future-proof path, but it was the generally accepted recipe for ‘success’.
In fact, he was frequently told horror stories over dinner of how some relatives once tried to create a business of their own and failed. Risk aversion was a big thing growing up.
Arguably, the worst nightmare of a middle class family is to slide into lower class. Of course, when people graduate from university and are locked into that first job, often with a mortgage, they often seal their fate, and kill their potential for entrepreneurship. He dubs this the Middle Class Trap.
He describes these childhood influences as carrying a lot of luggage that we sometimes need to get rid of in order to achieve our full potential.
For Federico, it was really his passion for trading card games and side hustles during his school years that forged him into an entrepreneur.
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Turning His Hobby Into a BusinessThat started with Pokemon in elementary school. The other kids wanted to be up to date about the latest Pokemon news. Having access to a computer with dial up internet and a printer, he began publishing his own weekly ‘newsletter’, and selling it at school for fifty cents.
He added an ‘upsell’ of being able to order cards which he then went to source. However, the school wasn’t pleased with him taking other students’ lunch money and shut him down.
Then Travella bumped into a game called Magic: The Gathering. A card game that would keep him captivated for the next decade.
He quickly recognized that as more of an adult game, adults were easier to monetize than kids. To be successful you had to have a strong balance sheet, and be able to buy lots of cards to win.
To finance his own game as a teenager, he began trading as many cards as he could get his hands on, ultimately trading tens of thousands of cards.
This experience taught him a lot about business, including using data to give him the benefit of information asymmetry, and having a better understanding of card values than other players. He could also profit from pricing arbitrage.
He found the cards were a lot cheaper in the United States. So, he would buy them, and resell them for a profit in Europe. All using his mother’s credit card as leverage.
Then he began utilizing drop shipping to send cards directly to his customers, and make additional margin on the shipping.
Science As An Excuse for ExplorationTravella went on to study Marine Geology in university. Having very diverse interests, he wasn’t really sure what he wanted to study. Geology provided the attraction of exploring the world, and the hope of some Indiana Jones-style adventure. The very opposite of a desk job.
After graduating he was interviewed at a big oil company. They showed him this big, beautiful chart demonstrating his potential career trajectory. The chart showed he could promote to becoming a senior manager, and maybe even a director some day. The only catch: it would take 25 years to get there.
He promptly went looking for a very different experience with a role in the startup world with Rocket Internet which he dubbed an ‘ MBA in entrepreneurship’.
We’ve had several members of the Rocket Internet mafia on the Dealmakers Show. They’ve done very well at cloning successful startups around the world. Including a clone of eBay which they took from zero to selling to eBay for $50M in just 100 days.
The next few years meant Federico was living out of a suitcase, working from places like Sydney and Singapore to build e-commerce leaders in emerging markets.
In Southeast Asia, thanks to the introduction of cheap Android mobile phones, a nascent consumer base could adopt e-commerce very rapidly. Travella, realizing this leapfrog opportunity, joined the early team behind Lazada. Lazada went on to become the largest e-commerce player in Southeast Asia, eventually getting bought by Alibaba.
Applying the Learnings: Starting NovicapOne of the problems Travella had witnessed at Lazada is some of the struggles small businesses go through when it comes to managing and financing their working capital.
He felt ready to take the leap because he felt he could access the resources (such as financial capital) to do a startup of his own. He threw his hat into the ring with Novicap, a fintech startup that focuses on providing end-to-end working capital solutions for businesses
Novicap operates throughout Europe, with a suite of credit and payment products for SMBs, mid-market companies and public administrations.
With only $3M in equity raised, Novicap demonstrated profitability and best-in-class capital efficiency throughout challenging market conditions, and closed $200M in debt financing in 2022. The fintech has transacted over $1.5 billion dollars to date.
Storytelling is everything which is something that Federico Travella was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Working capital for your business
- The differences between startups in Europe and the USA
- Market timing
- Startups as a career
Alejandro Cremades · EP 635 Federico Travella On Raising $200 Million To Revolutionize Small Business FinancingSUBSCRIBE ON:
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Michael Bronfein got his start as a butcher in a family supermarket. Since then, he has built a billion-dollar business, runs a multibillion-dollar private equity fund, and is now operating a growing wellness company with an emerging portfolio of cannabis-based products.
During his appearance on the Dealmakers Podcast, Bronfein talked about the most important thing in the organizations he has built, financing and fundraising, startup exits, and the future of the cannabis space.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPreparing Yourself To Be A Startup CEOMichael Bronfein grew up in Baltimore, MD, where he also headquartered his most recent successful startup.
From an early age, his mother taught him to be independent. She told him that he could accomplish anything he wanted, as long as he committed himself to it.
That’s something that has really stuck with him since he was five years old. Even if that sense of independence often also frustrated his mother as a child.
So, in addition to playing sports, he started his own hustle, mowing lawns at 10 years old, and then going to work at his uncle’s supermarket by the time he was 12.
Michael continued working with his uncle through college. Eventually, becoming a butcher in that supermarket. He learned a lot there. Perhaps most importantly, to talk to your customers, listen to them, and design things to make them happy.
He says that his uncle and cousin really ran and grew their business with the lens of their customers. Focusing on how to delight the customer in a way that’s more advantageous than their competitors. In Michael’s own businesses today, he tells his team that there’s only one thing that matters, delighting the customer.
Bronfein says that if you ask your customers what they want, they will tell you. If you give that to them, they will beat a path to your door, and won’t be easily lured away by competitors. You’ll also be focused on creating the things that they will pay for, versus what they won’t.
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Studying Accounting & Being a CPA and CEOMichael chose to study accounting and become qualified as a CPA. He saw that as the foundation for understanding the flow of money in a business. He says that if you get that, you understand how things work, can make decisions faster, and understand the fundamentals of a business’s health.
On graduating college, he was very interested in becoming a CEO himself. The person who would drive strategy and results. While having your independence and control.
He wanted to be a good CEO. So, he went to work in banking before starting his own company. Furthering his understanding of money and financing in business.
Not only the basics of credit, but also what separated the few successful businesses from the failures, what the mistakes were, and what the winners did right.
Financing & ExitsMichael Bronfein was able to build his first pharmaceutical company using debt financing while retaining his equity in the company. A business he grew to $1.2B in operating income, and sold to a publicly traded company.
He also made investments in order companies, as well as building another $500M pharmacy company.
Seeing his success, some of his friends asked him to help transition their family office into an institutional investment firm.
Over the next 10 years, he helped them raise seven different funds, and grow it to having $4B in assets under management.
There he learned to be really disciplined in backing those that were able to hit their next milestones consistently and to keep performing.
To ensure the companies he invested in were also disciplined in structuring and maintaining the right seats on the bus.
His most recent company has raised over $50M itself, and after their current raise sees the next step as an exit, probably in the form of going public in the next two to three years.
Storytelling is everything which is something that Michael Bronfein was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Curio WellnessToday, Michael is the CEO and co-founder of Curio Wellness. A cannabis-focused health and wellness company that he was talked into starting by one of his daughters.
She pulled him out of retirement to build a substantial new venture in the emerging cannabis space. They have really honed in on the medical side of this industry, with a growing portfolio of products, and four pending patents. As well as preparing a huge harvest for opening up to adult use.
After becoming one of the largest companies of its kind in Maryland, they have also recently moved to Missouri, where they expect similar success.
The Future Of CannabisLooking forward, Bronfein expects the FDA will take over regulation of the cannabis market.
He does not agree with cannabis being a scheduled drug as it is. While other guests on the show have had opposing forecasts, he believes that despite the current ongoing war on drugs, this classification will change and that Congress will wake up to treating cannabis like any other product in the US.
That still may mean that regulations and oversight remain fragmented on a state-by-state basis. Which is why his company has focused on becoming the market-dominating player in the individual states they operate in.
Listen in to the full podcast episode to find out more, including:
- Starting a business with family members
- Cannabis and its many health and wellness applications
- Building your operations and model right, before scaling and expanding
- Balancing your propensity to go fast, with what your team can handle
Alejandro Cremades · EP 634 Michael Bronfein: From Butcher To Billion-Dollar CEOSUBSCRIBE ON:
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James Tan has gone from startup founder to operating an $80M venture capital fund to fuel the growth of other early-stage ventures today. Now on his third fund, he’s already helped create four unicorn companies.
On the Dealmakers Podcast, Tan talks about being on both sides of the table, investing in over a hundred companies, building marketplace businesses, network effects, being ruthless when going against the competition, and as an entrepreneur.
Plus, going public, when you need to exit your company, and what he is looking to fund now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksMarkets & Startup EcosystemsJames Tan was born in Singapore. A market and startup ecosystem which has really evolved over the past few decades. A fact which he himself has certainly contributed to.
Though he credits it to a combination of its hard-working people, startups that have jumped on opportunities, educational institutions, government agencies, corporations, angels, and VCs providing capital.
Today, he says that Singapore is the number one startup ecosystem in Southeast Asia, and easily in the top five of all of Asia.
One thing that he says was really impactful on his own career coming from Singapore was needing to, and getting comfortable with going into new larger markets, cities, countries, and broader regions.
His studies that took him to Australia, China, and the USA certainly helped him gain a grander, more global perspective. Including watching the first and second dot com booms in action.
At school, he studied both business and computer science. He says having both real technical skills and a business mind are essential. They are two halves of what it takes to build something.
However, he chose to drop out of school. Not a decision that his parents loved, even after successfully building and selling his first company. He’s still not sure whether that was foolish optimism or great courage, but he wouldn’t go back and do it any other way.
In fact, his top piece of advice today would be to drop out earlier, raise funding earlier, and eliminate distractions, including studies so that you can just focus on building a business.
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Knowing When It’s Time To Exit Your BusinessAfter successfully launching and exiting his first company, James Tan went on to take his second venture public on the NASDAQ.
Going public and especially listing on the NASDAQ may well be the big dream of many entrepreneurs. Though for James, it was also very much about seeing the right timing to exit your company and move on.
He says that “many entrepreneurs fail to understand that there is a window of opportunity when the industry that you’re in and the company that you’re doing can be well understood and well covered by the market at large.”
Analysts, investment firms, and public investors are all riding trends. Once you miss that, he says, “it’s going to be a tough sell, because now you’re up against the new trend.” You must understand when that window, and exit while it is open.
Expanding Your BusinessThere are two big parts of growing your business that James talked about on the Dealmakers Show.
One is to scale up sales and revenue in your initial market. Then it is about if you can replicate that success in other cities, countries, and regions.
The way this founder tested expansion was to give new cities three weeks to three months to pay for themselves. They look at the costs for each market to justify itself. Including the hires, they would make, marketing, etc.
RuthlessnessTan sees ruthlessness as a desirable trait in startup founders. While business people may be very polite in public, the competition behind the scenes is certainly fierce.
He says that you cannot forget that if you aren’t number one or two in your market (maybe number three), you are going to lose. You will lose everything. Including the capital your investors provided to you, and the jobs your staff relied on.
If you want to disrupt an industry and stand a chance competing against larger incumbent corporations, then you have to find everywhere you can get an edge, and do whatever it takes to win against them, regulations, and anything else in your way.
One of these strategies being to outwork your competition. If you and your team can work through the weekends, and through the night when your competition is sleeping and taking days off, then that can be an advantage.
Minting UnicornsAfter founding his own startups, James is now on to managing his own venture capital fund, which has raised $80M across three funds.
Storytelling is everything which is something that James Tan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!They have made over 100 investments, including four that have already become worth more than $1B.
Quest Ventures focuses on funding early-stage startups that are ripe to scale.
Listen in to the full podcast episode to find out more, including:
- Network effects
- Fundraising and pitching investors
- How to pitch your idea to James Tan’s latest fund
Alejandro Cremades · EP 624 James Tan On Taking His Last Company Public And Investing In 4 Of Startup Unicorns In AsiaSUBSCRIBE ON:
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Muddu Sudhakar has already enjoyed several of his companies being acquired for hundreds of millions of dollars in value. His latest startup has already raised well over $100M and is on its way to disrupting yet another industry. Which may also be one of the few companies out there that are currently hiring, and in every department.
During his guest appearance on the Dealmakers Podcast, Sudhakar talked about going through the challenges various crises bring to businesses, acquisitions, and the ensuing resting and vesting period, products versus platforms, going all in on your startup idea.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhy You Should Go All In On Your StartupMuddu Sudhakar was born in a small town in India. His father was a professor. He quickly found academia a very competitive pursuit. He dreamed of ending up completing a Ph.D. or Master’s in the US, as the big goal for many of his fellow classmates.
He did end up getting into Yale, and then UCLA. However, he did not do his MBA at school. In fact, he says that you don’t need one. You’ll learn a ton as a startup entrepreneur. That’s the equivalent of an MBA. If your company is a success, then you’ll even be teaching other people too.
After college, he did end up working for several big corporations. Including IBM, Bell Labs, and Silicon Graphics. Then decided to take the risk, and leap into a startup of his own.
His take on this is that you should absolutely make a clean leap, and go all in if you are going to do a startup.
While he admits that entrepreneurship and startups aren’t for everybody, if you are trying it, it is a disservice to yourself and your old company to have one foot in each. He says that if you can’t do that, don’t do a startup at all.
If you do this, it certainly helps you hustle. It keeps you on a timeline to talk to customers, hone your ideas, pitch investors, and build products.
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Surviving Crises & Solving ProblemsSudhakar has now started and exited a variety of companies. His take on this is that he is just driven by solving industry problems. So, he has leaped from one category to the next, looking for the next challenge to fix.
On his journey, he has also led companies through just about every hurdle, from the first dot com bust to 9/11, the Great Recession, COVID lockdowns, and now the new banking crises we seem to be experiencing the tip of the iceberg of.
While his companies no doubt faced their own challenges through these crises, he has certainly consistently produced great outcomes regardless of them.
Muddu says that it is all about “persistence, determination, and not giving up. Every time the challenges are different.
No matter how many companies you have under your belt. At the end of the day you’re the product. You’re the owner. You’re the founder of the company.” You use your intuition, grounded in data, to get through it.
Or put another way, “It’s like a box of chocolates. You don’t know what you’re going to get. Once you open the box you may get milk chocolate, dark chocolate, or something else. In business you’ve got to take your limitations, and within those limitations you’ve got to do your job.”
AcquisitionsMuddu Sudhakar has now exited almost too many companies to count.
On the Dealmakers Show, he broke down what each of them has done, what the thesis for the company was, and his most important learning from each of them.
What he was clear about pointing out is that he doesn’t sell companies. Meaning he doesn’t go put them up for sale. His opinion is that once you put a sale sign on your thing, you’re like a loser. If somebody wants to buy, let them come, never sell.
To date, at least publicly disclosed, those exits have added up to over $600M. Including selling two different companies to the same acquirer.
Resting & VestingSome of the terms of your next acquisition to negotiate may likely be around whether you will stay on after the closing, and how long it will be before your stock is vested, earnouts are earned, as well as potential non-competes.
Sudhakar says that it should be all about what your acquirer wants. If they want you to stay, stay. If they don’t need you, then don’t try to.
Staying can be a great thing. He has become general manager of the new business a couple of times at least. It’s a chance to still take care of and grow your baby. To help make the integration a successful one.
AiseraThis is Muddu Sudhakar’s latest venture. A generative AI and ChatGPT solution for automating workflows. He started to first tackle all of what he saw as the inefficiencies in the call center industry.
They’ve already raised $164M for the journey, from some very notable investors.
Storytelling is everything which is something that Muddu Sudhakar was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- AI and automating workflows
- Disrupting the customer service space
- Products versus platforms, and product roadmaps
- 2023 as the ground zero for AI
Alejandro Cremades · EP 623 Muddu Sudhakar On Selling His Companies For Over $800M And Coming From A Small Town In IndiaSUBSCRIBE ON:
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Rob Biederman has gone from founding his own startup to leading a $100M plus venture capital firm that is eager to fund great entrepreneurs, even at the pre-seed stage.
On the Dealmakers Podcast, Biederman talked about the first step in any good business outcome, fundraising, and what’s even harder than raising capital. Plus, co-founder and board dynamics, where to invest now, what he’s been putting his fund’s capital into, and the $105M glass of iced tea.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom School Business Plan Competition To Serving Fortune 100 CustomersRob Biederman was born in NYC, close to Central Park. As his family began to expand, they moved out to the suburbs for more space.
From a young age, he says that he was always obsessed with getting to solutions. He really took to math and science in school, which he says felt like solving puzzles and playing games. When it came time for college, he chose Princeton and economics. Which really ended up pushing him down the path toward business.
After graduating, he ended up in investment banking with Goldman Sachs, and then at Bain Capital.
At Goldman, he says that he learned the fundamentals of finance, and how to work very hard, with a very intense team. Moving to Boston, with Bain, he found a great team that was serious about improving the companies that acquired through revenue growth.
He says that is where everything good comes from. Adding that “the first step in any good business outcome is having a product or service that the customer wants to buy, at a reasonable price, and making sure that that’s a defensible value proposition.”
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Studying At Harvard Business SchoolBain put him through business school at Harvard. Even though he had toyed with some small business ideas in his youth, this period really helped to demystify entrepreneurship and make it feel much more accessible and possible.
One class project gave them $5,000 and up to eight weeks to start a company. Competing teams went after ways to create revenues fast. Like selling t-shirts. Rob’s team looked at their own experiences, and what markets they knew. They struck on the idea of making consulting services more accessible and affordable for smaller businesses.
It took off. Before long, they were getting inbound interest from big companies like GE and Coca-Cola. Things really began to grow when they outsourced their business development.
Then when COVID lockdowns hit, many more businesses woke up to the fact that it was so much easier and more profitable to utilize remote contractors. Making them another success story that really thrived and was able to ride the tailwinds of the pandemic and remote work trend.
Cofounders & Board DynamicsAlthough Biederman’s startup began with more cofounders, it really ended up being him, and the current CEO, Pat, who took it through the eight years he was most actively involved in the company.
In spite of your blinding passion for a venture, you really never know where other people will be in their lives years down the road. Making how you set up equity to vest is one of the most important elements of forging a company. Which often happens over a four-year period.
Fortunately, even though not everyone rode the whole distance, he says it all worked out amicably.
While he and Pat have even had high-energy conversations about tactics and short-term decisions, and certainly disagreed on occasion, they stayed united on the long-term vision. Which kept them working together.
On the journey, Catalant raised $130M. Including investors the likes of Mark Cuban, Greylock, and Highlander.
Storytelling is everything which is something that Rob Beiderman was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Ultimately, Rob stepped up to a chairman of the board role, with Pat becoming the CEO. It’s a board that Biederman is very appreciative of. One which is very aligned. One which looks to tackle challenges together in unison, rather than working against each other.
An experience that he has certainly carried forward to his new projects today.
From Founder To Fund ManagerEventually, Rob became more and more interested in investing again. Once Catalant was in a good place, and the board got on board with his idea, he set out to look for ideas.
What he thought would be a couple of months off being a ski bum, ended up with bad snow, and him not being able to bear watching all the great investments pass him by.
Over a glass of iced tea on a porch, he ended up finding a partner who helped them raise a $105M initial fund to become a VC firm themselves. Today, Asymmetric Capital is actively deploying that capital into early-stage startups.
While parts of the VC ecosystem have become increasingly crowded and competitive, Asymmetric chose to go after the more neglected pre-seed stage and focus their efforts there.
Often even before entrepreneurs have formally created a company. Though Rob does state that they anticipate participating in follow-up rounds with their portfolio startups in the future.
Not only do they work to differentiate themselves by the effort they put in to help their founders be successful, but he says that they really focus on the people, even more than the idea.
The truth being that oftentimes ideas end up flopping, but if you invest in a great team, they will find something else or a new angel to apply themselves to.
Listen in to the full podcast episode to find out more, including:
- Fundraising is fast and easy, hiring is not
- Dropping out of Shark Tank
- Finding product market fit
- Being transparent with your investors
Alejandro Cremades · EP 622 Rob Biederman On Raising $105 Million To Invest In Disruptive B2B StartupsSUBSCRIBE ON:
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Jacob Krogsgaard continues to lead the way in renewable energy through hydrogen. A journey that has seen him start companies, fund and scale them, and take them public.
On the Dealmakers Podcast, Krogsgaard talked about selling your first company for $30M, integrations after acquisitions, becoming a public entity, building a billion-dollar company, timing, and his take on climate change.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSolving The Problems Of Sustainable Renewable EnergyJacob Krogsgaard was born in northwest Denmark. Not a very happening place except for the wind turbines that dotted the horizon back then.
When he was still just a teenager in the 90s, he experienced some of the initial indications of the big issues with moving to renewable energy sources.
During one storm, their electrical grid collapsed. It turned out that the wind turbines were just producing too much energy. More renewable energy was being created than was being used.
The solution back then was to call around to the local farmers and ask them to manually turn off their wind turbines one at a time or to manually rotate the days they had them on.
When it came time for university, Krogsgaard took a unique degree in Business Development Engineering. A program designed to create entrepreneurs. One that taught some broad technical engineering, as well as covering business topics from legal to design, and finance.
The program clearly worked. By his third year, he began working on the project that would become his first company.
Along with three other classmates, they began diving into the hydrogen space.
Although many told them that they were way too early for the world in working on this technology, in six weeks, they began working on fuel cells for small vehicles. Then stations to fuel those vehicles. Like forklifts, golf carts, and city-cleaning vehicles.
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Integrations & Selling Your CompanyJacob and his cofounders were able to bring in some R&D funding from the Danish Energy Agency. Before ultimately raising $30M for this company. Even though many of the investors they pitched didn’t understand the technology. Though later found they were kicking themselves for not having the foresight to participate.
They also brought in a strong board of directors early. Including the CEO and CTO of the world’s largest wind turbine manufacturer, and the former minister of Indian transportation in Denmark.
When global car manufacturers announced that they were aiming to have hundreds of thousands of fuel cells in cars by 2015, Krogsgaard and his team switched to developing new station technology to be ready to serve them and developed plans for a huge factory to accomplish it.
This led to them getting a great offer from a major Norwegian electronics manufacturer, which had recently gone public.
That was a deal worth $30M. With around a third in cash, and two-thirds in stock. They also brought in a lot of capital to invest in the factory and build the business. In a whirlwind transaction, they managed to get through due diligence and get it closed in about six weeks.
While many entrepreneurs find they get stuck on a two-year earnout clause, and the integration does not go well, Jacob was stuck around building the company for the next four years. He aided them in expanding out to Korea and California and really making the merger successful.
The Future Of RenewablesJacob says that he just wasn’t finished working or pursuing the mission of proving that hydrogen is the future.
So, he dove right into another startup. Today, he is the CEO of Everfuel.
They’ve gone fast. Ramping up from zero to 90 employees in just three and a half years. They’ve done that with a remote and distributed team in five countries, including New Zealand.
Everfuel has also taken a very different approach to its head office. He says they didn’t want to be boxed into concrete in the middle of the downtown of a big city.
Instead, they renovated an old farm in Denmark. A scenic location that fits better with their company story, and provides more space and creativity.
Before taking the company public, Everfuel raised over $100M. Even though the whole stock market continues its ups and downs, they listed as a billion-dollar company.
Storytelling is everything which is something that Jacob Krogsgaard was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Favorable TimingTiming has certainly been more favorable for this venture, this time around. He says that he has now been working on hydrogen for 20 years. Finally, in the past two years, people have begun to listen, and it is catching on.
We are now realizing that solar and wind generation isn’t enough. Not to have a sustainable world and grid. There is a lot more to it. While Everfuel may be leading the way, there is still a way to go before we have nailed this as a planet.
However, eventually, he sees us continuing to evolve in the right direction as we integrate new technologies.
Listen in to the full podcast episode to find out more, including:
- The pros and cons of taking your company public
- Jacob Krogsgaard’s top advice for starting a business
- How he thinks we are doing in the battle against climate change
Alejandro Cremades · EP 621 Jacob Krogsgaard On Building A $300M Company By Converting Wind Into FuelSUBSCRIBE ON:
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With a presence on every continent, Jussi Salovaara’s firm already has over $3 billion in assets under management, across 15 early-stage startup funds.
On the Dealmakers Show, Salovaara talked about going global, strategy, fundraising in the current environment, the importance of having a physical presence while others try to remain virtual, and more.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPreparation & StrategyWhile a lot of entrepreneurs talk about luck, Jussi Salovaara’s journey and advice focus a lot more on preparation and strategy for being successful.
Jussi was born in Finland. Growing up in an environment he describes as a cross between American suburbia, and the Soviet Union.
He enjoyed both playing soccer and singing. His participation in the Helsinki Boys choir ended up taking him around the world. Which ultimately certainly prepared him to create the global business he leads today.
He frequently found himself immersed in new cultures, staying with host families, where he didn’t even speak the language. From 11 years old, that saw him going to the US, Japan, and around Europe. Today he is based out of Singapore.
As a teenager, he also found an interest in card games. After getting frustrated from losing, he decided to apply himself to preparing for games better and being more strategic. He says that mindset, and combining strategy with winning tactics is a fantastic recipe for success.
After business school, which took him from Helsinki to London, he further laid the groundwork by diving into investment banking with Morgan Stanley, consulting with McKinsey and tech working with Nokia.
At Morgan Stanley, he says he learned to work hard. How to put in 100-plus hour work weeks. While there is a lot of talk about work-life balance out there today. He says that being able to outwork your competition is a big deal. Even an extra hour a day over what your competitors are putting in can really compound over time. Especially when your whole team is doing it.
At McKinsey, he dove into problem-solving and execution. Which is critical to what startups do every day. Making those incremental improvements and gains, that build up to big results.
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Making The Leap Into StartupsJussi says that he had begun looking at investment opportunities in early-stage tech startups just for himself. At the same time, reflecting on his day job, he was becoming turned off by corporate politics. He also wanted to have more of a direct impact on the world.
So, when an old colleague from McKinsey called with an invite to join him in building a new global venture capital firm that would help founders, he says that he leaped at the opportunity.
It only took him a few seconds to be emotionally convinced he wanted to be a part of that vision. A few hours to rationalize it. Then a few days to convince his wife to pack up everything and move to a new country.
He says that he has never regretted it for a second. He recommends others make similar leaps into entrepreneurship. It is something you’ll never regret trying. Even those who have failed at it never regret their time trying it.
Though he does also caution founders to stay humble, and not to get too drunk on their own hype. If you get too carried away with your own hype, he warns, it can lead to ethical issues, and mistakes for yourself and your company.
Creating The World’s Largest Early Stage Funding PlatformToday, Jussi is the co-founder and managing partner of Antler. Geographically it is the largest early-stage investment platform for startups.
They are on every continent, with 25 locations around the globe, and real boots on the ground there. They are in the US, Brazil, Europe, Kenya, and Ethiopia. With headquarters in Singapore.
Since 2017 Antler has already made around 750 startup investments, with $700M in capital, across 15 funds.
Storytelling is everything which is something that Jussi Salovaara was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!They specialize in early-stage, pre-seed investments. One of the things that really makes them different is that they are eager to invest right at the beginning of a venture. Really from what he describes on day one. Perhaps even before you’ve nailed your idea, or have incorporated a company.
Antler is passionate about backing entrepreneurs and unlocking entrepreneurial spirit. While many of their founders already have 10 years of work experience under their belts, others have been students, or have been working in their field for 35 years.
He says that they are so many potential entrepreneurs around the world, in all parts of society. Even those who have been in corporate for a while.
While it is primarily about investing, Antler also has an international advisory board with 700 advisors, as well as a very large community of founders and entrepreneurs.
Fundraising In The Current Economic LandscapeThere is no question that capital markets have rotated over the past year. It’s a different landscape for fundraising for businesses than it was in recent history.
Jussi says what that means for you as a company really depends on how healthy you are and how fast you are growing.
If you are growing super fast, you will find funding. Though you may also need to take a hard look at your budget and cut a lot of the excess.
If your business is doing terribly, well, he bluntly says that perhaps it shouldn’t be funded in this phase.
Then there are those that are growing but not wildly fast. There is hope. You can make adjustments. By making those, and getting introductions to the right investors, you can still do well.
Listen in to the full podcast episode to find out more, including:
- Creating a new world with far more innovation and entrepreneurs
- The power of going fast
- Hitting product market fit quickly
- Why having a physical presence is still vital in our connected world
- Startup fundraising
Alejandro Cremades · EP 620 Jussi Salovaara On Creating The World’s Largest Startup Investment PlatformSUBSCRIBE ON:
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Daniel Yu has been championing a huge problem in what may be one of the biggest markets in the world.
On the Dealmakers Podcast Yu shared his adventures as a global entrepreneur, going through pivots, and the benefits of having your own vertically integrated company. As well as fundraising for your startup, establishing and maintaining company culture, and building a whole new technological infrastructure in Africa.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTravel & TechnologyThese two pillars of travel and technology are a consistent trend that stand up many successful entrepreneurs. Daniel Yu has built his business on both of them.
Although born in Ventura County, Southern California, he was always raised with an international perspective. His mother was from the US, and father from Hong Kong. His parents frequently took him on trips around the world, to Europe and beyond. He was well aware of the world beyond his own suburban neighborhood. Finding a fascination with new languages and cultures.
This inspired him to study new languages and participate in learning programs abroad. Including learning Arabic in Egypt.
It was a friend with a similar passion for travel that really helped him bring everything together. This friend told him that if he wanted to create a highly impactful venture, then one of the best things for him to do was to learn technology and how to code.
Whatever business you end up going into, technology is going to be a big part of that. At least you will need to manage technical talent. So, he started to teach himself to code.
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The Big ProblemOn one trip to the Middle East Daniel found himself living in rural Egypt. His neighbors and local mom and pop shop keepers and bodega owners all seemed to suffer from a shared problem.
These local stores that would provide daily essentials including soap, rice, and sugar, would have a big problem when they ran out of inventory. It would require them to drive many miles and hours to a city to go to wholesalers. A long, expensive, and painful process that took them away from their businesses.
This got Yu thinking about how technology should be able to solve this problem. One that impacts many people on the African continent alone. Where this is the way 90% of products are bought and sold, with a flow of $700B in goods each year.
Landing back at University in Chicago, he found a business plan competition, submitted his idea, and won.
Dropping Out Of SchoolThe conversation to drop out of school to pursue this idea, wasn’t necessarily an easy one to have with his parents. However, the door would be open to go back to school should he choose to. Making it a low downside opportunity to pursue.
He also found that he could still leverage all the benefits of college, without having to go to class, by staying in the neighborhood around campus. He was able to engage in the community, talk to and get advice from professors, and attend entrepreneurship events.
Today, Daniel Yu’s top advice for others considering launching a business of their own is to “just get working. Just go to the ground, talk to the users, talk to the customers, talk to the partners. Don’t Wait. Don’t double guess yourself. Don’t fear you’re not capable, or that you’re not skilled enough or experienced enough to to take on those challenges.”
He sees so many people in the world held back from doing things by their own self-doubt and misbelief that they’re not qualified to work on a certain problem, or area. He recommends taking on the spirit of being agile, to make mistakes quickly and learn from them, and quickly adjust. Eventually you will find your path to really adding value for people in their lives. It’s a discovery process that can’t be skipped. Just go out there and do it yourself.
WasokoDaniel Yu’s discovery and idea turned into Wasoko. An ecommerce platform that connects all of the products across Africa. From major manufacturers like Nestle and Unilever, to regional ones, to the mom and pop shops and kiosks selling daily essentials to consumers.
Through their app, shopkeepers are able to order their inventory, with free same day delivery. Building on that they have begun providing flexible payment options for stores. More recently they have been providing their own private label products. Like you’ll find with the Kirkland brand as Costo, or Great Value brand at Walmart. Which they are already delivering across five countries in Africa.
A major part of their success is thanks to an early pivot. When they found their manufacturers and distributors weren’t delivering orders, Wasoko stepped up to take over the logistics part of the supply chain, to control the flow, and reliability.
They now already have a team of 1,000 people, and are really establishing a new technology infrastructure and platform capable of supporting many other services and businesses to be built on top of that in the future.
While this was neither fast, nor easy to accomplish, it certainly now gives them a major competitive advantage and headstart over any potential competitors in the future.
Raising Funding For WasokoThat meant financial backing was also hard to find in the beginning. Especially building in Africa, which was foreign to most large VC investors. Taking two years just to raise their Seed round. Though, they’ve now raised $143M and just keep growing.
Storytelling is everything which is something that Daniel Yu was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Africa as one of the largest and fastest-growing markets on the planet
- Startup fundraising
- Creating and maintaining company culture at scale
Alejandro Cremades · EP 619 Daniel Yu On Building A $625 Million Business By Transforming Informal Retail In AfricaSUBSCRIBE ON:
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David Waxman sold his first company to Microsoft, took his second public for $1B in just 12 months, and then launched an $68M fund to support other startups.
On the Dealmakers Show, Waxman talks about democratizing business on the Internet, finding alignment in acquisitions, the pros and cons of taking your company public, fundraising, hiring the right talent, and the qualities that make a founder successful.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFalling In Love With Tech & Achieving Fast ExitsDavid Waxman was born in Santa Monica but spent most of his life growing up in Berkeley.
He found himself immersed in an environment with lots of interesting people. Though in a neighborhood that really didn’t have any commerce or stores of its own.
He made up for this by spending his time in the local science museum that he could walk to down the street. He joined a club there and began to get his hands on technology and computers before people had PCs at home.
This is where he first learned to code. His fellow clubmates also went on to live out successful careers in deep tech, or working at companies like Google.
As a Master’s student at MIT, Waxman said that he expected he would go on to complete his Ph.D. Then a flight across the country completely changed that trajectory.
Several hours into the flight, he struck up a conversation with a fellow passenger who was at Harvard Business School. It wasn’t long before they teamed up with some other students to launch their first startup.
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Recommendation Engine FireflyFirefly started out as an early online recommendation engine. A tool that was able to identify and serve up recommendations based on interests in music, books, movies, and websites. That ended up being integrated with Yahoo.
Another of Firefly’s products provided a passport to the internet, which allowed you to control your data as you moved around the web.
That caught Microsoft’s attention, who had wanted to build something similar of their own. Within just three years of launching, Microsoft acquired the tool and turned it into Microsoft Passport.
Next, he started PeoplePC. Starting out as a solution to help the democratization of commerce on the internet, this company ended up creating a subscription service that made it easy and affordable to get PCs and internet access at home.
That caught the attention of Ford, who wanted all of its employees to use it. Then Delta Airlines, the New York Times, and Universal. That impetus took them through a $1B IPO. All in just a year from getting started.
David’s third venture SpotRunner was also acquired after raising $100M in capital.
Storytelling is everything which is something that David Waxman was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Pros & Cons Of Fundraising, IPOs & AcquisitionsAll of these things are big events that entrepreneurs often aspire to. Yet, it is important to understand their downsides, as well as the upside you may look forward to celebrating.
In terms of acquisitions, Waxman describes a very different experience and outcome between selling his companies to Microsoft and Earthlink.
One was difficult to really connect with. Which ended up seeing their technology not being used in the way that they had envisioned. The other saw great alignment and continued the mission they set out on decades later.
He says that he believes it is a good thing that we are seeing a trend in companies staying private longer, and going public later. While he would certainly do it again, he warns of the distraction it can be when building a company. You can get thrown around by larger macro trends in the stock market, as well as become distracted with maintaining your stock price on a daily basis.
When it came to raising $100M for SpotRunner, he says that perhaps it was too much money, too early. Before they really found a product-market fit to scale on. There were other transactions happening with big valuations, which made it easy to attract a lot of money, with big expectations
From Entrepreneur To InvestorEven before leaving his last venture David and his current cofounder Gil had been doing some angel investing, and advising in the Los Angeles startup ecosystem.
Then starting out with their own money, they launched the early-stage investment firm TenOneTen Ventures.
As they proved to be successful in their investments, they attracted money from other successful entrepreneurs and launched an $68M fund of their own.
They are particularly excited about investing in AI, machine learning, and big data.
However, he says that the success of an investment and startup really comes down to the founders.
They are looking for resilient founders. Those that can think on their feet and adapt. Who can listen to their advisors, customers, and the market. Entrepreneurs who are charismatic, and can attract great talent and capital, and engage customers. Those who can focus, and discern whether changes like Chat GPT3 require strategic and directional changes, or are simply a distraction.
Listen in to the full podcast episode to find out more, including:
- Learning from failures
- The startups TenOneTen Ventures has invested in so far
- Hiring and company culture
Alejandro Cremades · EP 618 David Waxman On Taking His Company Public For $1B In Only 12 MonthsSUBSCRIBE ON:
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Before others saw the need or believed it was possible, Ajay Kochhar was working on how to recycle EV batteries. He, along with Li-Cycle co-founder Tim Johnston, turned that into a global public company.
On the Dealmakers Show Kochhar talked about solving supply chain issues, sustainability and clean tech, cofounders, the benefits and process of going public, and his award winning solution for the future of EV batteries. Plus, how everybody you know can play a part in electrifying our future, by recycling all their devices.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksChemical EngineeringAjay Kochhar was born in Ontario, Canada. In spite of seeing all of the ups and downs of entrepreneurship from his family members first hand, there never seemed to be a question in his mind that he wouldn’t one day do his own thing.
From a young age he was always into STEM subjects, with a big passion for chemistry. Which took him into a study path and career of chemical engineering.
Before taking the leap into entrepreneurship himself, he wanted to find something that he really wanted to work on, and build some real fundamental and technical skills.
Figuring out what you are passionate about or want to do isn’t always easy. So, he recommends following what you are curious about. For Ajay, his curiosities seemed to meet at the convergence of chemistry and sustainability. The latter of which was becoming a much bigger theme while he was in school.
New fields were opening up. Rather than just traditional oil, gas, and petrochemicals jobs, there were new areas like environmental engineering.
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Working On Metals At HatchDuring college he ended up finding a role at Hatch. A global engineering firm based in Canada, with various divisions in metals, mining, energy, and infrastructure. He began working on nickel, copper, and other rare earth material projects. Then eventually lithium. All of which are relevant to EVs. As well as pollution control equipment, and scrubbing metal smelters for the environment.
After graduating he began working at Hatch full time. Where he also ended up meeting his future startup cofounder.
His curiosity evolved to interest in the design of facilities, mega projects, and how it all worked from a business perspective. So, he moved into a consulting and strategy role, which enabled him to look at these facilities from an investment point of view. Such as supporting investor due diligence, relaying the technical to real economics, and making the case to apply more capital to them.
In the midst of this he saw a void. The recycling of copper and aluminum space had become a big and mature business. Yet, there was nothing happening for the fast growing and urgent need to recycle lithium.
So, in 2016, Ajay and his cofounder Tim left Hatch, to leap into this space themselves.
CofoundersSome solo entrepreneurs do very well, and go onto create multiple ventures themselves. Though it is no secret that in general startup investors prefer ventures with multiple cofounders.
Ajay says he also found having a partner a huge benefit. Someone that can bring skills and complement yours. Someone who can work in parallel with you to get twice as much done in the same amount of time.
Those that have been on the journey before themselves also know that this is the recipe to make the highs even sweeter, and help make the burden lighter and more bearable when things are tough.
Your cofounders and initial advisors can also be invaluable sounding boards as you go. As you gain experience he says your judgment will improve. Still, everyone will make mistakes. That’s how you grow and get better. Today, his top advice for others launching businesses is to listen to your gut more. Of the mistakes he regrets, he says they often come back to having not listened to himself. When you doubt yourself, which is normal, Kochhar advises to cling to those first principles, and to work through it.
Li-CycleAjay’s company is Li-Cycle. A clean tech company focusing on the lithium battery recycling ecosystem.
So, rather than mining these rare earth minerals to make batteries that end up just being more waste and pollution, they can be recycled in an efficient way. That also means that those with a lot of this material can maximize their own finances by being able to recover and reuse those rare and costly materials.
Going even further they are building this space with localized, regional facilities, close to the most batteries, so that the entire process is more efficient and better for the environment. Which also means strengthening the supply chain domestically, and creating more resilience against even wild card crises like pandemic lockdowns.
Today, Li-Cycle has already grown to a team of 450 people, with facilities across the US and Europe, and offices in Asia.
While their main focus is B2B, they have partnered with companies that collect and aggregate lithium-ion batteries from the public s for recycling.
Storytelling is everything which is something that Ajay Kochhar was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Recycling EV batteries
- How Li-Cycle is championing this space
- The benefits of going public
Alejandro Cremades · EP 617 Ajay Kochhar On Raising $1.3B To Solve The End-Of-Life Lithium-ion ProblemSUBSCRIBE ON:
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Ben Lamm has already started a handful of companies, with just as many exits. He is now onto his biggest adventure yet. An effort to rewild the planet, which has already attracted $225M in capital, and 50 advisors.
On the Dealmakers Show, Lamm talks about the reality of entrepreneurial life, acquisitions, bringing extinct animal species back to life, fundraising, and building a billion dollar company in just two years.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Reality Of EntrepreneurshipIn many ways it seems that entrepreneurs are the new rockstars. At least in the media. Big clickbait headlines make fundraising, creating multi billion dollar companies overnight, and growing vast corporations sound easy.
Covering the highlights of Ben Lamm’s career as a serial entrepreneur may also make it sound simple. Though he is also very clear on the reality of what entrepreneurial life is.
Lamm was born and grew up in Texas. Perhaps one of the few true natives of Austin today. It’s a state that has been booming in popularity, as so many corporations, startups, and individuals have poured in. Looking for a vibrant, business friendly atmosphere, with lower taxes, and a better quality of life.
So, although much of his career since has been focused on technology startups, he studied finance and accounting. Tools he says have been useful in building businesses. Such as understanding financial documents and in evaluating term sheets.
Ben also says that there is a lot that even business school does not teach or prepare you for. Like managing supermajorities and board dynamics.
He explains that there is a lot of trial by fire as a founder. Even through exiting your company. You’ll make a lot of mistakes. Then hope you learn the lessons quickly, and the first time around, so that you don’t repeat them again.
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Being Passionate About EntrepreneurshipLamm says that being an entrepreneur is some special wiring in your DNA. It’s not something he would necessarily wish on everyone. It almost makes you unemployable. Which really left him the choice of either continuing to sleep on his parent’s couch or going to start companies.
It’s often a matter of either feast or famine on the journey. A rollercoaster of ups and downs that not everyone is cut out for. Including all of those around you. You must realize that it will affect and impact your family and others in your social circle as well. You’ll sacrifice relationships, sleep, and even your health on the way.
Most of the time you’ll be paddling uphill, through snow, fire, and meteor showers.
At the same time, that makes it very exciting, and the most rewarding thing you can do in your life. When you do it, you are like a writer approaching a new book. You have a completely blank page, to write your story in. There may be nothing as fulfilling as building a company that is really meaningful to you.
In fact, although he has started and exited several companies successfully, he says that if he could go back in time, he would focus more of his time on following his passions, and building businesses he really cared about. If he had done more of that, he believes some of those companies would have been even bigger successes as a result.
Starting & Selling CompaniesBen started out working with one of his professors. Together they built one of the four largest e-learning companies in the world. One that would train the staff of major brands like Whirlpool and Black & Decker.
Next is was onto Chaotic Moon. Which worked to help brands be everywhere, in a fragmented tech ecosystem with different operating systems. They enrolled clients like Disney and Starbucks.
Then it was onto diving into AI in the defense and infrastructure space.
Having gone through several acquisitions, Lamm says the decision was really never just about him. It was about the employees, investors, and other shareholders.
He sees his job as the CEO to “hire much smarter people than me empower them. Give them the resources and tools they need, help set that vision, but then fundamentally you listen to our board and shareholders. Ensure that you know I’m being a good steward of of where they want the company to go.”
If you can do that, and learn things quickly, you are already mastering two of what he describes as the entrepreneurial superpowers.
When it comes to getting acquired, he says it is really just about focusing on building the company. One that has a big impact.
De-ExtinctionColossal is Ben Lamm’s latest venture. A company on a mission to tackle de-extinction of the planet. One which has already raised $225M and grown to being valued at $1B, in just two years.
Their version of rewilding the planet includes bringing back to life extinct species like woolly mammoths, Tasmanian Tiger and the dodo bird. A dive into genetics which they believe will have many applications for human healthcare as well.
Storytelling is everything which is something that Ben Lamm was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Their version of rewilding the planet includes bringing back to life extinct species like mammoths and the dodo. A dive into genetics, which they believe will have many applications for human healthcare as well.
Listen in to the full podcast episode to find out more, including:
- Creating additional value with spin-offs
- The upside of embracing your critics
- What Colossal is working on
Alejandro Cremades · EP 616 Ben Lamm On Starting 6 Successful Startups And Now Raising $225 Million To Fix De-ExtinctionSUBSCRIBE ON:
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Gautam Gupta has gone from VC investor, to startup founder, and now back to investing in other entrepreneurs. Gautam co-leads the $460M TCV Velocity fund. He and his team are open for business and may be one of the few actively looking to invest in world-class startups.
On the Dealmakers Show Gautam talked about funding from a VC’s perspective, testing your business ideas, the process of recapitalizing a business, acquisitions, and the startups he’s looking to fund now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFunding From A VC’s PerspectiveGautam Gupta was born to parents who had immigrated to the US from India. Both his father and his grandparents had been entrepreneurs. They knew how to hustle to put food on the table, as well as what it was like to have to skip a few meals.
From a young age, he was a witness to dinner-time conversations about these businesses, and that inspired him to want to become an entrepreneur himself.
Even at school, he was always selling something to other kids out of his backpack or online.
When it came time to pick a college, he visited Babson, and absolutely fell in love with it. Today, he credits applying and getting accepted there as probably the one decision that changed his life more than anything else.
As a sophomore, he had the opportunity to intern with General Catalyst. Which was still a very young and new VC firm at the time. When he joined, they were maybe on their third fund, with around $300M. Recently they announced their latest fund is $5B.
Initially, he thought that he would hang out there for a couple of years before going to start his own venture and operating his own company. However, he found the work so fun and engaging that he ended up staying for the next eight years.
He enjoyed learning from the founders there, and from their business experience. He also learned how much sales were involved in being on the investor side too.
As a new fund, with no brand recognition, he would be out there scouring the web to evaluate businesses, hunt down contact information, and call on behalf of General Catalyst to pitch startups on taking their money.
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From Investor To EntrepreneurGautam connected with a long-time friend from college who wanted to start a business together. He had just exited another venture, and Gautam felt like he was at a point where he needed to make the leap, or just hunker down and commit another 10 years to his role there at General Catalyst.
They began bouncing around business ideas together. Gautam was especially passionate about health food and nutrition. He had long struggled with his weight, before learning more about nutrition and being able to lose 70lbs in six months through a combination of a better diet and exercise.
They came up with the idea of Naturebox. A box of healthy snacks they could sell online, and through some retail stores.
To test the idea out, they went to a local farmers market and picked up a bunch of snacks that were similar to their vision. They photoshopped some pictures of the products, and put up a single landing page with four bullet points, and a buy now button.
They ran some ads, and in one weekend, had 100 people Paypal them money for this box.
The problem was that their product didn’t exist yet. They could either refund the money or find something to ship. So, they ran down to the local Costco, grabbed some similar products, repackaged them in their own branding, and sent them out.
It worked, and in three years, they grew that business to $50M in revenue.
Recapitalizing The BusinessAt that point, they were burning a lot of cash. Capital markets changed their appetite for direct-to-consumer brands, and in 2018 they found themselves down to one month of payroll left in the bank and defaulting on venture debt that they had taken on.
While it was stressful, he now says that “I learned in that experience that ideas and people are way more durable than we give them credit for.” As a company, they banded together and were able to keep the business going. No matter how messy it gets, he says there is always a way to figure things out.
In this case, they did that by recapitalizing the business with new outside investors. Some initial investors decided not to participate and were willing to sell their shares or be diluted. Others did participate.
It ended up working out. After they got through that, Gautam says that he had grown tired of being in the operating seat and managing people. He preferred being on the front lines. So, they brought in a new CEO.
Over the course of that business, they had raised $70M before their acquisition.
Storytelling is everything which is something that Gautam Gupta was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The Velocity FundNext, Gautam decided to go back into investing, where he could lend the benefit of his operating experience to help other entrepreneurs.
Today, he is doing that as a general partner with TCV, and working with their $460M velocity fund.
So far, TCV has made around 396 investments, through 12 funds, with 197 exits.
Listen in to the full podcast episode to find out more, including:
- What the Velocity Fund is looking to fund right now
- How TCV helps founders grow their business
- How to get in touch with Gautam
- His top advice when launching a business
Alejandro Cremades · EP 615 Gautam Gupta On Co-Leading A $460 Million Fund Focused In Consumer And Enterprise StartupsSUBSCRIBE ON:
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Don Muir made the leap from working in private equity on Wall Street, to disrupting the largest traditional financial institutions in Silicon Valley.
On the Dealmakers Show Muir talked about debt versus equity fundraising, helping to roll out the lifeboats for Silicon Valley Bank customers as the ship went down, financial services for startups, value investing, and more.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksValue InvestingDon Muir was born in the Greater Boston area. After several years of living in Rhode Island, he returned to Boston, where Don ended up attending the very same public high school that his mother and grandparents had gone to.
His grandfather has always been a great inspiration for him in terms of igniting his entrepreneurial spirit. He had immigrated to the US, enlisted in the army, and ended up landing and fighting for America on the beaches of France on D Day in WWII. On his return he bootstrapped his own tailoring business.
Don’s other big passion has always been finance. Even as a teenager he saved up money from his side hustles, and convinced his mom to open an online stock trading account. He would use that for day trading. Researching companies and brands he knew, and making bets on them.
That passion for numbers took him to studying finance at Cornell. Where he ended up forming a not for profit organization that continues to be a vibrant part of the campus.
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Working At Boston Consulting GroupAfter graduating he joined Boston Consulting Group, and was able to take his interest in evaluating businesses to a whole new level. This time working on operational strategy for big multi billion dollar publicly traded companies. Experience that he says he has carried through to helping him build his own business today.
At BCG he was involved in due diligence for the private equity team, and some of the largest publicly-traded corporations in the nation.
Next he leapt to working at one of these large private equity funds to get more engaged in value investing.
Out of their NY office he would help find and evaluate businesses for them to buy. Focusing on those with lots of free cash flow compared to their valuations. Looking at who was on their cap table, the durability of the business, and their moat, as well as the margins, and ability to grow revenues and margins. Seeing the opportunities to renegotiate vendor contracts to improve margins, and how to price things right.
Finance Meets EntrepreneurshipNext Muir applied to Stanford and got into their MBA program. Which is where he finally found his passions for finance and entrepreneurship colliding.
He discovered that working in investment banking or private equity wasn’t really very cool out on the West Coast. Instead, he was immersed in an entrepreneurial environment, where everyone was interested in starting their own companies or going to work in tech.
The real catalyst for starting his own company was meeting his cofounders and advisors there at Stanford. Together they brought to the table finance, software engineering, and venture backed startup experience.
Don saw a big opportunity, and brought them together around his thesis that the startup ecosystem was being poorly underserved by the traditional financial services market.
He had worked in those companies, and knew them inside and out first hand. Out in California he saw that startups didn’t have near the access to the financial resources of the private equity backed companies he had worked with on the East Coast. Where you could pit the largest investment banks and commercial banks in New York against each other to bid in every financing transaction.
So, they banded together to launch digital bank, Arc.
Disrupting The Financial Services SpaceArc provides both cash management, with FDIC insured online bank accounts, as well as lending services providing advances on revenues for startups.
They’ve focused on providing a smoother digital user experience, with fast onboarding. Something which helped them 20x their pipeline of customers as they helped many bailout of SVB when it crashed, and move their money somewhere new.
Looking forward to the future, Don Muir sees Arc as a publicly traded company, alongside big banks like JPMorgan Chase and Wells Fargo, providing credit to the largest tech companies in the world, with an even broader suite of products and services. All software driven, with AI and machine learning to speed up credit decisions.
Debt & Equity FundraisingSo far Arc has already raised $31M in equity and $150M in credit financing itself, through a Series A round. That includes funding from investors like Bain Capital, Y Combinator, and hedge funds.
Storytelling is everything which is something that Don Muir was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Don says that equity is actually the most expensive way to fund a fast growing business. So, they carefully use equity capital to invest in high return parts of their operations. Then use their credit facilities to lend money and make a spread.
Listen in to the full podcast episode to find out more, including:
- How Arc is different from traditional banks
- Don Muir’s top advice when starting a business
- Investor rejections
Alejandro Cremades · EP 614 Don Muir On Raising $180 Million To Disrupt Wall StreetSUBSCRIBE ON:
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Joe Spector has helped take his first startup from zero to being worth over a billion dollars. Then after taking that company public, he decided to apply his experience to helping pet owners and veterinarians too.
During his appearance on the Dealmakers Show, Spector talked about launching new ventures that hit $1M in their first weekend, IPOs and fundraising, negotiating with investors, and pet health versus human health.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksClimbing The Mount Everest Of EntrepreneurshipJoe Spector was born under the former USSR communist system. While his parents shielded him from a lot of things and gave him a good childhood, it was a closed society, where you really didn’t know there were other options, ways to live, or think.
After spending time living in a tent in a refugee camp in Italy, his family landed in the US. They lived in subsidized housing and on food stamps, while his parents worked hard to provide.
They were both civil engineers. Though his father would put in extra time to make ends meet at the local flea market. A work ethic that Spector carries forward to his businesses today, with a “no one’s too good to take out the garbage” mantra.
While others may have focused on the struggle, Joe says he saw he was in a land of opportunity. Where, with a vision, you can be an entrepreneur.
To continue his education, he attended Berkley, then Wharton through his MBA. While he began his career working in investment banking, he quickly realized he was more creatively inclined and didn’t really like following rules and being told what to do.
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Business Plan Competition At WhartonIt was a business plan competition at Wharton business school that really set him on the trajectory into entrepreneurship. There he found that there were others like him.
Those crazy enough to have their own business ideas would find the courage to pursue them. It was a reality that just wasn’t possible in communist Russia.
Still, while he has enjoyed working in startups that have gone incredibly fast, he likens entrepreneurship to climbing Mount Everest. It is about setting your sights on reaching the top, and just setting out, taking one step at a time.
In fact, some of his top advice for others considering launching their own businesses today is to begin building your network and soaking up as much learning as you can for others to prepare yourself for the journey as a CEO.
He recommends getting into more experiences and situations where you can talk to more people that think differently. Then gain the confidence that you can be an entrepreneur too.
There is no single path to entrepreneurial success or being the CEO of a successful startup. You may be more or less of an introvert, or have a different background. What matters is being able to get the results.
Building A $200M In One MonthWhen Joe Spector met Andrew Dudum of Atomic, who is co-founder and CEO of Hims & Hers, he knew he wanted to work with him.
Make sure you also check out Andrew’s appearance on the Dealmakers Podcast for a power-packed and insightful episode.
Joe just kept persevering until Andrew gave him an opportunity. He said there was a hair loss thing that Joe could work on. He jumped on the opportunity.
Their launch weekend brought in $1M. Within a month, they hit a $200M valuation. They rode that all the way through an IPO, and a $2.3B valuation. A company that may still be one of the fastest growing out there.
Storytelling is everything which is something that Joe Spector was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Running With Hims & HersJoe saw that Hims was a good idea to run with, but a very hard one. A space that was highly regulated, yet very ripe for disruption. Especially with the incumbents doing a terrible job of branding.
They hit the ground running, and being easier to raise a lot of capital at the time gave them a lot of runway, and the ability to be creative and go big with their ad campaigns.
Prior to the IPO, he says that they raised around $500M. While in good times, many people may want to throw money at you, he warns that money always comes with a price.
You should always be negotiating the terms. You want a good valuation, but the least dilution. You also want investors who are partners that are really going to be helpful for your business, and not to be a distraction.
Of going public, like many other entrepreneurs, he describes it as a surreal moment. One that then brings a lot more regulation, and professionalism in your company.
Reimagining Pet HealthAfter Hims, Joe decided to apply his experience to transforming the pet health space, with his latest startup, Dutch.
Dutch brings together veterinarians and pet owners via video appointments and online prescriptions. All for a fraction of the cost of traditional vets for pet parents. While actually helping vets to enjoy a better living than they are used to.
Listen in to the full podcast episode to find out more, including:
- How Dutch is transforming this space for vets and pet parents
- How the fundraising landscape has changed
- The keys to growing a successful global startup
Alejandro Cremades · EP 613 Joe Spector On Building A $2.3B Company And Now Raising Millions To Bring Telehealth To PetsSUBSCRIBE ON:
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Nadayar Enegesi has gone from building companies out of Canada, back to the entrepreneurial hotbed of Nigeria for his biggest startup venture yet.
On the Dealmakers Show, Enegesi talked about how perseverance pays off, raising capital, building a multibillion-dollar company, company values, and starting up in Africa.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPivots & PerseveranceNadayar Enegesi grew up in southern Nigeria. A place with great weather and lots of seafood. From an early age, he says that he loved both music and math.
When it came time for college he took off to Canada to study computer science. While he says that he didn’t realize how big of a leap that move was until he made it, it has since made him more fearless and resilient to build things and enter new territory. An experience he is now very grateful for.
For his first business, Enegesi jumped into edtech. The idea was to bring global university content to others, including Nigeria.
That first attempt didn’t take off as planned for a couple of reasons. One being timing. Their target market of consumers just didn’t have the internet bandwidth to make it effective.
Secondly, they realized that people didn’t care that much about education and learning in itself. What they care about is outcomes and direct correlation in increasing their incomes.
Nadayar could have certainly given up his entrepreneurial aspirations right then. Which may have been tragic when you consider the value and impact his ventures have had since then, and aim to have.
So, switching things up, he teamed up with three other cofounders to take another run at this from a different angle. This became Andela.
Which began focusing on finding the brightest young people in Africa and teaching them to be software engineers, who could work for any company remotely.
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Raising Funding And Valuing AndelaAndela went on to raise well over $300M, with a valuation of $2B.
As experienced investors know, once you start fundraising and bringing in outside capital and investors, it is a process and cycle that never stops.
You are in constant fundraising mode to continue to try to double or triple your revenues and keep on pushing that speed of growth.
He says that there was little time to celebrate closing any of those rounds. Because once you get the money, the real work and pressure is on to deliver on your promises to investors.
Today, Andela is a technical talent marketplace. Providing access to remote jobs, and talent across the technology space, from software engineering to design, and data science.
His perseverance clearly paid off. Many people are certainly glad that he did not give up after those initial entrepreneurial challenges.
Today, his top advice to others is that “You have everything within you to materialize whatever vision that you have in your head. You have to trust that at the right time things will materialize, and you’ll meet the right people, and you will achieve those things.”
He admits that there were times when he was pretty nervous and scared, and did not believe that he had it in him. He credits their success to the amount of focus, the amount of perseverance, and also the people that were committed to accomplishing the same goals.
If he could go back in time, he says that he would save himself the anxiety, and just give himself that reassurance that all of those dreams were possible.
Building Companies In NigeriaNadayar Enegesi’s most recent venture is based out of Nigeria. He describes it as a place of great innovation and raw entrepreneurial energy.
A place where everybody is building something, and the pathway to wealth is seen as starting a business. Where you have this convergence of adopting a lot of digital technologies, where almost everybody has a smartphone and internet.
Yet, infrastructure in urban areas hasn’t caught up to the rest of the world. This means that anywhere you look, there’s a problem to be solved. If you can solve that problem and create more efficiencies or create convenience for people that need it, then there is a great opportunity.
In contrast to Andela, his newest venture Eden Life has already grown to 50 people, but has only gone out to raise $2M.
Not only are they intentionally trying to do more with less, but he also says that they do not have the problem of the extremely his cost of talent as his previous company faced in New York or San Francisco.
Storytelling is everything which is something that Nadayar Enegesi was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!His Mission – Economic Prosperity For AfricaAfter Andela had raised its Series D funding round, Nadayar had already been back with his boots on the ground in Africa for about five years.
He had traveled through Kenya, Uganda, Nairobi, and more. He was able to see the real daily challenges facing the people in the markets he was building his company in.
He says that he just couldn’t get it out of his head, and developed a feeling of personal responsibility to do something. He felt that he was there for a reason. In spite of the huge success of Andela, he was inspired to create more economic prosperity for millions more people. This was the catalyst for Eden Life.
Their vision is to help Africans thrive, by giving them better access to all of the things that they need in life, improving their quality of life, and saving them time, so that they can use that time to upgrade their skills, spend more time with family, or engage in more experiences.
Listen in to the full podcast episode to find out more, including:
- Creating a values-based business, and what to do when your values are challenged
- Managing quality in marketplace businesses
- Startup fundraising
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Ramji Srinivasan is now on his second big startup, and is working to make immune measurements routine as blood pressure measurements.
On the Dealmakers Show Srinivasan talked about genomics, surviving financial crises, raising $100M raised before his first acquisition, his hiring and interview process, vanity metrics versus authentic signals, putting more time back on the clock, business prenups, and running a dual IPO and acquisition process.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDropping Out, Saving Capitalism, And Having A Real ImpactRamji Srinivasan grew up in New York, where he promptly returned after college.
Even back in high school he began building things and experimenting with engineering.
One of his friends from school came up with the idea of a new brake light for cars that would change in intensity with pressure on the brakes. They created a prototype for that, which ended up winning third place at Intel’s science and engineering fair.
Tired of NY weather, he sought out colleges that offered something better. That took him to Stanford to study computer science. Followed by a Master’s in financial math.
Between the dot com bubble bursting, mass layoffs, and ecommerce appearing to be a fad, then 9/11, Ramji quixotically (his words) decided that he needed to personally save capitalism and New York by working on Wall Street.
In the summer of 2004, everyone else was outside enjoying the weather and having fun. While he was working 100 plus hours a week preparing forGoogle’s public offering. It was a big wake up call to what was possible, and how much others were out there changing the world in some way, while he was just pushing paper from behind a desk.
After reading Paul Graham’s book “Hackers and Painters”, he decided that if he didn’t make a leap he would just be stuck on this treadmill forever.
His eventual cofounders brought him an idea around genomics. It seemed like it could be the next big thing in the wake of the internet.
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Selling Your CompanyRamji Srinivasan’s first startup was Counsyl. A genomics startup focusing on women’s health and genetic screening.
Desiring to take genetics out of just the academic to the actionable, their clinical lab ended up serving a million patients, and grew to $150M in revenues, and posted several profitable quarters.
Before the exit Counsyl raised $100M.
Storytelling is everything which is something that Ramji Srinivasan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!They had their fair share of challenges including going through the financial crisis. He says that in times of financial stress, when you are responsible for many other people, you can face a crucible moment. You can either make really good or really bad decisions. In this case it forced them to quickly figure out a business model that worked and could make them cash flow positive. If you get it right, and persist, it will strengthen you, and bring you out strong on the other side.
However, eventually the shareholder dynamics they had became a major stressor. Today, he is a fan of business ‘pre-nups’. A tool that will clearly layout the cost of a break up. Through which he says can also ultimately free you up to work better together in a partnership.
Exiting CounsylWhile he says that they never set out to build a business that they would sell in the future, it came to the point when Ramji realized it would take years to fix their shareholder dynamics, and perhaps it was wiser to exit.
So, they ran a dual IPO and acquisition process. Filing with the SEC, but also keeping the options open to sell the company.
He says that they underpromised on their numbers, so that they could overdeliver in the process, and inspire even more confidence in potential buyers.
It certainly worked, and after 10 years with that business, it sold for $375M.
While he did bring along some of his former investors, going forward with his second company, he was more careful in picking those investors to bring into the venture.
After the sale, he says he felt a combination of both relief, but also mixed emotions over the loss of leaving that company behind. Something which many entrepreneurs don’t see coming, and should be more prepared for.
So, he packed his bags and headed off to China. He lived in a dorm to study Chinese, learned some MMA, snowboarding and skiing for three months. Then decided it was time to get back in the game with another company.
Making Immune Measurements RoutineAfter thinking about what to do next, Ramji got in touch with his eventual cofounder, Matt Spitzer at UCSF. In meeting Matt, Ramji was struck by Matt’s research on making immune profiling useful for clinical trial and patients.Together, they brainstormed customer needs and launched Teiko in September 2020.
Looking forward they hope to put time back on the clock for patients and their families.
Listen in to the full podcast episode to find out more, including:
- Honing in on the right metrics
- What Teiko is doing
- His hiring process
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Joseph Riley has become a master of turning challenges into profitable opportunities. Including building a big real estate startup that has raised hundreds of millions of dollars.
On the Dealmakers Show, Riley talks about the battlefield of entrepreneurship, turning a tough situation into a win when failure is not an option, debt versus equity fundraising, branding, and customer experience.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Battlefield Of EntrepreneurshipJoseph Riley grew up on a farm in small-town East Tennessee. Struggling in his first business class in school turned out to set his life on a whole new trajectory of turning challenges, and the threat of failure into big successes.
Back then, business class was basically just typing. There was no wifi in the school. When he was failing his typing class, his teacher offered to upgrade his grade if he took part in a public speaking contest. He did.
That continued to spiral upwards as she encouraged him to compete in the regionals and national competitions. That turned into becoming the National President of Future Business Leaders of America. Which in turn led to a scholarship to the University Of Virginia.
During this time, he joined the Army ROTC and pursued a Master’s in International Relations at Oxford.
Then Joseph went on to serve in the army for seven years. During this time, he met his wife, who also traveled a lot for her work with McKinsey.
There are many analogies between the army and battle and similarities in business and entrepreneurship. Which is certainly a battlefield. Perhaps even more so for startups.
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Learning How To Build SystemsHowever, one piece of common ‘wisdom’ that Joseph dispelled on the Dealmakers Podcast is this idea that the military equips you to come out and do well in building a business because you are good at building systems.
Instead, he says that the military is the most bureaucratized organization in existence. For the past 200 years, service members have just been plugged into systems and processes, and are trained to conform to them.
They are coming out of a very structured environment, in which they are told how to do everything. Right down to tying and cleaning your boots.
However, what it does seem to do well is to train people to face really difficult circumstances, and say failure is not an option.
When you are on an active battlefield, taking fire, you are outnumbered, have poor visibility, and the support you expected isn’t showing up, and no one is coming to help you; you just have to survive and figure it out.
When the army didn’t think that Riley was on the right track, his commander’s aide-de-camp made the surprise move of giving him another chance by putting him in charge of the most problematic platoon they had.
The one with the most drug problems, lowest marksmanship scores, lowest PFT scores, and of which many the army was trying to get out of the service.
Finding success in turning them around to being the top platoon in the battalion, Joseph got into ranger school and deployed with them to Afghanistan. Today, he is giving many others that second chance and helping them find gainful employment. Whether it is veterans, or the previously incarcerated.
Forcing FunctionsWhile we don’t always appreciate challenging situations at the time, embracing them, and working through them as opportunities, can certainly produce great results.
When Joseph and his wife had just finished renovating and furnishing their home, he was sent out on a last-minute deployment.
So, they decided to throw it up on Airbnb and HomeAway and found great demand for furnished short-term rentals close to military bases.
Lots of family members would come for various occasions, and it was just what they needed.
When he returned from that deployment, he moved his wife and himself into just one of the bedrooms and kept on renting out the other two rooms to short-term renters. He also bred their dog without telling his wife, as he saw it as being in the negative on the family balance sheet.
The rental was working so well that they began buying more homes, fixing them up, and operating them in the same way.
Then COVID lockdowns hit, and they lost 90% of their reservations and revenues in the first week. He had personally guaranteed millions of dollars in loans. Failure was just not an option.
So, they began running some new ad campaigns to capitalize on the trends of the moment, and they went out to forge partnerships and find those with essential workers who were still on the road.
Establishing Patriot Family HomesDiversifying out of only serving military families, and creating multiple streams of revenues is what happened to save them. Not only did it enable them to survive, but it actually dramatically increase their growth.
Their business is Patriot Family Homes. They’ve gone on to expand their portfolio and team dramatically. Including bringing in many military service members’ spouses to serve in the business.
They’ve now raised around $400M in equity capital and debt financing. With a vision of not only being national but eventually international as well.
Storytelling is everything which is something that Joseph Riley was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Branding and developing multiple brands
- Customer experience
- Debt versus equity funding
- Unique investor introductions
- Joseph Riley’s top advice when starting a business
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Davis Siksnans built his own unicorn startup before becoming an investor to help other entrepreneurs maximize the potential of their own ventures.
On the Dealmakers Show, Siksnans talked about his process for testing and vetting business ideas, the advantage of not starting up in the US, private equity versus VC funding, structuring your company to be able to raise outside capital, why not to incorporate your company in California, optimizing customer acquisition costs, and what he’s investing in now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksValidating Your Business IdeasDavis Siksnas was born in Latvia. Right when the country was gaining its independence after the fall of the Soviet Union.
The internet was just taking off. Even before he could get internet at home, he would go down to the local library, download materials, bring them home, and think about computing all night. Eventually, he taught himself to code in his own bedroom.
His cousin, who was more advanced in his software development, began helping him over Skype. At just 17, his cousin becomes the first iOS developer at a local company. Davis was able to get hired there at just 18.
He says that he has always wanted to study in the US. He finally got a scholarship to come and attend Wisconsin University. Where he found he could blend learning business and software development. He especially made sure to take advantage of marketing and other courses that would help him promote his own business in America later on.
Right after college, he began testing business ideas. He’s worked on over 100 of them. Though he may have taken a rather different approach to many. Often firing off five or more at the same time to see which had legs.
There were no VCs in Latvia back then. So, they would just test ideas that they could bootstrap with a small amount of money.
It all really came down to developing an MVP, getting it into the market as quickly as possible, and testing customer feedback.
Often that meant throwing up a landing page, emailing out a link to their database, and seeing how many people signed up. Then if it was enough, investing another three to six months in building the real product and testing it more.
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Building UnicornsPrintful was one of these ideas and tests which really turned into a runaway success. It was born out of a need that had for another idea and needed a print-on-demand solution. Between Shopify, Woocommerce, and other emerging e-commerce marketplaces, there were thousands of other businesses with the same need that they had.
Even through bootstrapping, they quickly became profitable. They kept reinvesting from cash flow, then, with strong revenues, were able to obtain bank loans. Ultimately creating a software and hardware business.
They had one founder in the US but found that operating out of Latvia was actually a huge advantage in being able to recruit amazing talent.
They managed to blend their company culture between continents with trips between the countries. At least until COVID lockdowns hit.
However, they found that within just three weeks, their sales shot back up again, and they had to finally go out and raise money to capitalize on the huge growth opportunity that they had.
Venture Capital Versus Private EquityDavis says that they had been exploring their options for an IPO or funding for a while. They knew that venture capital firms were looking for 10x to 100x returns. Versus private equity firms that would be happy with 3x to 5x returns.
They determined it would be easier to work with private equity and leverage one big investor instead of multiple investors.
They were also profitable and had a strong financial history. Which isn’t always what VCs are looking for.
It took them six to eight months to finalize the transaction between due diligence, finishing the financial year, and getting acceptable audited financials.
They also rearranged their corporate structure. No one wants to invest in a California-registered company. The taxes and other rules are just too ugly. So, they chose a Delaware company. Which is much more attractive to sophisticated investors for several reasons.
They also had a subsidiary in Latvia, which has no corporate income tax on profits.
Additionally, they shifted the company from an LLC to a C Corp, which many investors seem to prefer.
From Entrepreneur To InvestorAfter getting Printful to a stable place, and bringing in new executives, Davis ended up making the switch to investing in other startups.
Today, he is looking for other entrepreneurs with good products, who are ready to scale and go international. Those who can benefit from his experience with building his own billion-dollar company. As well as who can benefit from $100k to $1M in capital to fuel their next step.
Storytelling is everything which is something that Davis Siksnans was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- What Davis Siksnans is investing in now
- Testing your business idea
- How to optimize your customer acquisition costs
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Andrew Lacy sold his first company to Disney. Now he’s working to transform the healthcare system with his newest venture.
On the Dealmakers Podcast, Lacy talked about M&A deals, the diagnosis of business ideas, the problems and solutions to today’s biggest healthcare issues, startup fundraising, why more investors are better than fewer, and why never to invest in a second-time entrepreneur who had success the first time around.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTaking The Leap Into EntrepreneurshipAndrew Lacy was born in Melbourne. A place he describes as a great one for quality of life and growing up in. Though just incredibly far from everything else in the world. This means when most explore outside of the country, they go for a couple of years at a time. He has now been living abroad for the past 15 years.
The Australian education system is a little different in that you are given a book, of course, of which you can get into any which you already have the scores for. Rather than having to apply. Having done well in high school, he pretty much could choose from anything he wanted to study.
Having an interest in problem-solving, and a love for courtroom drama TV, he chose to study law at university.
Unfortunately, he soon became deeply disappointed that it mostly revolved around problems of a decade ago, not solving new things.
When he was exposed to the opportunity to go into consulting with McKinsey and work on new business problems, he jumped on it. There he was able to help companies deal with the threat of the internet, or how they could capitalize on it.
McKinsey put him through his MBA, which he chose to do at Stanford. He remembers rollerblading around Silicon Valley. Past companies like eBay and Yahoo. Where people sitting in offices were connecting with the rest of the world. He found that very fascinating.
He continued to struggle through his MBA, watching others go off and start their own companies. Rather than stay in San Francisco and continue to be miserable at watching others live out this dream, he requested a transfer to work with McKinsey in Spain instead.
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Returning to The Bay Area And Starting His Own CompanyAfter two years, he decided to return to the Bay Area in hopes of beginning by working in a tech company. He soon found that having a law degree and McKinsey on his resume were actually seen negatively, and he couldn’t get hired.
It turned out that it was easier to start his own company than to get a job working for someone else.
Since starting several companies of his own, he is often approached by others working in law firms or consulting firms like McKinsey, asking for him to have coffee and sell them on the idea of becoming entrepreneurs themselves.
He doesn’t believe this is the right way to think about it. He says that you cannot rationalize being an entrepreneur with lists of pros and cons or a spreadsheet. If you are comfortable taking the low-risk approach of staying in a corporate job and career, that’s fine. Entrepreneurship is incredibly hard. You are either compelled into it or not.
For those considering it, he recommends doing it sooner rather than later. Do it while you are young. When you have less financial responsibility, and can take big risks. Then you have plenty of time to recover and build back if it doesn’t work out for you.
Storytelling is everything which is something that Andrew Lacy was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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Your email address is 100% safe from spam!Selling Your CompanyAndrew Lacy’s first company was inspired by the launch of the iPhone. He saw the potential of what it could become, far beyond just being another smartphone.
So, he and his cofounder launched a sort of underground app store, and quickly hit 10M installs.
Raising money for it was a struggle. They went up and down Sand Hill Road, and were turned away by every VC firm they pitched. No one believed in the iPhone. They were only interested in funding deals to do with Nokia or Blackberry.
So they began bootstrapping instead. Then they were able to get some small checks from a number of angel investors.
They survived the 2008 financial crisis and just focused on building a bigger company. As they went to raise a Series B round of funding, they were hit with an acquisition offer from Disney.
Although he and his cofounder didn’t necessarily have the same level of passion for taking the deal, they ended up selling and exiting the company.
He spent the next year working for Disney in Paris, running some of their European studios.
Then he met his wife, began doing some angel investing himself, and decided he wanted to better learn how to build products himself.
So, he hired some developers to come teach him how to code in a practical setting. Six months later, he woke up and realized that he had inadvertently created a new company, with five people working for him.
He also ended up selling his next company within four years.
Transforming The Healthcare SystemToday, Lacy’s newest venture is Prenuvo. A hardware and software health tech company. One focused on diagnosing and preempting cancer and chronic diseases, with new applications for MRIs.
He sees this not only as a way to save millions of lives, but to stop cancer at stage one, and save the healthcare system billions of dollars, by turning it into a proactive, versus reactive system.
Listen in to the full podcast episode to find out more, including:
- Diagnosing business ideas
- Why not to bet on second-time founders
- How Prenuvo is changing health and wellness
- Why having more investors may be better
Alejandro Cremades · EP 608 Andrew Lacy On Raising $80 Million To Save Lives With Proactive Cancer ScreeningSUBSCRIBE ON:
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Antonio Juliano has already raised tens of millions of dollars for his tech startup that is forging the future of finance.
On the Dealmakers Podcast Juliano talked about the pros and cons of working for a startup before launching your own, the importance and difference timing makes, fundraising, crypto and finance, and how what you’re motivated by makes a massive difference.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Pros & Cons Of Working For Other Startups Before Launching Your OwnAntonio Juliano grew up in the suburbs of Pittsburgh, as the oldest of four siblings. After going through private school for K through 12, he headed off to Princeton University in NJ.
From an early age he loved computers and video games. Ninth grade brought real computer science classes, before majoring in computer science in college.
His father had been an entrepreneur. Which for Antonio set a high bar for achievements. That inspired him to start a company of his own. At least at the time, Princeton didn’t have a big culture of entrepreneurship. His classmates were going off to work at big companies like Goldman Sachs.
So, he saw the best path forward as moving out to San Fran and going to work inside another startup to see how it is done.
He applied to 20 or so companies, and was really struck with how Coinbase did things in the recruiting process. They offered a week work trial right off the bat. So, he skipped school and flew out to try it out. There he found the company full of amazing people.
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Working At CoinbaseAt the time, Coinbase was still relatively small. Just around 100 people, verses more than 4,000 today.
Antonio credits a lot of their success to the efforts they made in building the company culture and team. They would have lots of team events. Have offsites, go up to the lake, and just spend time getting to know each other for the week.
That included getting to know the founders very well. Which in turn meant they were first in line to help fund his own venture when he eventually went out on his own.
They also gave him a lot of autonomy while he was there. Which meant he had a lot of freedom to run with the ball on all kinds of things. From product management to launching in new countries, and working on bank integrations. All great ways to learn from others, so you don’t have to figure it all out yourself when you launch your own startup.
However, there can also be cons you should be aware of when going to work for other startups on the path to becoming an entrepreneur. One big one being that young startups often don’t pay much of a salary. With most of the compensation being in equity, which takes time to mature, vest, and be cashed in.
Stint At UberJuliano says he set the goal of having enough money to be able to run with an idea of his own for a year.
So next he joined a larger startup. Which was Uber, which had around 1,000 people at the time he joined them. However, he quickly found he wasn’t a fan of that bigger corporate environment. He didn’t like being managed, or just being a cog in a machine.
One day on the bike ride into work he just decided it was the day to quit. He gave his two weeks notice when he arrived at the office. Then struck out to find an idea of his own.
Getting The Timing RightTiming can really work for you or against you as an entrepreneur. It is probably most responsible for what people often refer to as ‘luck’. Being too early or too late can make things more challenging. While riding waves at the right time can create massive successes.
Antonio knew that he wanted to do something in tech. He looked at crypto, options to build on top of ethereum, and what value could be created around this space.
Five years ago the whole crypto and blockchain space was still very new to most people. He began building. First a search engine for decentralized apps. There just weren’t enough of them. It didn’t take off. After five months he decided it was time to move onto something else. Which still gave him a good six months according to his plan.
Next he began talking to the experts he knew. Including in the finance space. What he realized was that while there were a few emerging crypto exchanges, most of the transactions being done in finance in general were around derivatives.
Decentralizing The Derivatives MarketThat’s when Antonio saw the opportunity to bring together what was being made possible in decentralized finance, with the massive derivatives market.
His startup is already facilitating a billion dollars in these transactions per day, and he says they are barely beginning to see the tip of the iceberg. Consider that decentralized exchanges make up about 5 to 10 percent of the market right now. Just a small part of the derivatives market.
Looking forward, his startup, dYdX aims to become the largest decentralized exchange in this space. In a world where Defi is the norm.
Storytelling is everything which is something that Antonio Juliano was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Thinking long term when building your startup
- How your motivation impacts how you build your company
- The size of the derivatives, crypto, and decentralized finance market
- How he raised $87M for his startup
Alejandro Cremades · EP 607 Antonio Juliano On Raising $87 Million To Help You Trade Crypto For FreeSUBSCRIBE ON:
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Satyen Kothari has raised capital, sold companies, and now wants to help others to build their own wealth and enjoy more peace of mind.
On the Dealmakers Show, Kothari talks about his love for building things, startup fundraising, and how to navigate competitive markets with bigger and better-funded competitors that are trying to bankrupt you. Plus, going through the process of selling your company, the two paths for serial entrepreneurs, and wealth tech.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksA Love For Building ThingsSatyen Kothari was born and grew up in Bombay, India. Far before it became the famous financial hub that it is today.
Engineering was very much a part of the DNA of the country and his family. He recalls sitting with his father as he designed machines for the factory he worked in.
After years of begging, his parents finally bought him a Lego set. He would rush home from school and build things with it.
Later, when he discovered computers, he said it was just like Lego, except with infinite pieces.
From a young age, he yearned to move to the US for a better life. An environment where you could get by on your merits, rather than your connections in a very corrupt system.
So, in a long shot, he decided to apply to Stanford. He told his friend’s the worst thing that could happen is that they could say no. An attitude he says has been incredibly valuable throughout his entrepreneurial journey.
Getting accepted was one of the most exciting moments of his life. Which then meant he had to scramble to raise the money to attend, and even apply for scholarships to be able to afford the plane ticket.
The optimism around building things and building big companies around Stanford was contagious. After some internships, including at Apple, he dove right into his first startup.
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Winning In Hyper Competitive MarketsSatyen learned a variety of important lessons from that first venture. Including the power of macroeconomic trends, and what he liked doing versus what he was good at.
He spent eight years working as a consultant with brands like Yahoo, AOL, and Cisco.
After a year break, he decided to return to India, and there would launch his second startup.
Through vetting several ideas, Kothari chose the digital payments space and launched what is now CitrusPay.
The market in India was complex and fragmented. So, he set about building the infrastructure to streamline and integrate everything.
They did a couple of things differently. One was to convince merchants to come together and share their data. The Second was to go after other segments besides e-commerce. Then thirdly, to leap into mobile, when it was still just 2% of the market.
This helped them survive and grow when big competitors with lots of funding were trying to price them out of business, undercutting their rates, and willing to lose money to win the battle.
The Biggest Cash Acquisition In IndiaOn the journey, Citrus raised around $25M in funding. Including bringing in investors like Softbank and Sequoia.
At one point, they were asking for a $600k raise, and an investor provided a term sheet but offered $1.8M instead. 3x their ask. He wanted them to really get the security, reliability, and robustness right.
Storytelling is everything which is something that Satyen Kothari was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Ultimately, one event turned into meeting their future acquirer. A deal worth $130M. The largest all-cash deal in India to date.
Not everyone was initially excited about the exit. Satyen met with everyone. He saw it as a life-changing opportunity for everyone. A good moment to take some chips off the table.
He was already doing pretty well financially before the exit. The biggest difference, he says, was just not having to worry about the price if he dragged his feet and booked hotels or flights late.
Wealth TechSatyen says that there are two paths for entrepreneurs. One is to keep on building new companies within the same domain. He took the other path. To keep challenging himself by jumping into a new space.
He defines what he is doing with Cube Wealth more as ‘wealthtech’ than fintech.
His vision is to help everyone to enjoy more clarity and simplicity in investing and building their own well.
Cube Wealth does all the research and asset allocation for their portfolios automatically, with easy onboarding. It’s subscription-based automated wealth technology for India and the rest of the world. All so that regular individuals can invest better, and enjoy the type of peace of mind he has come to enjoy himself.
Listen in to the full podcast episode to find out more, including:
- Lessons from being a first-time founder
- Satyen Kothari’s top advice when thinking about starting a business
Alejandro Cremades · EP 606 Satyen Kothari On Selling His Last Company For $130M And Now Raising MillionsSUBSCRIBE ON:
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Drew Oetting is one of the biggest forces providing the financial fuel this new generation of fast-growing, super-sized startups need to make it.
On the Dealmakers Show, Oetting talks about the links between golf and investing, raising money for venture funds and startups, network management, taking advantage of trends, the new shift in where the best talent is moving now, and the companies he is excited about funding now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGolf & InvestingDrew Oetting grew up in the small college town of Iowa City. A place they relocated to from the south for their own university studies.
While perhaps not the most buzzing place in the world, he describes it as a nice, safe, classic American place to live. Somewhere that both his parents and grandparents have chosen to call their home through today.
Two big passions have been with Drew throughout his life, golf and investing.
His parents played golf, but weren’t big investors. Though he found that once you start playing golf as a kid you very quickly began to be interacted with as an adult around the course.
There he met a friend’s parents that were into investing, got to listen into conversations about business life, divorces, and more. He heard a lot about the financial crisis before it happened, and spent a lot of time reading.
When it came time for college, he received a scholarship from the Bill Gates Investment Group, and went to study math and science, while being able to continue playing golf.
It is a competitive sport, an individual sport. Drew says that he hated making mistakes. It taught him drive, and to take ownership of his game. In entrepreneurship, he says it is similar that if you believe you are responsible for it, you can determine your future.
While he got caught up in investing and building companies for a few years, he is back to playing golf, with even more appreciation for the game, and the time he gets to spend with others playing.
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Launching A Venture Capital Fund From ScratchDrew got introduced to Joe Lonsdale by a mutual friend when Joe was looking for a new Chief of Staff.
Joe was one of the founders of Palantir. A tech company involving Peter Thiel, which has recently had a market cap of over $18B.
Storytelling is everything which is something that he was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Lonsdale told Oetting that he wanted to build a new venture capital fund called Formation 8 (now called 8VC).
Of course, he didn’t want to start just any old investment firm. He declared that he wanted to raise the biggest first-time fund since the previous crash.
In spite of their previous achievements, it’s never easy to get big institutions to make a big bet on you when you are doing something new. So, they started taking meetings seven days a week.
Their first fund ended up being $448M, with 282 LP investors. Some of those just started out putting in $1M each. Now, as they’ve continued the relationship, they might put in $50M at a time.
Building Relationships, Network Management, And ResilienceDrew says that it is all about relationships, and managing your network, which is your best asset. That is where deal flow comes from. That is true whether it is about raising money to start your own fund, helping a startup get funded, or selling to customers.
They did a lot of events, dinners, BBQs, and speaking engagements.
Two of the notable investments they have been involved with are Affinity. Which Drew also cofounded. A business that grew out of its own need to manage data.
Resilience is another. One which was able to ride the tailwind of COVID, and the cheap money environment of that time. A startup that has gone on to raise $700M, and bring manufacturing back to the US.
Investing In The FutureAnother big trend that Drew began noticing was that all of the great tech talents seemed to be disappearing from the usual big tech companies.
People were leaving Facebook, Salesforce, and Twitter. He found out that they were migrating to biotech. A space seen as one that offered the most challenges, and where so many new innovations and technologies appeared to be merging. Among them being CRISPR.
Today, 8VC has $8B they are managing in their fund. Primarily targeting early-stage seed startups in non-consumer technologies.
Listen in to the full podcast episode to find out more, including:
- Managing your network
- The new trends that Drew’s fund is excited about investing in now
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After two previous successful exits, Mance Harmon is now on his third startup. One which has quickly grown to become a multi-billion dollar venture that aims to be the platform for tokenizing everything.
On the Dealmakers Show Harmon talked about the difference between strategic and financial acquisitions, building ecosystems, organizations, and governance which is far more robust and resilient to changing markets, the hashgraph, $100M fundraising events, and decision making as a CEO.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom Your First PC To Building StartupsMance Harmon grew up in rural Mississippi. His mother was a nurse, and his father a minister. He spent his early years in small towns, with his parents sacrificing a lot for him and his brother.
Wanting to go to college he bootstrapped his way into school by joining the military, and going into the Air Force.
After obtaining his degree, he became a commissioned officer, and started living his dream as a computer scientist. A dream he had since getting his first PC in the sixth grade. A feat achieved with the help of his mother, who helped put on a garage sale to raise the $100 he needed to buy it.
Working at the largest lab in the Air Force, on AI and machine learning, he ended up meeting his future co-founder. A business partner he has effectively been working with over the past 30 years.
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Cybersecurity And A Decentralized Identity SolutionHarmon ended up teaching computer science and cyber security in the Air Force Academy in Colorado. As well as working a massive program for the missile defense agency.
Together he and his cofounder came up with the idea for a decentralized identity solution. A three factor authentication on handheld devices, that would act as a password key.
They raised $300k from friends and family to get going. Then put together a pitch deck to go and pitch Palm with the idea of integrating it into their devices.
That first meeting was a success. Though the company continued to go dark on them for weeks at a time, as the people in charge of the deal keep on leaving the company.
Storytelling is everything which is something that Mance Harmon was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Strategic Vs. Financial AcquisitionEventually their first contact from Palm contacted them again. He had moved to Symbol Technologies (now Motorola) in San Jose. He said they just wanted to acquire their company instead of integrating their tech.
The experience taught Mance a lot about what he didn’t know about things, as well as the language of business.
That ended up with Mance moving out to join the company in California. Though, that only lasted around 18 months, before he decided to go at it again with another startup.
His next move took him out to Austin, Texas, to work on modernizing the building access control industry with data networks. They were the first to do this using wifi networks.
Even before starting to build they had already secured their first distribution partnership. They took the company national over the next six years, before being acquired by a partner with a private equity fund.
On the difference between the first strategic acquisition, and this second purely financial one, he points out the main difference as being in the first you end up becoming a part of the company as they scale and deploy your product. In the second you are out and onto something new.
Of course, there can also be differences in how acquired companies are valued and terms are structured.
Next, Harmon says he wanted to zoom out and better connected with the broader tech industry. So, he joined another tech company as he looked for something he really felt he could commit the next five to 10 years of his life to.
Swirlds & Hereda HashgraphWhile Mance was at Ping Identity, his old cofounder had been working on solving the issues of how to maximize the security of a network, while simultaneously maximizing performance. He solved that problem with the hashgraph.
They connected again and built a new pitch deck. Just as Mance’s boss was about to give him a big promotion, he felt compelled to pitch him his idea instead. Which resulted in Ping becoming their first investor.
Today, Swirlds technology, through the Hedera public ledger, competes in the same space as the other major platform providers like Ethereum.
Then they did something very unique, and borrowed a page of the playbook from Visa. They created a decentralized governance ecosystem. Which became Hedera. Which involves big names like Google, Boeing, Deutsche Telecom, the London school of Economics and more. A group they are growing from 28 players today to 39.
On their launch they booked a Broadway venue in Manhattan. When that sold out at record speed, they decided they would also live stream it. Which ended up in 80k people around the world tuning in.
After that, their global roadshow was made easy, and brought in $124M.
Listen in to the full podcast episode to find out more, including:
- Resilient and decentralized governance
- Decision-making and empowering your team as the CEO
- Hedera’s token, and the tokenization of everything
Alejandro Cremades · EP 604 Mance Harmon On Raising $124 Million To Power The Next Generation Of The WebSUBSCRIBE ON:
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Ravi Parikh is now on his second startup venture. After having built a very successful first company, he is now working to streamline development for other businesses, so they can move faster, and focus on what matters most.
On the Dealmakers Podcast Parikh talked about building with a remote workforce from day one, startup fundraising, and the number one factor for success and scaling faster.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTech, Music, And Startup IdeasRavi Parikh was born and grew up in the Midwest, where his physician parents had immigrated from India. After 18 years of growing up in Indiana, he soon found it in stark contrast to California, in many ways.
It was the 90s, and the internet was beginning to take off. Remembers that ever since he was five years old, that his dad would bring home all kinds of technology gadgets, including an early Mac computer. That got Ravi interested in video games, engaging in early online forums, and learning to write code. As well as making websites.
He balanced that with a love for music, taking piano lessons, participating in bands, and song writing.
For college he ended up landing in Stanford. He still remembers the first day visiting. Especially how cold it was in northern California, compared to the dream you see on TV.
He elected to study computer science, and loved being around so many other smart people. Many of whom are still friends to this day. Including his first cofounder whom he met there.
It was a time that minted many tech founders. As well as seeing companies like Facebook and Palantir coming to recruit, and offering big salaries to new graduates.
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Building A Career In MusicDuring his senior year at Stanford, Parikh found his music taking off. He had been publishing on Soundcloud and YouTube. People began writing blogs and articles about his music. Which turned into inbound interest to get him to go on tour.
For the next two years he ended up touring two to three days a week. In the meantime he spent his free hours working on his love for computers and side projects.
At the same time, his old classmate was working on his own side projects. Just as Ravi was getting tired of being on tour, he invited him to join him to start their first company together.
Finding Product Market FitTheir first startup Heap is all about web and mobile analytics. While Ravi says the original technology is still powering everything, it took them a while to really nail their business fundamentals, and find a great fit in the market.
While they found some early progress in securing some initial customers, and traction as they went through startup accelerator Y Combintor, they were also experiencing very high churn rates.
Customers just found it too complicated, and would just drop out. It wasn’t until they kept iterating, and made the outputs more visual and intuitive in terms of UX for their customers that they began sticking around, and they were able to secure long term contracts and develop predictable ARR.
These are certainly lessons that he took with him to begin his second startup.
Today, Ravi Parikh’s top advice when launching a business is to “just spend more time listening to users.”
He says that could have helped shave a year and a half off of the iterating and wandering through the desert they did at Heap. Which could have made them two or three times larger by now.
Instead they spent too much time writing code, and guessing what people wanted. Don’t get stuck in a room brainstorming and playing around on the whiteboard. In his opinion the number one thing to do is to just talk to customers. Saying that there is “never any substitute for just getting direct feedback from your customers from your users about your product.”
Starting AirplaneWith his latest venture Airplane, things started out a little differently. After taking heap to being stable and putting it in the hands of those who were experienced at managing a large organization at scale, he and his cofounder built Airplane based upon the shared pain points they had experienced in their own companies, and that others said they were suffering from as well.
Airplane is all about streamlining development of internal tools. Helping engineers to take a big bite out of the 25% to 30% of their time that they spend being derailed putting out fires and building things that are not unique, nor helping them progress along their real product roadmap.
Startup FundraisingAfter taking Heap through Y Combinator Ravi says that they still struggled to raise money. Their $2M seed round was the result of around 80 meetings with angels and VCs.
Even their Series A three years later took around six months to get just one term sheet. In spite of the fact that they already had $2M in ARR, and were cash flow positive. He credits finally closing that round with being in a strong financial position where they had the luxury of raising or not.
Heap has gone on to raise around $200M, and grow to around 400 employees.
Airplane has also raised several rounds of funding. Including bringing in lead investors like Benchmark and Thrive. Which he credits not only to being second time founders, but investors finding they were delivering real value and had strong NPS scores when those investors went out to interview their customers.
Storytelling is everything which is something that Ravi Parikh was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How Airplane is helping companies and engineers be more productive
- Building a remote first company and how it helps secure top talent and boost productivity
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Naveen Jain has created a whole string of successful startups. Now with his seventh venture he is tackling a problem faced by eight billion people around the world.
On the Dealmakers Show, Jain talks about creating your legacy, the best time to start a company, his framework for starting successful companies, the three questions to ask before starting a company, and the recipe for building a $100B company.
Plus, the number one predictor of startup success, why being an expert is overrated, how food can be as powerful as medicine, how to raise $170M, and how to think about exits and acquisitions.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Best Time To Start A CompanyNaveen Jain has now lived and operated businesses through the dot com bust, the 2008 Great Recession, COVID lockdowns, and the 2023 banking crisis.
He even took his first company public in the midst of the dot com crisis.
Naveen wants everyone to know that many of the best and most successful companies have been started in what many consider the tough times.
In fact, he says that trying to start a business in the middle of the euphoric peaks of the markets is not the right time to start. In those moments there is so much free money, that people raise enormous amounts, just to give away products. Few have a real business model at all. Which means you are competing against billions of dollars that other entrepreneurs and corporations are just willing to throw away to beat you.
He says that “the best time to really build a company is when the markets are tough. Because now you’re actually building a company that has a business model and you just have to stay focused providing tremendous value to your customers.”
It may be challenging, though he likens it to your heartbeat. The only way you know that you are alive is that you have a heartbeat which means your life is experiencing ups and downs. When your heartbeat is smooth then you are dead. Which means if you are looking for an easy life (smooth life) as an entrepreneur, you’re looking to live a life like a dead person. An entrepreneur should expect and accept these ups and downs. When it’s tough, all you have to do is hunker down and have faith that the next beat will be up.
He just warns never to become too arrogant in the up moments, as like a heartbeat up beat is followed by a downbeat which is to always remember that the winter will come after a great summer.
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The Framework For Building A Billion Dollar CompanyOn the Dealmakers Podcast, Jain shared the framework that he has used to create seven wildly successful companies.
It really all boils down to asking the right questions. These three questions in particular.
- Why this?
- Why now?
- Why me?
You have to have a strong why. He says that creating a 100 billion dollar company shouldn’t be the point. Rather focus on how you can solve a problem that a billion people are suffering from. If you do that, it is easy to create a 100 billion dollar company. The money will simply be a side product of what you are doing to solve their problem.
When you take this approach and are delivering value that will retain lifelong customers, you are also building a sustainable business.
Do not start with a solution or technology, and try to find a problem for it. Ask yourself what problem can I solve that will improve the lives of 1 billion people. You can create a 100 billion dollar company If you remain focused on building a product or service that will improve the lives of 1 billion people. At the end of the day, making money is simply a byproduct of improving the lives of other people.
Key To Successful Entrepreneurship – Timing!Naveen says that the number one predictor of success for entrepreneurs is timing. In spite of what some may say, this doesn’t have to be a matter of luck.
His simple method is to look back at what has changed over the past couple of years, and forward over the next five years to see what advances in technology and parallel discoveries are allowing these problems to be approached and solved like never before.
Then you just take your really big problem and break it down into steps that you need to solve, to make the big goal achievable. Then just focus on the next problem in front of you.
In this process, he actually says that being a domain expert can be counterproductive. Instead, it can be an advantage to be an outsider. Which allows you to ask different questions, not be bound by industry assumptions, and to often just use common sense that is being overlooked.
So, while some may see your lack of ‘expert’ status as a liability, it can actually be your biggest asset.
Food As MedicineNaveen’s latest startup is Viome. A healthtech and longevity company focused on personalized nutrition, early diagnostics, and ultimately the prevention of chronic diseases like diabetes, depression, Alzheimer’s, cancers, and more.
It’s all about a new and unique way to track what’s going on in our bodies and to prescribe the right personalized and custom-made supplements, along with other dietary recommendations.
Viome has already raised $170M for the mission and has helped over 500,000 people to take control of their own health so they can live long healthy lives.
Storytelling is everything which is something that Naveen Jain was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How to think about exits and acquisitions
- How to build your team and lead them
- How Viome works
- Building the right board, and how to manage them well
- How to raise $170M for your startup
Alejandro Cremades · EP 602 Billionaire Naveen Jain On His Framework For Building A Successful CompanySUBSCRIBE ON:
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After leading another great startup to scale and become profitable as their CRO, Alan Chang has raised tens of millions of dollars to take on what is perhaps the largest and most impactful industry on the planet.
On the Dealmakers Podcast Chang talked about doing the hard things and challenging yourself, fundraising and capital markets, disrupting existing industries with big incumbents, and energy.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDoing The Hard ThingsAlan Chang was born in Hong Kong. A place where he says that everything is within a few minutes reach, in just a one mile radius. Work, shopping, watersports, and hiking.
It’s also a place famous for investment banking and consulting. Though being very traditional in that respect has not embraced building a startup ecosystem and entrepreneurship as other places have.
Alan says that he has always loved pushing himself. He loves challenges, problem solving, and doing the hard things. So, when it came to college, he picked the hardest thing he could find, which was to study physics.
That took him to Imperial College in London. As well as closer to startups and being in a slightly more entrepreneurial hub.
Startups are something which he says he always wanted to do. Something perhaps inspired by his own father’s work. Even though he got to see the highs and lows of it first hand, he found starting something from scratch and being able to influence things very exciting.
He saw no reason to waste more time or to take any detours. Though rather to jump right into startups.
After a first attempt at a business in school, he figured the best option to learn how to do it well was to go work at another startup and learn from its founders.
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Building A Profitable Company Worth Billions Of DollarsChang joined UK based fintech startup Revolut. That was back when they were just about four people.
He loved the hustle, how fast they moved, and how hard everyone worked to outwork everyone else. As well as wearing multiple hats and just setting about solving the problems of the day, no matter what they were.
When COVID hit he was tasked with trying to make the company profitable. After losing 40% of their revenues during lockdowns. He not only brought them to break even, but to being profitable on their own as their Chief Revenue Officer.
On this journey they raised around $1.7B in funding. Becoming a 7,000 person company, valued at around $33B.
Storytelling is everything which is something that Alan Chang was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Tackling Big Problems & Innovating In Stagnant IndustriesAfter Revolut Alan Chang decided to throw himself at the biggest and hardest problem he could find with his own startup.
Today that is tackling the huge energy industry. One which perhaps has the most large and stagnant incumbents of any. Perhaps only next to finance.
Like banking, healthcare, and telecom, he found a massive market that was fragmented, and notorious for low NPS scores.
Not only have utility companies not been motivated by competition or themselves to provide better service, they have lacked innovation in UX. Chang looks forward to the integrated, one click type of buying experience for everything energy in one place. As you’d expect from Amazon for everything else.
Unfortunately, he points out that many entrepreneurs have been scared away from the difficulty of trying to break in and innovate in this space. Not only because of the competition, but because it requires hardware and software. You can’t do it just as a SaaS company.
While there is great impetus in going net zero, he notes that today’s renewable energy sources are diverse and more complex. While there is enough solar energy to create a surplus, it isn’t as consistent throughout the day as a big coal plant. Nor is wind energy. So it comes down to storage.
To tackle this, he has strived to build the best team in the world. He looks at it as if you were building a professional soccer team, and you wanted to win the World Cup. You have to have the best team, and those who are willing to make sacrifices to win.
TesseractAlan is working to disrupt the energy space with his startup Tesseract. On a mission to beat ‘big energy’ with 10x cheaper, 10x better, 100% renewable energy. All vertically integrated, with a customer centric approach.
They’ve already raised $78M for this. Which he credits a lot to building the right investor relationships in advance, and raising before they needed the money.
In fact, despite today’s challenges in the financial system, he says that even in Europe, there is still more capital than there are great entrepreneurs and strong ventures to invest that capital into.
Listen in to the full podcast episode to find out more, including:
- The state of the energy industry
- How Tesseract is setting out to change things
- Alan Chang’s top advice before launching a business
Alejandro Cremades · EP 601 Alan Chang On Raising $78 Million To Accelerate Renewable Energy Adoption GloballySUBSCRIBE ON:
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Having already started and sold two companies, Omer Davidi is now working on his biggest project yet. One that he believes will be responsible for most of the food production in the world.
On the Dealmakers Show, Davidi talked about launching and exiting multiple companies, managing distributed teams across six continents, raising tens of millions of dollars through a series B round, and creating a more fruitful and sustainable food system.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHands-On LearningOmer Davidi was born in ‘Startup Nation’, Israel. A highly respected tech and startup hub, with a very diverse culture.
It is a nation where you are thrown into mandatory military service relatively young. An environment where you are forced to learn a lot quickly, with significant consequences. You connect with many different people from different backgrounds, and in hard and challenging circumstances to accomplish the mission you are given. Along with being exposed to some of the most advanced technology in the world.
As far back as he can remember Davidi says that he enjoyed taking things apart to figure out how they work. In just one day, to his mother’s dismay he managed to take apart four computers to investigate everything that was inside.
Even before finishing high school he was able to begin working. Though quickly found himself starting companies of his own.
From launch through exit Omer says that there is so much that you learn just by doing and being hands on. Many things that you just can’t learn in school. Or are at least very different in practice.
However, once you’ve been through it, he says that you see what can be achieved. Then it is about having the right attitude, managing risks, bringing the right people that can support you in the areas that you don’t have enough strength or experience, and continuing to learn from your successes or failures.
The companies that Omer Davidi has started vary greatly. Rather than being stuck on one thing, he says that he enjoys looking at broken markets, where technology can make a big difference. Then he digs in, and lends his experience to understanding the problem, and potential solutions.
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TimingOmer started and managed to sell his first company in just about two years. His second company was also acquired in just about three years.
Through his experiences Omer says that a lot of it is about timing. Sometimes it is the only difference between success and failure.
This may be about the market being ready to accept your solution. Or it may be a matter of wars, global pandemic lockdowns, or financial and banking crises.
He says that “if you have something you want to achieve, try to pursue it as fast as possible. You don’t know what the world is going to look like six months from now or four months from now.” So, go fast. At least you will quickly get some proof of your concept, and be able to nail your unit economics. Then you can decide to hand off the company to those who may be better suited to managing it over the long term, or you can move onto the next idea.
In addition to timing, his top advice when starting a business today centers on focusing on the people that you walk with in the beginning.
You want to find people that believe in what you are doing, who are positive, and will support you. Though he also says that he would also “focus a lot more on those that told me why that will not work. Those are the people that taught us the most and made us better.”
Bee HeroOmer’s third venture didn’t work out exactly as he hoped, but it did lead him to meet one of his current cofounders, for his biggest project yet.
Most of us have now heard of the dire situation of what has been happening with the collapse of bee colonies, as well as the pains of our food production system, and the need for more sustainability. Together they decided to see how technology can solve these problems. They talked to farmers, looked into the data, and evaluated why other companies in this space hadn’t been able to make it work, or make a difference in the past.
Bee Hero found their sweet spot in focusing on pollination optimization. To utilize technology, to work with beekeepers to deal with their challenges and introduce different concepts of pollination to improve their results.
Today they are selling precision pollination as a service.
To date they’ve already raised around $64M, through a Series B. All with a distributed workforce of around 60 people, spread over six different time-zones. Something which he says is possible because of their shared passion and belief in what they are doing.
Looking Forward And Vision For The FutureLooking forward, their vision is to have 100M bee hives around the world, which are responsible for most of the food production in the world. A significant part of making sure that we create a sustainable food production system.
Storytelling is everything which is something that Omer Davidi was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!One that doesn’t require us depleting the resources that our children and grandchildren will need to grow their food and eat.
Listen in to the full podcast episode to find out more, including:
- Building a company on a remote workforce
- Convincing investors as you progress through different funding rounds
- Pollination technology
Alejandro Cremades · EP 600 Omer Davidi On Raising $64 Million To Improve The Health Of Bees With Machine LearningSUBSCRIBE ON:
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Andy Bromberg is now on his third startup. One which has already raised $100M from top investors, to make the financial services space simpler, and more accessible to everyone, everywhere.
On the Dealmakers Show, Bromberg talked about surviving business cycles and the darker macroeconomic phases of markets. As well as raising $100M twice for two different fintech ventures. Plus, picking the right investors for your journey, crypto, and the future of rewards programs.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDiscovering BitcoinAndy Bromberg is originally from the suburbs of Boston. From a very early age, he says he was flexing his entrepreneurial spirit with small business ventures of his own.
He has always had a love for numbers, and solving mathematical problems.
When it came time for college, he headed all the way to the West Coast to attend Stanford. This proved to be an incredibly formative experience, which really set the trajectory for his career, all the way up to today.
Starting out in freshman year, one of his professors was the founder of Coinbase. That startup engineering class proved very helpful in the details of building a startup. Including having many interesting founders and investors come in as guest speakers.
His computer science class offered a weekly hackathon. A small group of Andy’s classmates, and their professor would get together and code from 6 pm to 6 am the next morning.
Their professor was adamant that Bitcoin was going to be a big and important thing. So, the seven of them banded together to form the Stanford Bitcoin Group in 2012.
They spent the next couple of years researching and working on projects around Bitcoin. As well as going along Sand Hill Road to talk to investors about this new crypto space, and inspire them to get involved in some way. Those were connections that he is still in touch with now.
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Dealing With Market CyclesBoth individual industries and economies have their own cycles that they run on. The faster entrepreneurs learn them, and how to survive them, the better.
This was one of the biggest lessons that Andy Bromberg learned from his first startup venture, Sidewire.
As the technical cofounder, he teamed up with someone else who knew media and politics. They launched a platform that featured experts speaking to each other, for the benefit of the audience.
First, they learned the very cyclical nature of politics and elections, and how that may not be the most steady and consistent business to be in.
They also learned that while consumers may say one thing, what they are really to buy can be much different. For example, he found that while people said that they wanted to hear from experts, what they really wanted was to engage with each other, more like Twitter.
He also adds that the media industry was like a crashing plane that they were trying to save, and it’s hard to save a crashing plane.
Starting CoinListOverall, Bromberg found that there is rarely one reason businesses struggle. It is usually a combination of issues.
As he wound down this venture, he had the opportunity to head up a spinoff from AngelList, CoinList.
CoinList started off serving the hot ICO market. Which also had its own cyclical issues. When the crypto winter hit, their sales and revenues hit a hard stop.
They overcame this by diversifying into additional digital financial services, and new income streams.
That helped CoinList continue to grow. Building a team of 100, and raising $100M in funding on the journey so far.
Storytelling is everything which is something that Andy Bromberg was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!However, he says, the key to that is picking the right investors that are in alignment with your thesis. Many investors and users may come and go as cycles turn and ebb and flow.
What you need is investors that share your long-term belief in what you are working on, and will stick with you through it. Otherwise, it is going to be very difficult when they are panicking and want to sell.
Andy’s Advice To EntrepreneursAndy says that being well funded also means that your company will be “able to invest and grow and build through the winter. When summer comes again, it’s really powerful to be in that position of having been building.”
Today, his top advice when launching a company is to first ensure that you are deeply passionate about it, and are willing to commit and put everything you’ve got into it. As well as to prioritize building a high-quality team. He says that you cannot overestimate the importance of this. It is the foundation of everything else.
The Future Of Financial Services & RewardsAndy’s most recent venture is Eco. A new digital services platform that aims to simplify making your money work for you. While creating access to the best financial products for everyone, everywhere.
Eco is also tackling the broken rewards system. He sees it as a space with huge value. Which has unfortunately suffered from being so fragmented, and with users seeing their grantors constantly devaluing their rewards. Instead, he looks at this as a currency that should be able to be used anywhere you need it.
Listen in to the full podcast episode to find out more, including:
- The future of rewards
- Simplifying your finances
- Andy’s expectations for the crypto market
Alejandro Cremades · EP 599 Andy Bromberg On Raising $100 Million To Put Your Money Back To Work For YouSUBSCRIBE ON:
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Stephanie Tilenius successfully led her first startup through an IPO and also ran an $8 billion operation for eBay. Now she is taking on the healthcare space, which makes up 20% of the GDP in the United States.
During her appearance on the Dealmakers Show, Tilenius talked about the toothbrush test when picking a startup idea, tech and healthcare, fundraising, effective board dynamics, and company culture. Plus, the prescription for launching a successful startup.
Listen to the full podcast episode an review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksRunning A $1B P&LStephanie Tilenius was born in Ohio. Where she says life was all about good values, and playing outside, without devices.
Moving to the San Francisco Bay Area was a little different, and she has certainly witnessed how it has changed over the years.
For college and business school, Tilenius headed across the country to the East Coast. Ending up living and working in Boston for over 10 years.
After obtaining her MBA, she went to work with Intel. There she began tackling the problems in pharmacy benefit management and chronic disease with her first company, Planet RX. Which she took public in late 1999 before it was ultimately acquired by Rite Aid.
Next, Stephanie was introduced to Meg Whitman, who she was seeking out as a mentor ahead of starting her next venture. Meg was the President and CEO of eBay and convinced Stephanie to come join them.
Over the next few years, Tilenius worked with leaders such as eBay, and Paypal, as well as with Larry Page and Sergey Brin at Google. She helped build Paypal’s merchant services and mobile tools. Then became SVP at eBay to conduct a turnaround. During which she was managing $8B in P&L.
Over these years, she learned a lot about innovating through problems, saw the possibility to change the world, and the personal impact technology could have at scale.
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The Toothbrush TestGoogle is famous for only focusing on large-scale projects. If it wasn’t something that could be scaled to 100M users, it wasn’t relevant there.
Larry Page also had ‘the toothbrush test’. Meaning that if people wouldn’t be using a product twice a day, then it wasn’t really useful.
Stephanie says that these experiences also showed her that regulatory investment could become a strategic moat and advantage for a business.
Next, a combination of events came together to trigger the launch of her next venture, which already operates at a great scale, with users on their app five to seven days a week.
She had joined Kleiner Perkins as an Entrepreneur In Residence (EIR). Her father had also been suffering from chronic health conditions. Including diabetes, COPD, and depression. She found no one really helping to manage these issues on a daily basis, or addressing their underlying causes of them.
She began working on ideas for a technology platform with connected devices that would provide more consistent, daily healthcare management.
When she showed one prototype to two VCs, they told her she had to pursue it. She had the passion for it, and certainly the experience.
Vida HealthStephanie’s current venture is Vida Health. A mobile, virtual healthcare platform for preventing, managing, and overcoming chronic health issues.
They are a primary and enterprise health tech company, working with insurers and employers. Including the likes of Cisco, Walgreens, Boeing, Prudential, and Northrop Gruman. As well as Medicare.
They are now a Series D company, with 600 employees. Working to lower the costs of care, in a $4T industry, that makes up 20% of the GDP in the US. They’ve already raised $200M in capital for their venture.
Storytelling is everything which is something that Stephanie Tilenius was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The Prescription For Launching A Successful StartupStephanie’s top advice for launching a business is to “be stubborn on the vision, but flexible on the details. Hire the best people, build a really strong culture, and change the world together. Then put processes in place to really try to get 1% better every day.”
When it comes to hiring and building that great culture, she says that it sounds easy to go out and hire your first 10 employees, set a great example together, and let that trickle down as they hire more people under them.
In practice, she has learned that you must be much more deliberate about building your company culture and maintaining it. “Like a garden, and you need to constantly tend it and update it and improve it, and you can’t just let it rest on its own and assume that it will grow.”
This means taking time to set your values and talking about your mission, vision, and how your values play into this. They also celebrate those living out their values in their all-hands events and use storytelling to drive it home.
Listen in to the full podcast episode to find out more, including:
- How Vida Health is changing the healthcare space
- Effective board dynamics
- Servant leadership and leadership styles
- Growing yourself as a leader
Alejandro Cremades · EP 598 Stephanie Tilenius On Running A $1 Billion Operation At GoogleSUBSCRIBE ON:
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Jordan Noone was the youngest person in the world to get FAA clearance to fly a rocket into space.
On the Dealmakers Podcast Noone talks about persistence, solving miracles, raising over $1B for a tech startup, and the three key things he looks for when investing in other companies through his $100M seed stage investment fund. Plus, focused diversification.
Listen in to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFinding A Fascination With SpaceJordan Noone was born a third generation Pasadena, California native. His father had always aspired to become a pilot. Which ended up with Noone learning a lot about planes from books and watching flights with his Dad as a child.
That stayed with him through choosing to study for an aerospace engineering degree at USC.
His very first week of college ended up really setting the trajectory for the rest of his career, through today.
He immediately landed in the Rocket Propulsion Lab. It captivated him to the point that he skipped the usual college parties to partake in launching rockets out in the Nevada desert. He even ended up leading that group for his final two years of college.
They set out on a mission to become the first student group to fly a rocket to space. Which meant Jordan had to quickly embrace working through the regulatory side, as well as the technology side.
When big government agencies would stop engaging with them, they just persisted, and would drive 13 hours or more to knock on doors and keep their approvals moving.
They had to prove an enormous amount, Including that taking variances into account they wouldn’t hit other objects in space, wouldn’t injure wildlife, and could land in a safe zone. That led to him becoming the youngest ever to be FAA approved to put a rocket in space.
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Innovating Beyond SpaceXRight after college Noone went to intern with SpaceX. It was still a young company, with maybe 3,000 people, compared to 13,000 today, and the hundreds of flights they launch each year.
He began working on the cargo Dragon capsule flying on flight six of the Falcon 9, flying to the international Space Station.
While Jordan still talks highly of SpaceX and his experience there, two main things happened that inspired him to leave to start his own venture.
Firstly, Spacex had made a lot of progress in the industry. They had proven the commercial viability of it, and that companies in this market could generate returns for investors. They had also helped to drive down the cost of launching. Ultimately, helping to make a whole new space economy possible.
As with all corporations that get big, and begin to mature, Jordan found that there was a hard rule against science experiments. It was a non-starter there. So, he and his cofounder Tim Ellis left their jobs to launch their own space startup, Relativity.
RelativityRelativity is focused on 3D printing for space. Including metal 3D printing, and printing entire rockets. Today, they sell satellite launch services through their vertically integrated business.
They got their jumpstart from both getting a check from Mark Cuban after a cold email, and getting accepted into Y Combinator.
Through several rounds of fundraising, they’ve now pulled together over $1.3B in funding, and have grown their team to 1,300 people. All just step by step, proving the next part they can solve, and de-risking the venture for investors.
Storytelling is everything which is something that Jordan Noone was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!From Founder To Fund ManagerEventually Relativity grew to the point where they had to hire experienced executives that knew how to manage a large corporation at scale, with the right processes. Jordan began yearning for the early days again. The days of creating brand new things that have never been done before. The days of going fast and carving new trails.
As he was going through this, Jenna Bryant, an industry friend, reached out for help with mentoring her investment portfolio. That parlayed into him becoming co-founder and General Partner of Embedded Ventures.
Embedded Ventures invests in seed stage startups, with a $100M fund.
In contrast to other venture capital firms that spread their bets broadly in the hopes of striking it lucky with one dragon, Jordan Noone and Jenna Bryant take a focused approach to diversification. Meaning splitting their investments, but all within the general space category.
They are investing about a third of their funds into space assets. A third into advanced manufacturing. A third into digital engineering, software, and hardware design.
They’ve even funded and spun out companies when they’ve seen gaps. Like they did with KittyCAD.
When they are evaluating investments, they are looking for real technical differentiators that provide real moats.
Secondly, they look for the sweet spot between areas in which there is too much investor competition and the value is eroded by over-priced deals, versus ideas that are too far out, and will take too long to return money to their own LPs and fund.
Then thirdly, the founder’s ambition. Are they passionate enough to stay resilient and keep on going through the hard times?
Listen in to the full podcast episode to find out more, including:
- Investing in space
- The new commercial ecosystem evolving in space
- Creating market leaders
Alejandro Cremades · EP 597 Jordan Noone On Building A $4B Business By 3D Printing RocketsSUBSCRIBE ON:
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Daniel Khachab has built a billion dollar business in just three years.
On the Dealmakers Show, Khachab talked about doing the things that don’t scale in order to get traction, picking your business idea, the ease of expanding into new international markets, food waste and climate change, and of course, startup fundraising and surviving crises.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Gaining Traction & Delivering Value
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- Expanding Internationally
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- Picking Your Business Idea
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- Creating Technology And Systems To Help The Food Chain Gaining Traction & Delivering ValueDaniel Khachab grew up in the south of Germany, close to the Alps. He was fortunate to grow up in a very diverse family. Half of them were Bavarian Christians, and the other half were Lebanese Muslims.
Everyone in his family were entrepreneurs in some way. His grandfather, mother, and father all had their own businesses. He saw them all build something out of nothing. So, starting his own company one day was really the only path he saw.
Khachab launched his first entrepreneurial venture with a friend while he was still in school. It was an early social network that would allow you to post pictures online.
As other social networks began to emerge, they looked for ways to differentiate themselves. Including a brand identity that stood out, and enables users to host parties or make restaurant reservations and invite people in their network.
They got scrappy and found their first 6,000 or so users by going around town handing out flyers.
Even though they ended up allowing that project to wind down eventually as they went on to pursue other things, Daniel found plenty of great lessons from that first experience.
He discovered that partnering with a cofounder is even more serious than a marriage. How you must always put the company’s needs first, ahead of your own personal interests.
He learned the value of doing things manually, that don’t scale, in order to get that initial traction.
After that, he says it is “just all about user value.” Regardless of your branding, product, and go-to-market plan, he says that whoever “provides the most value to users is the one that’s going to win.” That might be in terms of features, speed, network effects, or something else.”
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Expanding InternationallyAfter a stint in the army, Khachab had an internship with Rocket Internet. They were essentially a company builder that worked across consumer categories and geographies and replicated the success of business models to great, highly valuable businesses in other regions.
This includes taking companies public on the NASDAQ and becoming a blue chip stock in Germany. Another became the first tech IPO out of Africa. One sold to Alibaba for $1.5B.
It was a great learning environment for discovering how to scale businesses and work in emerging markets.
During this time, he was able to travel and work in many places. While there are many differences in different markets, he says that one of his biggest learnings was how similar things are. Everyone essentially wants the same things. That may just show up a little differently in different countries.
For example, in Europe, consumers may want a 100-day return policy, and willing to trust they will get an online refund. Whereas in Colombia, consumers may expect to be able to get delivery and try on the goods while the driver waits for payment.
Daniel says to be bold. Just accept that this boldness means that you’ll make mistakes. Though, when you go fast, you’ll learn fast.
He recommends going into new countries with a small team of a couple of people, putting your product out there, and getting feedback. Do it for a few weeks. If it works, invest more. If not, then move on to somewhere else.
Lastly, he says that the most important thing was mission. That your role as a leader of a company is to give people a mission. Something people can give their all to, and will stick with when things are tough. Even though they will make mistakes on the way.
Picking Your Business IdeaFinally, Daniel Khachab decided it was time to leave Rocket and do his own thing. He gave himself three months to look for a business idea. Which ended up becoming 14 months.
He began by making a graph to try and decide what to work on. With major business categories on one part of the axis, and business models on the other. While it did produce a few potential ideas, he realized it wasn’t the right way to go about it. He needed a problem to solve. Something he was passionate about, and would happily dedicate the next 20 years of his life to working on. Something that should also be large, complex, and challenging.
Eventually, taking a month offline really helped in this.
He and his cofounders dug into the largest and most important problems they could identify. Ultimately they struck on climate change. Then food waste as a major contributor to that.
They discovered that around 50% of food produced is wasted, and that is one of the major contributors to the climate.
So they started Choco to do something about it.
Creating Technology And Systems To Help The Food ChainSo far, they’ve created the technology and systems to help both restaurants and buyers in the food chain, as well as suppliers. They have not only raised around 300M Euros for the mission but have grown their team to 400, with offices in 12 countries.
Storytelling is everything which is something that Daniel Khachab was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How Choco is championing the food waste problem
- Fundraising and staying ahead of financial crises
Alejandro Cremades · EP 596 Daniel Khachab On Raising $336M To Bring Transparency To How Food Moves Around The PlanetSUBSCRIBE ON:
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Rob Frohwein has been starting businesses since he was in high school. Now he’s helping other business owners with their finances – and employees.
On the Dealmakers Show, Frohwein talked about raising hundreds of millions of dollars, the art and science of balancing debt and equity capital, the important ingredients in a founding team, and how to know when you’ve got a great business idea.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksProblem Solving & Startup IdeasRob Frohwein was born in rural New Jersey, between Philadelphia and Atlantic City.
His father was a physician. Though with little to occupy him out in the country, Rob says that he applied his mind to thinking of ideas, and solving problems.
He built up this mental muscle from an early age. Whenever he would see something that wasn’t working or functional, his mind would go right to finding a way to solve it. Like why not have a two compartment trash can for handling recycling and other waste?
After college Frohwein went into consulting with Anderson Consulting (which is now Accenture). He dove into programming, and software development. Helping them to prepare for Y2K.
He thought the consulting business would allow him to see many different industries, and to flex his problem solving muscles. As it turned out, he just found that they were training consultants to be replaceable. So that they could replace them with another body whenever needed, without impacting productivity.
It just wasn’t feeding his need to be creative. So, he left to start his own business. He jumped into the sports collectibles space. Creating football trading card sets. Of which he was able to sell 6,000 of them.
However, in addition to getting blocked out of one contract by the NFL, he learned two other big lessons pretty quickly. One was that it was tough operating with a limited amount of money. The second was the importance of product market fit. It turned out that ‘the build it, and they will come’ approach just didn’t scale.
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Learning The Art Of Effective Marketing And Getting Into Law SchoolRob needed to learn marketing, how to find that fit, and have a marketing budget.
After this experience he decided to go into law school to have the backdrop of a real skill that he could rely on to make money.
As he was preparing for law school he worked with what was the largest direct marketer of collectibles in the world at the time, Franklin Mint. There he learned to sell, to find markets and customers, and more.
After obtaining his law degree, he did begin practicing as general counsel for several companies. This gave him another perspective on business.
That included the pain of layoffs when there were downturns and recessions, how to get a product to market and find the fit, how to manage board members, and expectations.
From those offices he witnessed 9/11 unfolding. Four days later he decided it was time to start his own company again.
He says that the good ideas are those that you let percolate over time, but which just keep on coming back to you, and keep tugging at you.
This time it was financing for small businesses. Just the thing he had needed access to a few years before himself.
KabbageKabbage is the now pretty well known online lender for working capital and small business loans.
What they really did differently at Kabbage was to connect to customers’ accounts to plug into their data in real time. This can clearly be very valuable in many ways. Perhaps most notably being able to have a constant pulse on their applicants’ businesses and cash flow, so that they could underwrite them in real time on a daily basis.
They went on to expand into more products. Raising $400M in funding along the way. Then being acquired, according to CNBC, by Amex for over $850M.
Storytelling is everything which is something that Rob Frohwein was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Picking Your CofoundersSomething else that Rob says he did differently with this business was to go seek out two cofounders. Rather than venturing on the journey as a solo entrepreneur again.
He had seen other companies continue to make strings of mistakes, because they didn’t have the appropriate experience on board. So, instead of walking through all of the potential mistakes ahead, and being bogged down by them, he brought in cofounders to help streamline the company.
One had a lot of experience in raising money and building companies in their local area. Another was already a fintech and financial services expert.
Bringing together those differences, but complementary skill sets certainly helped.
Keep FinancialRob Frohwein’s latest venture is another fintech company. This time focused on helping employers hire, retain, and incent employees with vesting bonuses, in an efficient and more transparent way.
They’ve already raised $9M for the journey.
Listen in to the full podcast episode to find out more, including:
- Product market fit versus proving your economics to investors
- Operating in a high-interest rate environment
- Equity versus debt funding
Alejandro Cremades · EP 595 Rob Frohwein On Selling His Last Company For $850MSUBSCRIBE ON:
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Now on his second startup, Santiago Molina’s latest venture has raised tens of millions of dollars, to facilitate the movement of $90B in merchandise.
On the Dealmakers Show, Molina talked about who to hire, the keys to a successful company, debt financing, picking great investors, building and funding companies in Latin America, and transforming regions with capital and logistics tools.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Three Fundamentals Of Building A Successful CompanySantiago Molina was born in Cali, Colombia. He says he won the lottery in terms of great parents that supported him and made sacrifices to ensure he got the best education, at the best school.
The 90s were a turbulent time in Colombia. Not only going through a major housing crash, but dealing with growing up in a violent environment. It is something that seemed normal until he got out of it. Though which he now credits with helping to build his entrepreneurial spirit and grit.
Playing soccer enabled Molina to get a full scholarship to college in the US. He came and got his degree. Today, he says that he loves to hire athletes for the strength and discipline they’ve developed playing sports.
He played defense in soccer. While that may not be as fashionable or celebrated as being at the front, scoring the goals, and only getting noticed at the back when you mess up, it taught him the value of always performing well.
Soccer took him through becoming an assistant coach while he was working on his MBA. After this he chose to move back to Colombia to try and make a difference there.
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Learning How Startups WorkLanding back in Colombia, Molina went into investment banking and private equity. This experience provided immense learning, across many different industries. Giving a lot of insight into the similarities between successful companies, and those that don’t make it.
Number one is really “understanding cash cycles, cash conversion cycles, and understanding how the money flows in the business. As well as how much money you need to produce more money.”
Secondly, he says that you have to understand scalability, and what you need to do to make something replicable. As well as the additional energy that will require.
With his current business today, Santiago says that it is all about building that solid base of fundamentals. So, that you can then build on top of that.
Thirdly, it is about being able to recognize the levers available to find efficiencies in your business to optimize profitability.
Perhaps most notably, one of his biggest observations from this time was how it is really the founders that are the rockstars of it all. That inspired him to become one of them.
Growing tired of the inability to really control the implementation and outcomes of his advice, he chose to quit his job and go in search of a startup idea of his own.
FinancingReconnecting with a friend from his childhood Santiago leaped into launching a microfinancing startup.
Their mission was all about applying new underwriting methodologies to provide access to financing for the underbanked.
In the process, they also raised around $25M for their own company over the span of around eight years. They were able to impact the lives of thousands of families in the process.
Storytelling is everything which is something that Santiago Molina was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Startups often raise a combination of equity funding and debt financing. When it comes to financing with debt, Santiago says that “You need to see yourself just as an intermediary. What you’re doing is finding allocation for resources that can generate a higher return. You’re in the middle taking a cut and transferring to the next party.”
In order for that to work, you have to be both efficient and have a performing portfolio. The numbers have to add up. The profit margins need to be substantial enough to allow for any losses and still deliver investors their returns.
This is something he certainly seems to have excelled at with his most recent venture. In which they have financed $90B worth of merchandise being moved, with less than a 1% default rate.
FinKargoSantiago Molina says that he was yearning to go back and start building something from scratch. His first company was already maturing, running smoothly, and had a great executive team in place. He just wanted the passion and excitement of the early days back.
This is when another friend called him. He was working with the largest shipping line in the world. Many of his SME customers were struggling because they couldn’t get financing.
Santiago started his research and found this $350B gap in financing for their region. It was such a huge opportunity, with so much impact to be had, that he had to jump into it.
He remains on the board of his first company. Though teamed up with two other cofounders to create Finkargo. A SaaS company that brings together the world of logistics and fintech to fund the movement of goods around the world.
Finkargo has already raised between debt and equity around $85M from international investors themselves. While growing a substantial team. Their vision is to help SMEs in emerging markets around the globe to connect across borders, buy from anyone in the world, and have full visibility and control of their entire supply chain in one single dashboard.
Listen in to the full podcast episode to find out more, including:
- The impact Finkargo is having on international trade
- Santiago Molina’s advice for starting a business
- Funding your venture from outside of the US
Alejandro Cremades · EP 594 Santiago Molina On Raising $85 Million To Bridge The Trade Finance Gap In LATAMSUBSCRIBE ON:
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Brian Fenty has been on both sides of the table as an investor and entrepreneur. He has leveraged that experience, as well as his love for culture to build an incredible business that delivers six star experiences.
On this episode of the Dealmakers Show, Fenty talks about what separates good companies from bad companies, how to choose the best board members for your business, turning failed acquisitions into big wins, and surviving financial crises.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- What Separates Good Companies From The Rest
- 2.The Basics Of Building A Business
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- Building A Valuable Board For Your Startup
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- Keeping An Open Mind To New Ideas
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- TodayTix Group What Separates Good Companies From The RestAlthough he has spent most of his life in big cities, Brian Fenty got his start in life growing up in a small town in Connecticut.
He grew up in a fun household. While his parents didn’t have a lot of money, he says that he quickly figured out how to be entrepreneurial. Starting at three years old he was cast in a show in a local theater, ultimately appearing in 55 productions by the time he was 14 years old, whichhelped him fund going to boarding school and college.
While he is a self-described introvert, that experience of having to learn a script and get up to present on stage certainly helped him on his journey to raising capital, and becoming the CEO of a 400 person company.
After studying entrepreneurship in college in North Carolina, Fenty began his career in private equity. He saw it as a way to balance a professional career with his creative side. Being able to be involved with many new creative business ideas and founders, and learning more about entrepreneurship at the same time.
Working with all of these companies also gave him plenty of perspective on what made companies successful.
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The Basics Of Building A BusinessOne common ingredient he found was the authenticity of genuine leaders with vision and purpose. Factors he feels would help ensure they make it through the highs and lows of building a business.
Secondly, he points out the importance of real commercial fundamentals, value, and aligning the interests of investors and founders. Especially in this current economic environment.
Thirdly, he says to be investing in products you believe in, and where you can add value. Those things within your expertise.
In his top advice for those starting a business, Brian says to be human, and focus on building human products. He credits much of his own startup’s success to that. Which has really shown up in putting the customer first.
One way they do that is to look for ways to add more service and value, for all customers, and to strive to get a sixth star on a five star review.
With that as their north star, customers never need to lose their loyalty and go to another platform.
Building A Valuable Board For Your StartupYour board members are an incredibly important and pivotal part of building any startup. They can make all the difference in how things go. Whether this will be a nightmare and disaster or a fantastic ride you are proud of.
Investors always pitch founders that they care, they are founder friendly, and will add lots of value beyond the money. This is all very important. Yet, many investors and those that become board members may not actually add nearly as much value as they claim.
Brian Fenty says that he regrets one early investment in which he really wasn’t a domain expert, and couldn’t add as much value as he wanted to, even though the investment turned out well financially.
Today, he says that he’ll “always tell companies when I’m joining a board or I’m going to advise that I have strong convictions loosely held. That means I hope that my expertise and my experience can lend value and show a different perspective. I never give advice as you should do this. I give advice as I’ve lived through a similar experience, here’s what I learned in that experience and how you might generate value from that.”
Keeping An Open Mind To New IdeasHe says that as a board member or entrepreneur you shouldn’t try to be the smartest person in the room. You want to be open to ideas and help seeing potential blind spots you missed.
When it comes to structuring your board, he says that in his case they are organizing their board members to help them get to where they want to be and for what they need in four years down the road, not just based on where the company was yesterday.
When it came to building his own company, they not only pulled in top advisors, but have partnered with great investors like Bain, to raise over $200M.
Storytelling is everything which is something that Brian Fenty was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!TodayTix GroupBrian Fenty’s own startup is TodayTix, the marquee brand of TodayTix Group, the global e-commerce leader for cultural experiences. It’s all about creating access to the arts and culture with the best value on tickets to cultural events, which you can purchase in 30 seconds or less from your mobile phone.
They’ve already built it into a global business that has made other acquisitions of its own and is generating $500M a year.
Listen in to the full podcast episode to find out more, including:
- How TodayTix is opening up culture and great shows for everyone
- The failed acquisition that turned into a hugely successful startup
- Fighting through financial crises to create new record results
Alejandro Cremades · EP 593 Brian Fenty On Building A $500 Million A Year Business By Connecting Culture To CommerceSUBSCRIBE ON:
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Philip Kelvin has gone from studying history to investment banking, to launching his own startup that seems incredibly well timed to help others through today’s financial turmoil.
On the Dealmakers Show Kelvin shared his insights on going global, financial cycles, navigating high interest rate environments, managing distributed teams, fundraising, and thriving through financial storms.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Learning How To Navigate Turbulent Times
- 2.Learning How The Corporate World Works
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- Launching Your First Startup
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- Tranch Learning How To Navigate Turbulent TimesPhilip Kelvin was born and grew up in London. His childhood had a big focus on education, working as hard as you can, and trying to reach the highest standards.
When it came time for university he chose to study history at Durham University in England. While, on the surface that may not seem like a natural segue into finance at Rothschild to everyone, he says he has found it valuable. Especially, when it comes to absorbing lots of data, figuring out what it means, and being able to distill and convey that to others. Everything else he says you can learn on the job. Though it certainly no doubt also helps to know your history when it comes to navigating business and economic cycles.
Right out of school Kelvin landed in the corporate world, in investment banking. A great fit for his skills in analyzing a lot of information. Just in this case it was company finances in the real world instead of just textbooks.
He considers the experience a great start for understanding the corporate world. How to work long hours, how to work efficiently, or not, how board meetings work, and more. As well as getting more insight into the world of business outside of his own lifetime. As many of his generation were too young to have really understood the impact of the last financial and banking crisis in their own lives. He then went back to academia undertaking postgraduate studies at the University of Cambridge where he wanted to push himself further.
Learning How The Corporate World WorksThe corporate world wasn’t far away and following that he spent some time in consulting with Bain who he had worked with at Rothschild previously There he learned how to do due diligence on companies. As well as how to very quickly become an expert in new industries in just a matter of weeks. The market, the competitive landscape, and to get to the root of issues fast.
Wanting to get his hands dirty, actually owning the responsibility for his advice and the P&L, and to be more connected to his work, Kelvin decided to join a startup.
Still in his late 20s he became the CFO of a mortgage company in the UK, right in the middle of COVID lockdowns.
His big takeaways from all of these experiences, including going through the current banking crisis with his own venture, are that despite your best plaid plans, your career and business journey will not be a linear path. That getting through it is all about adapting. The world will adapt to changes, and for your business to survive, you must adapt too.
That applies to financial crises, pandemics, wars, inflation, and periods of fast rising interest rates.
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Launching Your First StartupAlthough Philip took his time through academia and other corporate jobs before starting a venture of his own, some of his top advice for others is to just get out there and do it fast.
He says there is so much technology out there today that entrepreneurs can get going with a MVP very quickly, the Y Combinator approach, put it in front of customers, gain interest in it, and just launch.
He warns about trying to perfect things first. Instead, he recommends to embrace the possibility of failure. Even if you fail, you can keep going as an entrepreneur. Every experience will only help you learn something, and become a better leader and person.
The mortgage business that Philip was CFO at ended up encountering more issues. Not just the pause on business that resulted from COVID lockdowns, but then how the capital markets contracted and froze.
All of a sudden it became very hard to raise money, and house moving stalled as people couldn’t leave their homes. So, they ended up getting acquired by Better.
After that transaction he had the opportunity to move out to San Francisco. There he got exposure to the Valley, and found that he already had a lot of shared experiences with founders despite having been the CFO. To the point where he thought it made sense to become a founder himself.
He partnered up with his former head of engineering, Beau Allison, and began looking at problems that they had the capability to solve.
They decided on financial services, but to focus on the B2B side of things this time.
TranchTheir startup Tranch decided to tackle the buy now pay later space. Enabling companies to get paid faster, while giving their customers the flexibility to pay for their products and services over two to 12 months.
After going through Y Combinator’s startup accelerator program Tranch quickly went global, with distributed teams in the US and Europe.
They’ve already raised over $5M in equity, and a $100M credit facility to help finance their customers.
The financial stress out there, and more recent banking failures, as well as high inflation and interest rates have only helped fuel Tranch’s business.
He says that 60% of invoices in the US are overdue, and that people still don’t have access to their money in SVB and other failing banks. So, they also stepped up to help these customers with their services, and have experienced an enormous surge in demand.
Listen in to the full podcast episode to find out more, including:
- How Tranch works
- Decision making
- The new banking crisis
- Debt versus equity funding
Alejandro Cremades · EP 592 Philip Kelvin On Raising $100 Million To Transform How Your Business Pays For ServiceSUBSCRIBE ON:
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James Lochrie achieved one of the biggest startup exits in Canada with his first company. Now he is investing in other founders to help them bring their world changing ideas to life.
On the Dealmakers Podcast Lochrie talked about business models, acquisitions, effectively managing your board, J curve growth, key components of great entrepreneurs, and adapting to the new banking crisis.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Finding A Passion For Technology
- 2.Taking The Leap Into Entrepreneurship
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- From Raising $100M To Selling Your Company For $400M
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- Thin Air Labs Finding A Passion For TechnologyJames Lochrie was born to immigrant parents in Toronto, Canada. That gave him an appreciation for the struggle of making it, as well as support systems that can help make you successful. It also built into him some courage to take risks, and values that he says have helped him as an entrepreneur.
His father was a software developer in Ontario. Which gave him some early exposure to technology.
On his way to school there was a Radioshack where he would spend time on the latest machines, trying to figure out making video games.
While, like most of us, he still has a bit of a love-hate relationship with technology for how it can help, as well as the frustrations when it doesn’t work well, he says that it gave him curiosity and self-sufficiency.
After several attempts at pushing through university he decided it just wasn’t for him, and dropped out.
After a stint running his own landscaping company he went to work for an accounting firm to support himself.
Over the next 16 years he kept on growing with that firm. Moving into working with the technology team, then the operational side, and finances. Giving him a great perspective on all the aspects of a business, as well as how entrepreneurs saw and applied technology in their businesses.
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Taking The Leap Into EntrepreneurshipOver those years Lochrie found it becoming harder and harder to make the leap to doing his own thing in some ways. He began accumulating all of the trappings of a traditional career. Getting married, having three young kids, a home, and more.
At the same time he had been building up the experience and personal confidence in his own skills.
Then things began to change with the advent of companies like Quickbooks and some other smaller players in the market, along with other developments in technology.
The point came where he saw that he only had a certain number of years left of working, and was not satisfied with the contribution he was making to the world in his role. It was time to make the leap.
From Raising $100M To Selling Your Company For $400MJames decided to innovate in the financial services space for micro business owners, with new cloud based accounting tools.
They started out with a trickle of business as they began balancing their freemium model and free services with beginning to monetize different tools, like payroll.
They ended up acquiring a bank, and scaling to millions of users as they struck on the right marketing tactics to feed their customer acquisition funnel.
On the way they raised around $100M in funding, through a Series D round. Across those rounds they found VCs, as well as strategic investors, and banks from around the world.
Storytelling is everything which is something that James Lochrie was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Then after years of conversations, just after they had signed a term sheet for their Series E round, H&R Block made them an acquisition offer.
After three months of fine tuning the price and contracts, they ended up with a $400M all cash deal.
That not only enabled James to equip his own home poker room to play with friends, but to start investing in other founders and startups, which he is still doing today.
Thin Air LabsThin Air Labs is James Lochrie’s seed stage investment firm. Where they typically write the first check for founders, and work with them through their Series A.
He says that their focus is on finding great entrepreneurs, working on meaningful world changing ideas that go global.
The money they provide is just a part of that. James says they strive to really support those founders and companies in a holistic way as they strive to hit the J curve personally and corporately. Thin Air believes startups need more than just capital to grow which is why they also offer customizable services for ventures that can help them with securing non-dilutive capital as well as product strategy, development and growth.
They are looking for entrepreneurs with lots of energy, domain expertise around the problem they are trying to solve, a good rationale for why they are the ones to solve it, lots of optimism about how the future could be, and those ideas that will make big leaps in the world.
Check out the full interview for more on:
- What Thin Air Labs has been investing in
- Board dynamics
- Growing yourself as a leader
- James Lochrie’s top advice for entrepreneurs
- Managing your balance sheet in the current banking crisis
Alejandro Cremades · EP 591 James Lochrie On Selling His Company For $400 Million And Now Helps Startups Scale GloballySUBSCRIBE ON:
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Ron Gula built a multi-billion dollar business that went public. Now he is helping other founders make their startups succeed as an investor.
On the Dealmakers Show Gula talked about solving problems, bootstrapping through an acquisition, cyber security, direct versus secondary capital raising, what he looks for in a fundable startup, grant competitions, services versus product companies, and planning for success.
Here is the content that we will cover in this post. Let’s get started.
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- Problem-Solving
- 2.Bootstrapping All The Way To An Acquisition
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- Building A $5B Company
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- Direct Versus Secondary Capital Raising
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- Gula Tech Adventures Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksProblem-SolvingRon Gula was born in Rochester, New York. His father worked as a field engineer for IBM. Which meant he got a lot of early exposure to PCs and mainframes.
Of course he enjoyed playing computer games. Though was really most passionate about problem solving. Whether that has been puzzles, engineering designs, or algorithms.
While attending university in Upstate New York, Ron followed his father’s footsteps into the Air Force via ROTC.
He ended up attending a flight school for fighter pilots, though ended up struggling with the extreme Gs that put him through. Still, that experience certainly equipped him well for doing business with his own startup later.
He ended up moving into electrical engineering and communications. Then landing a post with the NSA, Gula became a penetration tester, tasked with testing the security of DoD networks.
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Bootstrapping All The Way To An AcquisitionAfter two years of working for another cybersecurity company in the DC area Ron says that he went home one day and asked his wife Cyndi if they could start up their own company. One that would develop a next generation intrusion detection system. Together they launched Network Security Wizards to do just that.
To be specific Ron says he was working for his wife at that company. He counts himself to be very lucky to be among the few who have managed to really make doing a company with family members work.
He credits making continual efforts, lots of communication, and finding a shared love of cigars. Over which they could talk things over.
They took the traditional route of bootstrapping the business. In just a year they ended up getting acquired for eight figures.
They just dug in to creating a great product that people paid for, and kept reinvesting the profits. They got noticed, and after several offers found a great match with Cisco competitor, Enterasys Networks.
Building A $5B CompanyAfter completing the post-acquisition integration Gula was ready for his next venture.
This time instead of simply providing the technology to detect network attacks, with his next venture Tenable he decided to take a more holistic and proactive approach to cyber security. One which would identify potential risks as well as attacks, and provide more reporting for management.
They ended up making money on day one by serving NASA as a customer.
By selling their software through licensing, and watching their cash flow, they were able to build up $50M in the bank before they raised a VC round from Excel. A raise that was as much about their brand positioning and being able to attract their ideal talent as the money.
Ron then handed the reins to another CEO who took them through the process of going public on the NASDAQ. Tenable has recently enjoyed a market cap of around $5B.
Storytelling is everything which is something that Ron Gula was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Direct Versus Secondary Capital RaisingOne of the other notable differences about how Ron has raised money for his companies is leveraging more secondary investment.
A direct investment is when you issue new stock to equity investors. So, if you go out to raise $10M to start something, you issue new stock, and start out of the gate with some valuation.
Secondary investment is when you are selling existing stock. Whether that is the founders or employees, or others holding shares, it means reselling those in exchange for capital.
They got the whole team together on the transaction, and ended up making millionaires out of some of them in the deal. Meaningful value that they were able to financially secure themselves with homes or cars, or paying for college for their kids. He points to that as being one of the most inspiring parts of the journey.
Gula Tech AdventuresHaving made a couple of investments while CEO of Tenable, after leaving he and his wife decided to join forces again to start their own startup investment firm.
They now run Gula Tech Adventures, along with doing some philanthropy and being involved in the policy making around cybersecurity.
Through Gula Tech Adventures they run million dollar grant competitions in the cybersecurity space. Today, they have 30 active investments, with around 15 exits under their belts already.
Listen in to the full podcast episode to find out more, including:
- What Ron looks for in fundable startups
- Product versus services companies
- The state of cybersecurity
- His top advice when starting a company
- Planning for success
Alejandro Cremades · EP 590 Ron Gula On Building A $5B Business And Investing In Companies That Protect CyberspaceSUBSCRIBE ON:
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Shensi Ding has already raised $75M for her tech startup, Merge, despite getting started in the middle of the COVID crisis.
On the Dealmakers Show, Shensi shares her perspective on what makes a good company: covering skills needed in a co-founding team, validating and honing your idea, the benefits of building your company in a crisis, getting your first sales reps hired, starting out in the trenches, the importance of sales and storytelling, and setting a company culture.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGaining Invaluable Perspectives On Building A Successful CompanyShensi grew up in the suburbs of Boston. Since it was so cold and there wasn’t a ton to do inside during the winters, she took to computers and taught herself how to code at just 12 years old.
Her parents were supportive of her love of technology. She started building websites and doing software engineering internships, ultimately attending Columbia University in New York to study computer science.
Finding a love for problem-solving beyond coding later took Shensi into investment banking and investing. She chose this direction because she felt like she had a skills gap in understanding how to read financial statements, evaluate a company, and analyze its performance.
From that time working in finance, Shensi learned a lot about what makes successful and sustainable companies — which ones had great moats, which ones had weak returns, etc. This education has carried forward to her own venture today.
Learning The Ropes Before Plunging HeadlongWhen it came to building her own venture, Shensi’s passion and willingness to get in the trenches and first work in each role made all the difference, especially when it came to sales, building the team, and fundraising.
Shensi and her cofounder, Gil Feig, started Merge by building the product themselves. They wanted to understand their product intimately, and they wanted to do the work before hiring others to do it. This mentality extended to sales as well, and both co-founders ran hundreds of sales calls before they hired their first sales rep.
By sticking true to the product and culture that they were passionate about building, Shensi and Gil were able to keep up their momentum when it came to recruiting and bringing in investors.
Before leaping into her first startup Shensi worked at a startup called Expanse, and that experience taught her a lot about how to build a company. Expanse was ultimately acquired for $800M by Palo Alto Networks.
Shensi and Gil were lucky enough to be good friends and realize that they had a shared problem at their then companies, but from different perspectives. Shensi saw the pain of integrations from the sales and financial angle, while Gil saw the pain of integrations from an engineering and customer success perspective.
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MergeAlthough they came from different industries, they realized that this was fundamentally a very similar problem. This insight led them to launch their own solution — Merge.
Merge has already grown to a team of 75 people in three years. Despite launching during the COVID lockdowns, they have successfully grown the company to onboard over 5,500 free and paying customers and raised $75M in funding from investors like NEA, Addition and Accel.
Storytelling is everything which is something that Shensi Ding was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Validating The Business Idea And Polishing Their VisionShensi credits a lot of Merge’s success to taking the time to further validate their idea and polish the vision for their product with their future customers before starting the company.
Those early efforts have not only enabled them to avoid having to pivot on the journey, but to build the features that were the most important and that prospects were willing to pay for out of the gate.
Launching during a crisis may seem counterintuitive to some, but they found great benefits in not having the normal distractions. During COVID, the only thing to do was work and this allowed them to stay focused on bringing Merge from zero to one.
Listen in to the full podcast episode to find out more, including:
- The importance of company culture
- How fundraising changes as you progress through different rounds
- The future of Merge and integrations
Alejandro Cremades · EP 589 Shensi Ding On Raising $75 Million To Create One Single API For All IntegrationsSUBSCRIBE ON:
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Uri Kolodny is now on his third startup. He’s now working on his biggest and boldest tech venture so far.
On the Dealmakers Podcast, Kolodny talks about optimizing your career for independence, pivoting your business, self-funding versus taking VC money, open source tech versus patents, selling your company, and going beyond the blockchain.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksOptimizing For IndependenceUri Kolodny grew up in Jerusalem. The heart of what’s now considered ‘Startup Nation’.
He says that he has always optimized his career and studies for independence. Which is really epitomized in entrepreneurship.
After going through the usual mandatory military service, and undergrad school for computer science, Uri ended up in the US for business school at MIT.
Although a professor friend from Stanford warned him that the content of an MBA isn’t much more than you can find in very old issues of BusinessWeek, the opportunity to build a strong personal network of connections was attractive.
It worked out. By the second year of business school, he had started his first company.
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Starting Up & Selling Your First CompanyUri’s first startup was in combination with an MIT professor, in which they commercialized his Ph.D. work. First for the telecom space, then medical devices when the communications market bubbled and busted.
After six years with that venture, they ended up selling that company to a private equity firm.
As with all first ventures, Uri describes it as a fertile learning ground. Perhaps even more so than his actual college MBA.
It meant learning to hire people, and how to convince highly talented individuals to drop other options and join the mission. He learned about team building and culture.
The importance of a well-fitting, co-founding team, and the amount of time they each invest in the business. As well as the pain of learning through the fundraising experience.
Including how some of those clauses in investor agreements really end up having an impact down the road. Like liquidation preferences.
Self-Funding Versus Accepting Venture CapitalUri describes fundraising for his first company as quite a brutal process. The Boston venture capital scene, in particular, was quite different than what the ecosystem has evolved into today. Especially in the wake of the likes of Facebook and Y Combinator.
Back then, he says it was much more about investors obsessing over controlling your business. Not nearly as founder friendly as it is today. Though he says that they were able to get a great investor and board member involved for their seed round.
Uri admits that he is drawn to hard problems, as well as to others that love tackling them as well. Which means it doesn’t always work out as simply as you planned. In this case, meaning his next venture ended up being put on ice after it just didn’t have the legs he hoped for.
Though he also spent time as an entrepreneur in residence (EIR) with two venture capital funds, working with them to try and license some IP from Technion in Israel.
Self-Funding His Second VentureGiven his earlier experience with outside investors, Uri took the self-funded route for his third startup. He liked the frugality and independence of this path. Though acknowledges that only being accountable to yourself, and having limited resources can be a disadvantage.
With this venture, he says he wishes they would have not kept striving for perfection, but would have gotten out there faster, engaged with the world, and embraced failing faster, to iterate and succeed faster.
Today, some of Uri Kolodny’s top advice is striving for a healthier work-life balance. Something that he says he is still working on himself. All too often, entrepreneurs who must be extremely passionate about their ventures end up so intimately tying their companies to their identities that they suffer for it.
Either in their relationships, by burning out, or by allowing their happiness and self-esteem to rely on the successes and failures of their companies.
Even when there are so many macro factors out of their control. Remember that you are not your company and vice versa. In fact, if you are successful, you may end up with many startup ventures under your belt across your lifetime. Some may be huge successes.
Others will be learning experiences.
StarkWareToday, Uri Kolodny is the CEO and co-founder of Starkware. A SaaS business that compresses transactions for the blockchain. Making it much more efficient, and, in turn, reducing the cost per transaction by 700x to 20,000x.
Since raising a $6M seed round in early 2018, they’ve now raised a total of about $200M, and continue to grow fast.
Storytelling is everything which is something that Uri Kolodny was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How Starkware is making the blockchain more efficient and usable
- The pros and cons of ICOs
- Finding the right investors for your venture
Alejandro Cremades · EP 588 Uri Kolodny On Raising $200 Million To Resolve Privacy And Scalability In BlockchainSUBSCRIBE ON:
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Gene Hoffman has started and sold several startups. As well as becoming one of the youngest CEOs of a public company in the United States ever.
On the Dealmakers Show, Hoffman talked about basketball and leadership, fixing the internet, selling your company for $100M, crypto, fundraising, and how he has seen the timing for launching and exiting companies.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFixing The InternetGene Hoffman now has a long track record of successfully fixing things and whole categories around the internet.
He was born and grew up in North Carolina. His father, a CPA, had his own national company, which meant that they often spent half the year out in Reno, Nevada.
In addition to doing some studio and radio work as a sportscaster, Hoffman was pulled into basketball, through high school and college.
He found himself working with a fantastic coach, in a school that was known for producing stars like Michael Jordan and Vince Carter.
Having gone through that same system, which goes well beyond just the sport, to your core principles, and how to think, and handle the media, he credits it with a lot of his business success since then.
Gene graduated in the early 90s when the internet was really becoming a thing. Linux was originally hosted there in Carolina, and he saw how the internet was taking over and providing access to things that television wasn’t.
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Then when Netscape went public, he and his friends really became interested in doing something of their own around this space.
They first considered starting their own ISP. Though quickly dismissed that as being a low-margin business with no real moat.
Then they saw Hotwire put up their first internet ad. They decided to create a business around ad blocking and controlling cookies, to give internet users more control.
It was a huge success. They were the talk of the media and were featured on the front page of the New York Times.
The company was quickly acquired, and they moved out to the Bay Area. Where Hoffman says that he got a fast introduction to how Silicon Valley worked. In turn, that company was bought by Mcafee.
Selling Your Company For $100MConsidering what to work on next, he looked at both crypto and the music industry. His wife wasn’t a big fan of having to move to some obscure tropical island with armed guards, and perhaps not being able to return to the US. So, he chose the music business.
They eventually took on the big problem that the music industry and other big companies and industries were facing with the gap between how credit cards were designed and the new subscription culture that was emerging for music and video. They did that at a great scale, with big customers like the NFL.
After ongoing multi-year conversations with the likely strategic partners that would either be a partner or an acquirer, they ended up selling.
He has now taken at least two companies public and had several acquired. For one of these ventures, he raised $40M.
Storytelling is everything which is something that Gene Hoffman was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!How To Pull Off Successful FundraisingWhen it comes to fundraising Gene says it is a lot about knowing which VC to get a warm introduction to, from whom, and how.
Then remembering what’s important to the investor, and what their motivations, and needs are. Including ensuring you are mapping out a path to give them 10x or better returns, and understanding the timeline for their fund, the need for liquidity, and delivering to their own LPs. Then getting to the point where you can predictably scale and deliver returns, and use venture debt to keep on multiplying your results.
Having been able to create a competitive bidding environment, Hoffman was able to sell one of these companies for $100M.
He finally rewarded himself with some much-needed time off. Including time to upgrade his boat, get his captain’s license, and embrace hobbies he neglected in the mayhem of growing companies. After a year, he found he was well-decompressed, bored, and ready to go at it again.
Chia NetworkIt was cryptocurrency that pulled Gene back into entrepreneurship. Another opportunity to fix something big.
He saw two glaring issues. One is bitcoin’s massive use of energy. The second is the lack of real security in smart contracting with Ethereum.
So, he jumped into Chia Network, of which he is now the CEO. They are improving the blockchain, to make it more secure, practical, and sustainable, globally.
They’ve already raised $80M on this venture.
Listen in to the full podcast episode to find out more, including:
- What Chia Network is doing
- Embracing regulations
- Carbon credits
- Fundraising
- M&A deals
- Gene Hoffman’s top advice for others considering launching a business
Alejandro Cremades · EP 587 Gene Hoffman On Selling His Last Business For $100MSUBSCRIBE ON:
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Dan Teran took the leap from legal to tech, sold his company for over $200M, and then leapt from entrepreneur to startup investor.
During this exciting episode of the Dealmakers Show Teran talked about raising tens of millions of dollars for startups and seed funds. As well as using M&A for growth, the process of getting your company acquired, betting on the US, transitioning from being a founder to being a fund manager, and what he’s investing in now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksLeaping From Law To Tech StartupsDan Teran spent a good portion of his youth growing up in rural New Jersey. Then moving to Baltimore for school at John Hopkins he discovered all of the many challenges and problems that can come with city life.
Through an introduction and finding a mentor who knew the local politics, he became interested in getting involved. A natural progression from spending summers volunteering from a Navajo reservation in New Mexico to an orphanage in Mexico.
After working as an organizer and policy advocate for a Baltimore non-profit, he went on to manage a state senate campaign, and then moved to New York towork alongside Erin Brockovich as a paralegal.
She had been retained by the law firm to aid in organizing communities which had been impacted by environmental catastrophes. It was an experience he describes as a great privilege. Together they ended up working on a case where Halliburton had poisoned groundwater in Oklahoma.
They even won a settlement for the people there. However, ten years later the settlement was still in the works. That whole experience in environmental law and politics showed him how slow moving things were in that world. As well as how arbitrary decisions could be. Especially when you involve local politics. Too many things that were not under your direct control to influence.
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Witnessing Upcoming StartupsAt the same time, living in New York, he was witnessing friends at startups. How fast they were moving, and how successful some were becoming. How you could write some code, ship a product, and people around the world could be using it the same day.
It inspired him to make the leap into the startup world. He applied to every startup in the NY tech community, and got rejected.
Then one gave him a chance on his background around organizing communities, and put him to work building theirs for artists.
That led to a new gig with Prehype and working on Barkbox, which ended up going public. There he was able to help incubate numerous startup ideas. They would partner with big names like Newscorp and Unilever. Then spin out companies as they proved to be successful, or drop or pivot them quickly if they were not.
M&A Strategy And The Process Of Getting Your Company AcquiredThat process of testing and running with new ideas led he and his co-founder Saman (who went on to found Ro) to come up with a successful pitch for their venture Managed By Q.
That company went on to raise $100M, as they evolved their business model. That included a very notable collection of angel investors who have done very well as executives and founders themselves.
Storytelling is everything which is something that Dan Teran was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!However, Teran says, not unlike the current environment, startups, including their own had been raising at high valuations, and then found the dangerous side of that as they grew.
When they were out fundraising for their Series C they met someone from WeWork. Over a long period of time the conversations came around to WeWork offering them enough to bite at the acquisition offer.
There seemed to be a bigger vision, a well capitalized partner, and the chance to accelerate. So, they ended up with a $220M exit.
Removing Risks For The Team & Building RelationshipsDan says that they removed risk for their team members by ensuring that they were rewarded with cash, upfront in the deal. Early investors also did well. However, after he ended up working on M&A inside WeWork, it famously collapsed after failing to make its IPO. No doubt having a substantial impact on the value of stock he was given in the transaction.
Of the mergers and acquisitions process Teran says that much of it is ensuring the executives have bought in. If they have, then they will find a way to make the deal work. If they are not, it probably won’t make it to closing.
A lot of this is about building human relationships over a long period of time, as well as showing how your company is the one that can solve the others problems in that timeframe.
He also notes that successful M&A is more reliant on strong strategic fit, and once you’ve really figured out your own core business well.
Founding Your Own FundAfter WeWork’s demise Dan says he turned to helping some of the founders he had already invested in as an angel investor. He found a knack for it, and enjoyment in helping them build successful startups.
The next natural evolution of that for him was to start his own venture capital fund. Gutter Capital focuses on pre-seed and seed stage startups, who are addressing the biggest problems in America. Including housing and climate change. Even more specifically focusing on SaaS startups and marketplace businesses.
Listen in to the full podcast episode to find out more, including:
- The dangers of high valuations in early funding rounds
- Success in M&A deals
- Raising money to start your own fund
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Tom Ellis has gone from bootstrapping his business to finding alternative financing methods and securing big private equity deals to grow.
On the Dealmakers Show, Ellis talked about the sport of entrepreneurship, the one job you should get before launching your own startup, staffing, building a marketplace, alternative ways to finance your startup and growth, top down versus bottom up hiring, and how to scale your team the right way.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Sport Of EntrepreneurshipTom Ellis was originally born in Seattle, before moving to Eugene, Oregon. Moving in your youth is always great practice for learning to network and meet new groups of people, to adapt to new environments, and deal with challenges that are out of your control.
Ellis also took to basketball. Making it all the way up to the state champion team. He says that playing sports is a great foundation for learning to succeed in entrepreneurship.
He says that it teaches you the ability to focus, how to work hard at something, that there is competition out there, and that in order to get the reward, you have to put in the effort. Plus, of course teamwork.
The One Job You Should Get Before Starting Your Own CompanyJoining the workforce, Tom Ellis started out in the fitness space before making the transition into the staffing industry. He told the Dealmakers audience that he thinks everyone should have a sales job at some point.
It taught him how to grind out the work, and to pitch in front of people. These are essential skills for any aspiring entrepreneur, who will no doubt need to secure customers and raise funding on the journey.
Most people don’t have what it takes to sell and keep on putting in the work. He says that out of the 27 people in his cohort of recruits at the staffing agency he worked for, half quit in the first two weeks. Maybe only three of them lasted as long as he did.
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Financing Your Startup & Company GrowthTom started out by bootstrapping his business. Then they were able to get an SBA loan of $80k to get things going.
A bank was willing to extend their financing up to $300k,much of which they invested in creating jobs. Of course, when they wanted to grow even further, the banks didn’t step up to help.
That’s when they found factoring as a way to access capital to grow the business. Factoring is a solution where you essentially sell your future income and accounts receivable, for growth capital now.
This lean approach also meant that they had to heavily focus on achieving real sales and making the business profitable.
This in turn can have its own problems, such as when he had to tell his salespeople that if they booked any more shifts for their clients that week, they would not be able to cover it. Sometimes your best month in sales is also your riskiest and most precarious for paying the bills and making payroll.
However, since then they have been able to bring in a big private equity partner with another $450M. Enabling them to take some chips off the table, restructure the cap table, hire more, and grow.
Storytelling is everything which is something that Tom Ellis was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Scaling Your Team The Right WayEllis has now grown his company ShiftKey to around 600 employees. No small feat by any means.
Over the years Tom says that he has learned the best way to build your startup’s team is top down versus bottom up.
While many new business owners look to grow bottom up, hiring basic help, in the hopes of grooming them into management later, that can be a slower route to success. They normally can’t scale themselves as fast as the business needs to scale.
Instead, Tom recommends taking the top down approach. First hire your leaders. Then let them build out their own teams. They’ll be able to operate at a better scale, get the work done, and manage the others that are brought in as well.
In fact, he says that your job as a CEO is really to just be a great recruiter and bring in the right people that can continue to grow and improve the business.
Note that hiring strong finance help is going to be one of the top needs of your recruiting list. Only once they brought in their own finance team were they able to make that big leap to attracting the big capital that really helped to move the needle, and stay out ahead of the competition.
The Staffing BusinessShiftKey is transforming the future of work, leveraging technology to empower licensed professionals to define their value, embrace independence, and live life on their own terms, while meeting strategic business, resource and workforce needs for licensed industries.
The ShiftKey model is bold, yet practical. Independent licensed professionals can choose their pay rate, set their availability, and connect directly with healthcare facilities with workforce needs, creating a “relief valve” and equipping care facilities at every level to make forward-thinking scheduling and business decisions.
Listen in to the full podcast episode to find out more, including:
- Business pivots
- How ShiftKey works
- Making private equity deals work
- How your business will be different after a private equity deal
- Tom Ellis’ advice when starting your own business
Alejandro Cremades · EP 584 Tom Ellis On Raising $450 Million To Address The Healthcare Workforce ShortageSUBSCRIBE ON:
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Michael Ronen has gone from investor to entrepreneur and back again. During which he helped the massive Vision Fund, and raised over $100M for his own venture.
During his appearance on the Dealmakers Podcast, Ronen talked about the top three traits of the best leaders and CEO, managing huge funds, capital, and economic cycles, and being able to turn a $1B profit on a single investment in just two years.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSteering Lasting Companies Through The Economic RollercoasterMichael Ronen was born in Israel. He grew up in a challenging time for the region, and close to a local air force base. Which definitely piqued his interest in becoming a pilot himself.
Right out of high school, Ronen joined the Israeli Air Force Intelligence Forces. He had grown up through times of conflict. Which he says provides a level of resilience and strength, that many haven’t been forced to develop growing up today.
That was built on his time in the military. At 18 years old you are thrown into completely new situations. Often where you just have to figure it out yourself. Where decisions don’t just mean the difference of dollars, but people’s lives, and even the security of the whole country.
Michael says his mother really wanted him to have a professional career. That took him to law school. A field that he believed would give him some perspective on business.
After practicing as a lawyer in Tel Aviv for two years he saw that most of the work they got to touch was once all the dealmaking had been done.
There was managing risk in the documents. Though what he really wanted to do was to be involved in the phase where businesses are being built and the transactions are being set up.
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Making Partner At Goldman SachsRonen says that he had always wanted to come to the US and become more involved in the business. Which ended up with him landing at Goldman Sachs in NY. Eventually becoming a partner there.
He says that every time he began thinking about doing something else with his career the job was made more interesting, got bigger, and was moved up the ladder. That lasted for 20 years.
Much of that time was focused on TMT (Telecom, Media, and Tech). While they may be very different industries, he saw that they would all be disrupted by new technology. Such as moving to broadband, then wireless, and now AI.
He saw how some big companies would fail to evolve and would go bankrupt. While others would embrace change and survive, and become very influential over time. Such as Google, Apple, and Spotify.
Michael also experienced the economic cycle as it turned through the first internet bubble, the 2008 Great Recession, and what’s happening more recently.
The Top 3 Traits Of Successful LeadersOf the CEOs and business owners leading their companies to success over the long term Michael offered three traits they share.
His big takeaway from those that were successful versus not is how the winners are able to benefit from the upswings and limit risks when the downturns come.
First, he says that these leaders lead by example. They know that their teams will copy their behavior. So, they must model the culture they want. They must do it visibly, and if they want it to continue, to align that with their hiring. Hiring top-down, and letting that continue to be passed down.
The second is to clearly articulate your vision for the company. You may have to get through the mundane grind sometimes, but keeping your team focused on that big vision will be critical in the outcome.
Then, thirdly it is about keeping a steady hand on the wheel. Compared to investing, he says that founding and running a company is much like taking a motorbike off road and managing the bumps at great speed while keeping your eye far ahead on the path.
Being able to see what’s coming, to keep steering, and to maintain your balance.
Taking The LeapMichel Ronen took his first real leap when he left Goldman Sachs. He was pulled in by Masayoshi Son, who wanted him to help manage Softbank’s Vision Fund. A $100B fund that has minted many unicorns. He did that and made some spectacular investments.
Yet, ultimately the draw of being involved in building a company of his own proved too much to ignore. So, launched his own venture Branded.
A company that began acquiring small brands that were selling online, and fueling them to greater success. After raising $100M in funding, getting it to being profitable, and becoming a more mature company Michael says that he was ready for his next challenge.
Storytelling is everything which is something that Michael Ronen was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!While he is still involved with guiding and helping Branded, he is now looking to leverage all of his experiences on both sides of the table to now build an investment firm of his own. One which does not just enable him to invest, but create something bigger than himself, and that will last for the long term.
Listen in to the full podcast episode to find out more, including:
- Billion dollar investments
- Investing versus building an investment firm
- Starting and managing a company during a crisis
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After building a billion dollar company and taking it public, he is now creating the technology that is fueling a new generation of robotics startups.
On the Dealmakers Show, Horowitz talks about game changing blog posts, finding product market fit, getting started during an economic downturn, taking your company public, robotics and autonomy, and what’s next in tech.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTaking Your Startup Full CycleEliot Horowitz is now on his third startup venture. Originally born in Connecticut, and spending a lot of time growing up between there and New York, he found an early love for computers, programming, and time by the water. All of which has come full cycle to show up in his most recent venture.
Both of his parents are doctors. His father was pretty big into computers. He brought home an early PC for the family, and would write basic games. Which in turn Eliot would try to hack.
That stuck with him as he went on to study computer science at Brown. Then an internship at DoubleClick put him on the path to launch a startup with Dwight Meriman and Kevin Ryan. Both of whom have also appeared on the Dealmakers Podcast for their entrepreneurial journeys and fantastic startup successes.
Their first venture together was Shopwiki. An attempt to aggregate and create a unified and simplified online shopping experience before Google or Amazon were big hits. Although they may have been surpassed by these giants, they were able to sell the company, giving them the full cycle experience of taking a startup the distance.
While Horowitz says there was still plenty of learning to be done in their second startup, by their third venture many things were a lot easier.
Things that seem complex, take up a lot of time, or need to be systemized, are just second nature by the time you are on your third venture. They don’t require time in decision making. You can just get busy executing on what’s unique about your company. These include how to hire people, run meetings, and more.
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The $14B Blog PostAfter Shopwifi, Eliot and Dwight decided to start by tackling a problem they were struggling with which was databases. It was something they wanted to solve for themselves anyway. Which became MongoDB. Of course, countless other developers wanted their solution as well.
They started out just as the 2008 Great Recession was hitting. While that meant capital was harder to come by, Eliot says that many other things were easier. Hiring was easier and cheaper as everyone else was making layoffs. There was less competition. Their customers were hungry for ways to save money and have their developers working faster, more efficiently, and more cost effectively. Real estate space was also far cheaper and easier to get into.
Still, they launched version 0.8, and had just two customers. It wasn’t until someone wrote up a review of their tools on a blog that things really took off. Which led to building a great community, with lots of engagement, and sold out conferences from New York to San Francisco.
Gaining Visibility With The IPOOn the journey they also raised around $300M, before taking the company public. Which recently saw them with a market cap of around $14B.
Storytelling is everything which is something that Eliot Horowitz was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The IPO only helped the company gain more visibility. Ignoring the great financial outcome momentarily, Eliot shares that he still gets very excited when he meets people who say their lives have been transformed by the technology they developed.
Having accomplished most of what he set out to do with MongoDB, Eliot says that he eventually decided to take some time off in early 2020 to spend time with family, and contemplate other big unsolved problems that he could tackle.
Enabling The Next Generation Of Robotics StartupsAgain, kicking off a new venture in the middle of a crisis (COVID lockdowns), Horowitz decided to take on his biggest and boldest project so far.
Eliot’s latest venture, Viam, has raised over $40M in funding already. While Eliot was certainly able to contribute to that from the great exits he already had achieved, they also enrolled investors including Tiger and Union Square.
Eliot says that they chose these partners and funding route so that they could go big out of the gate. To be able to build everything needed well, and to have a sizable impact quickly, not just in 10 or 20 years
Viam is all about making robotics easier and faster. So that new startups and their developers can quickly and easily bring their own visions to life, and have their own impact on the world.
That can be anything from creating a robotic cat feeder and monitoring their eating habits, to storing data on robot activity for future reference, to automating the cleaning of the oceans, operating robots to fix potholes in roads, construction work, or something else.
The Foundation Of A Successful StartupEliot’s top advice when starting a business is all about ensuring that you really understand your customers. That is absolutely essential for having the basis of a viable and successful venture.
That means being cautious that you are not just trying to justify your own assumptions, but are digging into their real needs, and why they want them solved. Then becoming a partner with them in doing that.
Listen in to the full podcast episode to find out more, including:
- Business models and product market fit
- Simplifying robotics and autonomy
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Rishi Bhargava exited his first company for $560M. Then raised a seed round for his latest venture that is more than 20x the average size for a brand new startup.
On the Dealmakers Podcast Bhargava talked about making the leap of faith into entrepreneurship, startups versus big corporations, sales channels and product market fit, the best thing about selling your company, and deciding on your business idea. Plus, fundraising and building to scale right out of the gate.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFinding A Love For Problem-SolvingRishi Bhargava was born and grew up in India. He says that even since kindergarten he was striving to move up, and shine as the best in his class.
After obtaining his engineering degree from one of the best colleges in India, he moved to the US for his Masters. Instead of continuing on to his Ph.D. Rishi found that he loved solving customer problems so much that he wanted to focus on working in the commercial side of things.
His first job out of academics was for a small public company. One which gave him some ownership of his own project. Though which also put him up against the dot com bust. A phase of the economy he experienced again in 2008, and sees similar patterns in now.
Then going to work in a startup he was able to experience the thrill of starting from the beginning, through to an acquisition by McAfee (then acquired by Intel). Becoming the first product manager there really hooked him on solving customer problems and creating solutions even more.
He also learned about designing products that scale and the importance of team.
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From Raising $70M To $560M ExitRishi says he was highly driven to do something of his own, and build something from the ground up. His parents who had worked for the same company their entire lives didn’t really get why he would leave a big brand name company and a steady paycheck. Though he found three other cofounders who were willing to take the leap with him, and they started Demisto.
He saw that being inside a large company just wasn’t the place to try and innovate and do something new. That isn’t something that big corporations are good at. Nor are they famous for going fast. Even if they may be good at acquiring new innovative products and technology, and deploying and managing them at scale.
Diving into this first venture Bhargava quickly learned even more about the fundamentals of a great startup and product.
They began by interviewing dozens of potential customers and floating their idea for a product. They quickly found that the customers had a different idea about what their real problem and need was. Rishi says that they discovered you don’t really need to wait to think of a genius idea on your own, and then hope to find a customer for it. Instead, just ask the people what they need solved, and create a solution for them.
Understanding The CustomerAt the same time this whole new category began emerging. Similar companies won awards and were acquired. So, they knew that they were on to something.
They knew their customer. They designed a product specifically for them. Then built a community to attract more of them. Their go to market really seemed to work. Over three rounds of funding they raised around $70M.
Storytelling is everything which is something that Rishi Bhargava was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!They were growing at 4x and 5x a year. That got them noticed by Palo Alto Networks, which made them an offer they couldn’t refuse.
That turned into an exit that delivered around 20x to their investors. With a great outcome for the whole team.
In fact, while the financial outcome was great for Rishi and his cofounders, he says he was happiest to see a good outcome for the employees. To achieve that together, and in turn want to do it all again.
After that $560M acquisition, Rishi stayed on for the next three years to help with the integration and further development.
The End Of Irritating PasswordsRishi Bhargava’s new venture is tackling the problem of authentication and the pain of passwords for applications.
Security may be vital. Yet up until now, the user experience of dealing with passwords and authentication has only been snowballing for the worse. Which is not serving customers or brands well. With Descope, they are working to enable a seamless and simple login experience for every app out there.
Investors clearly believe in the team and mission too. They’ve already backed them with a $53M seed round to be ready to build to scale globally out of the gate. Compared to the average seed round, which is just around $2M.
Listen in to the full podcast episode to find out more, including:
- Category creation
- Getting your company acquired
- Rishi Bhargava’s top advice before launching a business
Alejandro Cremades · EP 581 Rishi Bhargava On Selling His First Startup For $560M And Raising $53M To Make Login LikableSUBSCRIBE ON:
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What is a business grant? Why might a business grant be the right choice for you?
According to the Chamber of Commerce, around 400,000 small businesses open every year in the United States. While 80% of them survive the first year, about 50% can hardly reach the five-year mark.
There are many reasons why a business fails. Including competition, lack of foot traffic, and mismanagement. When it comes to kick-starting a new business venture, originality and traffic are not enough.
An innovative idea is nothing without the proper funds. Financial support is needed for survival, but also for maintenance and expansion.
Here is the content that we will cover in this post. Let’s get started.
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- Finding The Money For Your Startup Business
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- Business Grants 101
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- How To Get A Business Grant Finding The Money For Your Startup Business
Most entrepreneurs are not trust fund babies with money to spare. So, where do they get their funding from? Lots of small business owners apply for business loans. Loans consist of borrowed capital, which creates a debt that is paid back with interest across an agreed period of time.
While business loan options are plentiful, the process can be complicated. The wait is often long, and a low credit score can result in an application denial. Those who are lucky enough to receive the loan are also at risk. Variable interest rates fluctuate, making every loan payment increasingly pricier. If the business is unable to pay back the loan, the borrower can be personally responsible for the debt, risking their personal property.
Business Grants 101
As an entrepreneur venturing into a new business, you might be looking for funds. At that point it is important to understand what is a business grant. Are you afraid of falling into the loan debt spiral? Do you just not want the pressure of loan repayments when you are still figuring things out?
A small business grant might be the right choice for you. While they are more competitive and less abundant than loans, grants can offer great benefits at little to no cost. What do they consist of? A business grant is a free sum of money that offers the financial assistance every venture needs to grow. Yes, you read that right. For free.
The objective of the award is to eliminate the need for debt, allowing the business to grow and flourish. While giving entrepreneurs more flexibility and time to do what is right for the business, rather than being forced to make rash decisions just to bring a dollar in, at the potential cost of the brand and early users.
There are two main business grants divisions: governmental and private. As the name suggests, governmental grants are supplied by the American government. A percentage of the governmental budget is set apart every fiscal year for business grants. This sum is distributed at federal, state, and local levels. Every level, accordingly, has a different degree of competition and budget amount. These grants can be awarded by different federal grant-making agencies depending on the project.
The 26 grant-makers include the U.S. Small Business Administration, the National Endowment of the Arts (NEA), the Department of States, and the National Aeronautics and Space Administration. Every detailed listing can be found on Grants.gov.
Private grants are awarded by private organizations, like corporations, nonprofits, and private banks, as well as schools. They all vary in amount and can be received through competitions, applications, and portfolio or business plan submissions. For example, FedEx annually hosts a Small Business Grant Contest. The National Association of the Self-Employed (NASE) awards a monthly grant of $4,000 to one of its members. Many private grant-makers include their awards in catalogs like the Foundation Directory Online or the Council on Foundations website.
Whether private or governmental, business grants can be very selective which is a critical factor to know when understanding what is a business grant. Loans have no application requisites besides a good credit score, income and assets, making it relatively straightforward to apply for one through most national banks, a few private businesses, or credit unions.
Grants are a little more limited. Both private and governmental grant-makers reserve the right to award their grants subjectively. Every grant listing is created for a specific group.
Governmental grants are more often given to non-profit organizations, scientific and medical efforts, and educational endeavors. Within those groups, grants are made specifically for minority groups, women, and veterans.
Private grants are designed for businesses that portray the mission and vision of the grant-maker and meet the set criteria. For instance, you are starting a sport’s related business and there is a non-profit organization that hopes to further athletics in the community. You may be the perfect candidate for their grant.
Often corporations will offer business grants to applicants working on a product that could benefit the grant-maker or be mass-produced in the future. Comcast’s Innovation Fund offers financial support to entrepreneurs developing open-source software projects. Other limitations may apply within both grant groups, including time in business and the number of employees.
How To Get A Business Grant
Now that we know what is a business grant, how do you get one?
It typically starts with the process known as “grant writing.” The first thing to do is think about how your business and its services benefit your town, community, and clients. Additionally, know how much money you would need and what expenses would the funding go to. Be specific. This will help you better understand the kind of grant your project requires.
Keep in mind as well that being unbuttoned up is going to be critical. When it comes down to fundraising keep in mind that it is all about storytelling. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Then choose a type, governmental, or private. Once you have chosen, use one of the aforementioned online catalogs to find the grant that best matches you. Every listing will require a different collection of documents, often including business plans and financial projections.
Grant writing will take time. Not every business grant will be meant for you. If you find a complementing listing, a few months might pass before you hear back from the grant-maker, and the answer will not necessarily be the one you were hoping for. Don’t give up. Follow up. When the grant-making agency decides you are the right match, they will contact you and fill you in on how to receive your award and report back.
Hopefully this post provided some perspective on what is a business grant. As you are thinking about putting your materials together the video below might be helpful where I cover in detail how to create a pitch deck.
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Hanif Joshaghani has raised tens of millions of dollars for his startup that seems to only be growing in importance through the pandemic of 2020.
During our interview on the Dealmakers Podcast Hanif Joshaghani shared how he went from spending 12 years living in refugee camps as a kid to an MBA and founder of a fast growth startup. He talked about the keys to a successful business, raising big money during COVID-19, business trends and vetting potential investors.
Listen to the full podcast episode and review the transcript here.
Here is the content that we will cover in this post. Let’s get started.
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- Fight For It
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- Refusing To Be A Cog In The Machine
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- The Ingredients Of A Successful Company
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- Saving & Extending Consumer Relationships
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- Fundraising Fight For It
Hanif certainly didn’t have everything handed to him on a platter since birth. You can’t accuse him of being a trust fund baby who was born with all the connections and capital without having to work for it.
In fact, after being born in Iran, and smuggled over the mountainous border to Iraq as soon as he was old enough for the journey at 18 months old, Joshaghani spent the next 12 years of his life growing up in a refugee camp.
He stayed there until it became just too dangerous and some countries began accelerating the process of accepting the most vulnerable. It was then at 13 years old he was sent all the way to Canada to live with a foster family until his parents could join him.
Even then he had his work cut out for him. He had to catch up in school. He aspired to go to college, and that meant earning a scholarship to the University of Chicago. Then the real world of work and landing an MBA scholarship at the University of Toronto.
All of this gave him the mindset of never letting adversity get in your way. He equates remaining stagnant to just laying down and giving up. Instead he believes in constantly challenging yourself and fighting for it with every breath.
He was challenged even more when we went to school in New York. He discovered a completely different life and level of playing field. He was inspired to be a part of that.
Refusing To Be A Cog In The Machine
Hanif told our listeners that he was blown away the first time stepping onto the floor of the Chicago Mercantile Exchange. It was another new world.
He went into investment banking. He had a great salary. He says he learned a lot about capital markets, big financing, public companies and M&A deals.
Still, he came to the realization that no matter how good the money could be, he was still just a cog in the machine. Hanif wasn’t very passionate about that future. He felt the only antidote was to do something for himself.
So, with a couple of others he launched an advisory firm, CoreWest. After doing fairly well helping entrepreneurial small businesses in Alberta, they began investing in some of their clients’ businesses too.
One of these businesses was ASPS. Hanif decided to get even more involved, and had a vision of taking the hardware startup to software and beyond. They did well. Then parlayed that into an SaaS company, InvistaWare, which became Aimsio.
The liquidity he created with this venture enabled Hanif to lead the first round of funding for his latest venture, Symend.
The Ingredients Of A Successful Company
Throughout all of these experiences, from investment banking to consulting to investing, pivoting and growing these companies, Hanif learned a lot about what makes a startup successful.
His key takeaways which have helped him build his latest venture from scratch include:
- The importance of having the right team
- Have an idea you are incredibly passionate about
- Be sure to balance that passion with common sense
- Understand business is hard, no matter which one you try your hand at
The ability to bring it all together, he says, is really all reliant on knowing your north star. The “why” that you are so passionate about. This is what will enable you to align people, keep working through the challenges, build a great company culture, and reach great heights.
Saving & Extending Consumer Relationships
When it comes to balancing common sense with your passion for your startup idea, Hanif says this validation includes:
- Putting in the research
- Testing the demand and willingness of customer to pay
- Ensuring the feasibility of doing it
- Assessing the size of the market
He invested close to eight months in this process before writing any code for his new business.
Symend is a platform which helps organizations intelligently and empathetically engage with millions of customers who have fallen behind on their bills. It’s a huge challenge for big companies, one which many have struggled to overcome through email, mail and call centers.
Now more than ever they need to get better at building brand loyalty and retention. Recent events have put even more customers at risk At the same time, smart companies are realizing that it is their customer base which holds all of their value.
Fundraising
Symend has already raised close to $60M USD in capital.
This includes a Series B round raised in the midst of the COVID-19 crisis in May 2020. Hanif says this was possible due the combination of strong relationships with their investors and being positioned to be a crucial partner in helping other companies navigate this situation.
Read the full transcript of our Dealmakers interview for more on:
- Ways to deal with uncertainty personally and professionally
- How Hanif screens and builds relationships with investors in advance
- Picking the right investors over the highest valuation
- His top tip for what to do before you start your own venture
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Waseem Daher sold his first startup to Oracle, and the second to Dropbox. He’s now raised millions of dollars from some incredible investors to help other founders grow their companies by handling their backend office and accounting needs.
On the Dealmakers Show, Daher talks about the keys to successful cofounding teams, selling your company, the framework for building a winning business, the number one thing to focus on as an entrepreneur, and hiring well.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Keys To Creating Successful Cofounding TeamsWaseem Daher was born to Lebanese parents who immigrated to the US. Many of their friends and relatives all moved to the Cleveland area, where he found a great appreciation for family and community.
His uncle bought him and his siblings their first home computer which instantly enthralled him with not only games, but the ability to explore and build things.
Daher attended MIT to study computer science, where he met the two cofounders with whom he has now created three successful startup ventures with.
He went through internships with Google and Amazon. Then one of his cofounders asked him to join him in creating a startup around an idea he had. Being early in his career, and with the ability to always go back to working in tech for someone else, Waseem said he saw little risk in running with it early, rather than waiting to try starting his own business.
Now three companies in, and with two strong exits under their belts, they certainly seem to know something about having that founding team right.
Daher credits this to working so well together. Through working on things before launching their first company, to riding the highs and lows of that first venture together, they learned to trust each other.
They’ve also learned how to segment their roles and what they collaborate on, versus what they take responsibility for, and how they make decisions together to maximize their productivity. As you go from one venture to the next, he describes it as a virtuous cycle, in which you can focus on the business you are building, rather than figuring out all of these dynamics.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
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Selling Your StartupThey began by bootstrapping their first business. Along with a little help from some grants, and winning a MIT business competition. That seed money, finding paying customers, and being frugal enabled them to carry that company through to being acquired by Oracle for eight figures.
They stuck with Oracle for the one year vesting period. Though on the very next day their agreement was up, they met to plan their next venture together.
After just two years, this second startup was acquired by Dropbox. Again for eight figures.
From Daher’s perspective you really don’t just wake up one day and decide to sell your company. The best outcomes seem to arise out of a mutually beneficial and strategic vision and the right timing. Which can sometimes end up being the result of conversations over the period of a year or more.
Specifically he says that to maximize the probability of a good acquisition outcome, you “don’t build towards acquisition. Build a thing that your customers actually want and want to give you money for. Grow the customer base. Demonstrate that it’s valuable, and then potential acquirers end up seeing that.”
The Essential Elements Of A Great Business IdeaBusiness ideas are plentiful. Yet, honing in on what will really prove to be successful can be much more involved. Waseem Daher’s framework for filtering and selecting their ventures comes down to four main pillars.
The first is of course a very large market. A big painful problem that can support building a multibillion dollar company.
Second is the why now. Meaning what has changed in the world to make it possible to do this, when it wasn’t before. Something must have or is changing, or it would exist already.
Thirdly is why you. How is your team uniquely qualified or right to execute and succeed in solving this problem, and building this business?
Then, determine the easiest way to test the market for it. Which is often about getting really close to your customers. Something which he says you shouldn’t stop doing. You must have that dynamic figured out before you even consider building an infrastructure to scale anything. Otherwise you are likely wasting your time in the wrong direction.
In fact, he says that you really have one job as a founder. Which is to “make a thing that people want, that they’ll pay you for, and that they’ll tell their friends about.” Everything else, including your office design, worrying about your competition, etc. is not worth your time.
PilotWaseem’s latest venture is Pilot. A business accounting, tax, and CFO services, combining real human experts and great software.
They’ve already raised over $160M, from incredible investors like Jeff Bezos, Stripe, Sequoia, and many others.
Storytelling is everything which is something that Waseem Daher was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How Waseem thinks about competition
- Hiring well
- How Pilot can help your startup
Alejandro Cremades · EP 580 Waseem Daher On Selling His First Business To Oracle, His Second To Dropbox And Raising $160MSUBSCRIBE ON:
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What Is the length of a pitch deck? Or, how many slides should your pitch deck be?
Pitch decks are vitally important for startups. They are the key or the roadblock to funding for your business. In turn, that means they can make or break everything.
There are many tips for crafting a powerful pitch deck and pitching for fundraising. Yet, one of the main things that frequently confuses and sabotages startup founders is how long the pitch deck should really be.
Here is the content that we will cover in this post. Let’s get started.
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- How Long Your Pitch Deck Should Be
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- Put simply, when it comes to pitch deck length, shorter is better.
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- Having an optimum length for the pitch deck is critical
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- Cover Slide
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- Problem Slide
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- Solution Slide
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- Market Size
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- Competition Slide
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- Product Slide
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- Customer Slide
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- Feedback Slide
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- Traction Slide
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- Model Slide
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- Financials Slides
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- Investors Slide
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- The Team Slide
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- Use Of Funds Slide
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- Closing Slide How Long Your Pitch Deck Should BePitch deck lengths and slide counts alone can make or break your startup and fundraising efforts.
Length has a variety of impacts on the effectiveness of your deck and pitch. First, it is a significant signal as to whether you are going to make it as an entrepreneur and startup.
Just by the number of slides in your deck (without looking at any of them), experienced advisors and investors know whether you are likely to make it or not.
You are probably asking others for at least millions of dollars. Millions that you haven’t been able to put together in your lifetime up until now. Important capital they have personally sacrificed to save or raise. It is their livelihoods, family finances and reputations on the line.
If you couldn’t invest a few minutes to research for information about what is the length of a pitch deck, or couldn’t bother to deliver on it, why on earth would they consider investing so much in you?
Put simply, when it comes to pitch deck length, shorter is better.Creating a shorter deck can seem harder than just pouring out everything in your head onto slides. Yet, being able to do so is a big differentiator. It is a must. It proves that you can focus and execute, follow great, and get things done.
That is what differentiates the few founders and ventures that have what it takes to succeed, while 99% fail. If you can’t focus when it comes to simply putting together a deck, how are you going to build a scalable business?
Length also impacts how you deliver on the pitch during presentations. Even if you have a 60-minute pitching slot, having a deck that takes longer than 20 minutes to talk through can be dangerous.
You need to leave time for a Q&A period, late starts, and dealing with any technical glitches. You don’t want to get cut off and run out of time right before you hook them.
Being able to keep it simple, including plenty of white space and larger font sizes helps to get the most important facts across. It helps maintain interest and flow, and greatly reduces the risk you’ll lose the audience in the process.
Having an optimum length for the pitch deck is criticalLength even matters when it comes to document storage and file sharing. A shorter deck and smaller file size have many more options for sharing and publishing.
That can make all the difference when it comes to getting your deck in the right hands. It also makes it far less likely to be deleted for taking up too much storage space.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
So, how short is short enough? How many slides should your deck have? What Is the length of a pitch deck?
This may somewhat depend on what stage your startup is at. The earlier stage your startup is the less data you will have and be expected to present. Try to avoid exceeding 20 pages in your pitch deck at all costs. 16 is better. 10 or less is even sufficient for pre-seed, pre-revenue startups.
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Cover SlideThis is your first impression. Your cover slide can determine if they look any further or not. Include your company name, logo, and contact info. Lead in with a good tagline or slogan.
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Problem SlideShow that you have a clear handle on your problem. Explain it simply. You can talk around this slide and tell a story that resonates with your specific audience.
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Solution SlideWhat is your solution to this problem? How does it solve the one main problem?
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Market SizeThis data point is incredibly important to investors. How big is this market overall? What is your addressable and serviceable percentage of that?
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Competition SlideWho are your main competitors? How are they different? What are your sustainable competitive advantages over them? Position them well in a graphic that works in your favor.
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Product SlideWhat product are you creating to solve the problem? Use images of prototypes, screenshots and pictures of how it will be used in real life.
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Customer SlideAre your customers regular consumers, SMEs, or large corporations? What is your ideal customer avatar?
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Feedback SlideWhat feedback have you already compiled from potential or existing customers?
Need some added information? Check out this video where I explain how to create a pitch deck.
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Traction SlideWhat traction does your startup have? Specifically hone in on one metric. What progress have you made in terms of customer acquisition, sales volume, revenues, and profit?
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Model SlideWhat is the business model? How do you get customers, deliver to them, and make money?
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Financials SlidesIf you have already begun business include your existing financials. If not, this is all about financial forecasts for the next 1-5 years. This should include customer acquisition, sales, revenues, profits, and profit margins.
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Investors SlideWhat other investors are already involved or expected to participate in this fundraising round.
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The Team SlideUse profile pictures, and one to two sentence bios for each cofounder.
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Use Of Funds SlideHow much money are you asking for? What will you do with the money you raise? What milestones will it enable you to achieve?
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Closing SlideThank investors for their time, repeat your contact information so they can get in touch.
When you’re looking for information about what is the length of a pitch deck, keep these essential factors in mind.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Bibhrajit Halder has been a big part of the autonomous wave taking over the world. He’s already raised nearly $70M for his own AI software company that is helping to build the future.
On the Dealmakers Show, Halder talks about defense department grants and prize money, billion-dollar ideas, developing versus deploying your startup’s technology, hardware versus SaaS startups, and when to leap into your own startup.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Autonomous Wave & Billion Dollar IdeasBibhrajit Halder was born in Calcutta, India. The fourth of five siblings. By the time he was in middle school, he already knew that he was on the path to eventually go study in the United States.
After his undergrad in mechanical engineering, he got into Ohio University. Not even one Master’s degree was enough. So he got two of them, and a Ph.D., focusing on autonomous vehicles.
He says that he has always been interested in robotics, and then self-driving, autonomous vehicles.
Bibhrajit points out one major catalyst for this space that has proven to be tremendously transformational. Which was DARPA and their challenges and award money. They put up two $1M prizes, which ended up seeing the major universities and corporations getting involved.
Since then, we’ve seen the likes of Google get involved. As well as GM. Who bought the software startup Cruise for a billion dollars when it had no revenue. This has all snowballed with around $100B invested into this space over the past few years.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
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There are many applications for autonomous vehicles. Not just in the passenger vehicle market, but for going to space, and in mining and building infrastructure projects.
Bibhrajit chose to focus on the heavy machinery side. Joining Caterpillar just a week before they kicked off their own big project. That’s where he created his first patent. He hasn’t looked back since.
Learning & Launching Your Own StartupClearly, Halder put a massive amount of time into his academic education. Then he went to work for some of the most notable large companies out there. Including Caterpillar, Ford, and Apple.
At Apple, he saw the speed of technology developing. Then just the size and scale of their infrastructure and resources that they can throw behind something. As well as their own unique take on software and designing for user experience.
At Caterpillar, he also learned about delivering value to customers. Where you may be able to save a customer $25M on a project, 25% of their cost, or a whole year of work. Meaning that as a startup, you can’t go in and just pitch incremental changes of 5% or 10%, and expect to create a successful and sustainable business.
Another big difference he has picked up is the difference between developing your technology, and deploying it. Many new entrepreneurs may think that developing new technology is a big thing. Halder warns that development is just 10% of it. The other 90% is deploying your product, and keeping it running.
Today, his top advice is still to jump in when you are inspired to start something. He says that you will never be or feel ready. Even if you take another two years to learn more, you won’t be ready. Instead, just do it, and you will learn 100x more by doing it when you are not prepared.
SafeAIToday, Bibhrajit’s own startup is SafeAI. A SaaS company focused on helping heavy equipment owners to convert their vehicles into autonomous ones with their hardware and software.
They have doubled their team to 100 in the past year, and have offices in California, Australia, and Tokyo, where they are deploying their technology. With customers that have already made hundreds of millions of dollars in commitments.
Looking forward, Halder sees a world in which 80% of the equipment building our infrastructure is autonomous. We will be building a lot more, and faster. With humans focused on organizing and planning, while machines do the heavy lifting.
Leveraging Your InvestorsSo far SafeAi has already raised $68M in funding through a recent Series B round.
Storytelling is everything which is something that Bibhrajit Halder was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Looking back to their $1M pre-seed round, Halder says he never wants to show that ugly pitch deck again. Yet they have gone on to build a panel of 16 or more notable investors. Including their purely financial investors, strategic investors, and customers that have become investors.
He says their investors have been incredibly supportive, and have been instrumental in their success and growth. Not just financially, but willing to help in every way. Even taking texts and calls at midnight.
They bought into the vision, helped make introductions to other investors, found good hires, and sped up their delivery.
Listen in to the full podcast episode to find out more, including:
- The new world of autonomous equipment
- What SafeAI is doing for heavy vehicles
- Building a SaaS startup
Alejandro Cremades · EP 579 Bibhrajit Halder On Raising $68 Million To Accelerate Autonomous Mining And ConstructionSUBSCRIBE ON:
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Alexandra Zatarain is on a mission to help others optimize their sleep for their best lives using new software and hardware technology.
On the Dealmakers Show, Zatarain talked about the importance of storytelling, the science of Sleep, pajama party product launches, the number one thing for enhancing performance as an entrepreneur, building new categories, and today’s remote working environment.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksThe Pivotal Power Of StorytellingAlexandra Zatarain was born in Tijuana, Mexico. Her father from Sinaloa was an entrepreneur himself. Her mother was a doctor.
While Alexandra says that she never intentionally set out to be an entrepreneur herself, those early influences and exposure to watching her parents build their businesses certainly have come back to guide her own path.
She was able to see her father go through the highs and lows of growing a business and closing one down, and his perseverance. It taught her about the risks, as well as the freedom to create your own future.
Aspiring to take her professional career to the United States, Zatarain applied for jobs in the US, and after college, found herself moving to New York.
Having studied international communications, and augmenting that with courses on politics and business, Alexandra initially found herself working in a PR firm.
This certainly helped further build her experience in communications, as well as learning to appreciate the value and art of storytelling. Something she describes as a critical tool personally and in business.
She says that it actually begins with the stories that you tell yourself. The stories you tell yourself about how your life is going each day. Which can be used to motivate and propel yourself forward by putting yourself in the right mindset.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Learning The Art Of StorytellingOn the business side, storytelling is crucial and pivotal in selling your vision, both to yourself and others. That matters for hiring great employees, enrolling great investors, and customers, as well as advisors and others.
Of course, not every entrepreneur does well at extracting and distilling, and conveying their best story in a concise way. The earlier you can get help with that, the better. The faster and greater you can grow your venture.
In fact, even with her own startup, one partner at Khosla Ventures (and now with Founders Fund) let them know that they needed to rebrand and tell a different version of their story for others to really get it and back them.
Obviously, you need people to tell that story to. In fact, one of Alexandra Zatarain’s top pieces of advice for other budding entrepreneurs is to begin building a network of really smart people. She calls that one of the company’s most valuable assets.
Though a task she wishes that she had been more intentional about earlier on in life. To consciously be looking for those around you that are smart, and are the best in the world at something. Whether in your community, at school, or in your professional environment.
This is certainly true for finding your co-founders as well. Her startup includes her entrepreneur husband, and a third co-founder and CTO, who had all gotten busy embedding themselves in NYC’s emerging local startup ecosystem.
Sleep Tech & Pajama Party Product LaunchesAlexandra’s startup, Eight Sleep, took off after a house party where they showcased their initial product prototype, and a friend offered a small check to back their venture.
They’ve now raised $160M in funding, and have local teams in San Francisco and New York working on the hardware. As well as remote teams handling everything else.
Storytelling is everything which is something that Alexandra Zatarain was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Eight Sleep is effectively a SaaS startup focusing on sleep technology. Combining products that you can use to retrofit any bed, and turn it into a smart bed. This not only helps control your bed to enable better quality and length of sleep, but also provides you with all the data about your sleep, and some great markers of your health from the time you are sleeping.
In fact, she says that it may be used to help you diagnose other health issues, and get ahead of them.
Better Quality Sleep For Enhanced PerformanceIt is no secret that sleep is now being recognized as one of the most important factors for performance. More and better quality sleep may be some of our best medicine. Not to mention just making the world a better place, with fewer grumpy people who haven’t slept well.
Zatarain goes on to say, “sleep is the most fundamentally important pillar of health. You would die sooner of sleep deprivation than food deprivation. That is just how much your system needs it every single day, and it needs it in the proper doses.
Their core product, Pod, has reportedly been proven to improve sleep quality by up to 32%. As well as providing up to 34% more deep sleep. With an increase of around 19% in your recovery.
Listen in to the full podcast episode to find out more, including:
- Sleep fitness
- The advantage of remote-first team building
- Fundraising
- Building new categories
Alejandro Cremades · EP 578 Alexandra Zatarain On Raising $160 Million To Improve Your Sleep PerformanceSUBSCRIBE ON:
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Imran Khan went from becoming one of the youngest managing directors at JP Morgan to taking Snap through raising $4B, and becoming an entrepreneur himself.
During his appearance on the Dealmakers Show, Khan talked about learning to embrace new cultures and learning new things, building trust and credibility, the rules for raising money for your startup, and why you shouldn’t take the money.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom Bangladesh To International Investment BankerImran Khan grew up in Bangladesh. Working in the shipping industry for the government, his father gave him some exposure to international business early on in life. He was always encouraged to try new things and broaden his horizon.
Khan decided that taking off to study in a new country would be a great way to apply that. Hit an internet cafe and Yahoo, and got into college in Denver.
There were certainly some big cultural differences on arrival. From how close you should be when talking to people to how you get around town.
Studying finance led him to Wall Street, and becoming an analyst at JP Morgan. It was the pit of the stock market in the early 2000s. So many other analysts had lost their credibility, because they had been promoting stocks, without really warning investors of the risks. It was easy for him to step in, cover tech stocks and succeed. Quickly becoming one of the top analysts in his space. Then one of the youngest managing directors at JP Morgan at age 27.
From this time, he really learned a lot about the value of trust and credibility. How long it takes to earn and build, and how fast you can lose it. That applies to individuals and their careers, banks, and entire financial systems.
Over drinks with Alibaba co-founder Joe Tsai, Joe recommended he think about going more into investment banking. 48 hours later, he was making some introductions for him. Which ended up in a role with Credit Suisse. During his time there, they grew from $12M to $250M in revenue.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
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- Investor Access : connect with the right investors for your business and close them
Book a Call
New Trends & Raising $4BThe next big shift came for Imran Khan when Snapchat cofounder Evan Spiegel wanted to meet.
After doing a little research, Khan found out just how popular the app was. It was still young, but it had been gaining a lot of young users. They met and walked, and Imran says that he was just blown away by Evan’s intellect, vision, and thinking. He joined and ended up moving out to LA.
They worked on developing the product and monetizing it. Turning it into what is today a company with a market cap of over $16B.
Khan still credits much of that success to Evan’s vision, and the incredible team they had there. Including those that have gone on to have significant positions at Discord and Spotify.
In 2015 investors seemed to scoff at the fact Snap had no revenue. Three years later, they were doing $1.6B in annual revenue.
During his time with the company, they raised $1.8B pre-IPO, and then over $2.5B with the IPO.
Storytelling is everything which is something that Imran Khan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Raising Funding For VerishopFor his own, most recent venture Khan has raised another $140M. He says that in spite of his financial background, he continues to learn. Especially from the perspective of being the founding entrepreneur.
When it comes to fundraising, building and maintaining trust are still his top message. Warning to be sure that you don’t over-promise when you are pitching. Only promise what you know you can deliver on. Otherwise, it will get much more difficult to raise money from investors after that.
Avoid over-hyping things up. Instead, he recommends being transparent with your investors. Which will yield much better relationships with your board after you close the round.
Then when you get those term sheets coming in, it is time to negotiate your funding. He says that you should be willing to take a step back if the terms are overly complicated or you don’t understand what they mean and their impact.
Do not believe that anything is ‘standard’. You may hear that a lot as a new entrepreneur. Don’t fall for it. Be ready to get help negotiating.
Valuable Fundraising InsightsWhile it may at first seem counterintuitive for first-time entrepreneurs, Imran “I think you’re better off having a lower valuation but a simple cap structure.” Advising not to overly focus on the valuation. A fictitious figure that is easy to manipulate with the terms.
In fact, some of his top advice when launching a business today is not to raise too much money.
While it wasn’t hard for him to raise money for his new company, and $140M may not sound like much for a startup these days, Imran believes that it can be a constraint on innovation.
Just as having too many people can be a deadweight to carry around. Instead of being highly productive and efficient, being able to innovate and leverage your advantage of being a nimble startup, you could be weighed down with HR, meetings, and other people’s timelines and interests.
VerishopVerishop is Khan’s latest venture. One born out of the boom he saw coming in new content creators during his time at Snap. As well as the challenges he saw them encountering in promoting their own brands. Especially with Facebook, Google Ad, and other mediums of advertising becoming more difficult and expensive.
They’ve already been named one of America’s best startup employers of 2023 by Forbes. As well as being one of the fastest-growing e-commerce companies by Newsweek.
Listen in to the full podcast episode to find out more, including:
- What Verishop is all about
- Effective relationships with board chairs
- Lots more
Alejandro Cremades · EP 577 Imran Khan On Raising $140M To Make The Discovery Of Independent Brands EasierSUBSCRIBE ON:
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Ryan Morris has been on both sides of the table as an investor and an operator. His latest venture has already raised close to half a billion dollars to tackle a huge problem.
During his appearance on the Dealmakers Podcast Morris talked about team building, inflection points, turning companies around, picking great investors, getting your practice in, and investing in businesses.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksLeaping In, And LearningRyan Morris was born in Toronto. Known for its Canadian winters that are much more brutal than his current home in California.
From a very early age Ryan was deep into reading, technology, and figuring things out. Though he has certainly stayed well rounded with contrasting interests, personally and professionally.
As a kid he was fascinated by nuclear fusion. To him it was as interesting as any sci-fi entertainment. At 11 years old he thought it was a great way to create clean energy and save the world.
Then one day his father challenged him. Telling him that if he was ever going to do anything with it, he also needed to have a team to help build it, as well as the capital to fuel a real business.
So, he looked up the Forbes 400. He learned about Bill Gates and Warren Buffett, and how they did it. Years later he has landed Gates as an investor in his latest venture, Turntide
When it came time to get into a great college his uncle told him that rowing was a big thing among the Ivy League schools where the big science labs were. So, in spite of not having the build of your typical hardcore athlete, he signed up for the rowing team. By the end of high school he ended up being the strongest on the team, and winning the national championships.
It was a big wake up call that if you put yourself in a competitive playing field, and were willing to stick with the grueling first years, and have the patience and discipline to chip away at a big problem, you can achieve world class things.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
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Masters At Cornell And Working On Oil RigsWhen pursuing his Masters at Cornell he decided it was smart to maintain some more perspective and to stay well rounded. So, he took a year off, and looked up the most dangerous jobs in the world. He picked one he could get into, and ended up working around oil rigs in minus 30 degree weather in northern Canada.
He later did this again with road bike racing. Throwing himself into something, and building the muscle and skills as he did it.
Ryan managed to graduate right as the world was melting down in the 2008 financial crisis. Huge layoffs were happening, few were hiring, and many of his classmates went back to their home countries as a result. As for himself, he figured he might as well just jump into being an entrepreneur.
Fixing Things & Being Your Own CustomerMorris’ first project leaned on his own experiences and challenges. With all of the breaks and other activities he did during school he missed a lot of classes. So, he and his co-founder created a solution that would allow them to use video notes.
They took it to being cash flow positive and stable enough to fund their other interests. One of which was investing.
At the pit of the financial crisis he started Meson Capital Partners. An investment firm that now has $175M under management.
In a sense this was also a product and company he created to solve his problem as a customer too. In fact, sticking to that concept is one of his top pieces of advice for others considering starting their own businesses today too.
Then ensuring that you combine a deep empathy with your customer with better technology, and business you can scale, along with having the right people on your team. Those whose values are aligned with yours, and whose skills are the right fit for your stage of business.
The latter are points which he really learned as he invested in other companies, and then often ended up getting involved in turning them around.
They would invest in companies where they could add value. In many cases it was a human problem. With dysfunctional politics, executives and board members refusing to change things, or admit that they had made mistakes.
One of these companies ended up selling for $200M.
TurntideRyan Morris’ latest venture is Turntide Technologies.
A company building software-driven efficient electric motor systems for buildings and electric vehicles. Technology that powers most of what moves on the planet. With a focus on solving the problems of using rare earth minerals.
They’ve already built a team of 500, and raised $485M in funding. Their investors include Jeff Bezos, Bill Gates, and the Canadian Pension Board, as well as others.
Storytelling is everything which is something that Ryan Morris was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!In choosing these investors Ryan says that he was focused on those with shared values and timelines. Whereas most VC funds are only looking to invest for 5-10 years, and will pressure founders to meet their timeframes, he wanted people on board that would support them for the very long term. To do the big and hard things that will be really transformative.
Their investors include Jeff Bezos, Bill Gates, and the Canadian Pension Board, as well as others.
In choosing these investors, Ryan says that he was focused on those with shared values and timelines. Whereas most VC funds are only looking to invest for 10 years and will pressure founders to meet their timeframes, he wanted people on board that would support them for the very long term. To do the big and hard things that will be really transformative.
Listen in to the full podcast episode to find out more, including:
- What Turntide is doing for energy and the planet
- Inflection points
- Scaling teams
- Operating at different levels of scale
Alejandro Cremades · EP 576 Ryan Morris On Raising $485 Million To Optimize How Humanity Uses EnergySUBSCRIBE ON:
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Jai Shekhawat has built, funded, and sold companies. Now he’s investing in and advising other entrepreneurs on their own ventures.
On the Dealmakers Show Shekhawat talked about the advantages to building a company in a downturn, effective board dynamics, planning what you will do after you sell your business in advance, and why he made the leap from entrepreneur to investor.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksLearning To Operate In New EnvironmentsBeing able to adapt quickly, learn new things on the fly, and to operate in new environments are essential traits for entrepreneurs. Many seem to have become accustomed to this early in life after moving and traveling a lot, and becoming comfortable with that level of uncertainty.
Jai Shekhawat is no exception to this. He was born in a desert town in the northwest of India. His father was in the navy, and a submarine officer. Meaning that he spent much of his childhood moving around the coastline of India.
He even spent time living in Moscow, under the old Soviet Union as a kid. Before ending up in boarding school in New Delhi, when his dad was posted to the United States.
It is a life that makes you learn how to adapt and fit in to new places, to make new connections and friends, to be independent and become resilient if you are to survive. He says that also helped him develop a love for reading and individual racket sports.
See How I Can Help You With Your Fundraising Efforts
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Landing His First Job As A ProgrammerFinishing college at 22 years old, he ended up landing a job as a computer programmer. Within a few months he was told he would be moved to Georgia. At first not realizing that they meant Atlanta, GA in the United States.
Then Jai ended up working for Syntel for five years before choosing Northwestern, and the Kellogg School of Business for his MBA. That’s when McKinsey brought him in to learn the world of consulting. An experience which he says was instrumental in teaching him frameworks, how to break down and tackle big problems, and gaining the confidence to build a business of his own.
Eventually, consulting alone just wasn’t fulfilling. The entrepreneurial bug drove Jai to want to get his own hands dirty in operations. To build his own team, and see the work through.
Starting & Scaling Through An Economic DownturnJai Shekawat’s first venture was IT20 (now called Quinnox after a merger). A successful company that continues to operate today, with around 1,000 employees.
However, within a year of starting, he decided he wanted to be more involved in creating a new product, rather than just providing services. So, he traded some equity in his next venture, and put that company in the hands of some capable friends.
Next was Fieldglass. Before jumping in with both feet he spent time thinking, evaluating, and validating his idea. One of his main criteria he says was that it was a very large and unsolved problem. One that would come with equally large risks of failure, but also huge upside potential. Something which he would regret not trying more than failing at.
Fieldglass began by tackling the challenges of the growing contract workforce. A space which has only exploded in size over the past couple of decades.
However, by the time he had validated the idea, and had brought in his first hire (his CTO), and received a term sheet the financial world was already imploding in crisis.
They took the money, and learned how to make it last. He says they also found a great advantage in launching during a downturn. Most obviously as all the others who weren’t dedicated to their ideas folded and moved out of the space.
Raising Funding For FieldglassFieldglass went on to raise $38M in venture capital across four rounds of funding. Then recapitalized the company with a private equity deal which brought in $220M.
Storytelling is everything which is something that Jai Shekhawat was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!That downturn not only helped create more demand for what their business was selling, it turned them into a rocketship. They went from securing just 40 customers over the previous years, to bringing in 40, 60, and 100 in just the next 12 months. Their investors were incredibly happy. SAP ended up acquiring them. Making them the first unicorn of their kind.
Going From Entrepreneur To InvestorIn spite of the large and successful exit, Jai says he didn’t just rush out to splurge it all. He bought a home for his parents in India. As well as new squash rackets and squash shoes.
Next he decided that instead of being boxed in to working on one thing for 24 hours a day, seven days a week in a new startup of his own, he would take a more portfolio approach to his work.
This evolved into sitting on boards and advising many entrepreneurs, as well as investing in a portfolio of startups. That includes mentoring at a quantum computing accelerator in Illinois, being a trustee with the museum of natural history, and taking field trips with the scientists to places like Madagascar, Guyana, and Peru.
Building The Right Board DynamicsJai says it is not only important to bring in the right investors, but to build a board that functions well too.
A lot of this is about alignment. When it comes to funding, entrepreneurs need to bear in mind the timeline that most VCs are on, and their needs for liquidity. Which often means pressure to achieve that on the investor’s schedule, not yours. Private equity, and other investors may have a longer term view. Jai still recommends focusing on building a profitable business.
In terms of the board, Jai says it works best when there are both investors and operators on the board, and who work well with the CEO in helping them tackle the problems, rather than pushing them for their own interests, or without having hands on experience.
Listen in to the full podcast episode to find out more, including:
- Testing and validating your idea
- Risk of failure versus the rewards of trying something big
- Alignment with your investors and board
Alejandro Cremades · EP 575 Jai Shekhawat On Selling His Business To SAP For $1 BillionSUBSCRIBE ON:
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Sasha Orloff built his first two companies at the same time. Now he’s helping other founders figure out the financial puzzle they face on the startup journey.
On the Dealmakers Show Orloff talked about when you should move forward with your business idea, optimizing your time, the number one thing for increasing your startup’s success, how to pitch when fundraising, and more.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhen It Is Time To Pursue Your Startup IdeaSash Orloff grew up in California’s Bay Area. As with many successful entrepreneurs he spent some time traveling and exploring the world, and gaining new perspectives.
He studied in Europe and spent time living in Mexico, Honduras, Washington DC, New York, and San Diego. Experiences he says help you see bigger opportunities as an entrepreneur. As well as breaking out of the bubble that living in San Francisco can put you in.
He still returned to the Bay Area. Where he says he loves the constant focus on tomorrow. Being in the middle of all the energy and excitement, the VCs and founders. Which gives you a feeling of possibility.
Orloff also found an early talent for math. Especially applied math that he could use in real world business situations in his career across startups, non-profits, governments, mult-nationals across many industries
After 9/11, as many people were reevaluating their properties in life Sasha was inspired by a book about microfinance. That led him to work with the World Bank while getting his MBA, and then Citigroup’s venture capital team. Which brought him back to the West Coast of the US. His job there working with entrepreneurs and finding great ideas to fund inspired him to come up with his own.
See How I Can Help You With Your Fundraising Efforts
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Book a Call
Applying To Y CombinatorOn a whim on the way to the airport, he applied to Y Combinator, and got in. The mobile financial services technology he built as a result of that ended up with him building and funding two companies at the same time, Mission Lane and LendUp.
When it comes to your own startup ideas Sasha points to three factors in the decision to make the leap.
The first is being so obsessed with it, that you go out and tell everyone. You battle test it by getting their feedback, and having them tell you why it won’t work.
Secondly, making sure you can pull together a great team. Being able to convince others to quit their jobs and work for little, in the hope you can build this thing into a success together.
Then, thirdly, finding the path to finance it. For some that may be through bootstrapping. For others selling funds. Or others raising venture capital on the journey.
When you can check those boxes, and you can’t think of a reason why all of those things don’t exist, it is the reason it should exist. In his own words he says “I can’t find a way to say no and I get so excited about the yes, I feel like I don’t have a choice. I have to do it.”
Exiting And Developing New Business IdeasAfter his first two companies, working seven days a week, for eight years in a row, he decided he needed to take some time off. Those first two ventures found their product market fit quickly, became well capitalized, and they placed new CEOs in each.
What was supposed to be a couple months off to decompress and spend time with his family, turned into almost a year break.
For several months he left his mobile phone at home, practiced being present, and wrote down business ideas on a notepad. Big, ambitious ideas he thought that he was uniquely suited to tackle, Of course, there is also considering the size of the market and business you can build out of your idea, if it is defensible, how you will break into the market, and if people will pay for it
After six months he began bouncing those ideas off of other founders, and VCs. Then boiled that list down from 100, to twenty, to five, to three, to the one.
Sasha says that big trends and shifts also create the right timing to launch your ideas. Just as it was with 2008 and new financial regulations, the evolution of venture capital and startups for his third company, and the changes in markets and the economy happening now for other aspiring entrepreneurs.
Pitching & Financing Your CompanyMission Lane raised around $675M. LendUp raised about $361M. His new venture Puzzle Financial raised $20M just to get started.
Storytelling is everything which is something that Sasha Orloff was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Orloff says that your two biggest resources for building a company are your people and your capital.
He advises not to make the mistake of thinking you have to do everything yourself as an entrepreneur. Instead, hire smart, talented people, empower them to do their best work, and get out of their way. Your product will scale fast, and you’ll be able to scale yourself faster, and focus on your unique tasks, like setting a vision, hiring the team, and raising capital to pull it off.
When you are fundraising and pitching you have to tell your story and make sure that aligns with your finances. You have to highlight the best parts of that story, in a compelling way, and avoid going too deep in detail. The problem pitching as a founder is you know too much, so creating an exciting, vision of what the future at the right level of detail is hard.
He advises to “get help early.” To get that first sentence right, get the story right, and the practice your pitch.
Today, with Puzzle Financial, Sasha is empowering other founders to make better decisions, and understand their finances better with software, data, AI, and machine learning.
Listen in to the full podcast episode to find out more, including:
- Decision making and failing fast
- Hiring and empowering your team
- Debt versus equity financing
- How Puzzle Financial is empowering entrepreneurs at all levels
Alejandro Cremades · EP 574 Sasha Orloff On Raising $1B For Previous Companies And Creating Smart Accounting SoftwareSUBSCRIBE ON:
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What are the top venture capital firms by stage? In other words, who are the top venture capital firms for each stage of growing your startup?
VCs are probably the most common funding sources associated with the startup ecosystem. An increasing number of venture capital firms have popped up over the years.
For many entrepreneurs landing an investment from them is not only about the big money that they can bring to fuel the venture, but also the validation they feel it provides to their company and business idea.
Understanding the different players in this space will help you get to them and build relationships now, and understand how they fit into your financial stack and venture.
So, who are the major venture capital firms by stage out there today? What stages are they funding startups at? How can you get them to fund you?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksVCs And Startup FundraisingVenture Capital firms, or ‘VCs’ are investment firms specializing in the startup space.
They pool capital together into funds from other investors. Often other institutional investors. Then with these larger amounts of capital are able to deploy it in a more substantive and impactful way into the startup ecosystem.
They make a spread of bets into different ventures. Many of which may fail. This, in turn, means that they are constantly aiming for oversized returns in order to overcompensate for that risk.
VC firms have been increasingly expanding to invest at different stages of the startup lifecycle.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Alternative InvestorsOf course, venture capital firms by stage are not the only types of investors providing capital to startups.
They may certainly be a staple of many startup journeys. Though it is quite common for startups to have a variety of types of investors in their capital stack.
Next to VCs, angel investors may be the next well-known source of money for launching and fueling the journey. Angels typically invest at the earliest stages and do not have the amount of capital today’s startups need as they get into their growth stage.
Friends, family, and others in your personal network may come into play even before this.
Then there are angel groups that band together to spread their risk and make larger investments.
Public crowdfunding is always an option. While startup accelerator programs can bring both money and a framework for making progress in the early months.
Often later in the life of a startup, private equity firms and strategic corporate investors will play a role. Though the lines continue to blur, and very much depend on your unique venture and how you are pitching it.
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Other Sources Of Capital & FinancingTraditional equity capital investors are not the only way to fund your startup. They can certainly have their place and be instrumental in going big, and going fast. Though they are not the only option. There are other ways to get started and fuel your company too. Some may certainly have advantages over dilutive equity funding too.
GrantsGrants can be a great source of non-dilutive capital for your business. This can be a great point of validation for your startup. Especially when included in your pitch deck and PR. Both for attracting great talent, and approaching other investors.
There are grants at the federal, state, and local levels. Another big perk here is that not only don’t they require you to give up equity and control, but this money does not have to be repaid like a loan either.
There are also many other incentives that local authorities may offer businesses that can create jobs, including tax breaks.
Competitions & AwardsThere are a variety of competitions to enter yourself and your startup for. This can be specifically for coding, business plans, and more. Again, this can add a lot of credibility, boost PR, and can be non-dilutive money that doesn’t need to be repaid.
Loans & Credit FacilitiesThe most common and obvious alternative to raising equity capital is to borrow instead. Brand new ventures can be limited in their options. Many lenders will be leaning more toward your personal credit and guarantee than an unproven business.
However, as you grow and prove your concept, many more doors will be opened. This can range from business lines of credit to factoring loans, and SBA loans. As well as credit facilities that can be used to finance your customers at a great scale.
Partnerships & Customer Financed GrowthMany startup founders have found that partnerships with big enterprise clients are the way to get going. Some will invest in your business. Others will pay for their build. Both provide money and proof of commercial viability at the same time.
Other ways to finance your venture and growth through customers are through licensing your technology and prepaid sales.
Top Venture Capital FirmsThe lines have certainly been blurring with VCs investing across a broader section of the startup lifecycle. Though the three main levels are the early or seed stage investors, versus growth stage, and late stage venture capital firms.
There are certainly exceptions to when these firms will invest in you. It all comes down to the pitch, the venture, and your connections. Check out how the top venture capital firms by stage work.
Seed StageThe most notable early-stage VCs based on exits and ranked from top to bottom according to Crunchbase include:
- SVA (1,376 investments, 422 exits, and 5 funds)
- Lerer Hippeau (620 investments, 152 exits, and 12 funds)
- BoxGroup (602 investments, 106 exits, and 6 funds)
- Uncork Capital (402 investments, 102 exits, and 7 funds)
- Initialized Capital (492 investments, 87 exits, and 8 funds)
- Shasta Ventures (416 investments, 85 exits, and 7 funds)
- FJ Labs (1,200 investments, 81 exits, and 1 fund)
- Flybridge (401 investments, 70 exits, and 9 funds)
- Correlation Ventures (351 investments, 69 exits, and 2 funds)
- Global Founders Capital (921 investments, 68 exits, and 2 funds)
Series A1. New Enterprise Associates (2,106 investments, 566 exits, and 14 funds) 2. Sequoia Capital (1,782 investments, 359 exits, and 34 funds) 3. Accel (1,906 investments, 354 exists, and 33 funds) 4. Kleiner Perkins (1,373 investments, 322 exits, and 22 funds) 5. Bessemer Venture Partners (1,315 investments, 292 exits, and 14 funds) 6. Venrock (785 investments, 268 exits, and 10 funds) 7. Greylock ( 836 investments, 248 exits, and 8 funds) 8. Index Ventures (1,086 investments, 237 exits, and 20 funds) 9. Google Ventures (1,029 investments, 231 exits, and 1 fund) 10. Andreessen Horowitz (1,368 investments, 201 exits, and 27 funds)
Series B And Later Stage1. Insight Partners (988 investments, 193 exits, and 11 funds) 2. Norwest Venture Partners (879 investments, 191 exits, and 13 funds) 3. Tiger Global Management (1,144 investments, 133 exits, and 9 funds) 4. Western Technology Investment (388 investments, 133 exits, and 1 fund) 5. GGV Capital (876 investments, 130 exits, and 19 funds) 6. IVP (373 investments, 129 extis, and 7 funds) 7. Oak Investment Partners (402 investments, 119 exits, and 1 fund) 8. Wellington Management (220 investments, 108 exits, and 1 fund) 9. Thrive Capital (314 investments, 65 exits, and 8 funds) 10. Softbank Vision Fund (415 investments, 51 exits, and 2 funds)
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Are you ready for more in-depth information about how venture capital works? Check out this video I have created where I explain in detail how to approach VCs for funding.
How To Successfully Pitch VCsThere are now many, many venture capital firms by stage, different funds, and investment agencies out there. The real question is how do you successfully pitch them to get your startup funded?
ResearchThe first step before running out there to pitch anyone is to do your homework and make a shortlist of the best investors for your startup. This may still be over 100 firms long, but the tighter your process, the more effective it will be.
You want enough prospects in your pool to get a yes, and to generate some buzz and fear of missing out, while being effective and efficient in each pitch.
You want to know the investors that are excited about putting capital into companies like yours, in your space, at your stage and size. You need to know who is able and actively looking to invest.
The money is really just a small part of this. Startups should be looking at which VCs can and have proven to bring the most value beyond the capital.
Look at who may really share your vision and mission, and will enable you to operate in line with your values along the way.
Connection & Relationship BuildingThe next step is to reach out and connect with these investors. Warm pitching is a lot better than cold pitching. Taking time to build a human relationship, or even a working relationship of some sort, will go a long way in helping you determine the fit, and to build trust on both sides.
Outreach can be challenging. Use multiple mediums. The most common is often being in person at events, via email, LinkedIn, and Twitter. Or through their own websites. Even better if you can get a trusted introduction first.
Contact multiple people at a firm to ensure you are getting through. Or the one person you tried might be on vacation.
Creating Your Fundraising MaterialsNow that you know your target investors extremely well, you can craft the perfect fundraising materials to pitch them and close the deal.
Most obviously, this includes your pitch deck. Most commonly, a 10 to 16-slide presentation, will check all the boxes that your preferred investors are looking for.
It is important to remember that this is about them, not you. It is not just raving about your product idea or technical genius. It is about delivering the data points they need in a compelling way, that stands out, and in the format they prefer.
Along with your pitch deck, you may also need a business plan, investor updates, an action plan, and some strong outreach messaging. As well as a strong verbal pitch. Even if you will be pitching them live online.
Preparing Your Data Room For Due DiligenceSome investors will want more information before they are willing to offer a term sheet. All VCs will need to conduct their due diligence before moving ahead with the investment.
This can be extremely intensive. In fact, successfully pitching them, and bringing in the term sheets is just the start of the process.
Being sure that your virtual data room is fully loaded with all the materials your serious investors will need. This will help prepare you to ace this step, negotiate the best deal, and keep things moving swiftly through to a close.
Perfecting Your Verbal PitchPractice, practice, practice. You want this to be as natural as possible. As well as being able to wing it from memory if your tech goes down and your slides aren’t working. Also, take the time to learn how to pitch to the top venture capital firms by stage.
Launching & Running Your Fundraising CampaignOnce you’ve got everything together, it’s time to get out there and hit the circuit hard. You want as much momentum as possible. The more buzz and investor action you can get in a short period of time, the better.
Negotiating The DealAfter you get those term sheets in, it is time to negotiate. This always goes better with a professional negotiator as a buffer to help you. It’s not just about the top-line numbers. Not just the capital being invested and the shares being given. There is a lot of fine print, and many clauses that will make or break you later.
Delivering After The Money Is In The BankOnce you’ve closed the deal and have that money in the bank, the real work starts. You have to make sure that you can deliver, and hopefully over-deliver. Only then will they stick with you, and you’ll maintain the support of your board. As well as investing in follow-up rounds or recommending you to their contacts who can.
SummaryWho are the top venture capital firms by stage today?
There are a growing number of investment firms and funds that invest in startup companies. While more of them may invest across a wider part of the startup journey, there are also venture capital firms that specialize in investing in specific stages in the cycle, from the seed stage, through the growth stage, and later stage, more mature companies.
However, when it comes to getting funded, it is really about finding the best match in the current environment and pitching them well and effectively.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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What financial models do? What is the purpose of them for entrepreneurs and startup founders?
You are either the type of entrepreneur who loves and thrives on financial modeling, or who just can’t bear to stomach more than a few seconds of it. Regardless of this, you need financial models as an entrepreneur and founder. You at least need to know how to read basic financial models, know what they are for and how to leverage their findings.
These are just some of the reasons you’ll use financial models on your entrepreneurial journey.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Raising Capital
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- Making Acquisitions
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- Evaluating New Projects
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- Budgeting & Forecasting
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- Business Cost Cutting
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- Allocating Capital
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- Business Valuation
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- Recruiting
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- Cash Flow Forecasting Raising CapitalOne of the most basic and common reasons for financial models for entrepreneurs is for raising startup capital.
These financial models can be used to demonstrate to investors an expected return at different stages, as well as how much is needed.
They can also be used by founders and current shareholders to better understand the future impact of taking in loans and equity holders.
Remember that storytelling plays a key role in fundraising and you will need capital to scale things up. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Making AcquisitionsIf your business does well and is effective at raising capital, you’ll eventually probably be in a position to make acquisitions of other companies.
When it comes down to what financial models do, they can help you assess the benefit, opportunities, and risks of mergers and acquisitions, as well as what it will mean for your own financial models when others are evaluating your company.
This also applies to evaluate these factors when it comes to acquiring new technology or assets, and how those outcomes can be improved.
Evaluating New ProjectsDynamic financial models are great for evaluating the strengths and weaknesses of new projects and initiatives. They help determine if they are a good fit and worthy of your focus.
For example, Google isn’t going to devote any resources to a project unless it has the potential to become a $5B venture. It just isn’t worth their time. Depending on the stage you are at, this may be $10M or $100M.
Part of what financial models do is to enable you to ask “what if?” What if you invest in more stores or branches? What financial impact will it have? What could the impact on cash flow and profits be from expanding into new markets, verticals, or countries?
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
These models are good to run on a regular basis, and especially when it looks like big changes are in the works. What if a crisis impacts ‘abc’ or results in ‘xyz’? What if it lasts 36 months instead of three to six months? What will that mean for revenues and sustainability?Budgeting & ForecastingAt the outset of a business venture financial models definitely help identify cash needs and what can hope to be gained from going into this business. It helps clarify where money should be spent to achieve the desired goals and the anticipated return on that.
These are also tools to revisit on a recurring basis. You should be constantly forecasting based on changes and new data, as well as how the journey is unfolding.
Being able to see three to five years out helps executives and key team members to be strategic in the moves they make today, the relationships they go out to build, and the branding and product features that will create a ladder to where they want to go. This is a critical aspect of what financial models do.
Business Cost Cutting In fast-growth startup money often comes and leaves quickly. Often the board is happily operating at losses in exchange for growth. Then things can change, and you may have to quickly restructure and map a fast route to true profitability and sustainability.
Use financial modeling to see where costs can be cut, and the outcomes. What difference will massive layoffs make? How about shutting down stores or ending certain product lines? How will divesting assets or spinning businesses out of the parent company improve the bottom line and balance the budget?
Allocating CapitalAn important component of what financial models do is that they can provide great clarity on where to allocate capital. This is important internally as a brand new startup, as a large company, and in between when you are pitching investors and are laying out your planned use of funds.
If you forecast you can reach a certain milestone, you need to be focused on where to use the money to get there for sure.
This will be part of your business plan and the roadmap that you design for the next 18 to 24 months of the execution. On the video below I cover in detail how to write a business plan.
Business ValuationYou can use financial models to get a better idea of the value of your own business. You may do this for calculating potential financing, as well as when plotting your way to an exit through acquisition. Just be sure you understand how those you plan to present to view opportunities like this, and the factors they base value on.
RecruitingKey team members, cofounders, and advisors are savvier than ever. They want to see the potential of this company.
This is especially true if you are offering options and equity. What will that stake really be worth? Is it big enough to warrant their time and investment?
A peek at your basic financial forecast will tell them a lot about your ability to pull off this idea too. It shows whether you’ve done your homework, are being realistic, and really understand this space.
Cash Flow ForecastingSometimes it’s all about cash flow. Young startups are especially susceptible to the risk of cash flow shortages. Even Elon Musk with all of his billions in the paper has sometimes admitted he’s on the verge of bankruptcy and virtually has no cash. COVID-19 was a huge reminder of how even the biggest and longest-running companies can be at risk of failure from interruptions to cash flow.
Just a few weeks into the virus and Neiman Marcus announced bankruptcy. Many others have shuttered stores and will never open again. Use financial modeling to foresee these threats, prepare to weather them, and thrive and expand when others drop the ball.
Hopefully, this post provided some clarity on what financial models do.
The post What Financial Models Do appeared first on Alejandro Cremades.
Greg Marsh found a $250M acquisition for his first company, he is working on a project he feels is even more impactful.
On the Dealmakers Show Marsh talked about the link between philosophy and entrepreneurship, the differences between investing and operating startups, and the key traits of a fundable early stage startup. Plus, fundraising and selling your business, launching in London, and his latest venture Nous.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPhilosophy & EntrepreneurshipGreg Marsh was born in London, and has stayed loyal to the UK throughout his business ventures.
While it may have used to have been a torture to send people to the miserable weather of the United Kindgom, Marsh says that it has certainly come a long way in terms of technology and entrepreneurship.
In fact, while he may have been tempted to move to the east or west coast of the US, he also points out that London is uniquely a center of politics, economics, population, capital, and culture, all at the same time.
Unlike his sister who decided she wanted to be a doctor from the age she was 10 years old, Greg wasn’t sure what he wanted to do for a long time. So, he made decisions that helped him keep his options open.
While he loved computers and learned to code as a kid, he ended up studying philosophy. While that may not seem like a very applied course of study, there may be more crossover with entrepreneurship than you’d think.
There was analytical discipline, logic, math, and problem solving involved. There was abstract and creative thinking. Precursors to your engineering and other more tangible outcomes. While it may lack some speciality, that’s exactly what he says makes for a good founder. As a startup entrepreneur you have to be able to jump in and do a whole lot of different things.
If you let yourself go down any one rabbit hole, or get tied up in one department you are in trouble. That’s when you need to be hiring someone to take that over.
See How I Can Help You With Your Fundraising Efforts
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- Materials : our team creates epic pitch decks and financial models
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Starting Out On The Other Side Of The TableEntrepreneurship still wasn’t mainstream in the UK, and coming from two parents who were in law, Greg says that he started out in a more traditional side of the ecosystem, as an investor. Which still combined his love for technology and the creative. He began working at two venture capital companies, including Index Ventures.
He enjoyed it. Those says that you quickly figure out whether you are really meant to be an investor or an operator. Great investors are generally not operators. You get to work at the middle of it all, but are happy not being hands on. Operators on the other hand are entrepreneurs because they have to be. They want to be hands on, and eventually cannot stay on the side lines.
He took some time to go through Harvard Business School before returning to Index Ventures, and then ultimately being unable to shake the bug to dive into entrepreneurship for himself.
One of his biggest takeaways from this time investing in other companies was that success was largely about the team. Yet, despite algorithms, attempts at seeing patterns, and that some investors will say they are great at picking winning cofounding teams, “There’s an extremely low correlation between investor assessment of founding team quality and overall investment outcome.” Instead you should focus on “backing smart people and people who are likely to be able to course correct on the early stages of their journey.”
Ultimately, he decided that he could never let himself off the hook if he didn’t give himself a shot, and back himself in taking a shot at a venture of his own. He says that if you can be happy doing something else that’s great. Though some have the need for extreme stimulation, challenge, and creative work. He does, and even expecting some things would go wrong he dove in.
Finding The Right Idea At The Right TimeGreg had been evaluating several business ideas. Then the 2008 financial crisis hit and that changed his options. No one was funding anything. Which changed what ideas were viable. Ideas that required huge amounts of capital to be successful weren’t just going to fly at that time.
So, in 2009 he made a new shortlist of criteria for what he was willing to jump into. One of them was that it would be something that especially suited to starting in London.
His other criteria included not needing capital to achieve product market validation, and the right amount of technology, but not out of his wheelhouse.
Then one morning on the way to work he was struck with the idea he ran with. He noticed many empty buildings in the prime real estate area of Mayfair. Parked capital, but real estate that could certainly benefit from being utilized.
He turned that into OneFineStay, a more bespoke Airbnb if you will. After about five years, raising $80M, and growing to 700 people, they faced a fork in the road. Either to go another five years in growing the company, or to sell. Being a very management intensive business, Marsh says they agreed to an acquisition after exploring several brand partnership discussions. That was a $250M transaction.
Storytelling is everything which is something that Greg Marsh was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!NousGreg Marsh’s latest venture is Nous. A venture he says brings together his desire for having a great social impact. It’s all about helping homeowners enjoy a far more efficient process, and saving big on household related expenses. Which altogether make up around 40% of GDP.
Listen in to the full podcast episode to find out more, including:
- How Nous is helping homeowners in the UK
- Picking your investors
Alejandro Cremades · EP 573 Greg Marsh On Selling His First Startup For $250 Million And Raising MillionsSUBSCRIBE ON:
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Learning how to structure your business plan is one of the first skills every entrepreneur must learn.
The journey for every successful entrepreneur starts from this single document called the business plan.
This is not just a document. It is a guiding manuscript, an outline, a textual description of your idea, product concept, and startup vision.
It provides the readers an insight into the goals you are aspiring to achieve, how you are going to achieve them. And if they will be sustainable for future growth and profitability.
It will highlight your startup venture’s operational aspects, its functional requirements, and organizational breakdown.
Using it as a supporting document for strategic decision-making, it helps you showcase your startup venture to prospective investors.
The business plan also aids your pitch for the necessary funds needed to start and fuel the project.
In short, a well-drafted and comprehensive business plan can significantly improve your chances of raising investor capital. And becoming successful in your startup business.
Here is the content that we will cover in this post. Let’s get started.
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- Structuring an Effective Business Plan
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- Cover Page
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- Table of Contents
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- Executive Summary
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- Essential Components
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- Market Opportunity
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- Essential Components:
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- The Problem
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- The Solution
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- The Target Market
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- The Competition
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- Future Products and Services
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- Execution
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- Essential Components:
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- Marketing and Sales Execution
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- Four Ps of Marketing
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- Functions and Operations
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- The Company, the Management, and the Team
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- Essential Components:
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- Team Members
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- Organizational Chart
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- Company Overview
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- The Financials
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- Essential Components:
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- Sales Forecast
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- Salary and Expenses Forecasts
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- Income Statement
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- Cash flow Statement
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- Balance Sheet
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- Usage of Funds
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- Appendix
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- Summary Structuring an Effective Business PlanAre you starting a new company, raising money for your entrepreneurial venture? Or do you want to expand your existing business?
Then you need to have a business plan.
No matter what the immediate use is for your business plan, here are the essential components that must be included.
That’s how you can make your business plan professional and effective for you, your audience, and your business.
- Cover PageIt may sound small, but it says a lot about your professional approach as an entrepreneur.
Write down the name of the company, your (entrepreneur) name, and contact information.
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Table of ContentsA convenient tool that is added for the readers to scan through the contents of the plan and jump to the exact section they are interested in.
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Executive SummaryA business plan starts with an executive summary. This is a brief overview of the company and your plans.
The summary should be limited to one to three pages only, making it easier for someone to go through the text in very little time.
The purpose is to make the reader interested in the concept just by reading the executive summary.
It should be compelling, engaging and highlight the most attractive aspects of the document to keep the audience eager to know more.
In many cases, investors would first ask you only for the executive summary of the business plan.
If they find it prospectively attractive and you are able to ignite the spark, only then will they ask for the complete plan or a pitch deck. Or any other detailed information in the days to come.
Although it is the first part of the business plan, it is often easier to write it after completing the rest of the plan.
The executive summary should introduce your company, explain what it does, and lay out the basic purpose of your plan.
Everything should be written in a concise and precise manner. This is why you must take the time to understand how to structure your business plan.
Essential Components* Name of the Company * Business Overview – One-line overview of what the company does. You can consider this your value proposition. * Problem – One or two lines about the need of the customer or the market problem you are targeting to solve with your offering. * Solution – Concisely describe the product or service. Explain how it will solve the problem. * Target Market – Let the audience know about your target segment or prospective customer. Mention the size of the target market to spark real attention. * Competition – Is your specific need or problem being addressed by anyone else in the market currently? Mention substitutes and alternatives. * Management and Team – Give a brief overview of your team members and what makes them the best people for the job. * Financial Summary – Business is all about making money. Do not leave this portion out of your executive summary. * Funding Requirements: If you need to raise capital for your project, make sure to add exactly what you are looking for from the investors. In general, it is best to avoid mentioning any terms or conditions at this point. You can eliminate this portion if you are not pitching for funds. Though you still need to understand your financial needs and how they will be met. * Milestones and Traction – Every project should be divided into steps, goals, or future milestones. If you have already made some progress, mention it in the summary. If you have successfully done a pilot project or launched a prototype do mention its statistics. Understand the importance of numbers when learning how to structure your business plan.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!4. Market OpportunityThe next section of the business plan is the market opportunity or niche. This includes the customer need or problem you want to solve, your solution, your customer, and the market itself.
This section is strategically the most important of the business plan and contains the marketing aspects of this proposition.
The key is to make your business stand out and differentiate from the crowd.
Readers who reach this portion have a basic idea of what your company does, (they have been through the executive summary).
But in this section, they will be further enlightened with detailed information on every aspect.
Essential Components:The ProblemThis section should start with the need or problem that exists in a market.
Highlight the primary focus of the issue or difficulty the customers are facing. Explain their pain and discomfort.
This should be followed by ways they are currently solving the problem.
And why these alternatives need to be substituted or taken over by your offering.
Make sure to mention their reason for not being the best. For example, the price, the usage, availability, or any other aspect.
The problem description is critical for a good business plan because without it you cannot offer a good solution.
The SolutionNow is the part where you describe your solution, product, or service. What it is and how it will be offered.
Highlight how it will solve the given problem effectively and better than the competitive offerings.
The Target MarketLet the reader know whom you are targeting. Pinpoint your target segments and describe their characteristics.
Investors want to know who will be buying your product and why.
The CompetitionImmediately following your target market section, you should describe your competition. List down big names, if any.
Create a chart to show the market shares of competitors.
To make your market opportunity section more compelling, it is best to add supporting documents.
These may include market research, customer surveys, segment analysis, and even SWOT reports.
The critical element of the success of this section is to make your offering stand out and differentiate from the competition.
You need to focus on your competitive advantage and highlight it to the audience.
Future Products and ServicesEnlighten the readers about your future goals and expansion vision. Investors are interested to know the long-term growth and profitability potential of your business venture.
- ExecutionThe next section of your business plan is all about the execution.
It encompasses your plan of utilizing the available market opportunity and making a business out of it.
This section highlights the operational, functional, and sales aspects of your business.
When working out how to structure your business plan, make sure to include them.
Essential Components:Marketing and Sales ExecutionMake your audience understand how you plan to reach out to your potential customers.
Explain your selling mediums, distribution, and pricing mechanisms.
It is important that you mention if there is a need for making strategic partnerships, alliances, and other integration channels to execute your plan.
Four Ps of Marketing* Positioning: Describe your plan for placing your product in the competitive market. Luxury, standard, low priced, accessible, local, or any other aspect that you want to identify your offering for. * Pricing: Let the audience know how you are going to price your product or service. It will depend upon your position strategy as well. * Promotion: Briefly but explicitly provide your readers an insight into your promotional campaigns. Highlight the communication and advertising channels you are going to adopt. Do not forget to mention your promotion costs and how you plan to create profits from them. * Place: List down the areas or geographic locations your offering will be available to the potential target market. Also highlight your channels of distribution, like whether you will be retailing, franchising, dropshipping, etc.
Functions and OperationsNo business can run without an operational plan. It is the administrative, managerial and functional breakdown of your business activities.
To the reader, you need to provide information about your mode of operations. If you are a manufacturer or even a service provider let them know about your facility, technology, and production capacity.
Highlight your sourcing, supplies, and fulfillment capabilities. Explain your organizational functions, departmentalization, and chart of systems.
- The Company, the Management, and the TeamThe investors are very much interested to know about your team.
They want to know who will be running the show and how. Human capital is much more critical than any idea itself.
Essential Components:Team MembersIn this section, you can highlight the current team members, their roles, job responsibilities, and areas of expertise.
If you need to hire new people, also mention details about their required qualifications and job descriptions. And the value they would be adding to your company.
Organizational ChartProvide an organizational chart of the company for a better picture of your structure and internal communication.
Company OverviewHere you can add mission and vision statements, intellectual property or patents, the legal structure of the company, and ownership.
Also add the place of business, and history if any. As well as notable highlights about your accomplishments so far.
- The FinancialsInvestors are interested to know your financial status in the current scenario and the future.
Many entrepreneurs find this section the most intimidating one. Drafting and analyzing business financials is not easy for everyone.
You can ask an expert to prepare them for you. Or if you have the financial know-how you can do them yourself.
In either case, your involvement in every step as an entrepreneur is a must.
Once you have built a solid financial forecast for your startup, you need to present it in the most understandable way for your audience.
For a typical startup business plan, you need monthly sales and revenue forecasts for the first 12 months.
The rest can be annual projections for 3-5 years.
While detailed sheets can be attached in the Appendix section, brief descriptions of the following should be provided.
When understanding how to structure your business plan, make sure to include them.
Essential Components:Sales ForecastMention the assumptions you made and why they are valid. Note any authoritative resources you have used.
Come up with charts and graphs to illustrate your projections in a much easier-to-comprehend manner.
Salary and Expenses ForecastsHighlight your compensation and salary forecasts for the upcoming years. Estimated changes in expenses should also be projected.
Income StatementThings this forecasted statement should highlight are revenue, COGS, gross margin, and operating expenses.
Also add operating income, debt payments (if any), taxes payable, total expenses, and net profit.
Cash flow StatementMany naïve entrepreneurs confuse this statement with an income statement. The two are, however, very different.
Serving a totally different purpose, the cash flow statement helps understand the movement of cash or money in and out of the business.
It highlights the forecast of your monthly cash usage and needs.
Balance SheetThis report is important to understand the financial health of the company. It showcases the assets versus the liabilities and equity of the business.
Usage of FundsIf you are raising funds through this business plan, then you need to draft a plan of action for the usage of these funds as well.
- AppendixThe last section of the business plan is an additional informational chapter that contains detailed reports, supporting documents, and resources.
SummaryBusiness planning is a critical process that helps you in validating your idea, setting future goals, managing functions and successfully gaining investor attention.
Many first-time entrepreneurs underestimate the importance of this strategic document for the business’s future success.
Considering it as a trivial piece of paper that is not worth your time or effort can be a big mistake on your part.
Starting any company without proper planning is heralding a disaster for yourself.
You simply cannot jump into the industry and start running a company without direction and focus.
You need to do your research, analyze the market, create a plan of action and execute professionally.
And, learning how to structure your business plan is a great first step in the right direction.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post How to Structure Your Business Plan appeared first on Alejandro Cremades.
Bruce Smith has gone from competitive rowing and coaching to leading a connected fitness startup that has raised $288M, and is better for you than a Peloton bike.
On the Dealmakers Show, Smith talked about relationships with money, the superior health benefits of rowing, the similarities between hiring and the fundraising process, right-sizing your team, and more.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksRelationships With MoneyBruce Smith was born and grew up in a small rural town in Canada. So far out there that it took a 40-minute drive to get to school each day.
He was always eager to get out, and go find where things were happening. So, he moved out of his parent’s house while still in high school. He learned to make his own money early. Whether that was making pizzas, mowing lawns, or painting houses. He even paid his own way through college.
Early in life he says that he didn’t have a lot of money, and thought it would change things. He soon found out that money itself is not happiness.
What he does say is valuable and fun about money is how you can use it as a resource and tool to create things. To create the freedom to do new things.
It enables you to bring a team together. Accessing money, he says, is “evidence of trust between human beings.”
He discovered that early when he got a grant to make coaching launches at his job at community rowing.
Next, Bruce spent quite a bit of time traveling and exploring US culture. From Chicago to Vermont, to Boston. Ever getting closer to NYC, and the capital hub there.
See How I Can Help You With Your Fundraising Efforts
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Rowing, Coaching, And Leadership
Rowing is something that seems to have stuck with this founder his whole life. He was recruited to the rowing team in college. Then got pulled into the coaching side of it.
He has now coached all the way from high school through national teams, including being at the world championships 10 times for the US.
There are many similarities between rowing, coaching, and leading a startup as an entrepreneur.
Bruce says it is something people really put their soul into, and put everything they’ve got into winning as a team. Coaching at elite levels he describes as very much like being a CEO.
At this level, every individual on the team has dedicated their lives to it. Yet, each needs specific and personal coaching. Some only respond well to positive motivation. For others it is to point to what they are getting wrong.
He says that being able to discern those differences in leading people has proven highly valuable in building a company.
The Superior Benefits Of RowingSmith watched as Peloton got started with their bikes. Though as a professional sports coach he also knew that rowing was so much better for you.
So much so that if those he coaches can’t get out on the water, he has them do double the time on a bike to try to get similar benefits. More than that, he says cycling only works two of your seven major muscle groups. Whereas rowing works them all. It helps you develop bone density, strength, and you feel great.
He said he believes that if he could scale rowing for others, he could make the world a little better place. Not just in terms of their health, but sense of wellbeing, and even interacting with each other better.
Hydrow
With the above in mind, Bruce launched Hydrow. A startup on a mission to bring that experience of being out in the water into people’s homes, and make it accessible in a way that it wasn’t before.
It was around 2015, when technology was really catching up to his idea, to enable the ability to broadcast from the water, and leverage the cloud to make it affordable to broadcast into homes.
They are now considered one of the top five connected fitness companies in the world.
Hiring & FundraisingBruce Smith describes the hiring process much like the fundraising process.
His first hire was his CTO. That came through a connection and first asking this guy for advice. After several meetings and meals Chris Paul wanted to join the mission himself. Then in turn ended up bringing in their next few hires.
To date, Hydrow has already raised around $288M. Mostly in equity capital. Again it was about networking, getting introductions, and finding the first match. Even if it takes you repeating your pitch every day, and going through 400 investors before you find your lead.
Storytelling is everything which is something that Bruce Smith was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- The benefits of rowing
- Right-sizing your team
- The need to go fast
Alejandro Cremades · EP 572 Bruce Smith On Raising $288 Million To Create The Ultimate Home Gym Must-HaveSUBSCRIBE ON:
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Caesar Sengupta left working at Google with seven other cofounders to create a digital family office, and democratize financial services.
During this episode of the Dealmakers Podcast Sengupta talks about what he learned at Google, building a founding team and network of angel investors, fintech, and his top advice for starting a business of your own.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBuilding What’s NextCaesar Sengupta grew up in Delhi, India. It was a traditional middle class Indian upbringing, with a big focus on education, and aspirations of him becoming an engineer or a doctor.
As he was majoring in electrical engineering, he discovered computer science and programming. He instantly fell in love with it.
That inspired him to dig into research and academia. Seeing the best universities for his Ph.D. and grad school in the US, this took him to Stanford in California.
In classic Stanford fashion he took a semester out to try and start a company of his own. That first attempt didn’t work out as planned. Though returning to school he met the woman he has been married to for the past 20 years.
Caesar’s wife was contracted to work with the government in Singapore. So, he followed her, and embedded himself in the startup ecosystem there. This time it turned out much better.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Founding A Startup In SingaporeCaesar was one of the earliest team members at a startup that ended up being acquired by IBM.
During his time there the founder introduced him to all areas of the business outside of his engineering role. He got exposed to marketing, sales, and all of the other things entrepreneurs have to jump in and do to make it work in the early days.
After a stint in London, Sengupta decided he wanted to add more theory to his background, and started his MBA at Wharton to learn more about finance and the business side of things.
Then he got the opportunity to join Google, and stayed with them for over a decade building new things. Sengupta says that he saw it as a once in a generation opportunity. A place where you had the tools and resources, and smart people to create great products. He just kept on finding interesting new things to work on there.
He also worked directly under the current Alphabet CEO, Sundar Pichai. Learning an immense amount from him about investing in people. As well as bringing together the team with organization, product, and vision.
Banding Together Around A VisionEventually in 2021 Caesar found everything aligning to go at it again with a startup.
Having led fintech at Google for a while he saw governments around the world begin to put up boundaries around big tech to limit them. Meaning increased regulation around companies like Google.
At the same time machine learning and AI were evolving to the point where new things seemed possible.
On the personal front Caesar said that he decided if he waited any longer it may be too late.
This all came together with the idea to unlock ‘financial superpowers’, and to democratize financial services that had been limited to the ultra wealthy, and make them available to everyone.
All told, Sengupta took the leap as a group of eight cofounders, and a founding team of ~30 people on their mission to build a digital family office.
Raising FundingNot only did the vision resonate with so many early team members, but also with a group of 140 angel investors. Many of whom have been Google employees. Together they raised $90M to get going with Arta Finance.
Storytelling is everything which is something that Caesar Sengupta was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!He says that many of them wished for a product like this, and that it was available earlier in their lives, and could see the positive impact that they wanted to support it. This includes Eric Schmidt, and Jeff Dean. Not only providing a lot of credibility, but valuable feedback as well.
Arta FinanceArta operates as a digital family office. They are currently working through a waiting list of clientele, but have the vision of opening this up for the whole world, for all income levels.
Their AI powered investing, and access to private investments, as well as a suite of the usual family office products is designed to give individual investors the financial superpowers the ultra wealthy have. Only much earlier in their lives and careers.
The company has recently seen its headcount grow by 80%. Yet, Caesar says that they still have a lot more they are working on doing.
For those thinking about starting their own venture, Sengupta’s top advice is to “just get started, you’ll learn more doing it than by thinking about it.”
In spite of all the education and working at tech giant Google, he says the learning he has gained in the past year as a founder is incredible. Adding “I wish I could have set out on the journey earlier. That’s the only thing I would tell that younger self, just do it, get going. It’ll be fine.”
Listen in to the full podcast episode to find out more, including:
- How Arta Finance works
- Managing large teams of cofounders and investors
- Lots more
Alejandro Cremades · EP 571 Caesar Sengupta On Leaving Google To Raise $90 Million To Give You Financial SuperpowersSUBSCRIBE ON:
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Dr. Eric Whitaker has gone from physician to private equity, and is now a three-time startup founder.
On the Dealmakers Show, Whitaker shared his take on the best part of exiting a company, generating a 50x return for investors in just 36 months, expanding your business through M&A, and what he has been doing with his approach to holistic healthcare. Plus, the benefits of a remote team, the funding fine print that can ruin your venture later, and the difference between venture capital and private equity.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSolving Healthcare Issues At ScaleDr. Eric Whitaker grew up on the South Side of Chicago. A place he often refers to as beautiful, but has certainly been in the news for its challenges as well. Those that get out and become successful have proven to be scrappy and can create something from nothing.
He enjoyed playing basketball in high school and while his coach told him that he may never go professional, he could use basketball as a path through education and a better life.
He studied and became a doctor, with a specialty in internal medicine. Though he has always been focused on medicine for whole populations, not just one-on-one care in a local practice.
He’s worked for some of the largest public hospitals, including San Francisco General Hospital and Cook County Hospital in Chicago. He saw what worked, and the challenges. As well as what he calls “Social Determinants of Health,” which includes factors like transportation and food insecurity.
Dr. Whitaker started the first black men’s clinic in the 90’s, then became the State Health Commissioner for Illinois.
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The Best Part Of Selling Your CompanyDr. Whitaker’s First company was Symphonix Health Holdings
He had been flexing his entrepreneurial muscles in the public sector for years. Yet, he saw that he was really the only expert at his level, from his background, that could add something to the private sector.
So, around 2012, he decided to raise the money to start his own venture, and have an impact on individuals’ lives and health in a different way.
They launched in 2013, and after expanding to 48 states, 420k clients, and $2B in drug spend, the company was acquired in just 36 months, by UnitedHealth Group. This createda 50x return for their investors.
Dr. Whitaker started his next healthcare company with his wife. In fact, she led the ship as CEO. He remained founding Chairperson and was there to provide advice when asked, and to help with things like fundraising.
The company was focused on helping the African American community on the South Side of Chicago.
They led the company to 65,000 clients, and $300M in revenue beforebeing acquired.
They wanted to expand the business into other states, and had an investor willing to put in $100M to help them do it. Unfortunately, an earlier funding arrangement meant that they were barred from taking any outside money, and that funding partner did not want to expand. And if you can’t grow, you are just going to die.
These were great financial outcomes. Though, what he said was really great about achieving these exits was being able to write checks to help people and causes he cared about.
That included contributing to his old school, helping to fund the education for over a dozen other students to go through it, and writing checks to causes in the community he cares about most. As well as donating to African American Museums and similar institutions.
Zing HealthDr. Whitaker’scurrent and most recent startup venture is Zing Health.
During a two-year non-compete agreement stage, he says he began digging into new ideas. Including Medicare Advantage, a subset of Medicare. A product he says was great, but had very low enrollment, and poor health outcomes among its members.
So, Zing Health picked up the torch to help change that by managing members’ healthcare, and getting paid by the government to do it. With a focus on African American and Hispanic communities, and those in more rural areas.
They started out locally in Cook County, Chicago. Then branched out to 21 counties across Michigan, Illinois, and Indiana.
Then, they took to M&A to grow, acquiring Lasso Health, which was already profitable when the parent company wasn’t, and was already operating in 34 states across the country.
Venture Capital Versus Private EquitySo far, Zing Health has already raised $190M through a seed and seed plus round from VCs, and a private equity round.
Storytelling is everything which is something that Dr. Eric Whitaker was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The main difference he says is that venture capitalists are happy funding ventures trying to break new ground and try new business models. They understand the risk, and are happy to make the trade-off for grand returns.
Private equity firms, he says, are not so tolerant of risk, or trial and error. They want to invest in mature, proven business models, and marketing models.
Listen in to the full podcast episode to find out more, including:
- The advantages of gaining better talent by using remote workers
- M&A deals
- How to handle running out of financial runway
- Eric’s top advice before starting a business
Alejandro Cremades · EP 570 Dr. Eric Whitaker On Raising $190 Million To Bring Healthcare To Underserved PopulationsSUBSCRIBE ON:
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How to create a captivating pitch deck cover? How to create How do you create a captivating cover for your pitch deck, so your startup gets funded?
Your pitch deck is everything when it comes to fundraising for your startup. The cover is the vanguard of your pitch deck. It is the key to getting the rest of your pitch through to investors.
Just as a strong subject line is vital to getting an email opened, or a book cover makes almost all the difference in book sales, your cover slide creates the first impression for the pitch.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksStartup Fundraising & Pitch DecksPitch decks are still the heart of all startup fundraising. Which means the cover is absolutely vital to do well.
In order to launch and really take a true hyper-growth startup through to its full potential, most entrepreneurs will need to take in outside capital. Or at least a fair amount of other forms of financing.
Most will need a lot more money than they expect. It is a need that never goes away. Even after you take your company public.
So, if you are just starting out, this is the time to master the pitch deck cover. It will make everything else go faster and easier. It may make all the difference between your company making it versus being beaten out by the competition.
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Even if you’ve already raised a round or two, you already know that fundraising is never a slam dunk. Anything you can do to increase your chances of success, and create a more efficient process is going to be worth it. Especially as markets rotate and when investors are more selective in handing out checks, nailing the cover is important.
Even if you have established investor relationships, or are even pitching your personal network, your pitch deck matters. Including your cover.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!First Impressions Are EverythingAs with everything else in life and business, first impressions can be everything when it comes to fundraising for a startup. This is why you should know how to create a captivating pitch deck cover.
This is especially true when it comes to your pitch deck.
Investors are already hit with a barrage of pitch decks each and every day. They have to filter through the noise fast. So, if your pitch deck cover doesn’t pop, then it is easier for them to relegate you to the spam pile.
Even in the best-case scenario, when you are sending out your pitch deck, you only have about three minutes of their attention to close the deal.
So, your pitch deck must compel them to open your deck and click through, with a positive expectation that this opportunity is a great fit for them to invest in.
Aside from the aesthetics of your design, some of the key factors that check important boxes for investors that you can allude to on your cover slide include the following.
Big MarketInvestors want and need to know that you are in a really big market. It is the only way that they can make the returns they are investing for. If they aren’t intimately familiar with your market, or the category you are creating, you may want to drop in the space you are disrupting and its potential.
On TrendInvestors are just human, as are their own stakeholders and LPs. This means that they are often the victim of jumping on trends and following the herd. In a given period, that may be hardware, software, ESG, or something else. Link your venture to the trends that they are investing in.
Looks Like SuccessCarrying on from the above, it is ideal if you can link your venture to what success looks like in their minds. What companies have they invested in that achieved great outcomes? What investments may they be kicking themselves for passing up on?
How can you at least subconsciously link those together in their minds, while staying true to your brand? Is it colors and fonts? Or could it be in your slogan? For example, “we are the Facebook of _____.”
TeamAs an early-stage startup, investors have little tangible to go on besides your team’s resume. So, who is the most notable person on your team? Whose name will investors recognize? Who has achieved great returns and outcomes for startup investors in the past? Who on your founding team are notable experts in their field?
Innovative ProductHave you built a truly revolutionary product that will just wow them?
Value PropositionWhat is your compelling value proposition? How are you 100x better than any previous or existing solutions? What will make your offering irresistible to customers? Or how does your unit economics stand out far above the competition in this space? Answering these questions is a great first step in understanding how to create a captivating pitch deck cover.
How To Create An Effective Pitch Deck CoverLooks do matter. Though rather than just focusing on having the most beautiful pitch deck cover slide, what should be the top priority is an effective pitch deck cover that gets the job of securing an investment done.
It needs to not look bad. It needs to be substantive enough in order to get investors to click or swipe through. It needs to facilitate them in taking the next step.
Given the limited time you have their attention for, and how important showing your ability to focus is, this all needs to be achieved while maintaining simplicity.
What Goes On Your Pitch Deck Cover Slide?The cover slide needs to be very lean on content. To keep it simple, attractive, and compelling, you don’t have much space to work with.
It should include:
- Your name
- Contact information
- Your company name
- Your logo
By providing your contact details here, it is easy and fast for investors to refer back to in order to reach out and take the next step.
You may also want to include a powerful tagline or slogan. This is your one-line elevator pitch that should accomplish the positioning mentioned above.
How To Design Your Pitch Deck Cover SlideAgain, simplicity should be the overriding decision factor here. Keep it clean and fast to digest. Easy to understand and act on. Use these tips when learning how to create a captivating pitch deck cover.
Your color choices should match your branding and the test of your slides. If you haven’t crafted your brand identity yet, then this is the opportunity to bring all the above together and make those decisions now.
The same applies to font choices. They should be large. Use no more than two font styles. They should be easy to read and match the rest of your branding. It should present a seamless brand experience through your website and other assets and materials.
If you haven’t picked fonts yet, then be sure they bring together your startup’s culture and positioning, as well as allude to being a successful startup.
Design Your Own SlidesYou can design your own pitch deck slides. There are many presentation software choices to consider. Just remember to use something which makes it easiest to collaborate with your teams, and to present. Google slides may be one option that checks the most boxes for many entrepreneurs.
This is easiest if you adopt an existing pitch deck template. Which just requires you to plug in your startup’s unique information.
You may also work on this in conjunction with freelance and outsourced help. Whether that is giving them your raw data to run with, or having them improve on your first rough draft. You may need both a graphic designer and a professional copywriter.
The third option is to just commission a professional pitch deck to be created by an agency that specializes in this. Though pricing can easily run up into tens of thousands of dollars.
Balance the return on this investment, with being mindful of the resources you have, and how long it may take to successfully close this round and put money in the bank.
Even as you’re reading up on how to create a captivating pitch deck cover, you might want to first understand why the cover slide is so important. Check out this video I have created giving you more in-depth information.
Getting Your Pitch Deck In Front Of InvestorsWhen figuring out how to create a captivating pitch deck cover, you first have to get it in front of them. This can require equally captivating pitching materials and outreach efforts.
This may include applying and getting into opportunities to deliver your pitch live. Whether on TV or at local events.
In other cases, you’ll be running an outbound fundraising process, messaging investors. This can include voice or text, Linkedin, or email.
You’ll need a compelling intro message to get them to open it. Then in the case of email, a credible form address, a strong subject line, and then a pitch or pitch deck summary in the body of your message.
It is also far better to send a link to your pitch deck hosted online, rather than send your pitch deck as an attachment.
Before any of this, it is wise to spend enough time researching and shortlisting the best-fitting and optimal investors. Know who is most likely to say yes at this stage. As well as understanding what makes them tick and say yes. This will all help you design the optimal cover slide to seal the deal.
Following Up Your Cover With A Winning Pitch DeckThe cover slide can make a big difference in getting investors to move any further into your pitch. It can also be very pivotal in the way investors view you and your venture, and the terms they will be willing to offer.
However, this is just the tool for getting them to view the rest of your pitch. So you have to follow it up with even stronger slides to carry them through to offering you a term sheet.
The most important and common slides you will likely include in your pitch deck include the following.
- Problem
- Solution
- Market Size
- Competition
- Competitive Advantage
- Product
- Traction
- Customers and Engagement
- Business Model
- Financials
- Amount Being Raised and Other Investors
- Use of Funds
- Team
- Advisors
The Back Cover SlideJust as the front cover slide of your pitch deck is vital for getting investors to get into your pitch, the back cover, or final slide is vital for closing the deal.
The first slide is just getting them on the conveyor belt to carry them through to the close.
Your ending slide can be used to thank them for their time, to spell out the next step, and to reiterate your contact information so that they can seamlessly take action towards funding you.
SummaryKnowing how to create a captivating pitch deck cover is essential for getting your startup funded. As well as for obtaining the best terms, and securing your best investors when you are out there fundraising.
While looks and style are a significant part of this, so is the text you put on this gateway slide. It is your key to opening the funding vaults or getting locked out.
By honing in on the right investors, and then customizing your deck for them, while sticking to the current best practices in pitch deck design, you will greatly increase your chances of getting funded. As well as enjoying a more efficient and profitable process.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Keith Teare has been one of the most influential founders behind today’s technology and startup ecosystem. Now he’s changing things again with his new AI powered fintech that is changing the DNA of the venture capital space.
During his time on the Dealmakers Show Teare talked about creating the first revenue stream for Google, being founding investor at Techcrunch, challenging yourself, and his insights on taking your company public. Plus, when to give away your shares.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksRefusing To Be Held BackKeith Teare grew up on a council housing estate in the UK. A sharp contrast to the glamor and abundant wealth being shown off by the Queen of England with all of her jewels and crown.
That never felt right to him, and gave him a bit of a rebellious spirit. He says he dealt with it by reading and understanding things.
However, testing in school at age 11 landed him in the ‘B stream’ of education. With his teachers telling him that he was destined to work at the local factory.
He wasn’t a fan of that, and when it came to later testing got back on the A track. Still when he was told he shouldn’t even bother to apply to university he did, and got in. Being the first in his family to go to college.
He thought politics was a good way to change things, and knowing your history was a good way to enable that. So, he chose to study history, graduated at the top of his class, and became an activist leading protests against racism and colonialism. He was a Marxist.
Then he discovered the fun of learning to code. Starting on old Sinclair Spectrums and the Commodore 64. Which also brought together his knack for statistics and numbers. Which he has carried forward to today in the form of AI and machine learning.
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When To Give Away Your SharesKeith Teare’s first company applied his coding skills, and even took him to working on systems for Warner Brothers and big oil companies.
He even pulled in his brother from driving a taxi to becoming an even better programmer than he was. Taking him from someone else who was left behind by the system to becoming the CTO of the company when it went public.
Wanting to challenge himself to something fresh and bigger Keith says despite the company bringing in millions of dollars a year in revenue and becoming easy to operate, he chose to give his brother all his stock and leapt. He agreed to take another six months of salary, which put him on a deadline to make a new venture work and become profitable.
That company ended up going public too. Within a few years EasyNet Group became worth hundreds of millions of dollars.
However, the new board, which were outsiders who were simply focused on maintaining the numbers, ultimately told him to stop bringing them new ideas and ways to innovate. So, he resigned and sold his shares.
Yet, that hasn’t stopped him going on to create new ventures, and aspiring to go public for good reasons.
In fact, after being one of the first two owners at Techcrunch with founder Mike Arrington, he ended up giving Mike most of his stock as credit for his idea and work. That company has not only gone on to inspire so many entrepreneurs, but was also acquired.
Building The Technology Of The FutureKeith moved to the US in 1997, and landed in Palo Alto. There he launched RealNames. A technology that was the first to enable theweb to be used in different languages.
Within two years, and after raising $130M over three funding rounds, the company became a unicorn. That technology was implemented by Google, and became their first revenue stream. The realNames approach – typing keywords into the browser address bar – still powers Google’s I’m Feeling Lucky feature, and most browsers, today. They also partnered with Microsoft when Internet Explorer was powering 98% of browsers worldwide. Even back in 2002 they were driving 2B users to websites every 90 days.
Storytelling is everything which is something that Keith Teare was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Changing The Venture Investing EcosystemKeith’s most recent venture is SignalRank. The outcome of an essay he wrote on how Silicon Valley had evolved.
He realized that while the VC space had grown, there were still issues. Especially for early investors and founders.
There are now more than 1,000 seed stage investors out there, with 700 seed stage funds in Silicon Valley alone. While 100% of unicorn companies come from seed stage investments, later investors were diluting the seed investors positions, and making the lion’s share of returns at the expense of early investors.
Combining AI and fintech, SignalRank has been able to hone in on the winners in this space. Twenty Nine Percent of the companies identified by SignalRank’s AI at the Series B rounds have become unicorns. That’s in contrast to six percent of all Series B Rounds, and 1% for traditional VC investments overall.
SignalRank is what you might describe as Berkshire Hathaway 3.0, SignalRank sells their own shares, with these underlying assets, to allow more investors to participate in this success.
Looking forward, Keith says that he anticipates SignalRank going public, and enabling everyone to participate in this space, and enjoying liquid investments, with greater returns.
Listen in to the full podcast episode to find out more, including:
- Doing deals with the Chinese government
- Today’s VC ecosystem
- How SignalRank works
- Keith’s top advice for founders
Alejandro Cremades · EP 569 Keith Teare On Building Two Billion Dollar Companies And Using AI To Change Venture InvestingSUBSCRIBE ON:
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Jim McKelvey has now started close to a dozen different for-profit and nonprofit ventures, including Square. Now he’s tackling the problems we face on the internet every day, with the backing of Peter Thiel as an investor.
On the Dealmakers Show, McKelvey shared an immense amount of insights on being an entrepreneur versus just a business person, solving perfect problems, being attacked by giant competitors like Amazon, and the innovation stack. Plus, hiring Jack Dorsey, and what he looks for in successful team members.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksIf You Don’t Fix It, Who Is Going To Do It?Jim McKelvey was born and grew up in St. Louis. However, his idyllic youth was tragically torn apart when his mother committed suicide.
It was a huge wake-up call to the problems in the world. A driving force to get out there, take action, and solve them for others.
He realized that if he didn’t step up to fix things, no one else was going to do it. So, he just began fixing things, and he hasn’t stopped yet.
That started with creating a new textbook for his university as a freshman. It displaced the professor’s book and was professionally published by a national publishing house that requested a follow-up book.
By the time he was a sophomore, he already had two published books. That gave him some credibility and translated into getting invited onto various teams. Where he found he had a knack for helping to elevate groups and make them more effective. Even if he wasn’t the most qualified on the team.
Fast forward to today, and he has started a dozen different ventures.
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The Innovation StackMany of us have all heard the famous quote about good artists copying the ideas of others. However, the inspiration for Jim McKelvey’s most recent book ‘The Innovation Stack’ is all about doing new things that haven’t been done before.
Looking back on many of his ventures, and encountering a battle with Amazon, who wanted to take over their industry, McKelvey says that he realized that many of his mistakes were around just copying other people or existing solutions, rather than tackling things that were brand-new. And doing things differently.
He says this is really where the line is between business people and true entrepreneurs. Most just end up creating a better mousetrap. A slight improvement on something which has already been invented. Then spending the bulk of their time leading a business to just make incremental improvements on that.
Like the original iPhone versus the endless string of annual releases of updates to that.
Starting SquareJim McKelvey was involved in starting Square. Then Amazon decided they wanted to take the space. They have a strong playbook. They copy your product, sell it for 30% less than you, wield their brand name, and just steamroll you out of business. It’s a strategy that works just about 100% of the time.
Jim says that there really wasn’t a precedent for surviving and winning in that. There was nothing to copy. Yet, when they did survive, he found other case studies through history that it is those that truly do things differently, that emerge as leaders. The great category winners and market dominators.
His big passion today is to inspire and encourage others not to limit their lives to just copying, and making micro improvements, but to take on new things and solve problems no one has before.
Creating A $48B CompanyJim first met Jack Dorsey through a local coffee shop. Jack’s mother owned the shop where Jim would go get chocolate-covered espresso beans to fuel his team to pull all-nighters.
That turned into bringing Jack on as an intern. Then years later, when Jim lost a sale at his glass studio due to not being able to take a credit card, they launched Square together. A company now worth close to $50B.
Storytelling is everything which is something that Jim McKelvey was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The Traits Of A Successful EntrepreneurJim has now worked with many entrepreneurs, invested in them, and built many teams. So, what does he look for, and believe makes the difference between those that make it and are successful versus the rest?
He says that those just looking to get rich and famous probably won’t make it. Creating things and building startups is hard. They’ll eventually bail and find an easier way to just make money.
He looks for those that deeply care about solving problems personally. Personal motivation.
He says he does not look for experience. When the Wright brothers created the plane, there were no pilot training courses or certifications. They had to be the first to do something that had never been done before.
Eliminating PaywallsJim McKelvey’s latest venture Invisibly is all about taking control of your own data and its monetization, as well as enjoying a more seamless experience on the internet, without the hassles of paywalls.
They share their revenue with their users and make it easier and more intuitive to get the content you want, without interruptions.
Peter Thiel, famous for his book Zero To One, is one of their investors.
Listen in to the full podcast episode to find out more, including:
- When the first version of your product is too good
- Solving perfect problems
- How Invisibly works
- Landing investors like Peter Thiel
Alejandro Cremades · EP 568 Jim McKelvey On Co-Founding A $40B Business And Now Raising $20 Million To Erase PaywallsSUBSCRIBE ON:
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Ty Harris and Matt Wielbut came together around a shared problem to launch their own insurtech startup that has already raised $200M.
On the Dealmakers Show, Harris and Wielbut shared their insights on the insurance industry, selling your company, fundraising, the importance of clearly defining your roles as cofounders, and why you shouldn’t keep your business idea a secret.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksTy Harris – Learning, Curiosity & Computer ProgrammingTy Harris was born in Atlanta, GA. His father was an airforce pilot. Though he says that both of his parents really prioritized education, made sacrifices so that he could get a good one, and encouraged him to be curious and question everything.
He says that has stuck with him and has given him that ongoing first principles thinking. That and his focus on math and economics in school also led him to mix the two together on the debate team in school.
His studies took him through to MIT. Where they didn’t have a great basketball team but did have some of the best ballroom dancing in the country. Which led him to meet his wife. Then, ultimately, Matt who was his wife’s friend.
Ty says that his wife comes from a family of actuaries. Which inspired him to start taking exams, and took him into the world of insurance.
He found the work and environment at Liberty Mutual so engaging that he ended up staying there for 13 years. He kept on growing with them. Eventually, going from an analyst to chief product and underwriting officer.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Matt Weilbut – Programming & EngineeringMatt Wielbut was born in Poland. When he was just five years old, his family fled as political refugees. Spending two years in Germany, before gaining asylum in the US.
Matt credits a lot of his career to his father. He invested most of their life savings in an early Mac and brought it home for him to figure out. Together they bonded over learning to code together. From then until now, he says that he has been obsessed with programming and engineering.
That saw Matt heading into the investment banking world with Goldman Sachs. Always having a penchant for pushing himself to his limits, it wasn’t long before he threw himself into entrepreneurship. He says that he believes you should push yourself until you are a little uncomfortable and at least fail a little.
Selling Your CompanyWielbut’s first two startup attempts didn’t pan out as he had hoped. Though he says that it is okay to fail. If you continue, it will eventually work out. It did. His third venture, Elements Insurance, went all the way through being acquired.
They didn’t raise any money on the journey, providing a good outcome. Though Matt warns that selling your company isn’t as easy and simple as it is made out to be in the headlines of Techcrunch.
There can be a lot of years of hard work building the business in the meantime. Including enrolling hires in the vision and hoping the dream plays out.
Then when it comes to being acquired, there are often lengthy negotiations. During due diligence, your buyer will pick your business apart. Digging into every detail.
It was after this exit that Matt and Ty came together around the problems they saw in the insurance space.
Matt saw the issues from a consumer perspective and wished insurance brokers would make it easier. Ty had been experiencing problems from the perspective of an insurance agency and having to deal with insurance companies.
OpenlyTogether Matt and Ty launched Openly. What they describe as a next-generation insurance provider. One which is heavily tech-enabled, and specializes in homeowners insurance.
They are changing the insurance space in two ways. One is using technology and automation to make insurance more affordable. They say that traditionally 40% of the money homeowners pay for insurance coverage doesn’t go to cover claims, but just for administrative expenses.
Together with their algorithms for underwriting, they’ve been creating a lower-cost insurance option. One that they hope will help save homeowners $100B a year.
The other outcome of their technology is greatly simplifying and speeding up the process of getting insurance. Including cutting the time to get an insurance quote down from days or weeks to just eight seconds.
Although it took them two years to build their technology stack from the ground up, their offering quickly went viral once insurance agents began using it to serve their customers.
Raising FundingTo date, Openly has raised close to $200M in capital. They’ve also built a team of almost 300, with 55 engineers.
Storytelling is everything which is something that Ty Harris and Matt Weilbut were able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!For those considering launching their own business, Ty warns not to get too caught up in the hype. Don’t allow yourself to be intimated. Especially when meeting with VCs. At the same time, he says to be wary of easy money being thrown at you and luring you into thinking you don’t have to build a great company. Stay grounded, work on building a great company, and be confident when you get in front of investors.
Listen in to the full podcast episode to find out more, including:
- Why not to keep your startup idea a secret
- Going through startup accelerator programs
- The importance of defining your cofounder roles early
- Celebrating all of your successes
Alejandro Cremades · EP 567 Ty Harris And Matt Wielbut On Raising $200 Million To Save Homeowners $100 Billion A YearSUBSCRIBE ON:
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Christer Holloman has raised tens of millions of dollars for his fintech startup, including achieving 100% oversubscribed in funding rounds.
On the Dealmakers Show, Holloman talks about thinking bigger, selling to enterprise customers, engineering FOMO, innovation in banking, stepping away from your CEO position, and what you do next. Plus the power of publishing your own book.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksInnovating OnlineChrister Holloman was born and grew up very close to the arctic circle in Sweden. Where the sun doesn’t set for six months of the year.
One of his early rights of passage was going through mandatory military service, which has helped Sweden maintain being neutral for centuries, thanks to its great defensive system.
From his teenage years he says that he believed if he was going to be successful he needed to be closer to the action and in the heart of a bigger city. At first that meant having his eyes on the capital, Stockholm.
Then after a scholarship in the UK, he found London even bigger and more exciting.
London took him into the world of content and working for a major newspaper group. He was tasked with helping newspapers innovate and move online as people stopped buying paper. He aided in creating new products and revenue streams, like CareerBuilder.
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Working At GlassdoorHe then became one of the first employees of employer review site Glassdoor. A company that grew to 1,000 people and was eventually acquired for more than a billion dollars.
Holloman says that the impact of that was elevating his perspective. It was a huge contrast from the traditional businesses he had worked in. Not only in how fast you can go, but in how big you can go. Such as when one of his bosses said his $10M revenue idea just wasn’t worth the hassle.
Then talking with a friend who was working on a buy now pay later startup, Christer started to see the opportunities for doing something differently in the banking space.
He witnessed the challenges of raising the additional capital or debt facilities to lend out directly, and the drag of getting your own banking licenses. He didn’t see anyone else taking advantage of working with the banks as partners with software to empower them to do this, so he decided to take it on himself.
Enterprise SalesChrister decided to launch Divido with two other cofounders. A white label SaaS platform for the buy now pay later space. Enabling banks and retailers to provide credit to customers.
At the beginning they focused on SMEs. They built up over 1,000 of these customers. Then everything changed when they were approached by Lenovo as a big enterprise customer.
Holloman says that it not only helped them really up their game to serve clients at this level, but it got the board to decide to exit helping SMEs entirely, and go all in on selling to enterprise customers.
Of course, enterprise sales is a completely different animal than selling retail or to small businesses. In their case, it meant going from having one sales guy that could close customers every week and really ramp up traction, to a sales cycle that can be more than a year long. It not only means finding a decision maker, but often getting several decision makers on board. Then you might spend six to nine months going through due diligence, before finalizing a contract. Then to build for the client may take another six to nine months.
Engineering FOMO & Oversubscribed Funding RoundsDivido has already raised $50M. Including raising a big round amidst COVID.
Storytelling is everything which is something that Christer Holloman was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!In the early days Christer said that Divido found it hard to raise money. Many thought it would be too easy for others to copy. It got to the point where the founders began looking for jobs. Even when they finally got one investor to commit to half their ask, he says that he had to sell his car to find the money to live off, to keep going in the hope of completing the round.
The two things that he says turned all of their fundraising around was the validation that the first investor provided, and the fear of missing out that created among other investors. In fact, they not only filled that round, but ended up raising almost double their ask. Just a few weeks later the company was in an entirely different financial position.
After that, Christer says that they’ve become much more systemized in creating those same triggers to successfully fill their fundraising rounds.
That begins with doing plenty of upfront research on your space and the investors in it. Essentially knowing which investors have invested in your competition, and which are more likely to be available to invest in your venture. Furthermore, it is also key from his perspective, to shorten your list by those not only investing in your market, but your location. Then hit them all, as hard as you can, as fast as you can, in as short a period as you can.
Christer says not to limit yourself to one point of contact or one medium either. You don’t know who will be on vacation, or which channel will get your message through. So, contact multiple people at the same investment firm. Do it through email, phone, and LinkedIn. As well as live events where they are likely to be attending.
This of course needs to be in tandem with a very “compelling ah business case that illustrates that this is a huge opportunity and this is why you need a position to capture this opportunity.” Which you can deliver in a way that is understandable and relatable.
Christer is now working as an entrepreneur in residence for a major bank and has also published several books, including Transactional to Transformational: How Banks Innovate.
Listen in to the full podcast episode to find out more, including:
- The notable investors Christer’s strategy has enabled them to land
- How to manage your investors once you bring the capital in
- When to transition out of being CEO, and what to do next
- Christer Holloman’s top advice for starting a business
Alejandro Cremades · EP 566 Christer Holloman On Raising $50 Million To Give You More Choices When Managing Your FinancesSUBSCRIBE ON:
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Ethan Agarwal sold his first company after raising $70M for it. He’s now championing the area of financial health for entrepreneurs and others who need a modern approach to investing that understands their needs and aspirations.
During our time on the Dealmakers Podcast Agarwal talked about the boxes you must check to get a yes from investors, the most critical startup metrics, the importance of prioritizing health for founders, hiring questions, and why audio can be the most engaging medium for content creators and businesses.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFinding Your Way To Make An ImpactEthan Agarwal was born in Montreal, Canada. Then when his father made the leap from being a professor to software engineer and entrepreneur, the whole family moved out to the California Bay Area.
Ethan was still around nine years old at the time. That meant learning to be adaptable and to make new connections and friends. In fact, he notes research that has been done on the high correlation between successful startup founders, and them moving as kids.
At a young age he had a court side seat to watch his dad follow his passion in building his own company, and eventually take it all the way through going public. An experience he says was very inspiring for him.
Going to school in San Jose also put him in the middle of the evolving tech scene. His classmates at school had parents who worked for companies like Cisco, or had their own startups. He was just immersed in this culture of innovation.
While Agarwal recalls always liking to break things open to see how they worked, instead of becoming an engineer himself, he was much more fascinated with how technology can empower people to achieve things that they couldn’t have before.
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Education At John HopkinsFor college he chose to study economics at John Hopkins. For a while he became very interested in politics and law, and the potential for having an impact by directing policy. Then came to the conclusion that “the ability to drive impact at scale is arguably greater through software than it is through policy.” In fact, he says that “the reach and impact you can have by building really great software today is far more scalable than hardware or any other sort of technological innovation that has occurred in the last 200 years.”
So, as the internet began to scale he began plotting his own course to becoming a tech entrepreneur.
Wanting to become more confident in his skills and ability to build his own business, he stepped into a variety of roles that would provide immense learning.
That began with his MBA at Wharton. Then two years in investment banking, three years in consulting with McKinsey, and several with a hedge fund. That provided a lot of insight into team building, strategy, operations, finance, and more.
Health & The Power Of AudioToday, Ethan will tell you that your physical health is one of the top three things that you need to focus on as a founder.
Of course, for many it takes a real wake up call to make it a priority. He’ll tell you that he is no exception to that.
Working in consulting, and traveling almost nonstop every week he found he had been putting on some weight. It was a challenge to find healthy food, training and gyms on the go. Especially when classes like Soulcycle that were trending at the time were not just expensive, but require you sign up well in advance. He found it very inconvenient. Especially in an era when you could already do so much on your phone.
Digging into it, Ethan says that he defined three things that made great studio quality classes. Those are a trainer providing motivation, music, and guidance.
He decided that he could not only achieve that with audio classes, but that audio was actually far more effective and useful. Allowing you more freedom in your workout. Just as podcasts can do for business training. It proved to be even better than video, or a combination of video and audio.
So, he jumped in and launched Aaptiv. They grew to more than a million paying subscribers, across 20 different countries, and about $100M in revenue before being acquired.
The Boxes You Need To Check To Get FundedFor Aaptiv Ethan raised around $70M before selling the company. He has raised another $50M for his latest venture.
However, he said it took 120 investor rejections before finding one lead investor to step up.
Storytelling is everything which is something that Ethan Agarwal was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!With his experience across a variety of rounds, he says that in order to get that precious yes from an investor, you must check at least one of these boxes for them.
- A highly credentialed team
- Truly revolutionary technology and product
- Incredible growth rates
- Being in a really hot and big market
- Other notable investors are leading the round
With Aaptiv they managed to show up with tremendous growth, and got funded.
With his latest venture, The Coterie, they were able to bring in Andressen Horowitz as an early investor.
The Coterie is focused on helping those who make most of their money from assets (versus a salary) like their equity, to access and use the best financial tools and strategies, in a way that makes sense for them.
Listen in to the full podcast episode to find out more, including:
- Successfully pitching your startup to investors
- Three things to focus on as a founder
- LTV versus CAC
- The Coterie and your financial success
- Ethan’s top advice when starting a business of your own
Alejandro Cremades · EP 565 Ethan Agarwal: From 120 Investor Rejections To Raising $100 MillionSUBSCRIBE ON:
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Howard Lerman has been building and selling companies since he was in college. After taking his last venture through an IPO, he has launched a new startup helping to solve the future of work dilemma that many are debating right now.
On the Dealmakers Show Lerman talked about being on the leading edge of new technological revolutions, hitting market ceiling, selling your company, and the good and bad, and ugly of an IPO. Plus, the future of work, why not to self fund your own company, and the most important metric for your business.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksStarting & Selling Your First Company In CollegeHoward Lerman grew up in a suburb in Virginia. The same neighborhood as Sean Parker came from.
It was the 80s. Which meant a lot of riding your bike around, and no internet yet. He also sang opera, which didn’t always go down well when he was playing baseball.
Yet, even at 13 years old he began figuring out how to use computers to connect people. Starting out with using the phone to engage with bulletin boards, and to run computer games before the internet became a thing.
Getting into a great STEM school only fueled his passion for math, science, and technology.
It was a unique moment, on the verge of a new technological revolution. Where he has this technical skill that even his parents didn’t understand. Computing was on the front of major magazines, but most people didn’t know what to do with it yet. He says that it just became a part of his DNA.
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While at Duke University studying history, Lerman started his first company. It was a fun website that let you send tips to people anonymously. It went viral. Millions of people ended up using it. Then after it appeared on an episode of the Daily Show, it really exploded in popularity.
In just one year he ended up selling that business, taking his first company through the whole cycle.
When You Find Your Business Doesn’t ScaleHoward Lerman’s next business provided consulting services to government agencies and contractors.
It was just post 9/11, and felt like the patriotic thing to do at the time. Of course, consulting hasn’t really proven to scale as a business yet. So, they did end up having a good outcome, but it was time to move onto something else.
Next was the first iteration of the company he would end up taking public. It began as gymticket.com. An idea that you could do for health clubs what was being done for hotels online.
They were essentially driving leads in for gyms. After hitting around 2,000 gyms, and a few million in revenue, they realized there wasn’t much scale in it.
Howard says they face the choice between digging in and focusing on the vertical, or branching out horizontally into new verticals.
They chose the latter. They took it to vets, chiropractors, and in total around 20 different verticals. Along with building up $20M in revenues.
Then hitting a new ceiling, they started a new company, with the same cap table, and then spun out this company to fund their new one.
The Good, Bad, And The Ugly Of Taking Your Company PublicThe new venture became Yext. A powerful listing service that enables businesses to be found across the internet.
It was a huge hit with big Fortune 50 companies, and for all of their locations.
This has enabled them to go from raising a seed round, all the way through an IPO, and beyond. In total, raising around $250M.
No small feat, given much of this was done when there were far fewer VC firms in existence, and their business models were much more traditional than they are today.
Lerman recounts when there were only around 20 VCs, all huddled around Sand Hill Road. Individual angel investors at the time certainly weren’t throwing around million dollar checks like they can today.
It also meant being more disciplined in building a real business. Howard says he always liked to put up the results, and have the money seek them out, rather than vice versa.
Still, after taking his company public, he found several ways things changed. Including the investors you are talking to. Rather than when you are private, and your investors all want you to succeed, and your interests are generally aligned, when you are public, you will have those who want to short your stock, and bet against you too. You just never know what their intentions are.
Storytelling is everything which is something that Howard Lerman was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Accountability–The Secret to Successful BusinessesOn the positive side, he says the accountability you are forced to have as a public company helps build better businesses. Everything is out in the open.
However, this can also lead many to focus on pushing metrics for the next quarter, rather than making the best decisions for the long term.
When it comes to the single most important metric for all businesses and founders to focus on, Howard says that is your net customer retention.
Entering RoamAfter leaving Yext, he immediately started Roam. The company provides an all in one cloud HQ that cysts meeting times in half, boosts productivity, and builds community and culture in the new world of work.
Howard and his team believe that when the whole company is in one HQ people feel more connected to the company. Calendars are emptied. Culture comes back.
So far they have raised over $50 million from investors with Howard putting in $12 million of his own.
Listen in to the full podcast episode to find out more, including:
- How the fundraising ecosystem has changed
- When to bring in an outside CEO
- The process of going public
- Why not to self-fund your company alone
Alejandro Cremades · EP 564 Howard Lerman On His Last Company Being Valued At $1BSUBSCRIBE ON:
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Cap tables are a core part of growing any serious business. They can be especially important for startups.
As a startup entrepreneur, your cap table will influence everything from securing investments to the terms of those investments, your ability to recruit the best talent, and the eventual outcome of your venture. Not to mention how big you can go, and how fast you can grow your company.
While there are plenty of other urgent issues in front of you as a founder, this is an important factor that can quickly cost you a lot more than you ever anticipated, if you neglect it.
It is vital to understand the basics of a cap table, how it relates to investors, your equity, and control, as well as the mistakes to avoid, and what it will cost you if you don’t prioritize getting this right.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Is A Cap Table?A capitalization table, also referred to as the ‘cap table,’ is a document that shows the stakeholders in a company.
This is typically shown in a spreadsheet format. Listing all of the owners and equity holders, the shares issued, and more.
It shows how the company has been capitalized, how the equity has been managed, what’s left, and what’s possible going forward.
It is a vital internal document. One that will be used in a variety of important financial and other decisions. As well as, being one of the most important documents that prospective investors and acquirers will want to view when it comes to fundraising or an exit.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!What Is Included In A Cap Table?A cap table is most focused on displaying the ownership division of a company.
This includes:
- Shares issued
- Who holds stock, and how much
- Option pools held in reserve
- Convertible notes or other potential claims to equity and shares
- Valuation
This can, of course, get pretty complicated. It is one thing to register a new company, start a small business with a friend, and split your interests fairly evenly as partners. It is completely different when you are aspiring to launch a true fast-growth startup that you dream of taking to be worth billions of dollars, or more.
In this second case, you will have many more elements involved in your cap table. As well as many complicated terms and calculations defining the value and impact of these agreements over time. Shares may be vested over a period of years, there can be RSUs (Restricted Stock Units), and complex provisions for paying out investors in a liquidity event.
For these reasons, many argue that a traditional Excel format is not going to be sufficient or efficient. Especially if you try to DIY it from scratch.
Who Should Manage Your Cap Table?Unless you have a strong accounting background and a good understanding of all of the terms of investments, then it is wise to get help with creating and managing your cap table.
This can be outsourced. Accounting and law firms specializing in startups can help. As can leveraging existing cap table templates. There is also cap table software, and equity management software to consider.
Within your organization, your CFO will be heading up the responsibility for this task. Make sure you hire the best you can.
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The Pain Of A Poorly Crafted Cap TableSloppy, careless, or incorrect cap tables can be a major pain. They can hurt your business and its potential in far more ways than you imagine, and to a much greater extent than you probably realize right now.
Here are some of the common ways that a poorly crafted cap table can quickly become your startup’s Achilles heel.
Time & Energy DrainTrying to create and fix and update your cap table manually can take up a lot more hours and energy than you think.
While it is one of your most important documents, the ROI on your time is probably going to be low. It is not going to be efficient for most founders and new entrepreneurs to tackle this solo. Unless you have a great math and startup background.
That not only means lots of lost hours, that could have been spent on growing your business and making progress in other vital areas but draining you of your energy in the process. This is especially true when you have to go back and repeatedly fix it and update it yourself.
Learn the basics, delegate this out to someone extremely competent in this area, and go do what is going to grow your venture the most today.
More Intensive Due DiligenceA poorly crafted cap table is going to make going through due diligence far more intensive, painful, and slow. That’s even if your cap table can take you that far in a potential transaction.
The less you answer upfront, and the less confidence you give investors, the more they are going to have to dig into everything themselves. The longer the due diligence process, not only the longer before you can put money in the bank, but far higher the risk that it won’t complete.
Until you’ve raised money you probably think that pitching and getting term sheets in the door is the hard part. In truth, it is just the beginning. Due diligence is the real minefield.
Quickly Turning Off Potential InvestorsRemember that investors see and hear so much junk, and are bombarded with so many pitches that they are just looking for a reason to justify their preconception that your pitch is just more spam, and isn’t going anywhere. Don’t give them any red flags to cause them to just dump you in the trash folder.
If your cap table is a mess, or too light, then they will be perceived you are not organized, opaque instead of transparent, and will have more questions.
What you want to do is to get good at enabling fast decision-making, and carry them right through to taking action.
Not Maintaining A Healthy Enough Option PoolOne of the often overlooked parts of a cap table that new entrepreneurs overlook to their own detriment is maintaining a pool of stocks for the future. Especially for recruiting talent, as well as compensating new members of the executive team, and advisors that can really propel traction.
If you miss this element, you are going to end up diluting your stock even more later. Then lose more control, and have a weaker exit.
Unanticipated Impacts Of DilutionWhile some dilution can absolutely be worth the trade-off for the value you will receive, and how much larger it will take your venture, and in less time.
However, too much dilution can sap your share in your own company. That may just mean leaving you little to nothing when you exit. Or if you catch onto it earlier, discouraging you from really continuing to give this venture your all.
If you end up with just a small slice of your company, you can also lose control of your company, and the ability to make many decisions that are really important to you, and the purpose for creating this startup in the first place.
Not Having A Clear View Of The Value Shareholders Bring Versus Their CostEvery little issue gets greatly magnified over time. As your startup scales exponentially, so do the good factors and the flaws.
Your cap table is a significant part of this. It is important that you are aware of the value exchange. What you are getting in exchange for the stake you are giving up.
Paying attention to this in your cap table in the early days will set you up for a much better future. Or it can rob you of a lot of potential if you ignore it.
You don’t want a lot of value going out, and not getting an inferior return back. You don’t want a lot of deadweight sucking the life out of your company, when you could have gotten a lot more help in propelling it forward and making big leaps, for giving up the same amount of equity and control.
This can especially be a problem with early cofounders and friends and family investments. As well as any money you are bringing in, just for the dollars, and not the additional value those investors are bringing to the table.
Understanding the break-up of your company’s capital structure becomes all the more critical when you start fundraising. For more information about how rounds of financing work in startups, check out this video I have created.
Weak Outcomes In An ExitAs we’ve already alluded to a couple of times in this report, a poorly managed cap table can really show up with a big impact when it comes time to exit.
Many entrepreneurs really think forward and prioritize ensuring that their investors and team are highly rewarded when they exit a company. They find it extremely rewarding to deliver great returns and financial freedom to those that were willing to bet on them and make it happen.
Even if you are not there yet in your thinking, keep in mind that you could end up with a small slice of the pie if you are not careful. In fact, if you aren’t watching the fine print, clauses, and calculations when getting into investor agreements, you might walk away with nothing. Even if your company is acquired for over a billion dollars.
Expensive Costs To Fix ItIf you neglect your cap table in the early days, it is only going to get harder and more complicated to straighten it all out later. Not just in terms of cleaning up and beautifying how you present your deck, but in perhaps even restructuring past deals, and a ton of legal work. This can easily run thousands, if not tens of thousands of dollars to do.
Startup Cap Tables & FundraisingCap tables are a big deal in fundraising. They are certainly impacted as the result of bringing in more equity. Your cap table can be a significant factor in attracting capital, and the terms as well.
It’s Instrumental In Negotiating TermsYour cap table shows what is available, and how wisely you’ve managed it so far. This can certainly help in attracting solid offers from the start and avoiding wasted time.
Organizing & Presenting Your Cap Table When FundraisingYour cap table should already be updated and in an appealing format before you go out pitching. It may not be in your pitch deck. Yet, it should be sitting there in your virtual data room, ready to be viewed.
It Matters To InvestorsInvestors want to know how much is available, the threats to their capital and returns, and what may be a drag on that.
SummaryThe cap table is the heart of your business. While it may not always be exciting to be diving into spreadsheets instead of pitching, selling, and launching products, your cap table can make or break your venture.
Managing it well, and presenting it correctly, can make all the difference in how fast and big you can grow. As well as how easy it will be, and how rewarding the exit will be for you, and everyone else with a stake in it.
Getting this right from the start will propel your venture, and save a lot of pain and challenges on the way.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Sacha Michaud has not only been involved in the birth of several startups, but has ended up seeing them go public as well.
During his appearance on the Dealmakers Show Michaud talked about selling his first company for $18M, scalable business models, raising $900M for one of his ventures, and his top advice when launching a business.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGrowing Up In London And Traveling The WorldSacha Michaud was born in London, to an English mother, and Canadian father. However, it wasn’t long before his mother took him traveling the world. Living in places as diverse as Canada, Mexico, and Guatemala. As well as spending time throughout Europe, in Spain, Greece, and Switzerland.
He describes it as a very free childhood. One that certainly prepared him for embracing new things, connecting with new people, and no doubt being able to operate international companies. It also led to him meeting his wife, and learning to be self-sufficient.
His youth was also full of sports. Most notably horse riding, and then becoming an international jockey. Including racing horses throughout the UK and across the US.
However, after a trip to Boston, he fell in love with it. With no horse racing there he needed a new skill to support himself, and seized on the opportunity to learn computer programming.
That got him a job with a bank fairly quickly. Though when the internet was born, he decided to use the opportunity to start his first company.
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Starting And Selling His First Website Design CompanyThey provided hosting, website design, and domain names. Some of those things did not scale as well as others. Yet, hosting did, and enabled him to make money in his sleep. It got enough attention that he was able to sell this first company for $18M.
At the time they had around 18M active users. Which was quite substantial in the 90s. So, during the process of raising another round of funding they were acquired by a competitor with more capital, who wanted their traffic. That company ended up going public on the NASDAQ, before being acquired by France Telecom.
Next Michaud teamed up with another entrepreneur to work on a disruptive new sports betting exchange. There he ended up learning even more areas of building a commercial building, including managing the budget and marketing.
Then it came to the point where he felt that he should do something new. Staying in gaming seemed too easy. It was the emergence of the sharing economy that really caught his attention. Uber and Airbnb were coming up, and he wanted to be a part of that movement.
Finding ScaleAfter leaving his betting company Sacha says that he started sharing his idea with investors. Then met his cofounder, Oscar. Who had just come out of Georgia Tech, and been working on a similar idea.
They decided to join forces and tackle the space together.
With a modest pre-seed round of funding of just around $100k, they launched Glovo out of Barcelona, Spain, with a small team.
Although they had very limited capital, they were scrappy, and he says that constraint made them even better at achieving more with less.
They knew they were really onto something when after some clever PR they were able to see things take off pretty organically. They were getting emails from people who loved their idea. The company quickly created some buzz within the Spanish tech startup ecosystem.
That helped land them a $2M seed round the following summer. Enabling them to launch into more cities throughout Southern Europe.
Storytelling is everything which is something that Sacha was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!GlovoThey began by doing things that didn’t scale. Expensive manual processes. Helping people to order just about anything online and get it delivered or moved around town. Customers would pay the bulk of the delivery costs, and they would subsidize them with their earnings.
Then they made the switch to automating processes. As well as cutting deals with restaurants and stores that would pay them commission. Which enabled them to lower prices, attract more customers, and get the unit economics inline. That has enabled Glovo to handle over half a billion orders.
They’ve also grown to around 4,000 employees. As well as expanding into 25 countries. Including those in Europe, Africa, and Latin America.
Before the acquisition, and going public, Glovo raised around $900M. Still Sacha says that still meant pitting them against much larger companies in a David versus Goliath situation.
A lot of people wanted to win the space. They were willing to throw a lot of money at it to become the category dominating leaders. That’s who investors really want to bet on.
So even when it came to their Series C round, Michaud said they had to work through 110 rejections from VCs before they got one yes.
Ultimately Delivery Hero acquired the majority stake in Glovo for $2.6B.
It’s All About The TeamSacha Michaud’s top advice when launching a business today is all about surrounding yourself with the right people and partners. Which certainly applies to your cofounders, department leaders, and investors.
He says to focus on surrounding yourself with those that compensate your strengths by being strong in other areas, and covering more of the skills your company will need. People that you can admire and enjoy being around, not just working together.
Listen in to the full podcast episode to find out more, including:
- Leading a public versus private company
- Scalability
- Successfully integrating companies in M&A
Alejandro Cremades · EP 563 Sacha Michaud On Cofounding A Business Of 4K Employees That Just Sold For $2.6BSUBSCRIBE ON:
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Nikita Shamgunov built a $100M revenue company, before joining Khosla Ventures to invest in other startups. Now he is going at it again, with a new tech startup that has raised $54M in just 16 months.
On the Dealmakers Show Shamgunov shared an enormous amount of insights from being on both sides of the table. Including, great books for founders, how to push growth when you really need it, succeeding in enterprise sales, the difference between starting and incubating companies, transitioning from CTO to CEO, and building category dominating companies.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksQuitting Business School On The First DayNikita Shamgunov was born and grew up in Russia. These were times of hyperinflation, and a major transition in the economy as the iron curtain came down, and the world began to open up.
He remembers getting into an elite math high school, but finding the young professors and assistants needing to moonlight to make ends meet financially.
Both his father and grandfather were mathematicians. A path he thought that she would also follow. Until he discovered computer science.
That passion for computers led him into programming competitions. Even making it to the world stage. Competing and winning medals from Europe to Canada.
This led him to obtain his Master’s and to pursue her Ph.D. studying in St. Petersburg. Then for friends to refer him to working at MIcrosoft, and eventually joining them in Redmond. Where he worked on databases and complex systems.
Considering what would be next for him, Nikita decided to apply to business school to round out her skills. The expectation was that there would be the opportunity to meet and learn from great business leaders.
However, the first day brought the realization that everyone else was just lost. So, it also ended up being his last day, and the moment she decided to accept Facebook’s job offer down in California.
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Building A $100M Revenue CompanyWorking at Facebook integrated Shamgunov in the entrepreneurial heart of Silicon Valley. There he met his cofounder, and began reading essays by Paul Graham.
These were relatively early days for Facebook. When they were still just around 800 people. They were moving fast and trying to break things. A big change from the experience of working at Microsoft.
Still, curiosity about Y Comibinator led Nikita and his cofounder to apply. Where Paul Graham promptly told them they needed to ditch their Facebook badges.
They launched MemSQL (now SingleStore), and dove into the reality of the grind of being a tech startup entrepreneur. Living in the office, with a bunch of loud, hot servers. Spending hours and hours in front of screens coding away.
Today, SingleStore has already raised $300M, grew to $100M in revenue, and is well on its way to potentially becoming a public company.
Storytelling is everything which is something that Nikita Shamgunov was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Enterprise SalesSingleStore is focused on selling to big enterprise companies. Something many tech startups aspire to do.
Product prices can run from tens of thousands of dollars to hundreds of thousands of dollars per year. Which means that you may not need many customers to become a big company, with large amounts of revenues. Yet, as Nikita reminds us, it also comes with high customer acquisition costs and relatively long sale cycles.
In fact, he says that he ended up shifting from CTO to CEO to really drive the go to market, and
enterprise marketing. A critical task to keep up fast growth, in order to raise more funds, which in turn would fuel more growth.
This meant account account-based marketing, attending enterprise events, and collecting small numbers of high- quality leads.
Another hack he found for showing growth to investors during this time was to go to their existing customers and to ask for more money. Which they got. Though it may not be a successful strategy for every company.
That delivered 100% growth in their data, and landed them another round of funding from Google.
To keep on going and growing, they also had to make the switch from a hybrid hardware software company with on premises solutions, to the cloud. A transition he says took years. Not being just about the technology, but requiring the architecture and DNA of the company to completely change. Led by bringing in new management teams.
Building The Future & Category Dominating CompaniesAfter installing great management at SingleStore, Shamgunov found he all of a sudden had more freedom than he had enjoyed in a decade.
That led to becoming a partner with Khosla Ventures. Where he benefited from a broad perspective of the market, and what businesses really turned into huge successes, versus the rest.
It was then only a matter of time before he was pulled into incubating another venture of his own. This time, Neon. Which has already raised $54M in just 16 months.
Neon is building open-source cloud-native PostgreSQL. In essence, Neon is a serverless Postgres database that enables developers to move fast without managing and scaling infrastructure.
It automatically scales up or down based on demand and gives users bottomless storage out of the box. Neon also enables developers to instantly branch your data the same way you branch your code, making it a perfect fit for CI/CD and Preview Deployments.
Listen in to the full podcast episode to find out more, including:
- Launching versus incubating startups
- Creating category winners
- His top advice when launching a business
Alejandro Cremades · EP 562 Nikita Shamgunov On Building A $1B Business And Now Raising $54 MillionSUBSCRIBE ON:
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Elli Kaplan has already raised tens of millions of dollars to take on one of the biggest and fastest growing healthcare challenges we face today. The investments include top investors like Peter Thiel.
On the Dealmakers Podcast Kaplan shared how she helped create change through influencing policy, starting the first startup accelerator in Atlanta, and how to pitch well when fundraising. Plus, how her venture is digitizing healthcare, and is tackling Alzheimer’s Disease.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksCreating Change Through PolicyElli Kaplan was born in Denver, CO. Though her father, a pediatrician, joined the Indian Health Service, and shespent much of her childhood growing up on Native American reservations in Washington State and in Oklahoma.
This experience certainly made a big impression on her and the importance of healthcare, and has continued to drive her in tackling healthcare challenges through to today.
This is especially true around access to healthcare, and the significant impact healthcare services have on people.
She recalls her dad treating sick children who could have died without his help. The father of one simply didn’t have any money to pay. So, one night he came over with steaks he had cut from slaughtering one of his – cows as payment and to show his gratitude.
Another highly influential moment was in spite of her studying pre-med in college, and coming from a family of physicians and healthcare workers, her grandfather, who was also a doctor, began to show symptoms of Alzheimer’s disease. Even with how connected they were to the system, it was so hard for them to get a true diagnosis of his condition , Which made her think how much harder it must be for others to get access and care.
Kaplan said that she saw how powerful policy was in shaping industries and social services. She saw that people’s beliefs, and the actions they took to get people into positions of power to force change was a way to really shape laws, regulations, and make things different.
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Assisting In The Presidential Election CampaignSo, during her final year in college Elli says that she got involved in Bill Clinton’s presidential campaign, and helped get him elected. Then set about taking those ideas and policies in order to help change, design, and develop things at a government level.
After college she took a job in the White House and later the State and Treasury Departments before joining
the United Nations development program as Deputy Chief of Staff where they would go into emerging markets, help to craft policy, and put organizations in place to shape international economies.
What really caught her attention during this time was the interaction between public and private sectors and organizations including the role of entrepreneurs, and the early stage private capital to enable, supplement, and fuel them.
Launching Atlanta’s First Startup AcceleratorElli wanted to get more involved on the private side of this equation. Yet, felt she needed more experience before diving in herself.
That led to her returning to her studies at Harvard Business School and after graduating she moved to Georgia.
Atlanta’s startup ecosystem was still just forming. This was unlike Silicon Valley which was already very well developed, with all of the components in place to breed and fuel successful startups.
However, she saw that a lot of great talent was coming out of Georgia Tech, especially in terms of product people and engineers. She wanted to help bring it altogether. So, with a few others, they launched Altanta’s first startup accelerator and incubator in Downtown Atlanta.
Elli kept learning about what made a successful startup venture. Yet, healthcare was still very important to her. With the encouragement of others who said she should be the one to step up and do something about Alzheimer’s disease, she began to work on her own digital health startup, Neurotrack.
NeurotrackElli started out witnessing a fast aging population, with a growing risk of Alzheimer’s, and understanding that technology would play a big role in the digitization of healthcare services and products.
The Alzheimer’s space is certainly a challenging one. One in which many others, including giant pharma and biotech companies, and other healthcare providers have failed. This included some of their early customers, who gave up on creating drugs for these patients because they were not working.
However, today, Neurotrack is working through private practices to help identify the early symptoms of this disease, and enable healthcare providers and their patients to get all the resources and care they need to manage it. Much like we’ve seen the evolution of diagnosis and treatment for diabetes and cancer, they are working on standardizing cognitive health care in this space.
How To Successfully Pitch Your Startup To InvestorsTo date, Neurotrack has already raised approximately $60M, including from Peter Theil.
Storytelling is everything which is something that Elli Kaplan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Elli says that really researching and knowing your investors before you pitch them is critical.
In this case it meant turning what was supposed to be a 30 minute pitch meeting, into a full day of meeting partners in the space, and a check. Of course, once you land an investor of this caliber, it also becomes pretty easy to fill the rest of your round, and attract more capital.
Although this disease category is a tough space, littered with other failures, and a very long timeline to really solve at scale, Kaplan said she went in knowing Peter had invested in other startups around this space. This included drug makers absolutely needed her diagnostic product to be able to become successful themselves. That really clinched the deal.
Listen in to the full podcast episode to find out more, including:
- Elli Kaplan’s top advice for other entrepreneurs
- How Neurotrack is tackling Alzheimer’s
Alejandro Cremades · EP 561 Elli Kaplan On Raising $60 Million To Keep Your Mind Sharp And Memory IntactSUBSCRIBE ON:
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Bharath Krishnamoorthy has gone from young rebel to working for one of the world’s top M&A law firms, to startup entrepreneur.
On the Dealmakers Show Krishnamoorthy walked us through his journey from failing student to startup success. Including student loan debt, pivots, transportation tech, the three boxes every great business idea needs to check, dealing with non compete agreements and competitors trying to sue you out of business, and the importance of sleep.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom Lawyer To EntrepreneurBharath Krishnamoorthy grew up as one of three siblings to hard working parents. He says that he never really loved the system, or being a young student.
In fact, when he was exiting high school, he had gotten in so much trouble that his parents agreed to cosign placing conditions, provided he went into law school.
He got into Columbia, and went on to get his law degree. Even though, looking back he says that may be too young for people to be making decisions about taking on hundreds of thousands of dollars in student loan debt.
He then went on to work for one of the nation’s top law firms. Spending a lot of time in M&A and private equity. With one of his big takeaways being the incredible quality of work being done there at Gibson. They would proofread things a hundred times over to be sure there were no mistakes in their customers’ legal documents.
He says that he has tried to carry that commitment to an excellent product with him in his own startup.
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Dabbling in EntrepreneurshipFrom a young age Bharath says that he had an itch for the entrepreneurial. While he dabbled in fun exploits like trying to go door to door selling violin performances for 25 cents a pop, he hadn’t really seen entrepreneurship as a viable career path.
However, he eventually realized that starting a business is something that you can just do. Through a series of progressing conversations with his best friend from high school, Shawn Vo, they became increasingly interested in building something together.
He then met former presidential candidate Andrew Yang. Who encouraged him to push ahead, in spite of his situation. That helped him go from thinking that he would have to work for the next 10 years to pay off his $250k student loans before considering a startup, to being more confident in making the leap.
Pivoting To SuccessBharath had his legal background. Shawn had his fintech experience. Together they began ideating on a variety of business propositions.
They would take an idea, go talk to people, and see if it really had legs or not. One was digitizing pricing and scheduling for bus operators with software. They gained some customer interest, and even an LOI from a sizable operator. So, when he got his annual bonus from his law firm, it seemed like a great time to make the leap.
It still meant humble beginnings. Sharing one bedroom, in a three bedroom house. Eating very modestly, and working away.
Within six months they were bringing in $8k a month. Then ran into the fact that the market was just too small. Even if they executed perfectly, and were lucky, it just wouldn’t ever be a grand business.
Yet, they had just gotten into Techstars. So, they decided to just try to figure out how to make it work. They raised $1M out of the Techstars program, then went on to keep pivoting to new business concepts over the next two years.
He says that they never thought about quitting, so just had to power through. Refusing to be blown around by the emotional highs and lows of startup life.
Ultimately, Bharath Krishnamoorthy’s startup settled on digitizing payments for the freight industry, with their transportation tech startup now known as Denim.
The Fundamentals Of A Successful Startup BusinessDuring those years of pivoting Bharath says that they became much better at learning what makes a good business. Then, things really changed when they began looking at it through the lens of an investor, rather than what sounded like a cool business to a couple of college kids.
This included seeing if a product really had traction. How it would look like at scale. What the real economics of the business should and could look like. Obviously having a really big market. Then something which could have a real impact. A venture they would feel comfortable committing the next 10 years of their lives to.
DenimThey knew they hit it when they began getting traction with digitizing freight payments.
That helped unlock funding. Resulting in raising $165M in debt financing and equity capital so far.
Storytelling is everything which is something that Bharath Krishnamoorthy was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Denim is becoming a universal freight payments network, with numerous ways to build on that in the future. Bharath says he sees the freight markets bottoming out now, with lots of upside coming.
Denim already has a team of 70 employees. They are processing $100M a year in payments for the freight industry, and continue to grow.
Listen in to the full podcast episode to find out more, including:
- The importance of sleep for founders, and the impact it can have on your success
- Finding the courage and rationale to launch your own venture
- Debt versus equity capital
- Non compete agreements
- When your larger competitors try to sue you out of business
Alejandro Cremades · EP 560 Bharath Krishnamoorthy On Raising $165M To Simplify Payments In A $10 Trillion IndustrySUBSCRIBE ON:
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What are board minutes? Board minutes are an extremely important part of operating a business. Especially for those desiring to build a large, fast-growing company, with as few legal issues and distractions as possible.
This is not one of the most common topics covered and sought out by entrepreneurs looking to launch and begin running a startup. Yet, it is a factor that can be incredibly impactful as you really start growing, are out fundraising, and are building a professional organization.
Neglecting them, being sloppy, and failing to keep good records can really become an Achilles heel later on. So, getting in a good habit of managing this well will only help remove hurdles and drag on your venture.
So, what are board minutes? Who takes care of them? What other factors should founders be considering when managing their boards?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBoard Minutes 101Board minutes are an official and legal record of what occurs during board meetings. Especially, covering key decisions made, and items voted on.
This is a written record that will be saved for future reference and provided to others as needed.
Every meeting of the board of directors should have written notes in the form of minutes. How frequent your meetings will be, and minute requirements may depend on the laws governing your specific type of corporate structure and entity.
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Board Of Advisors Vs. Board Of DirectorsWe are talking about board minutes in relation to meetings of your board of directors.
As a startup entrepreneur, you may have both an unofficial or more casual board of advisors, as well as an official board of directors.
Advisors are crucial for all business owners and operators. These can come in many forms. From mentors to peers in mastermind groups, and paid consultants. As well as advisors for specific needs, including fundraising and M&A.
Your board of directors has official titles. Typically Chair of the Board, Treasurer, Secretary, and Vice Chair.
Even as you’re learning more about the various titles, you’ll need to know more about the roles they play, their responsibilities, and what to expect from the board members. Check out this video I have created explaining each chair in detail.
How To Build Your BoardYour board may start out by being your co-founders. As you raise capital, you can expect your investors to also place their own representatives on your board. Which gives them significant control over your company, and their investment.
Your board is critical to and absolutely pivotal to the success and failure of your venture. As well as its level of performance, and the ultimate outcome.
With this in mind, there are several factors to keep in mind when assembling and organizing board members.
This includes the credibility they will give your company. Their reputation will directly reflect on your business. Then there is the tangible value they will bring to your venture. This may be their contacts, as well as their business acumen. As with your co-founders and executive management, you want them to cover various parts of the business. Without too much overlapping.
Then you will also need to have board members whom you can work well with. Otherwise, every step and decision is going to be incredibly painful. Having a good relationship with them in advance will go a long way to avoiding major issues.
How To Manage Your BoardEffectively managing your board is going to make all the difference in how this venture goes.
It will impact your product, profitability, salary, the treatment of your team and customers, your fundraising, and any potential exit, as well as how well that turns out.
On one hand, you serve at the will of your board of directors. Depending on how your shares, classes of shares, corporate documents, and cap table is structured, they could well have the power to not only determine your compensation but whether you continue to be able to work in your own company.
On the other hand, some entrepreneurs will tell you that their perspective is that their board is there to serve them. Much of this comes down to how you manage and interact with them.
Be very conscientious with their time, be organized, be transparent, and maintain trust.
How To Write Board Meeting MinutesAt every meeting, there needs to be board meeting minutes.
Understand what are board minutes and make sure they have the following traits:
- Brief, but intelligible
- Self-contained
- Formal in style and tone
- Written in the past tense
- Impersonal
- Decisive (as the discussion allows)
The secretary of the board is the individual tasked with taking and writing the board minutes. Which will then later be approved by the Chair before recording.
Minutes should contain all essential information, though be concise enough to be usable and efficient to use later on.
Board Meeting Minutes TemplateHere is an example of how you can create a template for your board minutes.
- Company name
- Name of meeting
- Location, date, and time of the meeting
- Names of those in attendance and absent
- Unfinished business from the previous meeting
- Approval of board minutes from the previous meeting
- New business items
- New data being reported
- Items to be voted on
- Conclusion of those decisions
- Action steps to be taken after the meeting, and who is taking responsibility
- Information about the next meeting
- Time this meeting is adjourned
- Signatures
Mistakes To Avoid With Board MinutesEven as you understand what are board minutes, you should also know how to create them. Failing to document a quorum is a big issue. If a quorum is required to vote and make a decision on certain items, to be legal and stand, this must be documented.
Including unnecessary but sensitive information. More and more people will have access to this content. There are also many risks of leaks, hacks, and more. If it’s sensitive, but not needed in your minutes, remove it, with the appropriate approval.
Waiting too long to clean up and provide minutes just creates more potential problems. The memory of the exact events and words will become vaguer. There is more chance of losing the notes. There is the risk of just not getting them filed in time for something important.
Poor organization of records of minutes is a big problem too. They should be easily found as needed. This can be a serious legal issue. Especially if there are disputes, or resolutions for time-sensitive and major factors, like fundraising and M&A. Having backups online and in hard copy can be wise.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Risks Of Poor Minute TakingWhile this may often seem like a small, tedious, and unimportant task in relation to everything else going on in your business, there are serious risks of failing to keep minutes.
Piercing the corporate veil is always a risk that needs to be carefully avoided. This is when a judgment or lawsuit is levied against the company, but also flows through to the individuals, and their personal finances.
If you have not kept great corporate records, and have kept your business and personal finances separate, then creditors could come after your home, vehicles, other assets, bank accounts, and future income from other sources. Do not let that happen.
The other most obvious risk is that there is a dispute about a decision and action that has been taken. The minutes, as well as any other supporting corporate documentation, are the evidence to provide clarity and back up opposing opinions.
Avoid Conflicts And Legal IssuesIt’s in black and white and has been reviewed, approved, and recorded. This should first help avoid any attempts to dispute anything, and then provide clarity on the issue.
If you don’t have this documentation all types of internal fights and legal battles can arise. Often around the biggest and most important events, and at the worst time. This can include agreements to take on debt financing, the terms and clauses of funding agreements, and selling the business.
Fraud is another reason that minutes become extremely important. This is proof that the board was not involved, and did not approve any fraudulent moves that could lead to huge legal settlements, deep, long, and disruptive investigations, and very costly bad PR.
In fact, not keeping minutes can alone be a big red flag that draws this uncomfortable type of scrutiny. Which could otherwise be quickly cut short. So, take the time to understand what are board minutes and how to craft them.
When Is The Right Time For A Founder To Step Back And Become A Board Member Only?This is not a transition that many new startup entrepreneurs initially plan for or expect. They often either think that they will continue running this highly successful business into infinity, or will sell the company quickly for a huge financial windfall.
However, it is actually not that uncommon for founders to eventually step back, and restrict their engagement to being a board member, rather than a part of the executive management. This is often to the position of Chair of the Board, though does not have to be.
In fact, if you are successful, you may end up joining the boards of several other organizations in addition to your own startup.
More and more frequently, we are seeing startup founders take the advice to recruit and bring in more executive management early. Even an outside CEO.
Advantages Of A Timely ExitThere are many advantages to this, even when it is not immediately necessary. For a start, it can take an enormous amount off of your plate. Including hiring and building out the various departments in your business. It also means bringing in veteran expertise, where you may lack it.
That is a way to hack decades of experience and knowledge, without having to go through all the time and expensive trial and error. This can be vital as a technical founder with little practical business experience. Which can also give investors a lot more confidence when it comes to fundraising for your business.
Then there is the time when the business may outgrow you. There is a lot you can do to learn and try to stay ahead of it. Including bringing in other strong board members. Though, sooner or later, it just may not be as efficient and effective as it could be. The last thing you want is to be the roadblock or ball and chain holding the mission back, and preventing the best performance.
You may also simply not enjoy it at some point. Your company will morph as it grows. As it matures or even goes public, it can lack the speed and excitement that really hooked you to entrepreneurship in the beginning.
Or you may have another project you want to jump into, or just need to avoid burnout. It is perfectly acceptable, if not better in many cases, to pass on the baton and stay on the board while letting others handle the day-to-day.
SummaryLet’s reiterate what are board minutes. Board minutes are official records of what happens during meetings of your board of directors. They are essential for each meeting. Organizing and making them well can save you and your company from all types of issues later on.
It will help avoid miscommunication, disputes, and lawsuits. While making it easier to move forward with your mission.
This may not be the most exciting part of a startup, but it is core to everything. Know what they should look like, and appoint the right person to handle this for you.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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George Mancheril took the leap from working in traditional finance to launching a fintech startup that provides crucial funding for businesses in the cannabis space.
On the Dealmakers Show, Mancheril talked about this huge and evolving market, different types of capital and financing for cannabis companies, how technology is helping, and his top advice for other entrepreneurs launching their own ventures.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFinding A Passion For FinanceAlthough he was originally born in India, George Mancheril says that his earliest memories of childhood are only of growing up in the Bronx.
Even as a kid, he recalls being interested in global events, and ultimately found that the finance industry was a great place to apply his skills, and keep a pulse on everything that was happening out there, and what was coming in the future.
The pull of being in a dynamic environment, with constant change, and challenges, also really attracted him to the space.
So, after studying at NYU, he hit Wall Street to begin a career in finance. Working at firms like Goldman Sachs and Guggenheim.
There he worked in structured credit, portfolio management, analysis, and trading. There was a lot of time spent working on lending to higher-risk corporate borrowers. Often dealing with illiquid investments, structuring loans, and evaluating the perspective to understand what the collateral is. Then, as a lender, getting an attractive return but also protecting that investment as much as possible.
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The Emerging Cannabis IndustryAfter years of working in the traditional finance space, George says that he began craving more of a challenge, and was becoming more interested in more entrepreneurial opportunities.
In 2013, he moved across the country from New York to Los Angeles, and that’s where everything began coming together.
At the time, California only had the medicinal Cannabis market in the country. It was the first time Mancheril says that he saw Cannabis dispensaries around in person.
The regulations began expanding for recreational adult use. Not only in California, but in Washington and Colorado too. He calls it the ‘green wave’.
For a long time, George says that he had held strong opinions about drug prohibition, as well as how the failed war on drugs has wasted a lot of resources and done so much damage.
This brand new industry had brand new companies, and brand new operators that had assets were stifled by the lack of financing. Due to cannabis still being illegal on a federal basis, meant many parties could not, and still won’t, participate in it.
It seemed like all the pieces were coming together for what he would do next, and a space in which he could lend his skills and experience in structuring lending deals.
Bespoke FinancialGeorge says that he started out by networking. Meeting and talking with like-minded individuals. Five years ago, that gave birth to his fintech startup, Bespoke Financial.
They provide debt financing for operators in the cannabis space, across its supply chain.
While many institutions would normally want to invest in markets as exciting as this, they can’t, or won’t due to the federal illegality issues. So, Bespoke brings together capital markets, and acts as a bridge to provide loans to those that need, and can use it.
Including lines of credit that operators can use for working capital. Otherwise, there can be dramatic time drags in them getting paid. While the new technology to optimize their operations, and infrastructure can tie up large amounts of money that could limit their growth.
George puts their core mission as “being a partner for the cannabis industry. Being out there enabling entrepreneurs to really capitalize on their vision and actually scale their businesses and grow.”
It’s a whole industry that he describes as going from zero to one.
One that seems to still be in its infancy, with demand and applications continuously growing.
So far, Bespoke has already raised $200M in debt financing and equity capital itself. As well as expanding into lending in 18 states, and growing its team by 50% last year alone. As well as now having provided $1.8B in financing to cannabis businesses.
Storytelling is everything which is something that George Mancheril was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Trust Your GutToday, George Mancheril’s top advice for others starting businesses is to really cling to your strength of conviction.
That includes knowing what is most important, what your goals are, and prioritizing that.
As with many other highly successful entrepreneurs we’ve interviewed on the Dealmakers Show, he says that there is often a general consensus and that maybe you should challenge, and believe in yourself instead.
That is certainly true of the startup ecosystem and business itself, as well as for individual industries. Don’t be afraid to be a contrarian. Be wise when others rush in blindly and too bullishly. See the silver linings when they are too bearish.
Listen in to the full podcast episode to find out more, including:
- Debt versus equity capital for startups
- Operating and scaling in highly regulated markets
- The outlook for the cannabis industry
Alejandro Cremades · EP 559 George Mancheril On Raising $200 Million To Fund The Future Of CannabisSUBSCRIBE ON:
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Barrett Bilotta has raised hundreds of millions in capital for his energy company in the past year alone. Today, the company is in hyper-growth mode as they expand from the northeast into other parts of the country.
On the Dealmakers Podcast, Bilotta talked about building businesses in college, how the military prepares you for entrepreneurship, solar energy, and taxes as a profit center.He also discussed being one of the few companies out there growing their team this year.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPreparing For EntrepreneurshipBarrett Bilotta was born and raised in a small town in Massachusetts.
From an early age he was involved in hockey as a goalkeeper. Something he says was instrumental in forging him to deal with the stress and environment he would later encounter as a business owner.
Coming from a long line of family members that served in the military, and having to find a way to cover his college tuition and degree in political science, he initially enlisted with the Coast Guard.
It seemed like a natural progression from his time in the boy scouts, and just a couple years after 9/11, a patriotic duty.
This transitioned into the National Guard and ROTC which offered a better deal for financing his college studies. On graduation, he was a commissioned Second Lieutenant in the Army.
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Stint In The Army – A Learning ExperienceThe military also proved instrumental in preparing Bilotta for going into startups and business. He says that he learned systems, and how to get things done to complete whatever mission they were given.
He also learned how to listen to senior people with more experience, but then have the authority to direct his own team, and bring together people from all types of backgrounds to get things done.
Additionally, he learned how to get into a good daily cadence, and still be able to take on the new and unexpected things that are going to get thrown at you, while staying cool, calm, and collected in the process. Ultimately, to just grab the bull by the horns and tackle it.
During college, he had begun acquiring properties around the University of New Hampshire to rent out as student housing. Even though interest rates were 13%, it was the heydays of the subprime loan boom, and mortgages were easy to get. This provided him with additional income during these years.
StartupsAfter college, Barrett joined two friends in a tech startup. While it didn’t end up panning out exactly the way they planned, they were able to sell the company, and it led him to meet Ken Rubin, who is his business partner today.
His big takeaway from this first startup experience is to have a clear vision and strategy. Especially as a software company, they found clients always requesting new features and integrations. Being able to differentiate between what is really urgent versus important for the business is critical.
He also learned how not all capital is the same and to find investors that can bring a lot more value than just money. Everyone has money. Look for those that can add more guidance or other benefits. He says that could have made all the difference in the ultimate outcome of that venture.
In fact, while he describes the motivation, passion, and excitement of new things as a strength of entrepreneurs, some of his top advice for others today is to avoid that shiny object syndrome.
To beware of the double edged sword that it can be. You’ve also got to be disciplined and focused, rather than bouncing around.
After that first venture, Ken and Barrett teamed up to expand on his previous experience in real estate. That in turn translated into the redevelopment of a 225,000 square foot property in downtown Durham, NH. That development company, Madbury Capital, continues to thrive in that space.
However, when they were approached to lease their roof for solar, they found a whole new business.
Agilitas EnergySolar programs and initiatives were coming out, and new energy mandates were becoming law.
As they began researching and diving into the solar space, they found it more and more compelling. There was a lot of synergy with what they were doing in real estate development. A lot of crossover in the process, and an area in which they already had a lot of experience.
So, now with Agilitas Energy, they have moved into selling kilowatt hours instead of renting apartments or commercial space.
They’ve gone even further today in trading energy, and helping grids become more smooth and sustainable – which is no small problem given the huge push towards everything electric.
Going beyond New England, they’ve begun going national with a new project in Texas. The company is also planning to nearly double their team size this year to keep up with their business that has seen revenues rise by 400% a year.
Raising Funding For Agilitas2022 was a big year for Agilitas Energy, with even more emphasis on moving to clean energy, and pressure on many companies to gain tax credits, resulting in a huge raise of $350M.
Storytelling is everything which is something that Barrett Bilotta was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How Agilitas Energy is building the infrastructure of tomorrow’s clean energy
- Picking the right investors for your startup
- All the employment they are creating in the process
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Nicolaus Radford has now launched three startup ventures. Including a marine robotics company that has raised over a total of $125M with the bulk coming during its IPO.
On the Dealmakers Show Radford discussed the power of networking, adapting spaceflight technology for the marine world, RaaS (robotics as a service), creating autonomous underwater robots, and taking your company public in a $3T industry.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksCompetitiveness, Exploration, Connecting & LearningBefore working on space and deep ocean projects, Nicolaus Radford grew up in rural Indiana. It was the 80s, when Knight Rider wowed TV audiences with smart car KITT, and you played basketball with a hoop on your barn.
Always having a competitive spirit, Radford was into track and field, and competing in decathlons in college. That also meant a lot of physical wear and tear, and many surgeries. So, today, he flexes his competitiveness through entrepreneurship, building businesses, and playing poker.
As he moved into high school and college, the realization that he was not one of the rich kids also fueled that competition, and provided some motivation to excel. He was the first in his family on his father’s side to go to university. Now he’ll tell you that he has learned $20M isn’t much at all.
He started out looking at biomedical engineering programs, which took him to Purdue. Where he again found an affinity for technology, engineering, and research.
Purdue’s connection to NASA, led him to work there as a flight controller right out of school. While he loved learning about space shuttles and being involved with various missions behind the scenes, his engineering spirit was driving him to want to build things himself.
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RoboticsWalking through the halls at NASA one lunchtime he encountered an early version of Robonaut, a robotic astronaut prototype. He was instantly obsessed with being a part of the lab working on that.
After six months of networking, he got in. By the time he left NASA, he was running that lab.
During this time he continued networking and expanding his learning. An activity he says is key for opening the door to the opportunities that are knocking.
He did this to open new doors for what he could work on next. He built skills in creating big public and private partnerships. Met people in the DoD, and among Fortune 500 companies, and got involved in driving public investment into NASA.
Robots As A ServiceNicolaus Radford says that he woke up one day at NASA realizing that there is no one else forcing him to do anything. That there is tremendous freedom and flexibility. That he could choose to just go off and write his own story. So, he did.
He began by developing some things within NASA. Then began getting a lot more exposure to what was happening in the marine technology space.
A good 18 months thinking about his next move. Then, in spite of going through a divorce and the financial mayhem that comes with that, having a mortgage, and a child,, he cashed in his 401k, and dove into his own company, Nauticus – going almost a year without being paid. He said, “I would look at myself in the mirror in the morning and wonder, “Am I financially ruining myself? What have I done?”
One of his first big revelations was that no one wants to buy robots. They want what the robots can do. So, they came up with RaaS (Robots as a Service). Instead of buying and owning the robot, customers contract for the services the robots can provide.
Through his research Nicolaus also found that there had been very little innovation in the underwater space in almost 60 years. Even for the most rudimentary tasks in the ocean it often cost in excess of $100k a day for the machinery and labor.
So, he came up with the idea for autonomous surface vessels and underwater robot marine craft. Which with their algorithms could provide the same services at just $40k. A value point that customers quickly showed they loved.
Looking forward Radford says he sees the future as having a “blanket network of autonomous machines roaming the ocean, that you call up like an uber to do a variety of work all over the industry.” He is also passionate about creating consumer experiences. Providing access to everyone. Just like we’ve seen space tourism become a thing.
Startup FundraisingNauticus has now raised over $125M.
In addition to more than $30M in government grants, that includes a $3M Series A round, $20M Series B, and an extension round of $25M.
Then they took the company public in 2022.
It was an experience that he says almost killed him. Both emotionally and physically. It was tough on his health, and meant working nonstop 18 hour days through the IPO process. Including flying around the country to meet with investors.
It was made even more challenging in that they were launching in one of the roughest periods for the S&P 500, and equity markets were in chaos. It was 2022. Yet, he says the strong belief of their big shareholders enable them to succeed in spite of it all.
Storytelling is everything which is something that Nicolaus Radford was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Today, they continue to grow and operate their robotic fleet.
For others considering launching their own companies Radford says to “Trust your intuition.” He told the Dealmakers audience that there were so many times he listened to his head, or other agencies, and went along with their advice and decisions in strategy and technology. In which he should have just gone with his gut instead.
Listen in to the full podcast episode to find out more, including:
- The two other startups Nicolaus Radford has been working on
- How big and important the ocean is compared to space
Alejandro Cremades · EP 557 Nicolaus Radford On Raising $125 Million To Develop The Future Underwater RoboticsSUBSCRIBE ON:
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How does due diligence work for startups?
Due diligence is one of the least talked about parts of doing a startup. This, in turn, means it is one of the areas in which founders are least prepared physically, in the form of documentation, and mentally.
Yet, it is also one of the most critical phases of fundraising and M&A for achieving any type of exit. Unless you can skate through the startup due diligence process, your venture isn’t going to go far.
It can be a beast. Though being informed and prepared is 80% of the battle here. The more accurate your expectations, and ready you and your company are in advance, the less stressful it will be, the more profitable these transactions will be, the quicker you’ll get through it, and the greater the potential of your company.
So, how does it all work? What should you expect from the startup due diligence phase? How can you excel in it?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Is Due Diligence In Startups?Due diligence is essentially an audit of a startup. Most commonly encountered during startup fundraising, and when selling your company.
This is where acquirers, investors, or other auditors take a deep dive inside a company to truly evaluate it. Including determining the real value and assets, liabilities, and risks.
This is typically far more intensive and lengthy than most founders anticipate. Which can really mess with your plans, expectations for putting money in the bank, and the ultimate terms of your deal. Or, for that matter, completely derail any prospective deal you thought you had.
When Does Due Diligence Come Into Play?Due diligence generally comes into play during the following situations for startups:
- Licensing and regulatory approvals
- Filing for an IPO
- Mergers
- Selling your company
- Financing your company
- Equity fundraising
This may also be applicable to securing big government contracts. As well as selling to or partnering with large corporations.
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Due Diligence In Startup FundraisingThe first point at which most startup entrepreneurs will encounter due diligence is most often when they go out to raise capital.
It’s kind of like what a lender may do in the form of investigations and verifications for a loan, only on steroids.
No matter how attractive your pitch, is or how interested you get investors, they are going to want and need to conduct thorough due diligence on your company before they can complete that investment.
This is not just to ensure they are getting a good deal, and are making a sound investment, but because they often have legal and financial obligations to other investors as well. Such as the case with angel groups and VCs. If they don’t do their homework, then they are going to be on the firing line when things go wrong.
So, don’t count on money hitting the bank until you’ve passed this step in the fundraising process.
Due Diligence When Selling Your CompanyThis is very similar to startup due diligence in fundraising. For all the same reasons.
Obviously, regulators and the SEC, and various stock exchanges have their own rules. Though what’s involved and can be negotiated may vary more widely when it comes to M&A and selling your company. Especially depending on the size of your company, the complexity, which assets are being focused on as the source of value (think acquihires versus asset sales), and the dollar amounts involved.
Before you can expect to close on the sale of your business, or even set the final terms in stone, you will have to endure this same process.
Keep in mind that in fundraising or selling your company, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Your email address is 100% safe from spam!Steps In The Fundraising ProcessAs fundraising is most often the first encounter most entrepreneurs will have with this type of startup due diligence, let’s dive into where it fits into the process.
Networking & Relationship BuildingEven before the pitch and showing off your deck, fundraising begins with networking and building relationships.
You have to get to know investors, or at least know those that can introduce you to the right investors. In this process, you can also have conversations about and learn what they look for in due diligence, and the issues or good experiences they’ve had with other startups they’ve invested in before.
The more you build trust and credibility with them in advance and tell them how you are doing things in your startup, the easier due diligence can be. Especially in the case of early rounds with angel investors.
PitchingThen the time comes to get out there and actively pitch your startup. To send out messages, present your pitch deck, and wow them with your verbal pitch.
Though if you have already managed to attract inbound interest in investing in your startup, you may have the upper hand in negotiating the due diligence phase.
The pitch is all about the sale. It is getting them interested in all the highlights and potential. Of course, then you have to back it all up. That’s where startup due diligence comes in. It’s where you prove everything you’ve proclaimed, and really have the back end of your business buttoned up too.
Term SheetsIf investors are interested, the next step is for them to provide you with a term sheet.
This is essentially like a letter of interest. An offer. It lays out the general proposed terms of the investment. Including what they expect to get in return.
Depending on the sophistication of the investor, and how developed their systems are, it may well detail the items to be included in due diligence as well.
NegotiationsAt this point, you’ll begin initial negotiations. Hopefully, with some strong representation and guidance.
This includes negotiating what will and won’t be included in startup due diligence. As well as what the findings can impact, and to what level.
Other items included in these negotiations are likely to be pricing, board seats, types of shares, decision-making powers, and much more.
Due DiligenceNext comes this startup’s due diligence phase. Expect absolutely everything about your business and you as a founding team to be thoroughly investigated and verified.
Including patents you claim you have filed, the completeness of your product, your sales and profits, contracts, and more.
Expect teams to go through every document in your company’s history, to talk to your past business partners, vendors, customers, and more.
RenegotiateAfter all of this, you can expect your investors will often want to renegotiate some of the terms and clauses in your funding agreement.
Some use this phase to purposely find justification to get a better deal. Others just find issues that warrant them protecting themselves further.
After this back and forth, you can hopefully save the deal, and complete the funding.
ClosingOnce the final agreement is drafted with any revisions, then you can proceed to sign and get money transferred to the bank.
What Are Investors (And Acquirers) Looking For During Due DiligenceThe main categories that investors are looking at in startup due diligence include:
- Product
- Market
- People
- Financials
- Equity Structure
- Risks
ProductInvestors need to verify the product exists, it is and does what you say, and that any IP is protected as you say it is.
MarketIf your investors are not already domain experts in this space, then they will want to have further research done to evaluate it, and if it is viable and able to deliver on their wants, expectations, and your pitch.
PeopleThey need to know who is involved, what their stake is, what control they have, and what their backgrounds are in terms of finances and good business dealings.
FinancesInvestors typically want to look at all the financials of a company. They not only want to know what the balance sheet is, and how much capital you have, but the cash flow coming in, profits, and more. They need to know what liabilities and debt obligations there are, as well as the real value of any assets that can act as collateral if your startup fails.
Equity StructureWho else is on your cap table? What pools of shares are there? What classes of shares are there?
RisksIn addition to financial obligations, investors need to assess all other risks, including IP conflicts, competition risks, economic risks, pending lawsuits, control of the company, and more.
When you’re ready to know more about how to navigate the due diligence process when fundraising, check out this video I have created. You’re sure to find it helpful.
What’s Normally Included In Startup Due Diligence?What are some of the items you can expect to be on your investor or acquirer’s startup due diligence checklist?
- Product testing
- Market research data
- Pricing and profit margin info
- Patents, trademarks, and other IP
- Product and business roadmap
- Banking and financial statements
- Financial forecasts
- Audits and tax documents
- Cap table
- Copy of investor agreements
- Shareholder agreements
- Supplier list and contact information
- Partner and distribution channels contacts and contracts
- Customer information
- Employee contracts
- Documentation of any assets and liabilities
Where Most Entrepreneurs & Startups Fail In Due Diligence* Over-promising in pitches * Not budgeting time and resources for startup due diligence * Not having your documents and data ready * Poor accounting * Lack of organization * Not being mentally prepared for this part of the marathon
How To Prepare To Ace Startup Due DiligenceThere are four main things that you can do to help this process go more easily.
Keep Great RecordsIt will go much easier if you are in the habit of maintaining great, clean, and well-organized records.
You’ll be able to enter due diligence with confidence, and will be able to support a higher valuation and better terms.
Budget Time & Resources In AdvanceExpect this to be a full-time job for one of the founders or executives for months. You need someone strong who can handle 18-hour days, midnight calls with lawyers, and dealing with countless requests.
Be sure to budget for this, and for someone to handle their normal workload.
AdviceDo not enter this without great advisors. The more you can get, and the earlier you can get it, the better.
VDRStart loading your virtual data room with all of this information well in advance of your campaign so that it is ready to go. You don’t want to burn great capital raising or acquisition opportunities because you were the drag on the process.
SummaryStartup due diligence is one of the most critical factors for a new venture. It will make or break your venture. This can happen before you can get off the ground, or even after you’ve been operating for a while, and thought you found an exit.
It is a core part of any equity fundraising event or acquisition. As well as other key deals startups make.
Entrepreneurs tend to focus on the sales pitch, but rarely give enough time and attention to preparing for this often grueling part of the process.
Fortunately, there is a lot you can do to learn about it, get great help, and get in shape to walk through this part of the game a lot easier and faster.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Illia Polosukhin has already raised over half a billion dollars for his startup that pivoted from AI to blockchain technology.
On the Dealmakers Show, Polosukhin shared his experience in machine learning, artificial intelligence, and blockchain. As well as infrastructure as a service, taking your company through a major pivot, fundraising, and building an all-remote company.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBuilding The Infrastructure Of The FutureIllia Polosukhin was originally born and raised in Ukraine. He grew up in the 90s. A period of hyperinflation and extremely high food prices, as well as plenty of uncertainty.
So, very early in life, he started figuring out how to get a job to earn money, as well as fuel his love for computers. From the late 80s, he was playing games with friends on early home computers. Then building his own games as early as 10 years old.
After working on neural networks in high school, Illia found himself coding and working on machine learning at university. Which ultimately led to him securing a job in San Diego, California.
Wanting to participate in this work at a great scale, he ended up joining Google. While they imagined incredible things, it was still too rough, slow, and too expensive to run them. So, they switched to working on the transformers and infrastructure that is powering things today.
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Going Out On Your OwnIllia Polosukhin says that he always wanted to build something of his own.
Moving from Ukraine to the United States was a part of this plan. From a deeply corrupt system to somewhere that offered more opportunity.
Google was another stop on this journey. Not just for the scale, but also to meet smart people, and network with them while he figured out his next step. A place where he could connect with Silicon Valley and, as many of his peers moved on to their own ventures, the next generation of startup founders as well.
In fact, Polosukhin’s top advice before launching a business today is all about networking. Something that doesn’t always come naturally for introverts, engineers, and technical founders. Something that he says he wishes he had been doing more of since college. Not just meeting people for business but building real human relationships, and friendships. Hanging out with interesting people you can learn from. People who will drive you to be a better person. The ambitious and innovative.
Another part of his leap into his own startup was the big corporation experience of working at Google. As with any organization of its size, there are the notorious typical problems of internal bureaucracy, decision-making, and moving extremely slowly.
So, Illia and his cofounder Alex decided to go out on their own and create Near.AI.
From AI To Blockchain: Pivoting Your StartupPivoting your business is rarely an easy or pleasant thing, but it is often necessary, and the right decision.
Alex and Illia gave themselves a year to figure it out and set out to research and begin working on a product. They dove into AI and mobile applications. Realizing what direction they were going in would require a far bigger team and a ton of money.
In the process of building up their data, they created a crowdsourcing system. They ended up with input from people all over the world, from the US to China and Russia. They would pay people a few cents per entry.
Many of them didn’t have a bank account, making processing international transfers even more challenging. So, they began looking into blockchain. Though found the existing infrastructure too expensive and complicated.
They concluded that if they could solve this problem for themselves, there would be many others that would need that solution as well. So, they pivoted to working on the blockchain and what they call infrastructure as a service.
Ultimately today, the NEAR Protocol is a layer-one blockchain that is designed as a community-run cloud computing platform and that eliminates some of the limitations such as low transaction speeds or low throughput and poor interoperability. NEAR Protocol is being built by the NEAR Collective, its community that is updating the initial code and releasing updates to the ecosystem.
In addition to this, part of their ecosystem also includes the company they launched called Pagoda, which is the first-ever Web3 startup platform – and main core protocol contributor of NEAR. The Pagoda vision is to empower developers with a fully Web3-native toolset for building, maintaining, and scaling blockchain-based startups.
Startup FundraisingSo far, Illia has raised $550M for this venture.
Storytelling is everything which is something that Illia Polosukhin was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!No small feat. Though a necessary one, given that they needed to develop a global infrastructure that worked from day one. There was no cheap MVP to create here. A journey no doubt also complicated by the fact that they had to keep their initial investors on board through the pivot, and go out and find new investors willing to bet on them.
After their first pitch deck was touched, they accepted the feedback and kept going back. It’s a process that he says never stops. Even when you are not actively raising, you are always pitching everyone, getting feedback, gauging how far you are from your next raise, and what you can do to get through to your next milestone.
Building A Fully Remote CompanyIllia Polosukhin is yet another entrepreneur recently featured on the Dealmakers Show who has managed to build a fully remote company.
Even before the COVID lockdowns hit, their company already had as much as 30% of their workforce working remotely abroad. As well as having their local team in San Francisco working just two days in the office.
Of the two companies he is currently involved in, one has 90 people, and another has over 10,000. Which now operate as remote teams working on different projects.
Listen in to the full podcast episode to find out more, including:
- Operating remote teams
- Building blockchain infrastructure
- The future economy
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Chris Dean has taken several companies through successful exits. Now he’s working on his biggest project yet. One which has already attracted tens of millions of dollars in investment, and moves billions of dollars each month.
On the Dealmakers Podcast, Dean talked us through his series of startup exits, and experience selling companies. As well as what’s going on in the fintech space, your real job as a leader, and the system and fundamentals of building a successful business.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDiscovering StartupsChris Dean was born and grew up in San Diego, California.
He grew up living in what he describes as the world’s smallest house. Yet, being right by the beach meant being able to get outdoors and hit the water each day.
From high school through college, he says he really took to and excelled in physics, statistics, and computer science. That took him into research, where he says he loved being in a room alone, with just a whiteboard.
When his wife led them to move up to San Francisco, Chris said he decided to jump into Stanford.
Being in this environment led him to his first real job, which happened to be at a startup. As the first employee, he was the subject matter expert for this AI and machine learning venture. It was the heydays of the dot com boom. Though he didn’t exactly think the craziness in the office was really a sign of the leadership having things under control.
However, he did decide he really liked talking to customers, figuring out what they really wanted, and building it for them. He decided then that startups were what he wanted to do for the rest of his life.
He had been working on the largest machine-learning problem up to that time. Their computer network was gigantic compared to today’s computers. What he discovered was that it was the amount of data and quality of data that was more important than the algorithms themselves.
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Baby CenterThe hunt for more data led him to work at another startup that seemed to have their business side together a lot more than his previous company, Baby Center.
They ended up getting acquired and went through an IPO that saw his shares go from being worth $20 each to $80. Then, despite having the world’s most trafficked website at the time, the company went bankrupt.
That was followed by launching an enterprise software startup in the HR space. Having raised very little money, they ended up getting acquired for $200M, delivering a very profitable exit.
Storytelling is everything which is something that Chris Dean was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Fundamentals Of A Successful BusinessHaving been through the full cycle more than once, Chris not only found that he had the freedom to choose to focus on the things that were most interesting and important to him, but he was learning how building a successful business is really like computing. It’s about having the right components and operating systems.
Making sure that you are solving the right problem is the first part of that. You are not going to find product market fit, or find people to pay you if you don’t.
The second part is making sure that you surround yourself with the absolute best people you can. This includes finding partners, cofounders, and executives that are good at things you are not, and enjoy doing the things you don’t. Like marketing, if you are a technical founder.
Then it is finding a highly productive team, and leading them well. As a leader, Chris says your job is really just to pick the right problem, then have the people there that can execute it.
Go Big But Keep It SimpleToday, Chris Dean’s top advice when launching your own business is to go bigger, and keep it simpler. He says that “there’s not a reason to pick a small problem. All problems are hard, so pick a big problem. It has a bigger effect. It’s easier to attract great people to a big problem than it is to a small problem. It’s more interesting to solve the big problem.”
Then at all times, make sure that you are ruthless in making sure that your description of the problem is very, very simple. You want your solution to be simple. You want the problem to be as simple as possible. Because as you grow, it is very hard to manage that complexity. If it’s just you in a room, you can do all sorts of things. but as you go from 10 to 100, to 1,000 employees, it’s hard to manage that. “It has to actually be simple, or no one’s going to keep up with you.”
Improving The Banking SystemAfter his previous exit, Chris semi-retired, while doing some consulting. At least until his friend Dan drew him into the banking industry, and went to work at his startup.
That company was acquired by Silicon Valley Bank. Chris ended up staying there for the next two years as the companies integrated and beyond.
The more he learned about the banking sector, the more interested he was. The more shocked he was at just how bad the system was, and just how low the bar was to make great improvements with relatively easy-to-build software.
So, Chris, and his now cofounder Jim got to work figuring out the best strategy to tackle this problem. Together they’ve created Treasury Prime. Which is connecting US banks with innovative fintech startups to change the way banking works for the better. Looking forward, he says we haven’t even begun to see all of the things that will be made possible as others begin to build on top of their platform.
So far, they’ve already raised $70M, built a team of 100, and are moving $3B in capital each month.
Listen in to the full podcast episode to find out more, including:
- Fundraising for your startup
- Structuring M&A deals
- Changing the US banking system
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Casper Rasmussen has gone from consultant to founder and raised tens of millions of dollars for his fast-growing business, which has already expanded into eight countries in just two and a half years.
On the Dealmakers Show, Rasmussen shared his experiences in M&A and selling companies, moving from technical engineer to operator, the EV space, and choosing the right time to run with your startup idea. Plus, fundraising and extension rounds, and getting your go-to-market strategy right.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSelling Your CompanyCasper Rasmussen was born and raised in Denmark. Always having a talent for physics and math, and coming from a family of engineers, choosing to study electronic engineering in university just seemed like the obvious choice.
It was in college that he first learned to code. Then finding out how much easier it was to troubleshoot and debug software than working on circuits, he began working in a new direction. Eventually, developing some of the earliest Android mobile apps.
This landed him his first real job in consulting on mobile apps. Moving up from mobile lead to CIO, and partner, he helped grow that company. Within seven years, they advanced into five countries in Europe, grew the team to 150 people, and sold the company.
During that same period, he was involved in launching two other startups. One in New York, and one in London.
They also acquired other startups before being acquired and eventually took that company through an IPO.
On going through the process of selling your company, Rasmussen said it was a six to seven-month process. One that began with a few exploratory meetings to make sure it was a good culture fit, and they were heading in the same direction.
Then the lawyers get involved, and it gets really intense. He says it is not something you can really fully prepare yourself for. In fact, just dealing with the lawyers and all of the questions during the due diligence phase became a full-time job for one of the founders for a good six months. Something few entrepreneurs’ cofounder teams anticipate and budget for.
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Choosing The Right Time To Run With Your Startup IdeaCasper says that his time in the consulting world gave him the advantage of being exposed to many different industries.
It was a great experience in terms of getting really good at building and launching things. They did that for over 500 different mobile apps. They really learned what to do, what not to do, and what really worked when it came to taking new technology live.
Yet, in this space, you normally aren’t involved much after it takes off. Between this, and knowing that as a new startup entrepreneur, you may not get paid for a while, and how much hard work it could be, he was determined that when he tackled his own startup, it would be a strong idea that he could really commit himself to.
The exit from his previous company also provided the financial security and safety net to be able to move forward. He had some cash buffer and knew he could always go get another job if it ended up failing.
Casper and his cofounder began exploring the EV charging space; they focused on the software element, and how they could integrate into that.
Then things really came together to give them the confidence to dive in.
They saw others moving in that direction. Then they saw Denmark go from EVs being just 1-2% of sales over six years to jumping to 8% in six months; they knew the momentum was there.
With such large incumbent corporations eyeing this space, he knew they weren’t going to make it just by bootstrapping. So, when they were successful in raising their pre-seed round for this idea, they knew they really had a startup idea to run with and launched Monta.
MontaThe initial concept for Casper’s startup Monta was the Airbnb for EV charging points. Enabling businesses and other property owners which earn money when others charge up at their stations. It is a B2B, to B2C subscription business model.
In the past two and a half years, Monta has grown to 150 employees, serving eight countries in Europe, across 54,000 EV charging points.
Startup FundraisingTo date, Monta has already raised around $60M through several pretty rapid rounds.
Storytelling is everything which is something that Casper Rasmussen was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!They started out fundraising by just going out to meet with angel investors and talking with them, with just a 10-slide pitch deck. They had an idea and were willing to quit their jobs and go all in. That was enough to put a pre-seed round in the bank. With investors interested in a way to participate in this trend, and without investing in electric car startups or other hardware.
Within six months, they had launched their product and were gaining traction in their home market.
For their seed round, they managed to secure their first term sheet within just around three weeks of pitching.
Over the next 12 months, they expanded into Germany, Sweden, and the UK, and gained more traction.
Eventually, they began to attract inbound interest from investors and agreed to take an extension round, based upon doubling their valuation.
Listen in to the full podcast episode to find out more, including:
- Preparing for your fundraising rounds
- Finding an effective go-to-market strategy
- Hiring a CEO early
- Casper Rasmussen’s top advice when launching a business
Alejandro Cremades · EP 554 Casper Rasmussen On Raising $60 Million To Power The Infaestructure Of Electric VehiclesSUBSCRIBE ON:
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Oliver Kharraz, MD’s, healthtech startup, Zocdoc, has not only attracted hundreds of millions of dollars in investments, but has become the largest marketplace of its kind.
On the Dealmakers Show Kharraz shared his insights on the framework of a great business, building marketplaces, pricing models, and the key to unlocking becoming an effective CEO for a larger organization. Plus his experiences in selling a company, startup fundraising, sales led versus product led companies, and redesigning your company culture.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGoing Out On Your OwnOliver Kharraz grew up in Germany, before becoming an exchange student to the US, and catching the entrepreneurial bug.
His mother was German, from an artistic family. Oliver’s father was — a political activist, who was kidnapped and tortured by the secret police. In fact, Kharraz says he has only known his father as having paralyzed arms due to that experience.
This has acted as a constant reminder of his father’s sacrifice and leadership to make the world better, which has driven Oliver to do big things, and have a great impact through his own work. A character trait which he says has helped attract great people to come along on Zocdoc’s mission, to give power to the patient.
His father was a big believer that once you turn 18 years old you should be able to stand on your own two feet, and earn your own money.
So, in college Oliver started his first tech company— a pre-internet company, before the likes of AOL were famous. It was a bootstrapped business that focused on making profits from its cash flow. In fact, it was doing so well that he decided to drop out of school for a while to focus on preparing to sell the company.
After that was complete, he returned to his studies in med school, and then worked as a physician for a few years.
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The Framework For A Successful StartupEventually recognizing that he probably sold his first company too cheap, Oliver says he vowed to go at it again, with more knowledge.
This led him to join McKinsey as a consultant to round out and further build his business acumen. He stayed long enough to make junior partner.
During this time he took a deep dive into health care technology, and developed great insight into this industry.
He also began defining the framework of what would make his next startup a great success, and a huge company.
This specifically included:
- Having a great company mission
- Being in a large market
- Having a substantial moat around the business
- Based on contrarian insights, that would provide a headstart in digging out that moat (in the case of Zocdoc, our contrarian insight was that there is a hidden supply of care)
Startup FundraisingOliver’s latest company, Zocdoc, has now raised nearly $400M across several rounds of funding.
Storytelling is everything which is something that Oliver Karraz was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!While many might think coming from a background of being at McKinsey when going out to hit Sand Hill Road to pitch investors would be a great asset and advantage, Kharraz says it was surprisingly actually more of a hindrance. In fact, after many pitches, turn downs, and no term sheets, he finally learned from one investor that it was the fact that they were consultants that was really getting them turned away.
So, he traded the khakis and buttoned down shirts for jeans and t-shirts. That’s when the term sheets started rolling in. Despite the fact they were trying to raise their first round of equity capital back in the pit of the 2008 financial crisis.
In spite of raising so much capital Kharraz told the Dealmakers Podcast audience that they have continued to be “extremely prudent about how we spend our money and the money we spend,” and have not let money replace critical thinking and ingenuity.
One really important factor in fundraising according to this founder is to “think about what’s the milestone that you want to deliver for the next financing.” Make sure that you really start thinking about this before you even have the prior financing closed. This will help you better position yourself, and know what you can promise, and deliver on.
ZocdocOliver Kharraz is currently the CEO of Zocdoc, a healthtech marketplace born out of the need 16 years ago to fix the broken healthcare system. Specifically, Zocdoc helps patients find and book care with the provider who best meets their needs,The company speeds up patients’ access by uncovering the “hidden supply of care,” meaning the 20-30 percent of appointments that become available last minute due to cancellations and rescheduled appointments.
Zocdoc now boasts the largest telehealth service in the country.
Additionally, they have expanded into 200+ medical specialities, with services in every major city. Enabling patients to make around 50M appointments each month, and connections to 12,000+ different insurance plans, and building a sizable team.
The Key To Unlocking Becoming An Effective CEO Of A Larger OrganizationWhile entrepreneurs need to be confident in their own skills and capabilities, Oliver says that he has learned from his board members that in order to really grow a big business you must delegate more, and let others do the work their way.
You may be 20% better than much of your team in many areas, but you’ll never be 20% better than everyone. So, you absolutely must delegate jobs out completely, and accept how they do things.
Listen in to the full podcast episode to find out more, including:
- Pricing and business models
- Building marketplace businesses
- Growing your business through crises
- Redesigning your company culture
- Sales versus product led businesses
- Working in highly regulated industries
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Acquire vs acquihire, what should every entrepreneur know? Acquihires have become a much more well-known form of startup acquisition. How are they different from traditional acquisitions and M&A deals?
Eventually, if you are successful for long enough, your startup is going to head toward some form of exit. An acquihire could be one of them.
So, could an acquihire be right for you? When is it the right move? What are the potential pros and cons of acquihires? How do you get started and negotiate the best possible outcome?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksStartup ExitsWhether an exit was a part of your initial vision or not, if your company survives long enough, it is the most likely outcome.
How To ExitMost new business attempts and startup ideas fail. Very, very few may continue to be private companies long term, and become reasonably large businesses. Some will go through an IPO and become public companies. Which is a form of exit for investors and founders. Sooner or later, the founders will move on after this event. At least with very, very few exceptions.
Of those that survive and get attention, a merger or acquisition is probably the more likely outcome.
A subset of this is acquihires. You also need to understand the difference between an acquire vs acquihire.
We’ll take a look at a couple of others in a moment.
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Why Exit?Exits provide liquidity events for investors and shareholders. When you take outside investment, you are really choosing to head toward an exit. They are investing either to get a windfall payout of returns at some point, or to at least get reasonable yields and be able to recapitalize at some point.
Of course, in some cases selling or liquidating a business is about salvaging what’s left amongst what you or your investors may feel is a failure or dead end. It can be a huge mistake to just close the doors, fold, and walk away when you could still extract some significant value in an exit. Some form of M&A deal is always worth exploring.
Then, in other cases, an exit is simply the best choice and path forward for the mission of the company, and all of its stakeholders, including the employees and customers. It can help speed up and scale the impact, improve quality, and put the business in the most capable hands to operate at a much larger level and different phase in the journey.
Or perhaps you are just tired or ready to move on to another project.
When To ExitWhether it is an acquihire or other type of exit, timing can make a huge difference.
Whether it is a bankruptcy situation, or just seeing the ceiling or end of the joy ride in sight, staying ahead, and liquidating before the value goes down is just wise.
In other cases, you may face external conditions, or internal ones, which make it impossible to raise new capital, get financing, or keep growing enough organically, and selling your company is the best option.
You may just hit a plateau or level where your company is best merged or put in others’ hands.
In other situations, it is about simply the right timing, given the development of your business, your industry and competition, and the economy and markets. In some phases of the economy, valuations and terms are incredibly generous, and deals are fast and easy to make.
With lots of inbound interest too. At other moments, it takes a lot more selling and connections, and valuations and terms will be more challenging to negotiate. But take the time to understand how an acquire vs acquihire work before making your move.
Regardless of whether you’re going for an acquisition or an acquihire deal, the first step always involves knowing how to value your company. If you need more information about how to execute that, check out this video I have created.
Common Types Of Startup ExitsThere are a variety of ways to exit your business, including the following.
Asset SaleAn asset sale is about acquiring the assets of a company. This may be about the structure of the deal for one of the parties and their tax preferences. Or it may be about acquiring physical assets, or IP. This can often be a necessity in a bankruptcy-type situation where the company must be liquidated. Not all assets must be included in the deal.
MergerThis is where two or more companies are combined together. There are many reasons for mergers. Including roll-ups to prepare for a larger exit or IPO, to consolidate an industry, or to grow and expand efficiently. Or to become a larger player in the face of competition, and benefit from improved economies of scale.
AcquisitionA traditional acquisition is about one company buying another. It does not always have to be a larger one buying a smaller one. In fact, there are some great case studies on the Dealmakers Podcast on how some have pulled off the reverse. There are many reasons for acquisitions. Acquihires are one of them. It can also be about acquiring assets, users, customers, geographic markets, operational efficiency, taking out the competition, diversification, and acquiring specific metrics.
AcquihireThis is going to be the main focus of this article. It is a subtype of acquisition. With its own reasoning, math, and focus on specific factors and terms. You’ll learn in detail the key distinctions between an acquire vs acquihire.
Acquire Vs. AcquihireSo, what’s the difference between regular acquisitions and acquihires?
How might they differ in terms of the process, terms, valuation, and other factors?
Let’s first take a look at each on their own. Then their contrasts, and the pros and cons of acquihires. As well as the steps involved in them.
What Is An Acquisition?An acquisition is when one company buys another. This can be an all-cash deal, an all-stock transaction, or a combination of both.
Not all assets and liabilities must be included, but they often are. Including the IP, customer contracts, accounts receivable, data, tangible physical assets like equipment and real estate, and employees.
According to Techcrunch, Google, Twitter, and Facebook are still among the biggest acquirers of startups. As well as, in turn, are some of the most active and significant among acquihires. But, there are differences in how an acquire vs acquihire works.
What Is An Acquihire?Put simply; an acquihire is an acquisition that is focused on acquiring the target company’s team.
So, acquihires can work much like traditional acquisitions. As a founder, you may be selling your business in its entirety, with everything in it.
Your acquirer will focus on acquiring your team. Or maybe exclusively trying to negotiate the assimilation of your team. This may or may not be obvious from initial conversations and offers.
It is a way to buy and gain talent, which may come along with some of the things that they’ve already created.
Why An Acquihire?So, why consider an acquihire as your exit?
There are potential advantages for both acquirers and sellers in an acquihire transaction.
As a buyer, this is a route for growing companies to take to acquire great talent. Talent which may otherwise be unavailable. They have been proven to be able to execute and achieve valuable things. This may include the founders or software engineers, and other in-demand roles.
With the end of non-compete agreements in the target of regulators, this may not long be a big focus for grabbing a few individuals. However, there is great efficiency in being able to acquire a strong and proven team that knows how to get things done and has already learned to work really well together.
Plugging in teams like this, especially sales teams, can help rocket a business with far more ease and cost-effectiveness than trying to recruit and bring together a team of your own from scratch.
Similar to asset sales, acquihires can offer a greatly simplified way of selling your business or buying a business in some terms.
When Are Acquihires The Right Move?As an acquirer, this may be the right strategy in very tight and competitive job markets. It may end up being a lot cheaper, faster, and easier to buy a team than to recruit, test them out yourself, and have to offer huge sign-on packages to convince them to come on board.
As a founder, it can be meaningful to get your team acquired when you don’t foresee things going great in the near future. It can be a way to capture and extract value from all you’ve built when you may otherwise have to conduct a major pivot or are not sure you will survive changes in the marketplace.
An exit for your company can also be wise when your startup has really peaked, or when you are at peak value creation compared to the amount of work and time required to really make the leap to the next level. Especially if there is uncertainty about the economy or other factors looming over the next few years. It can be better to take the money when it is on the table. Especially when you don’t know if it will still be there tomorrow.
How Might A Traditional Acquisition Differ From An Acquihire?There are several ways that you may find an acquihire ends up being a little different from other types of startup acquisitions. So, how does an acquire vs acquihire work?
What Is Focused OnHere the core focus is on the team and employees. In some cases, this may really be what acquirers are focusing their entire transaction on in terms of value.
So, it will all be about the quality and value of your employees. What they are worth. Especially in contrast to other options the acquirer has for recruiting comparable talent, onboarding them, and getting them to produce.
The more you can do to show the superior advantages, cost savings, and returns on this, the higher the price you ought to be able to get in an acquihire transaction.
Keeping The TeamIn many other M&A and exit scenarios, the team may not be kept on, or at least for very long. Or in the roles and the compensation packages they were used to.
In this type of deal, you can be far more confident that your employees will keep their jobs and livelihoods, and will continue to be compensated in the way they expected.
Though you may also need to consider how your team will feel about this. Will you and your team really thrive and enjoy working in this new environment? It can mean new bosses, new roles, more or less control, and a completely new company culture and way of doing things.
Especially if you are a scrappy startup being acquired by a larger corporation that is far slower, more constrained, and has much different rules and processes for getting things done.
ContractsExpect a lot of the focus in due diligence and negotiations to be focused on employee contracts and agreements. Including stock options and other benefits.
ValuationHow your company is valued, and the price willing to be paid will focus on what your buyer is focused on acquiring. In this case, that’s the team instead of IP, or physical assets, data, or financials.
Be sure you know the current employment market and HR space to really understand your value, and the factors involved. As well as the levers at your disposal to increase that value, or that could greatly diminish it before closing.
EarnoutsIf you’ll be staying on with your acquirer, there may be a lot more compensation that is up for negotiation in the form of earnouts. That is a percentage of the sales price of your business which is based on the performance after the transaction is complete. It is what you can achieve over the next few years inside your new parent company. So, take the time to understand in detail what is acquire vs acquihire, and how both processes work.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
Keep in mind that in fundraising or acquisitions, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The post Startup Acquisition: Acquire Vs. Acquihire appeared first on Alejandro Cremades.
Karl Siebrecht not only helped take one company through a $6B acquisition to Microsoft, but has gone on to raise almost a quarter of a billion dollars for his latest tech startup.
During this episode of the Dealmakers Podcast Siebrecht shared his insights on teamwork, luck and navigating the things out of your control, acquisitions, warehouse management, and building marketplace businesses.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
- 1.Learning & Teamwork
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- Serendipity
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- Flexe Learning & TeamworkKarl Siebrecht was born and grew up in suburban Houston, TX. His father was in marketing. Working for brands like Coca-Cola, and Minute Maid. From an early age this sparked Karl’s interest in brands, competition, and customers. All the things his dad would tell him about.
To afford his tuition to Duke University to study economics, he found a ROTC scholarship. That led to him becoming a diving Navy officer.
There he learned a lot about grit and teamwork. Traits and skills that are absolutely vital as a startup entrepreneur.
He says that walking in the mud at the bottom of the ocean, with zero visibility, is pretty humbling, and will certainly require some grit. As well as testing you both intellectually and physically.
Then there were great lessons in facing adversity and working as a team. Whether you are in the military, or in a startup, he says that when things get hard, you have to rely on those around you, and pull together as a team.
You have to cut through everything that is not mission critical, and focus on the one most important thing. Then go figure out how to do it. Regardless of whether that is retrieving a helicopter from the bottom of an ocean, or solving a customer service crisis. If you can accomplish it together, you will come out stronger.
After his four years of military service Siebrecht decided to continue his learning by going to business school. While many of his classmates had already been working at consulting firms or investment banks for four years already, working with spreadsheets, learning about finance, what a P&L was, and all of those things were brand new to him. Yet, he loved it and just soaked it up.
Next Karl went to work in private equity with Bain Capital. That led to him helping grow an incredibly fast moving consulting service to private equity funds.
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There he learned how to conduct deep analysis into businesses and markets. How to run with a
Hypotheses, and figure out if a company can be a lower cost competitor or a premium price solution, and then prove that out.
SerendipityWhile Karl Sciebrecht says that success is a lot about your team, having a good product, and executing well, it is also a lot about luck. Or maybe in different cases you may call that serendipity, or just events that are beyond your control. Some of which you can prepare and plan for, others you just have to execute on.
After Bain, he went out to Seattle and had the good fortune to join a fast moving tech company that had just raised their Series B round. Within a few months of him joining they went public. They pulled off their IPO just 13 days before the NASDAQ crashed, and the dot com bubble burst.
That company ended up being acquired by Microsoft for $6B.
Next he moved into Adtech, just as the space was emerging. It didn’t end up being the huge financial outcome they hoped for, but they did manage to sell the business.
This didn’t stop Karl from jumping into another startup, after the serendipitous meeting with another investor at a party, who gave him the idea for his latest venture, Flexe.
FlexeThe idea was that while businesses are very dynamic, and their needs are hard to forecast. Whether that is because they are growing incredibly fast, or the economy changes on them.
Yet, the warehouse industry, much like office or retail real estate, has been very rigid and static. Traditionally requiring long term, multi year leases, and being locked into those financial obligations.
The concept of Flexe was born on the idea that if you could create a technology platform that could allow for the sharing of warehousing services and warehousing capacity, and monetize that through a flexible model, it would be very valuable. In fact, it not only helps users of warehouses, but enables landlords to really get the most out of their real estate too.
Flexe has accomplished this with its warehouse management software, and platform which allows businesses to fractionally utilize these spaces, either in terms of size of their needs, or time.
Flexe has already amassed a team of around 470 employees, and continues to grow at a rate close to 100% year over year.
They’ve also raised $240M in funding through a Series D round. Accomplished through multiple, well spread out fundraising rounds which enabled them to prove out, and optimize before adding more financial fuel.
When it comes to fundraising Karl highlights the importance of picking the perfect investors. How do you do that? He recommends to, “just be really honest and transparent like this is what we do, but this is who we are,” and to let people self-select in. He says that “you’ll get lots of people who pass. Everybody gets lots of people for the most part who pass. But, you’ll find that you end up with the right partner.”
Storytelling is everything which is something that Karl Siebrecht was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Karl’s top advice when launching a business of your own
- Building marketplace businesses
- The future of logistics and warehousing
Alejandro Cremades · EP 552 Karl Siebrecht On Building A $1B Business By Offering On-Demand Warehousing SpaceSUBSCRIBE ON:
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Scott Gravelle has now raised well over $200M to forge the future of manufacturing automation and the next generation of the supply chain.
On the Dealmakers Show Gravelle talked about bringing the right people on board for the journey, picking the right investors for your startup, robotics, running with the best business ideas, and the difference between corporate governance in the US versus Canada.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksLearning, Ideas, And Making ThingsScott Gravelle grew up in Canada. A country he says cares for its people. Although it may be notoriously known for its long dark winters, he says that gave him a lot of time to work on things.
Growing up in a blue collar, middle class environment he was expected to get a trade. He initially followed his aunts and uncles into cabinet making. Though always having an entrepreneurial spirit he says he was always looking for ideas and new things to learn.
Scott was working in a hospital as a physician’s assistant, and was initially inspired to become a surgeon. That fork in the road meant either becoming a surgical nurse or a medic in the army. So, on his 20th birthday he entered basic training for the Canadian armed forces.
When the military was making budget cuts they laid him off. So, he went to college to study science in nursing. On graduating, the medical system was making major cuts and were closing hospitals.
While many may be crushed by events like these, Gravelle seems to have found a way to keep on parlaying them into new opportunities.
Next he found himself back in the cabinet making business. This time in California, doing high end interior work. That turned into becoming an accounts manager for a cabinetry company, designing the work.
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ManufacturingLooking for a new activity to do, Scott bought himself a longboard. It broke after two days, and the company offered no support. He decided he could build his own, and better. Others soon wanted them, and that thrust him into the manufacturing business, which is a path he has been on ever since.
His company became the fifth largest longboard skateboard manufacturer in the world. Though, it was not a big market, and one which was very seasonal. After five years he threw in the towel. Though he took his experience in automating the manufacturing process, and began a consulting business to help others implement digital manufacturing strategies into their own businesses.
After calling one robotics company for parts, he found out they had just been acquired by Amazon for $775M. That really sparked his interest in supply chain automation, and warehouse automation.
After watching a documentary on ants, he came up with the idea for three dimensional storage.
Business IdeasEven though he was captivated by this new idea, he spent the next two years trying to find a real reason not to do it.
Going from selling $5,000 in skateboards to skate shops to $5M to $50M projects to Fortune 500 companies would be quite a leap. Though he says he would not allow fear alone to be the reason he didn’t move forward.
He looked at the size of the market and its rate of growth. He checked customer interest, and if it was a defensible business. He never found any legitimate reason not to pursue it, so he did, by creating Attabotics.
Today, Scott Gravelle’s top advice for others launching a business of their own is not to be afraid of the biggest, most disruptive ideas. That small, incremental ideas are not safer than big ones.
In fact, he says that “the bigger the idea you have, the more disruptive the idea you have, the more likely you are to find support, and the less likely you are to encounter competition.” So, if you’re going to put effort into anything, “pick the biggest idea, because it’s the same amount of effort as doing the smallest one, but you’ll have a chance of making a bigger difference.”
AttaboticsToday, Scott is the CEO and CTO of Attabotics.
Originally he thought they would just create and then provide the IP to others. Yet, everyone they encountered that was interested told them that they were moving faster in this area than they ever could themselves.
Six years later they now have the hardware and software, 300 employees, and have raised $230M between government grants and equity investments.
Storytelling is everything which is something that Scott Gravelle was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Picking Your InvestorsDespite all the technology, Scott says that building a business is still a lot about the people. That’s not just your employees, but also your investors.
They’ve raised a substantial amount of money, as hardware is not cheap or quick to get going. Yet, he says that your needs for investors can change on the journey.
Some of those that are interested in investing in the early stages, may not be the same ones you need later on. Though remember that these aren’t people you can just fire like employees.
He recommends thinking very long and hard about the big vision you have for your business and how those investors will fit in. It should be a long term relationship.
Listen in to the full podcast episode to find out more, including:
- Fundraising and staving off takeover attempts in a crisis
- The future of automation in the supply chain
- The difference in corporate governance in the US versus Canada
- Hiring and managing your team
- When to let people go, even when it is incredibly hard to do so
Alejandro Cremades · EP 551 Scott Gravelle On Raising $230 Million To Create The Future Of Supply ChainSUBSCRIBE ON:
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Considering giving shares to startup advisors? What should you know about advisory shares before you make your decision?
Giving shares to advisors has become very common for early-stage startups. It can provide great leverage in making great progress on your journey.
Of course, any wise founder should do their homework on what a reasonable amount of equity is to offer in this situation, the value they should expect in return, and understand the basics of how these shares work. Plus, who you should consider giving these types of shares to, and how to avoid any potential cons.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Are Advisory Shares?Advisory shares are shares of your stock, or equity, given to startup advisors.
This is instead of, or in tandem with, other types of compensation, salary, or consulting fees.
Making this trade-off can be essential for many ventures. If not, at least one of the first tasks which really makes everything else easier and more efficient.
If you haven’t given serious consideration to this strategy yet, or haven’t given it the time and priority it deserves, it may be the key to clearing the roadblocks you have been facing. As well as, making important leaps that can make the entire mission possible.
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Why Give Shares To Startup Advisors?There are a variety of reasons that startups eagerly look to recruit advisors in exchange for shares in their companies.
These are some of the most obvious.
AffordabilityMost early-stage startups do not have huge budgets. Especially when they are eager to spend on people and advice. Even if that is truly where the best value for money can be found. There are plenty of other startup costs, even aside from building your product, or fundraising.
Successful individuals in the startup ecosystem love to help. Though their time is clearly in high demand, and highly valuable. Giving equity is a way to afford them, without having to fork over big consulting fees, or hourly compensation and benefits. You can imagine what Mark Cuban could charge for just an hour of his time.
Of course, your startup advisors still need to believe in what you are doing, the value of it, that it really has legs, that you are going to be coachable, and let them bring their value.
At the outset of a new venture giving away advisory shares really doesn’t cost you anything. They have little, or perhaps even no, tangible value to you. Yet, they can become enormously valuable.
Experts With A Vested Interest In Your SuccessThis is a strategy to not only get vital and impactful advice to guide your startup, but also to enroll experts and personalities with a vested interest in your success.
The more successful your company becomes, and the more value they help create in it, the greater the reward for them. As such, it is a great way to create alignment in motivations and actions.
They can become some of your most powerful brand ambassadors, as well as really bring direct tangible value in addition to their advice and input.
Fundraising CredibilityOne of the big reasons that startup entrepreneurs dive into this topic so early is that having credible advisors in your pitch deck can make all the difference in getting funded.
This is aside from the fact that they may be providing hugely important introductions and recommendations to investors, and paving the way to more yeses.
The team is everything in fundraising. Especially in the early stages. Yet, most first-time startup entrepreneurs do not have the strengths or resumes that investors are looking to fund. Their founding teams alone do not cover all of the essential skill sets required to make a successful business.
Giving out advisory shares and being able to instantly upgrade your team, and advisors slide in your pitch deck can make night and day difference in getting funded, who will fund you, and how much.
It will even make a difference in who you are able to hire as employees or recruit as on-demand outsourced help to get through the next steps of your journey.
Go FasterHaving great advisors to lean on and learn from can certainly help your venture go so much faster. They can help you make those critical leaps in credibility and visibility. As well as helping to keep you focused on the most important priorities to make progress and go fast.
This is not just for boosting your ego and making you feel good about how your business is going. That hypergrowth is essential. Not only to hit the mass many companies require to be viable, but to attract funding and investors, to gain and retain the best talent, and to stay ahead of the competition.
Go BiggerGreat startup advisors can absolutely help you go bigger. Not just in terms of helping to speed up your growth, but also in terms of the sheer size of what’s possible for your idea and venture.
Experienced advisors can have an eagle-eye view, and may see possibilities far bigger than you have imagined for your company. They know how to connect the dots.
They will also likely have the connections to make that possible. Whether that is investors, vendors, distributors, or M&A deals. Offering advisory shares could ensure that you have the best professionals working for you.
Avoiding Mistakes & Reducing RiskKnowing what to do is only half the battle on the startup journey. Maybe even less than that. What is far more impactful, and will make all the difference in speed, size, and success versus failure is knowing what not to do.
This is where experienced startup advisors can really help you leap over the pitfalls and keep going in the right direction, without all the missteps and unnecessary mistakes.
It’s what you don’t know that really messes you up. The only way to avoid that is to have those that have been there before to guide you and teach you.
How Much Equity Should You Give To Startup Advisors?The amount of equity in your company that you may give to startup advisors can vary widely.
0.25% to 1% appears to be quite common. That is per advisor. Though you may also want to give out more advisory shares in some circumstances.
Factors to consider in this equation include:
- The stage of your startup
- How much your shares are currently worth
- Your expectation of the increase in value of those shares during their term with you
- How much time and work do you expect them to commit
- The value you expect to generate or receive with them as advisors for your startup
- How badly do you want to secure specific advisors
- What other shareholders and current board members will agree to
Is It Worth It?Whether giving out advisory shares really pans out to be worth it, and how valuable this arrangement is, will vary depending on who you bring in, how you structure the agreement and advisory shares, and how much value you extract from them.
This can include:
- The specific investors you bring in
- The credibility and authority they add
- The network they have, and open up for you
- The unique experience they can bring to the table
- The quality of the advice they provide for your startup
- How available they make themselves to you
- The financial advantages of giving them equity versus other compensation in terms of cash flow, and a salary or other compensation
Startup Advisors Vs. Mentors Vs. ConsultantsStartup advisors can be very much like other mentors and consultants.
One of the main differences, and what makes them more like your equity investors and board members is that those startup advisors you give equity are shareholders in your business, their general interests are aligned with yours, and they are a part of your business.
A mentor is more of a casual relationship. There is nothing really tying you together. Though their advice and guidance can be just as important. Though they are not going to add the value that having an official advisor in your pitch deck and on your website will provide.
Consultants are more like mentors, except you pay them. Mentors generally don’t charge you. At least not more than the price of lunch or coffee. Startup consultants are generally more transactional in nature. You are trading cash for a specific benefit or service. Which may be fundraising, overcoming specific business problems, or developing a go-to-market or marketing plan. Consultants may charge hourly or flat fees or success fees.
When working out the advisory shares to give to your startup advisors, be mindful of the valuable assistance they can provide when raising funding for your new venture. Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!The Potential Downsides Of Giving Advisory SharesThe one big fear or risk in regards to giving shares to advisors, or employees, or anyone else for that matter, is that they are not going to provide a fair amount of value. You don’t want to lose money.
These are people who are joining your cap table, and who will be on it forever unless they sell the advisory shares or you buy them back. Be sure they are people you want onboard for the long term.
Dilution may be a fear for some. Too much dilution can be a bad thing. Yet, if you are choosing your advisors well, you probably have everything to gain, and really nothing to lose.
The biggest risk is that they don’t stay, keep offering value, and end up reaping a windfall when your company becomes worth billions of dollars. It may not be much to lose, but no one likes giving away their company for free.
Crafting clear written agreements can help avoid this. As can just being sure, you are smart and careful in picking the right people. Vesting schedules also help back this up and ensure it. For example, not having those shares ‘vest’ or transfer to them for a year or two, once they’ve proven to show up and help.
SummaryGiving advisory shares to bring in startup advisory can be one of the best moves that entrepreneurs can make.
It is easily one of the easiest, most efficient, and most cost-effective levers that are right at your fingertips. Which can also make all the difference in speed, size, funding, and the amount of stress as you are on this journey.
Understanding how they work, who makes great startup advisors who are really worth the investment, and how to best structure advisory shares and arrangements is important.
It can impact your cap table and all of those factors that circle that. Yet, structured well, with the right startup advisors can help you overcome hurdles, and launch your venture forward to successes you may not have even thought possible.
Understand how advisory shares work, do the math on the returns and pick great startup advisors that will move the needle for your company.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Stephany Kirkpatrick has built a career out of fintech and transforming legacy businesses and infrastructure into modern platforms that can support a new generation of business and products. All while helping millions to enjoy instant payments.
During her guest appearance on the Dealmakers Podcast Kirkpatrick shared her love for building things, digital innovations, and creating better, faster, smarter outcomes for financial services.
Plus, we talk about her experiences in M&A, startup fundraising, the secret to game changing products, and building a business that can withstand down turns, with fully remote teams.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Planting The Seeds Of A Flourishing Fintech Career
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- The Full Cycle Experience
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- Orum
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- Building A Company That Can Withstand Tougher Economic Times
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- Looking Forward Planting The Seeds Of A Flourishing Fintech CareerStephany Kirkpatrick was born in Oregon. Her father had immigrated to the US from Yugoslavia when he was seven years old. This fact, ended up ultimately being the genesis for the incredible impact she is having on millions of lives.
Stephany says that growing up in an immigrant household meant seeing finances from a different perspective. Her father was a small business owner. Yet, he wasn’t a part of the traditional banking system, didn’t have a credit score, and so on.
This got Stephany thinking about how to help others with financial services, and set her on the path to become a certified financial planner.
His work also inspired her to embrace her own side hustle, and then have the courage to turn that into a business.
Although her most recent business is a part of the New York tech scene, it was going to college in California that really exposed her to Silicon Valley, startups, and technology.
Right out of school Kirkpatrick found herself working for a tech company that showed her the ability to use software to achieve leverage to impact hundreds of thousands of people, and to create new user experiences.
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The Full Cycle ExperienceHer first venture was an early dive into SaaS in the financial services space. She joined LearnVest during the early days. It was her first real journey of experiencing finding product market fit, building and securing IP, and then going through a $350M acquisition.
In this process, and post-merger they went from touching hundreds of thousands of people to millions. While transforming a 150 year old business into a new digital power player.
Stephany says that once you taste that experience of taking a company through the full cycle you’ll never want to go back. While it may never be easy, and it will always take a lot of work, you can create massive value and outcomes.
OrumNext Stephany continued building out her experience and network by working with Soulcycle and Equinox.
Building a team, and finding the right timing, and leveraging her years of experience she struck on the idea and found the momentum for her next venture, Orum.
It all really boils down to enabling instant payments. Bringing our financial services inline with the real time needs and lifestyles we are enjoying in every other area today. Orum decided to tackle this by focusing on building the infrastructure to enable this. Which means they now boast the simplest API integration for instant payouts.
Looking forward they envision the time when this will fuel many new products and services we haven’t even considered yet.
Building A Company That Can Withstand Tougher Economic TimesThere is clearly a lot of uncertainty about the near term performance of the economy. So, how do you enjoy a company that is built to survive that?
To date Orum has already raised $85M in capital. Much of that was done in her socks, from her child’s bedroom, before she got her real home office. They have a fully remote team spread across 23 different states, and only recently held their first in person board meeting.
Stephany says that they have been very focused on their product as a painkiller, not being just a vitamin. It is something needed, that meets a current pain point. In fact, in tougher economic times, we can certainly imagine that getting paid faster will be more important.
Storytelling is everything which is something that Stephany Kirkpatrick was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Looking ForwardLooking forward and addressing your go to market is also just smart. How might you diversify the industries you serve, the size or avatar of your customers? Who you are selling to within those organizations, and your go to market strategies, tools, and marketing messages?
For example, you might now want to have been all in on just serving crypto companies lately. However, you may also find that if your service helps other businesses cut costs and improve their revenues, your sales pitch may be a hit with many CFOs today.
Listen in to the full podcast episode to find out more, including:
- Post merger integration experience
- Stephany Kirkpatrick’s top advice when launching a business
- Startup fundraising
- Payments
Alejandro Cremades · EP 550 Stephany Kirkpatrick On Raising $85M To Create A Frictionless Solution To Move Your MoneySUBSCRIBE ON:
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Christina Cacioppo has gone from academia to VC firm to becoming an operator. Leveraging that breadth of experience she has not only raised $200M for her own venture, but is helping other software startups launch and accelerate themselves.
On the Dealmakers Show Cacioppo discussed getting the confidence to become an entrepreneur, compliance and security for startups, recession proof business models, acquisitions and integrations, and managing company culture as you take your company global. Plus, the why, when, and how of startup fundraising.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- Finding The Confidence To Launch Your Own Startup
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- Working at Union Square Ventures
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- Vanta
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- Startup Fundraising Finding The Confidence To Launch Your Own StartupChristina Cacioppo was born in Iowa, and grew up between there and Columbus, Ohio. Her parents were both professors who really loved their work.
A lot of her childhood was spent running around the halls of Ohio State’s psychology department. Growing up, she thought that learning and becoming a professor, as well as being able to love your work was just what everyone did.
Believing she would also follow this path Christina headed out to California to study economics at Stanford. She went on to obtain her Master’s. Though in that final year, engaging in product design classes, and discovering what it was like to build things set her on a completely different path.
Although she now realizes that it wasn’t really true, she felt there was a lot to do before starting a company of her own. Like learning to code, getting industry experience, and employing people. As well as just generally believing that people like her didn’t just start companies of their own.
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Book a Call
Working at Union Square VenturesLanding in New York, Christina started her first job at early stage venture capital firm, Union Square ventures.
Over the next two years she spent her time speaking with as many as 600 founders, and listening to their pitches.
That was certainly a wake up call that she could start her own venture. As well as providing a lot of insight into which entrepreneurs did well, and not.
One of the big insights from this period was that being successful in fundraising does not necessarily translate to success in building a company.
If startups didn’t have product market fit, or lost it, all of the money in the world was useless. Many not only imploded in a big way, but more commonly ended up withering away, and dying a slow and painful death over a period of years.
Secondly, and just as impactful is the ability of founders to quickly, and succinctly communicate. As well as to have that clarity of thought themselves. If you don’t have or learn that, it is going to be very hard to raise money.
VantaChristina decided to take her bonus money and live off of that while she built things herself. She started with a blog. Then decided to take a job as a product manager with Dropbox.
It was there, and in the process of trying to launch a product for them that the idea for her own business sprouted.
The legal department quickly notified her that she needed to meet a lot of compliance and security items.
It was a very manual process. One that others were certainly grappling with too. So, she spent the next year talking to founders and startups in San Francisco about their security practices and compliance processes.
Then another six months going into other businesses and helping them work through these things, and find a way to standardize it. So, that way they could secure the customers they were prospecting.
This turned into Vanta. A B2B SaaS startup helping companies monitor their assets, and demonstrate their security to their customers.
Over the past year they’ve grown their headcount by 78%. As well as raising $200M in capital through a Series B round of funding, acquiring another company, and branching out into Australia and Ireland.
Storytelling is everything which is something that Christina Cacioppo was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Startup FundraisingBeing on the other side of the table before having to raise money for her own company was certainly an advantage for Christina.
First, she says to remember that investors are just people. They may be very good at what they do. Yet, they are just humans. Don’t be scared of talking to them. Do take the time to build relationships with them over time.
Secondly, she says that investors always like to invest their money in startups that don’t need the money. Just like banks like to loan their money to those that don’t need it.
With this in mind, they started out just working off of their cash flow until they hit $10M in revenues.
At that point, two things triggered Vanta to raise money, and accept external capital. One was that their competition was growing, so they needed to hit the pedal and go faster. The other was that even though they were doing very well, both prospective customers and talent didn’t appreciate how strong they were, because they hadn’t raised capital and been in the news for it. So, it was as much a credibility play, as it was financial.
Listen in to the full podcast episode to find out more, including:
- How to maintain company culture as you expand internationally
- Fundraising for your startup
- Building a business that thrives in good and tough economic times
- Christina’s top advice for other aspiring entrepreneurs
Alejandro Cremades · EP 549 Christina Cacioppo On Building A $1.6B Business By Simplifying Cybersecurity ComplianceSUBSCRIBE ON:
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What is post-money valuation for startups?
Valuations are one of those parts of startups that many entrepreneurs and founders only wake up to once they head out fundraising, or begin negotiations to sell their companies. That’s not ideal and certainly leaves you scrambling to catch up when you want to be out ahead of it.
Valuations for startups, in particular, are complicated further with pre-money and post-money valuations. So, what are they? How do they differ? What do you need to know about the nuances of them and their impacts on your company?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- What Is A Post-Money Valuation?
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- Pre-Money Versus Post-Money Valuations
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- Why Is Post-Money Valuation So Important?
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- The Impact Of Post-Money Valuations On Future Rounds
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- Access To Financing
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- The Value Of Your Shares
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- Terms Versus Valuation
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- Liquidation Preferences
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- Control
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- The Pros & Cons Of A High Valuation
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- The Pros Of High Valuations
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- The Cons Of High Valuations
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- Common Startup Valuation Methods
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- Achieving A Higher Valuation For Your Startup
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- Summary What Is A Post-Money Valuation?Put simply, a post-money valuation is how much your startup is worth after a round of investment. Its value after a new cash injection from investors is put in the bank.
For example, if your company is worth $200M before a new round of funding, and your new group of investors puts in $200M in new money, your startup may have a post-money valuation of $400M.
This is still, of course, open to negotiation, and alternative methods of business valuation.
Pre-Money Versus Post-Money ValuationsA pre-money valuation is how much your company is worth before receiving new money in a round from investors. How much it is worth just as it stands before more fundraising.
This involves more common approaches to business valuations, and startup valuation methods.
Then the new money being put in is added to that in order to calculate your startup’s post-money valuation.
Investors will use your pre-money valuation to calculate the percentage of your company they will take in the form of shares when they complete their investment. Or, more specifically, the share price they are paying for that percentage of ownership with your new valuation.
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So, if you have a pre-money valuation of $150M, and they put in $50M in new funding, they are becoming shareholders with a 25% stake or ownership position in your business.
Are you looking for some in-depth information on how to value your company? Check out this video I have created, where I explain in detail how to execute this task. It can make a significant difference in your fundraising efforts.
Why Is Post-Money Valuation So Important?While calculating a post-money valuation may sound easy, and maybe in some cases, it is highly impactful and can have a variety of effects on and in your business.
Some of these may be obvious. Others may not be, as a newer entrepreneur, in your first or second company.
There may be elements of fundraising that are more important than this paper’s valuation. Though it is essential to understand the influences and consequences of a valuation. Especially the pros and cons of higher versus lower valuations.
The Impact Of Post-Money Valuations On Future RoundsAs we’ll dig deeper in a moment, high post-money valuations can be problematic for some startups when it comes to raising future rounds of capital.
You always want your valuation to be going up. Especially at key moments, like fundraising. Be sure that even if you are accepting a bullish or even perhaps slightly overly generous valuation in this round, you are confident you are on a trajectory that will continue to lift your company’s value for the future.
Otherwise, you will be giving away more of your own shares, and diluting the ownership further. Aside from the fact that your investors may not be pleased that the value of their stock is not increasing.
It is good to have some motivation to keep growing. Just not so much pressure that you end up trying to take shortcuts or turn to short-term thinking and decisions which jeopardize the long-term viability and profitability of your company.
Balance this, with the fact that your investors may truly see far greater potential and value than you can from your perspective. Be sure to ask, and understand what they are basing these numbers on.
Access To FinancingThe strength of your balance sheet and other financials can certainly be impactful when it comes to accessing other types of financing as well.
No one wants to finance or loan a bankrupt business. The more equity in the business, the easier borrowing, or opening vital credit facilities will be. Along with the ability to obtain far better terms, and lower costs of borrowing.
The Value Of Your SharesOf course, the more valuable your company is, and the higher its valuation goes, the more valuable and higher the worth of each of your shares in your company goes.
You may end up with fewer shares, and a smaller percentage of ownership at each round, though it is important to look at the net value of your shares. As well, of course, as any other factors which may impact that value, and what you can do with them.
Terms Versus ValuationWith the above in mind, savvy entrepreneurs, and repeat founders tend to put more priority on negotiating the terms than just the paper valuation.
Valuation is a factor. It can be influential in a variety of ways. Yet, it is the terms of a funding agreement or investment contract, which really lay out the impact of this transaction.
This is why the funding process really starts with a Term Sheet, and the founders and their board are able to review and negotiate the terms, prior to opening up deep due diligence, spending time, more money, and expending resources with a potential investor.
Liquidation PreferencesThis is one of the most important terms in fundraising. One which few new entrepreneurs understand the gravity of. This is why some have ended up selling their companies for a billion dollars and ended up getting zero, or pretty close to it.
Liquidation preferences refer to who is preferred or prioritized when there is a liquidation event. As well as how much they get. In some cases, investors will want not only their capital back, but guaranteed multiples of that capital, before anyone else, or you, as the founder, get a penny.
So, if your value hasn’t multiplied dramatically, then you might find you are not getting very much for all of the effort, time, and money you are putting into this venture.
ControlVoting rights, board seats, dilution, shares issued, and other factors all impact control of your company.
Outside investors can bring a tremendous amount of value to your startup. They can dramatically rocket your progress, and help you take your company to heights you didn’t even dream of.
That’s if you pick the right investors, and set the right expectations, with the written and legal documentation to ensure that from the beginning.
If you don’t, and you fail to pay attention to or appreciate the fine print, then you may be shocked when your investors take over your business. They can have the right to fire you, adjust and dictate your compensation, and make a wide variety of operational and product decisions.
The Pros & Cons Of A High ValuationThere are both pros and cons to high valuations. Just as there is to everything else in life and business. It is important to know them, and the trade-offs.
The Pros Of High ValuationsCredibilitySome founders have intentionally looked for supersized rounds of funding and valuations to boost their credibility. If you are raising $100M or have a $1B valuation virtually out of the gate, it suggests you are working on something of value. It will at least get you some attention. Of course, sooner or later, you are going to have to back that up too.
Attracting Top TalentThe best talent wants to work for the best companies. Valuation and fundraising amounts alone may not be directly linked to the underlying quality of the business, though it can be an indicator that many talented workers are watching. Everyone wants to work with the winner. Even more so if they believe your company can afford to pay them well. Especially in an environment where others are making substantial layoffs.
The Cons Of High ValuationsDown RoundsIf you cannot top your previous valuation when it comes time to raise again in a few months, you face a down round. Or at least a flat round. Meaning your valuation is flat or has decreased.
This can be due to your own lack of growth, or the ability to establish tangible and measurable value in your company. Or due to external market factors, and overall valuations of shares and businesses crumbling.
This is not good PR. In these cases, you will also likely be giving up more of your own ownership and control over your company. As well as potentially seeing the value of your existing shares decline.
Growth MetricsAn outsized post-money valuation means it may be harder to keep up attractive growth metrics. You first have to catch up with that valuation, then show hypergrowth on top of that. Especially as an early-stage startup, future investors are going to want to see uncommon, and extreme rates of growth, that will multiply their money.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Common Startup Valuation MethodsCommon pre-money and post-money valuation methods for startups include the following:
- The Berkus Method
- Share price multiplied by the number of diluted shares
- Pre-money valuation plus new investment cash
- Discounted cash flow method
- Precedent transactions and comparable market transactions
Achieving A Higher Valuation For Your StartupFortunately, startup founders do have a lot of control over the valuations assigned to their startups when fundraising.
Some of the ways to do this include the following:
- Bring in more capital in your next funding round, which will directly increase your post-money valuation. Seek larger investors with more money or more investors.
- Improve the metrics that create a more valuable company. Focus on pushing your basic business metrics to increase your pre-money valuation in advance. Including revenues.
- Consider an M&A transaction prior to, or in conjunction with the next round. This can enable you to acquire the metrics you need to show more value, and become a more substantial player in your market.
Then negotiate, negotiate, negotiate. It helps to have a third-party expert act as a buffer in this process. If a higher valuation is really the goal, then you may be willing to make trade-offs in certain terms of the investment. Know your bottom line, and leave room to negotiate, so that everyone feels they are winning something.
SummaryPost-money valuation is a very important factor for startups and their founding entrepreneurs. While there are many other things vying for your attention in your startup, understanding pre and post-money valuations, and their impacts on your company now and later is vital for founders.
Get to know how they are calculated, what you can do to change them, and the pros and cons of high and low valuations at each round.
This, as well as mastering negotiating the best terms on each investment, will make all the difference in growing your venture to where you want it to be.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Austen Allred is on a mission to help people level up their skills and incomes, and his startup is helping thousands of them find new roles in tech fields, online.
On the Dealmakers Show, Allred talked about reading a life-changing blog post, embracing uncertainty, empowering remote work and the next generation of tech workers, edtech, and outcome-based pricing and business models. Plus, raising $100M, and balancing a cash flow positive business versus a growth-only mindset.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- The Life-Changing Blog Post
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- Starting The EdTech Business
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- Helping Others Find A Better Path
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- Outcome-Based Pricing & Business Models
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- Bloomtech The Life-Changing Blog PostAusten Allred was born in Utah. Growing up Mormon meant a very family-centric household, where he was taught hard work, to provide for himself, and to embrace starting businesses and side hustles. Which has resulted in most of his family becoming founders of some kind or another.
As a guy in the Mormon church, when you turn 19, you offer to serve on a mission. You are not told where you will be sent in the world until you receive your letter to head off. Allred ended up being destined for a small town in Ukraine that he had never heard of.
After a couple of months of fast-paced missionary training, he headed off into a completely new environment.
It was a small mining town that had seen its industry collapse, and people weren’t getting paid. It made him very grateful for the middle-class upbringing he had. Then he had to learn the language, spend all day out talking to people and getting to know them, and had to get comfortable with being different.
Returning to the US to go back to school, Austen says that he found he had learned to think more independently, and was much more comfortable in taking risks and living in uncertainty.
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- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Starting The EdTech BusinessIn fact, he ended up going from college dropout to starting a huge edtech business of his own.
He knew that he wanted to start a business, but hadn’t yet learned to code. It was then he came across his inspiration through a blog post online. He read the story of a guy who had moved out to Silicon Valley and lived out of his Honda Civic while trying to break into the scene there.
Allred says that he just happened to have the same kind of car. He realized that you just need to get in the middle of things and figure it out as you go. So, not having enough money for even one month of rent in Palo Alto, he drove out to California. He slept in his car, showered at the YMCA, and after receiving some help from strangers along the way, he ended up with a job as a growth engineer at a Silicon Valley startup.
Helping Others Find A Better PathAusten quickly found he was making six figures out in San Francisco. In contrast, when he would visit home, the average income there was just $35,000 a year.
The default path for people was either going to work for $15 an hour or, if you could manage and stomach it, taking on $100,000 in student loans to go to college.
He wanted others to experience the change he had. Realizing that if people just learned to code, they could land great tech jobs from home, and not necessarily have to go to the extremes he did on his journey.
However, at the time, online education really wasn’t a thing, and the few options there were, were still very expensive.
Austen ended up writing a book about growth engineering, which people started buying up. Then he and a friend decided to create a course to teach people a programming language. This side hustle money ended up pulling in more than half their annual salaries from their jobs.
Still, they saw a gap between people getting all of this information, and actually implementing it in their own lives. So, they thought, what if they could walk people through their journey, by teaching them skills hands-on, and helping them at least get part-time jobs in tech? It soon brought in enough income that he could quit his day job and created Bloomtech.
Outcome-Based Pricing & Business ModelsWhile they were making some good money, they realized that many more people loved it, but just didn’t have the money to pay for what they were offering. They tried out several models and talked to Wall Street bankers about financing options.
They tested having people pay some money upfront, and more after. They tried payment options and income share agreements.
Ultimately, they decided they would provide their training free upfront, and students wouldn’t have to pay unless they landed a job paying at least $50,000 a year. Results and outcome, or value-based pricing and business model, which has proven incredibly attractive and profitable.
BloomtechLast year Bloomtech graduated 1,000 students who landed tech roles. They have placed workers with just about every tech company, and have partnerships with companies like Amazon to place their students. Their graduates are seeing their incomes rise by tens of thousands of dollars.
So far, they have already raised $100M in capital for the journey from going through Y Combinator through a Series C round of funding.
Storytelling is everything which is something that Austen Allred was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!They’ve also taken a different approach to building a business than the average VC-backed Silicon Valley tech startup. Instead of just blindly focusing on growth at all costs, and being happy losing millions in the process, they’ve been working to balance cash flow and demand better returns on their investments in growth.
Listen in to the full podcast episode to find out more, including:
- Balancing a growing and cash flow-positive business
- How Bloomtech works
- Austen Allred’s top advice when starting a business of your own
Alejandro Cremades · EP 548 Austen Allred On Raising $100 Million To Create A Proven Path To A Well-Paying JobSUBSCRIBE ON:
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Michael Fey has gone from playing soccer, to writing software, to building really big businesses.
On the Dealmakers Show, Mike shared his professional journey, including going through acquisitions, the ‘luck’ of other companies making layoffs, rebranding, restructuring and saving businesses, why not to (always) listen to your customers, and who to talk to instead.
In addition, Mike talks about creating pitch decks, raising a $20M seed round, positioning your startup for an aggressive raise, and when stealth mode works for startups.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHere is the content that we will cover in this post. Let’s get started.
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- From Soccer To Software
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- Acquisitions & Integrations
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- Island
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- Fundraising
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- Tips For Starting Your Own Business From Soccer To SoftwareMike grew up in a small town in Ohio where he played just about every sport he could – – including soccer which took him all the way to college.
In college, he got his degree in engineering physics. He thought he might become an astronaut, though found himself lured into software.
He became a developer with Lockheed Martin and joined Mercury Interactive where they wanted a specialist in Java. When asked if he was great at it, he said yes – – and then spent the next four weeks getting great at it.
Acquisitions & IntegrationsAfter that, he joined McAfee where he moved up the ranks and became CTO, and then GM of their enterprise business.
After Intel acquired McAfee, Mike joined Blue Coat as President and COO, at the same time Intel was trying to right-size their acquisition and meet their margins, meaning restructuring their team.
He ended up hiring 350 people from his old company demonstrating that when downsizing is widespread, it can be an opportunity to acquire talent and build out a great team. He says that helping Blue Coat succeed would have been a lot harder without this opportunity.
With Blue Coat well into a successful turnaround, Mike then helped orchestrate an acquisition by Symantec. Surprisingly Symantec made him president and COO and the Blue Coat CEO Greg Clark became the Symantec CEO. Integrating Blue Coat and Symantec was a massive undertaking that was tough and exhausting; 24 hour days, a lot of complexity to work through and many tough decisions.
While serving out his non-competes after exiting Blue Coat, Mike was approached by Andreessen to join one of the companies in its portfolio. He went in, rebranded the business, repositioned the product, resized it and turned it back over to the original founders.
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- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
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IslandAs Mike contemplated the next phase in his career, his current co-founder approached him to jump on board with a startup idea he was working on. After much thought, deliberation, and evaluation, Mike agreed to join as the CEO of Island.
Their idea was to completely reinvent the web browser for business. To bring together all the core elements needed for an enterprise to work securely, and build them right into the browser. By doing this, Island gives the enterprise complete control, visibility, and governance where nearly all the work happens, while users get the same Chromium-based experience that they know and love.
FundraisingTo date, Island has raised over a quarter of a billion dollars in funding.
Before going to raise money, Mike and his co-founder took their time reaching out to their network and getting feedback from prospective customers, including challenges. Doing so put them in a very confident position when they started talking to investors, resulting in a substantial $20M seed round.
The pitch deck they used is very similar to the way they still pitch their customers today. They covered all the main data points investors wanted and had supporting slides to cover the objections they knew they would get; ending with 10 investors to pick from within two weeks.
Their choices included Sequoia and Cyberstarts. Sequoia’s logo obviously offered a lot of credibility and Cyberstarts had a great network.
Storytelling is everything which is something that Mike Fey was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Tips For Starting Your Own BusinessFor others aspiring to launch startups of their own, Mike says to focus on people, and to surround yourself with people who matter and those that you can learn from.
He warns against worrying about the small stuff. Let yourself enjoy the journey, and trust it will work out.
Mike also recommends looking for a problem that you can bring a unique solution to. To do this earlier in your career. Rather than trying to make minor improvements to existing solutions.
Listen in to the full podcast episode to find out more, including:
- Transitioning from technical skills to business operator
- Why not to listen to your customers
- When stealth mode can work for a startup
Alejandro Cremades · EP 547 Mike Fey On Building A Business Valued at $1.3BSUBSCRIBE ON:
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Pete Flint has taken two companies through IPOs, as well as taking one through a $3.5B merger. Now he is heading up his own venture capital fund to help empower the next generation of founders.
During his appearance on the Dealmakers Podcast Flint talked about creating MVPs and fundraising, IPOs and M&A transactions, content and SEO, and assembling a team and $450M investment fund. Plus, the keys to getting through crises and tough periods in the economy.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksSeeing The Opportunities & Getting Through Challenging TimesPete Flint was born and grew up just outside of London, in the UK.
His father was a professor, and his mother a school teacher. So, getting good grades was clearly expected and a necessity. That continued through going on to university to study physics.
His dad would bring home early computers. The big ‘PCs’. Intrigued by computers and seeing the internet revolution and Netscape going public, he began looking for related internships and summer jobs while in college.
He did stints at both IBM and JP Morgan. Quickly learning that he did not want to work for an investment bank, but definitely loved the internet.
During this time he was emailing all of the startups in the UK to find a role. There were only 17 of them at the time. Eventually, after raising some funding, the CEO of Lastminute.com brought him on board as a part of their founding team.
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- Fundraising Process : get guidance from A to Z.
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- Investor Access : connect with the right investors for your business and close them
Book a Call
Riding The Dot Com Bust & Starting A New CompanyThere Flint rode out the dot com boom and bust. They rose and scaled. Then hit the first internet bubble, followed by September 11th. It seemed like a tough time when no one wanted to get on a plane. Yet, their platform saw the opportunity to match hotels and airlines with many empty seats and rooms, with consumers looking for a great deal.
They saw the company go public within just 18 months of launching, to the stock diving 95%, to ultimately being acquired for $1B.
When it came to building his next company, Pete says that before they even sat down to write a line of code they worked on defining their values. He decided that if they were going to put 70 to 90 hours a week into this, they had better create a company they wanted to work in.
They not only wrote down their values, but what they were going to do to make sure they persist authentically in the organization. He says that investment in their company culture really enabled them to build a great team, and get through future tough periods, like 2008.
Taking The Company Through A $3.5B M&A DealAfter that first exit Pete had the opportunity to get into Stanford business school and move out to Silicon Valley.
He saw this as an opportunity to immerse himself in the top league of entrepreneurs, and broaden his knowledge of business. He found he was surrounded by amazing businesses, had lots of resources at his disposal, and time to consider his next move.
After his first year living on campus, he had to find his own place to live. He and five classmates started looking for somewhere to share. Yet, he was shocked at the lack of efficiency and technology to help in this process. There was Craigslist and local real estate agents, but at a time when companies like Google were going public on the back of their search engine, it seemed that there was a huge gap.
He dug into this problem, teamed up with a classmate, and found some computer science students to help start building a prototype.
His initial expectation was that the backend technology would be the hard part of building this business. A marketplace that would match all the housing inventory on the market with consumers looking to buy and rent. Yet, when they went out to pitch VCs with their idea and prototype, investors found the interface so ugly they rejected them.
It was when they invested in building out the front end, and making it pretty, and then started targeting angel investors with that, that everything changed on the fundraising front for them.
Building His Startup TruliaPete went on to raise $33M through several rounds, including bringing in Excel and Sequoia. Then when hitting more roadblocks in fundraising they launched a modest $500M IPO.
Several years later, when going head to head with Zillow, their startup Trulia ended up in a merger worth $3.5B.
Pete says that their features had become very similar, and they were both spending enormous amounts of money trying to out market each other. It just made sense to blend the companies together into a market leader.
Storytelling is everything which is something that Pete Flint was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Funding Founders To Build Market-Transforming CompaniesSince leaving Trulia, Pete Flint has since co-founded NFX, a venture capital firm that has raised over $1BN to back pre-seed and seed stage startups.
NFX has been building a community of hundreds of thousands of founders around the content they’ve published at www.nfx.com, and other software tools to help them.
His firm NFX has been building a community of hundreds of thousands of founders around the article content they’ve been published, and other tech driven tools to help them.
They’ve also built out a team of very experienced investors who are former operators themselves. With a focus on funding network effect businesses.
Listen in to the full podcast episode to find out more, including:
- Building marketplace businesses
- Using SEO and content to build hyper-growth startups
- The NFX team
Alejandro Cremades · EP 546 Pete Flint On Selling His Last Company For $3.5 BillionSUBSCRIBE ON:
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Who qualifies as an accredited investor? In other words, what is an accredited investor, and why does it matter for your startup?
Accredited investor status differentiates them from those that are not accredited to participate in certain types of investments, and at what level. It also makes all the difference in who you can market your investment opportunities to, and how.
Understanding who qualifies as an accredited investor is vital for staying out of legal and financial trouble, finding the right investors for your startup, and conducting appropriate campaigns.
Here’s what you need to know about who qualifies as an accredited investor. As well as some of the alternative sources of funding for your venture.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhy Does It Matter?There are at least six reasons why understanding accredited investors and how they differ is vital as an entrepreneur and startup founder.
- Staying Safe: Avoiding lawsuits, SEC investigations, and financial penalties
- Qualifying Them: Knowing how to qualify accredited investors and verify it
- Who You Can Raise From: The investors you can solicit and accept funds from
- The Process: How are you allowed to market or secure investors for your startup
- Limitations: Knowing limits on how much can be invested, and shares sold or traded
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Position: How these fit into the financial stack for your startup See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close themBook a Call
What Is An Accredited Investor?Who qualifies as an accredited investor?
Both individuals and legal entities can be accredited investors. For individuals, the qualification is either:
- A net worth of over $1M, not counting any personal residence (either individually, or with a spouse or partner)
- An annual income of over $200k in each of the previous two years, with reasonable expectations for the same for this current year, or $300k with a spouse or partner
Holding certain securities licenses, being executives or officers of a company selling securities, clients of a qualifying family office, or knowledgeable employees of a private fund can qualify individual professionals as accredited investors as well.
Entities are also qualified as accredited investors. Per the SEC website, the following criteria apply for entities to qualify as accredited investors:
- Legal entities that have more than $5M in investments
- Employee benefit plans, 501c3 charities, LLCs, trusts, family offices and clients, partnerships, and corporations with more than $5M in assets
- An entity in which all equity owners are accredited investors
- Exempt of registered investment advisors, or broker-dealers
- Financial companies, such as banks, insurance companies, investment companies, saving and loan associations, and business development companies
What Are Non- Accredited Investors?Unaccredited investors are those that do not qualify as accredited investors according to the above criteria.
Generally, those that are not credentialed finance professionals, are not high-income earners, or high net-worth individuals and couples.
This does not mean that unaccredited investors cannot become investors or participate in your business venture, but there are rules on engaging with them, what you must provide them, how much they may invest in your company, what they can do with their shares, and when.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Startup Fundraising: Accredited Vs. Non-Accredited InvestorsAside from the qualifications already listed above, what are the differences in raising money and getting investments for your startup between nonaccredited versus accredited investors?
Let’s take a look at some of the pros and cons for the average startup company. Remember that each venture is unique, and you may have your own perspective on these factors as well.
The Pros Of Raising From Accredited Investors* Fewer rules and limitations * Less management with fewer but more sophisticated investors * Larger amounts can be raised from each investor * Investors may bring more value in terms of resources, experience, and contacts
The Pros Of Raising From Non-Accredited Investors* Ability to engage consumers as backers and brand ambassadors * Far more investors to reach in this pool * Less competition for their investment * Gaining visibility at a high level
The Cons Of Raising From Accredited Investors* Obligation to verify and qualify them * A smaller investor pool * More competition for investors’ money
The Cons Of Raising From Non-Accredited Investors* More upfront legal costs for fillings * A higher burden of disclosure and content creation * More management intensive
Types Of Accredited Investors For Funding Your StartupCommon types of accredited investors that you may include in your fundraising campaigns include:
- High-net-worth individuals
- High-income earning individuals and couples
- Finance professionals
- Angel investors
- Angel groups
- Family offices and their clients
- Venture capital firms
- Private equity funds
- Insurance companies
- Other investment funds
- B2B customers with substantial assets
How To Pitch Accredited Investors To Fund Your StartupThe exact types of accredited investors you may pitch for funding your startup will vary by stage, round, industry, and more. Yet, the steps involved are really the same.
Learning to run a good, efficient fundraising process, with replicable results will make all the difference for your company, the mission, and the ability to reach your big vision.
Learn Your Ideal & Target InvestorsThe first step, before anything else, is to get clarity on exactly who your target investors in this round are going to be.
This means giving serious thought to who your ideal investors are. As well as who is willing and able to fund your business right now.
Key questions to ask in this process include:
- Who has the amount of money I need to raise in this round?
- Who is focused on funding startups at our stage of business?
- Who is excited about funding this type of product, and company, in this market?
- Who shares our vision and values?
- Which investors are able and actively investing in line with our timeline for closing this round?
- What additional value should investors bring in terms of resources, expertise, and contacts?
- Where can I reach these investors?
- What is most important to them in
- Which investors are likely to provide the type of funding and terms we are looking for?
Use this process to begin creating an investor avatar, and shortlisting the investors you will pitch in this round. The answers to these questions will help you figure out who qualifies as an accredited investor.
Get Introductions & Build RelationshipsThe next step in raising money from accredited and even non-accredited investors is to connect with them and begin building, strengthening, and nurturing relationships with them.
While startup investing is a financial transaction, and you’ll need the data points and math to line up for them. Securing an investment in your startup is still significantly about human relationships. It is who you know, who knows you and knows you, likes you, and trusts in you relationships.
If you are starting from scratch with no network among the investors you intend to pitch, you can hack the process by getting introductions to them from people they already know and trust. Who do you know or can leverage that already knows them and has a relationship with them? Maybe that is your peer founders, fundraising advisors, mentors, and existing investors.
Then get busy building and strengthening those relationships. Invest time in getting to know them, building trust, and giving them value.
Create A Winning Pitch Deck That ConvertsRegardless of your network, being able to get your messages through, and even having friendships with great-fitting startup investors, you are still going to need an effective pitch deck that checks the boxes, and converts.
In many cases, your contacts will have to justify and be able to defend this investment to those they are responsible to. Their families, their clients, and partners.
This means you must not only create an attractive pitch deck; it must flow with the correct order for your slides, and provide the key data that investors need to value your startup, assess the risks, and make an informed decision.
The fast track for getting this right, and efficiently getting a winning presentation completed is to use a proven pitch deck template.
Follow Up, Follow Up, Follow UpEven the best pitches and decks are not always going to lead to an immediate deal. Even in the best-case scenario, you are probably looking at additional investor meetings, negotiations, due diligence, and finalizing paperwork before closing.
Investors are incredibly busy. So, even if they are interested, they can require some follow-up to get them to act. In sales in general (and fundraising is a sales process), it can take seven to eleven touches on average to convert and finalize a sale. So, be prepared to follow up.
Follow up with calls, texts, social, emails, and in person, and keep showing up and showing that you are executing.
Even as you’re learning about how to identify accredited investors, you might need more information about how to find investors for your startup. Check out this video I have created explaining the right sources of funding you should look for. You’re sureto find it helpful.
Other Financing Sources For Your Capital StackOutside accredited investors or even public crowdfunding with unaccredited investors are not the only way to raise money for your startup.
They can certainly play a significant, important, and valuable role. Including angel investors and VCs. However, they are just a couple of groups, which may be the optimal choices at some legs of the startup journey.
Here are some of the other sources of financing that can fuel your startup along this marathon. You might want to explore them even as you understand who qualifies as an accredited investor.
Loans & LendersDebt financing certainly has its role in business. This may range from using personal credit to get your venture started and off the ground, to merchant cash advances and working capital loans to keep growing after you’ve proved a track record of revenues, to convertible debt from early investors, to huge debt facilities for financing your customers.
CompetitionsPrize money from awards and competitions can be a great way to simultaneously both gain visibility and credibility while putting more financial fuel in the bank. Even better, as it is non-dilutive capital that does not need to be paid back.
This can include business plan competitions hosted by schools and businesses, hackathons, and coding events.
Startup AcceleratorsStartup accelerators can provide structure, direction, and positive pressure to make progress fast. They may offer additional resources, as well as some credibility. Though can also provide much-needed seed capital, with introductions to accredited investors at the end of the program on demo day.
Government GrantsGrants are another form of non-dilutive capital that can look great on your resume, and does not need to be repaid.
CofoundersDon’t overlook the option to bring in additional cofounders that won’t just add their time and skills, but their own seed capital as well. Together you can cover all the initial skills you need, and self-fund longer so that you can negotiate better terms with outside accredited investors once you’ve achieved some traction.
SummaryWho are accredited investors?
Knowing who qualifies as an accredited investor is vital for a startup founder. You must know how they are different, what difference it makes in the fundraising process, and how to qualify them.
If you don’t, everything can be derailed by finding yourself bogged down by SEC investigations, lawsuits, and hefty financial penalties.
Then formulate a strong fundraising process for pitching and raising from accredited investors. As well as understanding the other sources and types of financing and capital available to your company, and how they all fit together in a smart financial stack.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Who Qualifies As An Accredited Investor? appeared first on Alejandro Cremades.
Since growing and selling a company for 10 figures, Brian Requarth has created a community and fund for other entrepreneurs aspiring to create highly successful startups of their own.
During his appearance on the Dealmakers Podcast Requarth shared his experience growing companies by turning personal challenges into opportunities, capitalizing businesses, and M&A transactions. As well as expanding your horizons by embracing the adventure of uncertainty, and building marketplace businesses.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksExpanding Your HorizonsBrian Requarth grew up in a small town in Northern California. He recalls his parents as being very supportive, and encouraging his passions, though teaching him how to work hard for everything.
His father was a small business entrepreneur, and his mother was involved in the community and social impact projects. Brian might just be a perfect combination of both of them.
However, it was studying Spanish, and a yearning to see the world that really expanded his horizons, and set him on the journey that has led him to where he is today.
Learning Spanish led him to travel and embrace new cultures. That began with packing up in a Nissan Pathfinder with a good friend, and just driving south. After Texas, they landed in Latin America. He embraced the adventure of just figuring things out as they went.
His now wife was in Colombia. He fell in love with the country almost as much as her. Scrambling for a way to make a living there, he stumbled into becoming an English teacher.
He taught himself to teach, and knocked on doors to sell his classes. It was another hustle that built on his ventures teaching swimming lessons and selling candy as a kid.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Turning Personal Challenges Into Billion-Dollar CompaniesSo many great companies have been born out of personal points of frustration, and entrepreneurs just finding a solution they wish existed in the world for themselves.
In Colombia Brian faced his next challenge of finding somewhere to live. He had tried renting a cheap motel, only to discover it was an hourly hotel room.
He turned to the local newspaper real estate classifieds. Which resulted in meeting a local agent. He offered a physical print out of local listings to go see, for a fee.
Of course, after forking over the money, he found he wasted the next day running around looking at properties that were not a good fit.
After reading a case study on another big business that had been built in Latin America, he was inspired to change things, and create a solution himself. After meeting his technical cofounder in an immigration office, they banded together to build Viva Real.
It was a reinvention of the classifieds online. Or like Zillow for Latin America real estate. Which meant they faced the dilemma of balancing the chicken and the egg of building a marketplace business that requires building both inventory and customers.
Put simply, they began putting up customer listings for free, got busy on their SEO to drive in a lot of traffic, and proved the value to real estate companies. Resulting in making $5,000 in prepaid listing fees in a single day.
From there they kept on scaling. After starting out bootstrapping they raised $250k from a friend, before going on to attract an investment from a CEO of one of the largest companies in their space out in Australia.
Soon it became clear that they were up against a couple of far better funded incumbents. Brian says “If you don’t have a seat at that table, you are on the menu.” Ultimately consolidation would happen. So, they engaged in some M&A to build their business, close the gap, and become a more significant player.
They ended up raising $74M in capital before being approached about an acquisition themselves. That turned into a long 18 month process by the time they negotiated the terms, went through the due diligence, and made it across the finish line.
Still, it ended up being a huge $640M outcome.
Storytelling is everything which is something that Brain Requarth was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!LatitudDuring the long process of selling their company, and waiting for the government to approve the sale, Requarth says that he needed something to distract himself.
So, he threw out an invitation to early stage founders in the region that may want help. At this point he had over a decade of experience in building businesses, fundraising, M&A, and more. He ended up having 150 video calls with other founders that summer.
There were two big takeaways that jumped out at him from that experience and all of those conversations:
- This new generation of founders were very talented and had high ambitions
- They still lacked understanding of many fundamental parts of growing a startup
Brian got together with two other experienced founders and began thinking about how they could help other entrepreneurs, which are one of the most powerful levers in the economy and society.
They began hosting live panels and Q&A sessions. It morphed into Latitud. His latest venture that helps entrepreneurs VC backed startups in LatAm for a fraction of the cost. They also have a fund to help fuel companies in their fellowship as well.
Listen in to the full podcast episode to find out more, including:
- Fundraising and being persistent in landing the investor you really want
- M&A and integration
- Brian Requarth’s book, Viva the Entrepreneur
- His top advice when launching your own business
Alejandro Cremades · EP 545 Brian Requarth On Selling His Company For $640 MillionSUBSCRIBE ON:
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How to assess your startup’s financial health? In other words, how do you assess how financially healthy your startup is?
Financial health is the lifeblood of any business. Just like for humans. The vast majority of businesses, and especially startups, fail because they run out of money. In fact, just about every cause of new business failure in the first five years can really be tied back to financial management. It’s also what takes down even large incumbents with billions of dollars.
It is vital to keep a handle on the pulse of your company’s financial health. There are many reasons for this. Though you can’t improve on what you don’t know and measure.
So, how do you measure it? What are some of the specific metrics to keep an eye on? How can you improve your company’s financial health, and keep it healthy?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhy It’s So ImportantUnderstanding the financial health of your company is critical internally, just as it is knowing how it can affect external perspectives and interactions. Including both public and private capital markets.
If you don’t know how healthy your business is or not, how can you improve on it, save your business before it dies financially, or needs to go to the ER or ICU?
If you know, then you can manage your company well. You know when you have the capital to grow and invest in new areas and grow your company. You know the types of returns you need to be demanding from your capital.
It also gives you the foresight into effective planning, understanding your upcoming financial needs, and helps in staying ahead of the need to raise more funding.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Knowing your financial health reveals the strength of your positioning in negotiating financial transactions, provides more optionality and helps you understand how lenders and investors will view and value your business.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!When To Assess Your Startup’s Financial HealthThe time to wake up and be alert to the financial health of your company is not when the checks are bouncing; your payroll service tells you that you are out of money, or invoices are 90 days late, and collectors are calling.
Founders should have a constant view of their startup’s finances, and what it means.
Even before opening a business, you should be working on your business plan to know how much startup costs are going to be, and how much it is going to take to stay alive and to reach important milestones. For, example, how much is it going to take to fuel your company through to the breakeven point? Make sure you add some financial cushion to this, as it always takes longer and costs more than you think.
Then be sure you are regularly reviewing your finances on an ongoing basis. Depending on the stage of your startup and the size and depth of the team you have, you might need to have a serious review of your finances every month, quarter, and year. As well as having a dashboard for a real-time view on demand.
Then you will certainly want to take a more in-depth look into your financial health before a new financing round or other major events.
Anytime there is a major change in the economy, world, and capital markets, a fresh review is needed to anticipate how this may impact you going forward.
How To Assess Your Startup’s Financial HealthObviously, this is extremely important. In fact, it is probably the most important task a startup founder has. So, how do you do it?
The most obvious is to be constantly monitoring your accounts and reviewing your financial reports. Looking at your capital, expenses, and income.
Your bookkeeper and accountants should be providing you with regular reports and financial documents. Especially around tax time, and ahead of running a fundraising campaign. Including your balance sheet, cash flow statements, and P&L.
At certain times you may need or benefit from outside audits as well. Such as verifying your finances for certain platforms, SEC filings, going public, M&A transactions, and more.
How To Measure Your Startup’s Financial HealthHere are some of the core ways and metrics to look at to evaluate your company’s financial state.
All of them are important. Some are more pressing than others for different scenarios.
Startup Burn RateThis metric reveals how much money your startup is burning through each month. It is how much your expenses are, and what it is currently costing to keep the machine on, and the doors open.
It also specifically reveals how much money you are losing each month. If you are not yet at least breaking even, then it shows how much capital you are bleeding out, and that needs to be paid out each month.
You must know your expenses. You can’t just swipe the company credit card and write checks without limit.
RunwayYour startup’s runway is how many months left your company can survive based on your current spending.
This is one of the most critical metrics for startups, and their potential investors to know.
It reveals how many months they have left before going bankrupt based on their current expenses, and the money they have in the bank.
For example, if you have $100k in the bank and $10k in monthly expenses, you have 10 months of runway left.
This is vital for knowing when you need to begin running a new funding campaign. As well as for investors to assess your strength, and how much they should be investing to keep you going to the next round.
Money In The BankHow much cash does your startup actually have in the bank?
This is one of the most important measures of health for a company. Expenses can be cut, and income can be increased, or cut off at any time. Your bank balance will show how well you are prepared to weather all of this.
It is also worth contrasting this with the liabilities and debt obligations your company owes to get a true idea of your startup’s net worth. That’s another great starting point for how to assess your startup financial health.
Net ProfitHow much net profit is your company bringing in?
Profit margins are a great insight into the financial viability and competitiveness of your company. Gross profit can be a benchmark for investors and lenders to look at, as well as potential acquirers of your company.
However, net profit shows how much real profit is coming into your company. This is money to build up your reserves and expansion capital, improve your overall financial health, and cover emergencies.
Financial Modeling & ForecastingYou can also use financial modeling software to forecast the financial health and performance of your startup.
This can be based on continuing the way things are now, to account for various internal and external changes, and to forecast returns for potential investors when fundraising.
You’ll be including financial forecasts in your pitch deck every time you go out to raise another round of funding for your startup.
ValuationsThere are various reasons to have your company valued. This may be for borrowing and raising equity, licensing, preparing for an IPO, or for a merger or acquisition.
There are also a variety of valuation methods for startups. The most applicable will vary depending on why you are doing it, and who for.
It may include the above metrics, or be based on your product, sales, and the defensibility of your company in the market.
Working out the financials for an established startup is the easy part. The more challenging aspect is how to present financials for a startup with no revenue. If you need more information about how to do that, check out this video I have created.
Tips For Managing Your Startup’s Financial HealthHow can you best manage and improve your company’s financial health now, and along the journey? The first practical step is to know how to assess your startup financial health.
Cut Your Business ExpensesIf you are not in the healthiest position or can benefit from tightening up, one of the first questions will be how can you trim your expenses. That may be optimizing your sales funnel, better marketing, eliminating office space, or layoffs.
Increase Your IncomeIf you can’t reduce your business expenses any further, then the only other option is to increase your income.
There are a variety of ways to do this, from releasing new products, adding new price points and service levels, offering sales and discounts to drive more cash flow, focusing on presales, or offering prepaid discounts for those that pay a year in advance.
Raise Well Before You Need ItRaising more capital before you really need it will help keep your company in good financial health. Those who raised right before COVID lockdowns, or the downturn in capital markets, positioned themselves to survive the tough times, and really grow while others were struggling.
It’s going to be a lot harder to raise when you are desperate for money. Investors and lenders will smell it, and the terms they will offer will be much worse.
Raise When The Market Conditions Are GoodRegardless of your own plans or current financial position, it is wise to take the money when it is available, and the market is healthy. When investors are desperate to deploy capital, they will provide more money, with fewer requirements, the process will be easier, and the terms much better. The reverse is also true.
Review Your Finances RegularlyEven if you hate watching the numbers and the details, it is absolutely vital to keep your eyes on your financial health. If you ignore it, it will not be healthy. The outcome is not likely to be what you are hoping for.
Hire A Great CFOIf this isn’t your strength or passion, then one of your early hires should be a very strong CFO to stay on top of this and manage your finances well. They can keep you in great shape, and free you up to focus on what you love doing the most. You may even offer some equity or hire a fractional CFO to make it more financially viable in the early days of your startup.
Keeping Investing In Your Personal GrowthEven if the financials are your least favorite part of business, you will reap great benefits from constantly investing in, and improving your knowledge of these topics. It will gain you more respect among your team and investors, enable you to really go the distance with your mission, and make that vision a reality. If you don’t, it doesn’t matter how great your product is. If you are bankrupt, you won’t be able to make it or get it out there
SummaryHow do you assess your startup’s financial health?
Understanding your company’s financial health and the situation is vital. It is your most important job as a founder.
There are various metrics and valuation methods that can be involved in this. It really depends on the situation, stage of business, and why you are measuring.
Keeping a pulse on this will help you keep your company alive, enable you to grow intelligently, stay well ahead of your financial needs, and be able to optimize your finances at every step of the way.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post How To Assess Your Startup’s Financial Health appeared first on Alejandro Cremades.
Des Traynor has built a tech startup that empowers businesses to have 20 million conversations with their customers every month, which has also enabled him to invest in dozens of other startup companies.
During his appearance on the Dealmakers Podcast, Traynor talked about the power of blogging, UI and the value of talking to your customers, making internet business personal, raising millions of dollars, and how he evaluates potential startup investments.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBecoming Obsessed With New TechnologyDes Traynor grew up in Dublin, Ireland. It was the 1980s, and a tough time for the country economically.
6 of his brothers ended up emigrating to the US. Traynor spent much of his childhood playing soccer, and being into music. Though it was getting his first computer that really set the trajectory for his life. A Commodore VIC-20.
In fact, it was playing computer games with a friend and tinkering with the computer’s memory that really got him delving into technology. They figured out how to hack games to give themselves more lives, and so they would never run out of ammo.
This passion took him to study computer science and software engineering at university and put him on the path to making it his life’s work.
He even went on to begin working on his Ph.D. Yet, found watching the new technology that was emerging every day so compelling he just had to get involved.
It was a time when Gmail, Google Maps, and other elements of Web 2 were being released. He particularly became attracted to usability in product design and then ultimately product management.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
The Power Of BloggingDes Traynor credits much of his success to his blogging.
He is passionate about storytelling, and appreciates all versions of it, including reading a good amount of fiction books. Being involved in the tech community in online forums, and reading articles by Paul Graham certainly influenced him in making the leap as an entrepreneur as well.
He says that at least half of his career is a result of him writing blog posts, including meeting the CEO for his company. He says that “you really really can’t overstate how important that is as a skill, and how it most directly helped.”
He says that he probably wrote around 93 of the first hundred Intercom blog posts himself, though he is also now working on Intercom’s own product podcast.
It didn’t just attract online traffic either, it turned into live performances of the blog, with events in sizable venues around the world, from Dublin to San Francisco. It was instrumental for crafting their brand and founding story too.
Making Business On The Internet PersonalDes’s first business started off as a software development agency, building things for other people to buy themselves time to work on developing products they found interesting and valuable.
They had built several things. One they really wanted to scale. He saw the need to make interfacing with their customers easy, or they just wouldn’t use it.
So they built a widget to talk to customers inside the product. He became obsessed with the importance of talking to customers.
He had seen how a local coffee shop owner was able to build up their business one customer at a time—something that wasn’t really enabled on the internet at the time. So, they wound up their consulting business and decided to go all in on this widget as its own business, Intercom.
IntercomThe early days of Intercom were much like any startup. Working 16 hours a day, six days a week. Building, shipping, and getting customer feedback.
They did a lot of things that didn’t scale on the way. Like talking to individual customers for long periods of time, and emailing them individually with personal messages and cold pitches.
Today, they are a B2B SaaS business, with five offices, around 900 employees, and over 25,000 customers who have half a billion conversations with their customers every month using their software.
On the way they’ve also raised $241M, partially thanks to sending their CEO out to raise in California, and to head up their go to market plan and marketing with US based talent.
They are working on building a much better world and internet by designing for customers and enabling businesses to benefit from providing dramatically better, and more personalized customer service.
Storytelling is everything which is something that Des and his team were able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Investing In StartupsTraynor has also invested in dozens of other startups himself. Asked about his criteria for investing, he told the Dealmakers Show audience that 80% of the pitches he turns down are due to one of the following.
- They don’t have a good product
- They are not solving a real problem
- It’s not a problem that people care enough to pay for
Listen in to the full podcast episode to find out more, including:
- The types of startup investments he is making
- The future of business on the internet
- Des Traynor’s top advice when launching your own business
Alejandro Cremades · EP 544 Des Traynor On Raising $241M To Connect You With Your CustomersSUBSCRIBE ON:
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How investors review pitch decks before funding startups?
Just like selling your customers, it’s not so much about you, but rather meeting their needs, and wants, and understanding how they think so that you can show them what a great opportunity you are offering.
You don’t get many chances to blow when it comes to pitching startup investors. You certainly may not get a second chance with your most desirable and ideal investors.
Understanding how they review pitch decks, what they are looking for, and what will get you rejected is a big part of the battle when it comes to fundraising for your startup. It doesn’t have to be difficult, yet few entrepreneurs appear to even take a few seconds to consider what their prospective investors are thinking, and how they work.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksPitch Decks & Fundraising For StartupsA pitch deck is one of the most essential tools every startup needs to equip itself with.
Even before thinking about fundraising or going through the process of building out a full business plan, it can be extremely helpful, if not critical, to put together a few slides in a pitch deck.
It will help you think through and crystalize your idea. It will enable you to recruit advisors, mentors, cofounders, and key talent. As well as equipping your team to do their best work, and work efficiently.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
No matter how well you know any potential investors, you are still going to be expected to deliver a good pitch deck. These few slides alone will make or break your access to money, the most important support, and in turn, your mission.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Pitching Live Vs. Sharing Your Pitch DeckWhen you are pitching live, even with your slides on a screen as a backdrop, it is much different from simply sharing your deck with a potential investor, and letting them make their way through it.
Both ways can work. You may well do both with the same investors. Yet, it is important to understand the nuances, and how to optimize for them.
When you are pitching live, you have the ability to read the room and read your audience in real-time. You can see when they are losing interest and tuning out, versus leaning in, are being engaged, and are digesting what you are delivering.
You have the ability to tweak and modify on the fly. To speed through to the points that may be most relevant to your crowd, and to adlib as necessary. You can also save a lot of time for a live Q&A, so that you can convey what they need, and overcome objections easily.
You don’t have these luxuries when just sending your pitch deck and letting investors navigate through it on their own. You’ve got to nail it all the way through.
The Right Way To Send Your Pitch Deck To InvestorsThe first obstacle to getting potential investors is simply to get your pitch deck through, and get it seen, and opened.
There are other articles that dive deeper into this topic specifically. The essence of this is that you need to share a link to your pitch deck hosted online. Do not send your pitch deck as an attachment. Otherwise, you will immediately drastically reduce the chances of your message getting through, or your pitch deck ever even being opened.
After they’ve opened your message, which takes a great blend of art and science in itself, you will need a strong pitch message. Don’t just expect them to open a link or file from a stranger on the internet. Most of us have already trained our kids to be smarter than that.
You need to immediately establish that this pitch is a great fit for them, worth their time to review, and is an opportunity they don’t want to miss out on.
To accomplish this, you may want to include a pitch deck summary. Your pitch message for your pitch deck may also include your latest investor update and links to any recent PR. This will establish your credibility right away, and prove you can execute.
How Investors Review Pitch DecksFirst of all, investors don’t review most pitch decks they get. They are busy. They are inundated with more junk than ever. In many cases, to be efficient with their time, they are just looking for reasons to discard your pitch, and justify their assumption that you are just offering more spam.
Cold pitching can work. Though you will have far more luck in fundraising if you have already gotten an introduction from someone they know and trust, or have spent some time building the relationship in advance.
First Impressions CountWhether it is fair or not is a whole other argument. The bottom line is that, just as in many other things in life, first impressions count. They will make or break your opportunities. This is certainly true of your pitch deck cover slide too.
Don’t overdo the visuals. They won’t cover for a lack of substance later on. Though you do have to nail the right format for your pitch deck cover slide. It has to be great to get investors to swipe to the next slide, instead of relegating you to their spam box.
How Long Do You Have?On average, investors take less than three minutes to review the few pitch decks that they take seriously.
That makes it essential your pitch deck is very brief and speedy, and easy to find the answers they need, and they still have time to act afterward.
Depending on the stage of your startup, you only need 10-20 slides in your pitch deck. Normally 12-16 at the most. Less is more if you want your fundraising campaign to be a success.
Each slide must be very concise, with minimal text. Augmented by quick and easy-to-get visuals where applicable. Don’t forget this aspect when working out how investors review pitch decks.
What Investors Are Looking For When Reviewing Pitch DecksExactly what boxes need to be checked, and at what scale will depend greatly on the stage of your business, and the investors that you are pitching at this round.
For early-stage startups, it is much more about the vision, team, and idea. For later-stage companies, it is about tangible data.
Angels, VCs, family offices, strategists, and private equity firms will all have their own factors they are prioritizing.
Each can be unique too. For some, investing is just about money. For others, it is balancing returns versus risk. For others, it may be feeling good about what they are investing in. Each will also have their own expectations of the returns that will make investing worth their while.
Did You Do Your Homework?Far more than the exact data you have or the spin you put on your business and solution, investors are reviewing pitch decks to see if you even did your homework. If you are serious about this.
Did you bother to research what they want in a pitch deck, and what’s important to them? Did you search to get your hands on a good pitch deck template?
Did you do your market research and validate everything? Did you make sure this is a good fit for them and respects their very valuable and scarce time?
If the answers are no, you are not ready to share your pitch deck.
Can You Focus & Keep It Simple?Startups cannot be successful without the founders being able to focus intently and keep it very simple.
If they cannot, it will derail everything else they are trying to do. They will not be able to execute and actually make things happen.
This will show up in how much content is on each of your slides. It will show up in how you describe your product and its value and benefit. It will be demonstrated in your roadmap, financial forecast, and milestones.
If you are not sure you are nailing it, put it through the grandmother test.
The ProblemOne of the most critical factors for investors is the problem you are basing this business on.
Is it a real problem? One they are already familiar with, or have already validated for them? Is it pressing enough that your prospective customers care enough to pay real money to solve it?
Most startups fail right here. You can tweak just about everything else about your company, but if the problem isn’t viable, then your startup has no foundation to stand on. When understanding how investors review pitch decks, make sure to have the problem clearly outlined.
To make the right impression, you should know how to send a pitch deck to investors the right way. For more information on how to do that, check out this video I have created.
Market SizeIs your problem, customer pool, and their spend big enough?
This is one of the critical pillars of any company. You can only grow as big as your market will support.
Startup investors are often looking for 10x to 100x returns. If you can’t offer the opportunity to easily achieve that, you are probably not a fundable company.
TractionTraction speaks huge amounts about your business and the investment opportunity.
If you have the right traction, this is a no-brainer for investors to throw money into and a lot of it.
If you don’t have it, then you are going to have to fit for the money and crawl your way tooth and nail to getting funded. At least, unless you are a pre-seed startup with a golden idea and team, and strong relationships.
FinancialsHow well have you managed the money you’ve had so far? Is there really a credible and viable plan to multiply their money here?
Team: Can You Stick With It?The team is everything in early-stage startups. Ideas are cheap and plentiful. Great teams are rare.
It takes an enormous amount of grit, tenacity, and mental and emotional fortitude to make it as an entrepreneur. Most people do not have what it takes.
Keep hitting them up, follow up, and break them down to prove you are doing it anyway.
Can You Protect Their Money?You need to show that this is not just commercially viable and potentially profitable, with good unit economics, but that you can minimize their risk too.
What is your moat? How is your position in the market defensible? This is the benefit of doing hard things, with big barriers to entry.
Can You Sell?If you can’t sell them, you can’t sell to customers or other investors in the future.
They will want to know who else is investing to demonstrate this. Securing a strong lead investor early will make it a lot easier to get others to jump on the bandwagon.
SummaryHow investors review pitch decks?
You’ve really only got one shot to crush it when you are sharing a pitch deck with investors remotely. You have to get your deck through. Get it opened. Then make sure you keep them flowing through, so they are not only compelled to act but have time when they reach your last slide.
Understanding how they screen, view, and evaluate pitch decks will be vital to your fundraising success, and your startup’s ability to survive and thrive.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post How Investors Review Pitch Decks From Startups appeared first on Alejandro Cremades.
Eytan Bensoussan has taken on the mission of reinventing financial services for small businesses, and dramatically increasing their survival rates.
On the Dealmakers Show, Bensoussan talked about growing up in a family of small business owners, fintech for small businesses, the art of stubbornness, and how to perfect your fundraising during changing times.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksGrowing Up In A Small BusinessEytan Bensoussan was born and grew up in Montreal, Canada.
Apart from the obvious cold weather, he was raised in a family of small business owners. Including his aunt, uncles, father, and grandfather.
He got to see what entrepreneurship was like from the inside. All of the stress and anxiety that came along with the financials. As well as how his father, who was an engineer, seemed to spend all of this time and mental energy managing the money part of the business, instead of working in his sweet spot of engineering, which came so naturally to him.
Eventually, this would be the seed that would blossom into the thriving business he has built today.
Even during high school, he spent a lot of time carrying around and reading biographies about founders that had built giant businesses, like Bill Gates.
When it came time for university, he sought out learning that would help him invest and build something from the hard sciences. So, he began studying math and biochemistry.
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- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
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The Art Of StubbornnessIn order to make any progress at all, entrepreneurs have to be stubborn. It can be their downfall. Though it takes a lot of stubbornness to grind through the process and years it takes to create a huge success story.
Eytan Bensoussan certainly has this trait. He transitioned into studying law. Which he says provided more analytical and structured thinking. However, he quickly found himself diving from being in the top three percent of his class to being in the bottom 15%. On the verge of quitting, he decided he would rather suffer through it. Ending up graduating within the top 15% of his class.
After college, Eytan found himself working at McKinsey. In similar circumstances, a senior partner sent him a message questioning if the firm was the right fit for him. Again, he sprung into action and met the challenge. Powering through the next couple of years, to eventually leaving on his terms, when he was performing very well in his role.
Fintech & Reinventing BankingDuring his time at McKinsey, Bensoussan enjoyed a lot of access to witness the challenges of finances in business.
He was watching the early stages of the fintech revolution as it started becoming a thing in Berlin, Paris, London, and Tel Aviv.
He didn’t see the same momentum happening in North America. Though he knew it was a trend that would eventually spread.
After watching and waiting for someone else in the banking community to roll out a solution, with no movement in sight, he decided to quit being a consultant, and jump in to make something happen himself.
Recalling his family’s experiences with their own businesses, he decided to tackle this space to the benefit of small business owners, instead of consumer banking.
Netflix For BankingEytan saw that the vast majority of business startups were failing. With 80% of small businesses failing due to cash flow issues. Which he had seen result in some people losing generational wealth in the space of a week.
So, he created NorthOne. What you might call a ‘Netflix for banking’ approach. Effectively providing small businesses with an inside finance department. Especially for those that don’t have the expertise and budget to build one out themselves.
They have already grown to 70 employees, and are seeing an incredible impact in increasing the chances their small business owner customers survive and thrive.
Perfecting Your PitchNorthOne has already raised $90M for their venture. Starting out with securing funding just on their initial concept.
Storytelling is everything which is something that Eytan Benoussan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!However, that doesn’t mean it was always easy. In fact, Eytan says it took getting through 150 turn-downs from investors before getting a single yes.
He says he learned to iterate along the way. Working with a spreadsheet, he would note down the feedback from each pitch, and then tweak and hone his presentation each time.
As the pandemic lockdowns hit, and investors became more selective, he says that he also learned to read the room and adapt on the fly to flip to highlighting the most important facts and data points the particular audience was engaged by. Especially, as the company grew, and investors became more interested in unit economics, revenues, and profit.
Listen in to the full podcast episode to find out more, including:
- Titan’s top advice when launching a business
- How to make business decisions efficiently
- The evolving climate for small business owners
Alejandro Cremades · EP 543 Eytan Bensoussan On Raising $90 Million To Create The Netflix For BankingSUBSCRIBE ON:
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How to think about startup traction? In other words, what’s the best way to think about traction for startup founders?
Traction is one of the most pivotal metrics for startups. Growth is vital for all businesses, no matter what size and stage of maturity. It is even more critical for startups. For survival, especially when it comes to fundraising.
So, how should entrepreneurs think about startup traction? What does it really mean? How do you attain and maintain it?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Is Traction For Startups?By definition, traction is pulling or drawing something along. Such as car tires or tank tracks gripping the ground to pull the vehicle along.
This is very applicable to startups and businesses. In this use case, traction is making progress. Though, sometimes, even often, it takes work. It takes the right tools.
So, traction is growth in your business.
It is one of the key metrics companies, and specifically, startups, are judged and evaluated on.
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So, how do you measure it, and get more of it?
Before you continue reading this post, take a few minutes to check out this video I have created. In it, I have explained in detail how to get traction for your business. You’re sure to find it helpful.
Traction In StartupsThere are only two directions for any company to go. Either up or down. It is impossible just to stay static in business. It’s not possible to simply tread water forever.
Even if you try, another competitor will be swimming past you, and take your customers with them. They will have the advantage of constantly compounding their traction and gaining strength in momentum, attention, and finances.
Regardless of how large your aspirations are for your business, or whether you think you’ll need outside financing right now, your company must always be growing and making progress.
Everything gets harder when your business is stalled or declining. The opposite is true when you have traction and know how to control it. Then the positive results are exponential.
A startup with traction is one which draws the best talent in your field. Everyone wants to work with and be affiliated with a winner. In the reverse, without traction, you’ll likely be losing your best talent.
Customers see the headlines too. Consumers want to align with winning, trending brands too. Not the losers.
Traction is Critical for Attracting FundingTraction is incredibly important when it comes to obtaining investments and in startup fundraising. Investors require traction. They desire and need high-speed growth. Without traction, they see something is wrong. There is far more risk. They won’t be able to get the returns they must have.
It also shows that you haven’t secured product market fit. Or you are not serving your customers well enough. Or your management team is not capable of executing well enough to achieve and maintain growth. None of these things are going to attract investors to participate.
The opposite is true as well. Traction shows that your startup is on the right track. You can achieve things. You may have hit product market fit. You can not just create a commercially viable product, but can also manage growth.
This is a highly attractive indicator of an investment that will be multiplied for angels, VCs, and other investors. This is why you need to think about startup traction.
This also applies to advisors, vendors, partnerships, and more.
How Much Traction Does Your Startup Need?The velocity of traction your startup needs will often depend on why you need and want it.
As a company, it is good to know that your growth is in line with the overall economy, market, and industry benchmarks. Though, this is just a start. The basic level of acceptable performance.
Everyone you engage with will have their own specific requirements or expectations for your rate of traction too. This includes all types of startup investors, being accepted by startup accelerators, and meeting expectations in public markets. That could be 10 percent a month. Or it may be 20 percent to 50 percent week over week in the earliest stages of a startup. It may be far more modest for mature blue chip stocks.
However, in startups, expectations for traction seem to have been speeding up too. Everyone wants big growth, and to be part of a wild success story. Especially when it comes to making money. As well as bragging rights. The world and business are far more global today, with more room to grow, and the ability to grow far faster than ever before. Especially for tech startups.
Ways That Startup Traction Is MeasuredThere is more than one metric, or way to measure and demonstrate startup traction.
Often, once you are gaining great traction in one area, others will naturally rise as well. Not always, especially if you are sacrificing one for the other. Though a rising tide often lifts all boats.
Still, startup success is all about focus. It takes simplicity to make progress, win, sell, and raise money.
With this in mind, pick a metric that you are confident that your startup can perform well on, and keep on driving at a great rate.
This is especially important for creating a winning pitch deck and pitching investors. Though it is also critical for all stages of business. Be sure to pick the metric which is most important for your stage, and what’s next.
Get your team focused on that, and measure it visibly and constantly, in order to keep on driving it up.
These are some of the common ways businesses can measure and demonstrate growth. Go through this checklist that will help you understand how to think about startup traction.
UsersIn startups, customer acquisition and the number of users are frequently a top focus. It’s a popular metric for traction, and a big data point to be used in pitch decks. Especially if you are pre-revenue, or are likely to be acquired for your users, rather than profits.
HeadcountIn recent years employee headcount has often been used as a proxy for traction. It can be an indicator of how much your business is growing. Though it is not always a measure of revenue or profit. A more meaningful measure of business health and profitability may be revenue per employee.
ValuationAlthough experienced entrepreneurs warn newer entrepreneurs not to get overly caught up in valuation. Especially when it comes around to fundraising and paper valuations. It is certainly a volatile metric, which can be subject to emotional markets.
Of course, at some point, a company’s valuation and share price do become important. Especially when you are preparing for an IPO, are public, or are working on M&A deals.
Market ShareMarket share is a valuable data point. It is meaningful in how much of your space you are winning and holding. The percentage you need or which is notable will depend on your type of company and your market. In some spaces you. You may only need 40 percent market to be the market leader in some industries. Or just low single digits to create a multi-billion dollar business in others.
ProfitTraditional business valuation measures real profit. Ultimately, it is what a business is created to do. This might not be a priority for all startup investors. In some phases of the economy, losses are acceptable in exchange for other types of traction. Though, when there are corrections, profitability quickly becomes much more important.
RevenueThe precursor to profit is revenue. Revenue means sales and that customers are willing to pay real money for your product. Which is what differentiates a hobby from a true business.
Sales VolumeBefore revenues and profits are sales volume. How many units are being sold? In terms of pure traction, it may not matter whether you are bringing in $1 to $1M per sale. Though increasing per-customer revenue and profit margin should always be on your radar. These metrics can prove to be critical when you think about startup traction. That’s because the numbers will influence your fundraising success rates.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!How To Gain & Maintain More Startup TractionJoin A Startup AcceleratorA great way to be forced to make progress as an early-stage startup is to join a startup accelerator program. They are structured to push you to make progress and get traction in just a couple of months. Acceptance can also come along with seed funding, and then introductions to more investors on demo day in the end.
However, startup accelerators like Y Combinator are famous for being harder to get into than Harvard. Proving you already have some great traction may be important before you apply.
Growing Yourself As A Business LeaderTo grow a business, especially as you advance to more significant levels for the first time, you must grow yourself as a leader. Don’t be the roadblock holding up the machine, and blocking your own traction.
Invest in consistent learning, and enhance your skills in hiring and fundraising. Leverage the know-how and experience others have as startup advisors and consultants and advisors. Working on your skills as an entrepreneur is a good start when you think about startup traction.
Publish Content, Content, And More ContentCompanies with the most traction are now content companies in some way or another. Whether that is podcasting, blogging, PR, article marketing, or video publishing.
Mergers And AcquisitionsM&A is a powerful method for making big leaps in traction. Use it to acquire the traction of others, or their teams, tech, market share, and branding.
Strategic PartnershipsCreating exclusive or semi-exclusive agreements to sell your services or product, or to license it can help you plug into massive traction almost overnight. As well as building strength and sustainability in your volume of business.
Optimization & AutomationSometimes scaling traction is easily done with a few tweaks to optimize and automate operations.
How can you automate your processes and systems?
It may be tweaks to your website or sales funnels. It could be improving the use of your CRM, and automating follow-up. Or using new software or leveraging others to hack time, and get more done.
Branding Or RebrandingThe brand alone can make all the difference in traction. A hot brand can grow extremely fast. A trusted brand can maintain business volume, and improve its unit economics.
It may be time to invest more in your branding and brand visibility. You may need to pause and rebrand or restructure your brands. Or it might help to acquire or merge with a trending or more trusted brand.
New Products & UpsellsImprove sales, revenues, or profits by releasing new products, working on upsells, and add-on products that grow per customer value. Just don’t abuse or mllk your most loyal customers to death. It could have the opposite of the desired effect.
Sales & MarketingTraction often simply comes down to sales and marketing. Perhaps you haven’t really invested in a professional marketing plan and strategy yet. Or you may just need to scale up and start investing a lot more in your monthly advertising budget.
Resetting Company GoalsWhen did you last pause, evaluate, and recast your goals?
It may be time to upgrade those goals, set higher and more aggressive milestones, and chart new forecasts.
Be sure you are also making these goals and metrics clear and visible to your teams, and have their buy-in. If they don’t know, they are going to be working in the wrong direction, or aiming lower.
SummaryHow should you think about startup traction for your company?
Traction is one of the most vital metrics for startups. In fact, growth is essential for all businesses of all sizes. You grow or die.
As a startup entrepreneur, you must master creating and maintaining traction. As well as being able to demonstrate, and convey it well. This is true for recruiting great employees, advisors, and investors. Customers will notice as well.
Make sure you know how to measure traction for your startup. As well as which are vanity versus truly valuable growth metrics. Plus, how to move the needle, and keep your growth rates up.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post How To Think About Startup Traction appeared first on Alejandro Cremades.
Mike Evans raised $84M for his first startup, before taking it public. He’s now working on a new gender-inclusive venture that is creating jobs at a great scale.
On the Dealmakers Show, Evans talked to us about being hangry, why money is only the sixth most important thing in picking an investor, how to put your board members to work, what to do with yourself when you take your company public for a lot of money, and the benefits of a business with bigger barriers to entry.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksHangry: How Grubhub Was BornMike Evans grew up in Georgia. He was always entrepreneurial. Even starting with his own lawn-mowing business at 13 years old.
With an interest in writing software and robotics, he headed off to MIT to learn to code.
Working at an early online classifieds company that was operated by big newspapers, Mike got his first taste of working in corporate America. There he learned about things like HR, as well as the fact that he didn’t really enjoy working for other people.
At the time, it was really hard to even order a pizza. So, with this frustration, one night after a cold nasty long commute on the bus, he began coding what would become Grubhub.
It began as a hobby. An online guide to which restaurants on the north side of Chicago offered delivery. He would call around, get their menus, and upload them online.
As they started getting some traffic, his cofounder Matt sold a restaurant on advertising with them. The next week Mike decided to take the leap from playing with this on weekends to going full-time with Grubhub.
They started out by bootstrapping for the first three years. In fact, Mike and his wife found themselves $250,000 in debt, including student loans.
Still, he hustled and made it profitable. Within a few months, he was able to pay himself a salary. They grew to $600k in revenues with just five employees before they took any outside investment.
As they took expansion capital, they kept on growing, and through a few rounds and the acquisition of another company, they were obviously able to grow Grubhub into a great success story and prepare for an IPO.
See How I Can Help You With Your Fundraising Efforts
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What To Look For In An InvestorGrubhub ended up raising $84M before it went public. On the advice of a mentor, Mike became very intentional about the investors they brought in.
Storytelling is everything which is something that Mike Evans was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!He was taught that money is only the sixth most important thing to look for in an investor. All investors have cash, but that’s not what makes them great. In fact, for his most recent company, he allowed in investors, even though he could have easily self-funded the entire venture with what he made from Grubhub.
More importantly, he says you should be looking for investors that check the following boxes first.
- They are strategic thinkers
- They have a domain experience
- They have connections to make introductions
- They share your beliefs and values
Mike says that investors ought to be interviewing, questioning, and testing potential investors as much as they are doing the same screening for you.
Structuring Your BoardMike notes that if you have bootstrapped a profitable business, you can just keep on growing it and make a lot of money by yourself. Though, if you want to stretch yourself, then do take on investors and a board of directors who you will have to report to, and can learn from.
When it comes to taking on investors that will join your board, he says that you should be doing it to bring in their expertise, not their money.
In fact, he sees it as a way to put them to work for free. He’ll assign them roles and tasks, and people to mentor. Each of them should bring a different strength to the table. Real experience from having operated their own companies before. He even suggests that you stay away from consultants and investment bankers that do not have their own operational experience.
What To Do After You Take Your Company Public For A Lot Of MoneyThe first trade of their stock at IPO sold for almost 4x what they expected. It was a very profitable exit.
Mike says that it completely changed his life.
Instead of rushing out to buy his own private island, he actually got on his bicycle and rode across the country from Virginia to Oregon. He took a tent on the back of his bike and didn’t even stay in hotels. What he describes as a good thing for himself, and in stark contrast to flying around on private jets and eating steak provided by investment bankers.
Then he stayed home after his daughter was born to spend the first two years of her life with her.
However, his doctor ordered him back to starting businesses. He told him that 36 was far too young to retire. That he would just feel useless and get depressed, become an alcoholic, or something.
FixerMike decided he wanted to do something more meaningful with his next business. Instead of blockchain, AI, or big data, he wanted to do something more tangible.
So, he created Fixer. A premium handyperson service that is training people to get into trades is creating many jobs and is making it easy for homeowners to get the help they need, right from their app.
Listen in to the full podcast episode to find out more, including:
- Going through the IPO process
- The vision of Fixer
- Mike Evan’s top advice when starting a business
Alejandro Cremades · EP 542 Mike Evans On Building GrubHub In A $7 Billion BusinessSUBSCRIBE ON:
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What is the difference between accredited investors vs. non-accredited investors when it comes to fundraising for your startup?
This can still be a very confusing part of the process of fundraising for startup entrepreneurs. Yet, it is a critical differentiation. One which not only means different processes, but also has serious, and very expensive consequences if you get it wrong.
It is always wise to seek the customized advice of a professional fundraising consultant with legal experience, and a law firm that can protect you.
Startup founders must understand the difference between these types of prospective investors, where they fit into their financial stack, the pros and cons of each, and how to go about raising from them.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhy It’s Vital For Startup Entrepreneurs To Understand Accredited Vs. Non Accredited InvestorsThese are two types of individual investors and entities which may invest in startups.
The more optionality that startups have, the more flexibility, and better terms that can be negotiated, the lower the risk of running out of money, and the more optimized the financial stack can be.
Every source of financing can have its place in a startup’s journey. This includes loans and credit fasciitis, business credit cards, non-accredited investors, accredited investors, grants and competitions, venture capital, convertible debt, private equity, and strategic corporate capital, as well as the public markets through stock exchanges.
More than access and finding the right fit at the right time, or alternatives when traditional funding is tight, there are legal and financial regulations around raising money and selling stock in your company.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
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If you are not aware of these differences and qualifications, and the proper rules and laws around soliciting and accepting funds from these different types of investors, it can become a huge problem.
You may end up with criminal or civil investigations and lawsuits. Have the SEC, FTC, or other agencies breathing down your neck unnecessarily, or face many fines. If the financial penalties don’t break your company, then the bad PR certainly can on its own.
Not to mention no one is going to want to work with you. So, be informed, have great counsel to advise you and act on your behalf, and raise and grow your company legally and swiftly with the best capitalization arrangements.
Before you read ahead on how to understand investors, you may need more information about the different types of investors for startups. Check out this video I have created that will provide all the details you need.
What Is An Accredited Investor?When understanding the differences between accredited investors vs. non-accredited investors, know that both individuals and legal entities can be accredited or unaccredited investors.
IndividualsFinancial criteria for individuals offer two options for qualifying:
- Having a net worth of more than $1M, not counting any personal residence (either individually, or with a spouse or partner)
- Having an income of more than $200k in each of the previous two years, and reasonable expectations of the same for the current year, or $300k with a spouse or partner
Professionals also qualify if they hold certain securities licenses, are executives or officers of a company selling securities, are a client of a qualifying family office, or the knowledgeable employee of a private fund.
EntitiesAccording to the SEC website, the following are the criteria for entities to qualify as accredited investors.
- Entities owning more than $5M in investments
- 501c3, employee benefit plans, family offices and clients, LLCs, trusts, partnerships, and corporations with over $5M in assets
- An entity where all equity owners are accredited investors
- Registered or exempt investment advisors, and broker-dealers
- Financial companies, including banks, insurance companies, investment companies, business development companies, and saving and loan associations.
What Are the Advantages Of Being An Accredited Investor?Being an accredited investor certainly opens up more investment opportunities for an individual or entity.
Many investment opportunities and participation in many assets are restricted only to accredited investors.
One main reason for that is the costs, paperwork, and risk of letting in nonaccredited investors. As well as the amount they can invest. Many companies simply don’t want financial and legal liability. Or don’t see the additional labor and management as being profitable.
So, as an accredited investor, you’ll have a more diversified menu of investment options, can invest more in them, and also have fewer restrictions on when you can exit, and who to.
Being accredited especially opens the doors to investing in startups, private equity funds, and participating in other private investments.
Why Is Accredited Investor Status A Thing?Why is there a need for differentiation and laws regulating this status for investors and financial transactions?
Of course, there are financial revenues for regulating agencies. Though this is primarily about protecting consumers from losing their money. Especially, being fooled into poor investments, or investing in things that they really do not understand.
More so that they do not lose all of their life savings and retirement money. Which would then leave the government and other taxpayers on the hook to take care of them.
So, it protects investors. Yet, also protects companies accepting their capital by ensuring their investors are savvy enough, less likely to complain they didn’t understand it, and won’t sue because they put in their last dime.
Similarly, in the middle, it protects broker-dealers, fund managers, and other conduits of this money and the securities they are selling participation in.
How To Know If Your Investors Are AccreditedIn some cases, it has been acceptable to have investors and buyers sign affidavits self-certifying that they are accredited investors.
It also makes a lot of sense to verify this for your own legal and financial protection. There are third-party platforms that offer certification.
You can also get an idea, from the other investments they have been a part of recently.
Do not assume.
Fundraising From Non Accredited InvestorsThe big difference between accredited investors vs. non-accredited investors for startup fundraising is who you can solicit for investments.
In most cases and circumstances, you cannot publicly solicit and market to non-accredited investors to buy anything which may appear as securities in your company. If you do, you can expect a cease and desist order from the SEC. Which may then live online forever, tarnishing your online reputation.
Obviously, public markets are an exception to this. Public companies sell and trade their shares with non-accredited investors all day, every day.
Since the JOBS Act, non-accredited investors have been able to find more investment opportunities, like startups. While enabling more startups to raise from a far larger pool of potential investors.
There are huge benefits to including non-accredited investors in your financial stack. There are far more of them, for a start. Everyone is chasing accredited investors. Which makes it very competitive. Yet, the vast majority of the population is nowhere near accredited investor status.
Be Open to Accepted Funding from Non-Accredited InvestorsYou may also really want to give non-accredited investors access to this great opportunity which they are finding hard to participate in elsewhere.
Through certain SEC regulations and filings, you may solicit unaccredited investors. The SEC approves third-party investment platforms for this purpose. These crowdfunding platforms do a lot of the heavy lifting to enable this.
However, some startups can find this time-consuming and financially prohibitive. It is not uncommon for lawyers to charge six figures to help with these filings. Then you have all of the other marketing, promotion, and pitching to budget for and handle.
You are also limited to $1M per cycle and have to provide substantial amounts of disclosures and education to meet regulations.
Donation-based crowdfunding is another option. In either case, this can help with visibility, credibility, and customer engagement.
The other option can be to stick with your personal network, friends, and family, and get them to ask you about investing with you. You can accept their money.
Raising Money From Accredited InvestorsGiven a choice between accredited investors vs. non-accredited investors, accredited investors are the most common target for startups.
This may be partially just because it is the way it is normally done. Though, there are also the cost, time, and liability considerations that are involved in the decision.
Perhaps the most significant, which makes accredited investors the go-to for startups, is that accredited investors have a lot more money to invest at a time and may be a lot less management intensive.
This can include:
- Angel investors
- Venture capital firms
- Startup accelerators
- Family offices
- Private equity funds
- Corporate strategies
So, what are the steps to raising equity funding from accredited investors?
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Know Your Target MarketThe first step to raising any financing, whether debt or equity or from accredited or non-accredited investors, is to get clarity on who your target prospects will be. This will change with each round of funding too.
Get to know your investor profile and avatar. Who are they? What is it they want? Where are they looking for it? What matters in the process for them? How can you check the boxes, and streamline this process, while making it a no-brainer for them to participate?
Begin making a list of potential investors and channels.
Create Your Pitch Deck & Fundraising MaterialsNow that you know who your audience of prospective investors are, you can create a well-curated pitch deck that meets their needs and wants.
Begin with a proven pitch deck template. Get in the right data points, in a visually appealing, simple, and compelling way.
Create your supporting materials for your fundraising campaign. This can include all of the additional documentation that will go into your virtual data room for depth and due diligence. As well as your marketing and PR content to raise your visibility and credibility through this period, and drive better business performance. Keep the differences between accredited investors vs. non-accredited investors in mind when crafting the deck.
Make ConnectionsConnections and relationships are a very important part of fundraising. This can include further shortlisting your target investors, and connecting with them in some way, on or offline. As well as generally getting out there and networking in the right circles. Plus getting introductions from those who specifically know your ideal investors, and fundraising consultants who know who the best investors for you are, and have relationships with them.
Get Busy PitchingNow get out there and take action. You can submit your pitch deck to investment firms and startup accelerators online. You can get on TV shows, and into live pitching events. As well as conducting outbound pitching and messaging to your ideal investors.
This process will often involve several investor meetings, term sheets, and due diligence before you get through the closing and put money in the bank.
Follow UpInvestor updates are very powerful for nurturing potential investors, as well as for maximizing your current ones. Leverage their expertise, get feedback, keep them engaged, show your progress and how well you are using their money, and keep them in the loop about how they can help with your next round of fundraising.
SummaryWhat is the difference between accredited vs. non-accredited investors for your startup?
There is a difference in qualification. Both for accredited individual investors, and entities.
Then there is the difference between the processes and rules for raising from each type of potential investor, the rules regarding the selling of their stocks afterward, and how you can and cannot solicit investments.
Understanding these differences and the rules can make all the difference in your survival as a startup, and the ability to thrive. Know where each fits into your financing, then work the steps to engaging them and successfully pitching and bringing them on board.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Accredited Investors Vs. Non Accredited Investors appeared first on Alejandro Cremades.
Shelby Clark raised over half a billion dollars for his first company. Now he has switched to the other side of the table to invest in new emerging medicines and as a startup investor.
On the Dealmakers Podcast, Clark walked us through getting into startups, creating the Airbnb for cars, building marketplace businesses, his role in the sharing economy, what he’s doing for the LGBTQ community with a resort in Costa Rica, and what he’s investing in from the other side of the table now.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFrom Mobile Lemonade Stands To Harvard Business SchoolShelby Clark was born in suburban Denver. Colorado.
As far back as when he was just five years old, he was flexing his entrepreneurial spirit. Not only did he have a lemonade stand with a friend, but when sales were slow, they would get out there, door to door, selling their product from a wagon.
After his father passed away, Shelby says that he became very intrigued with technology and the body and if there could be large-scale innovations in healthcare that would help a lot of people. That led him to take on a challenging college major in biomedical engineering.
His first job out of college landed him in management consulting. It was a path to learning more about the business side of things, to complement what he had learned about medicine and technology already.
He found management consulting beneficial in learning how to quickly familiarize himself with a completely new space. He was thrown into airline maintenance, t-shirt manufacturing, and oil exploration.
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Intense Traveling & Long HoursOf course, this isn’t always as glamorous of a job as it is made out to be. It means an intense amount of travel and very long hours. He also didn’t feel that he was really making the world a better place. When you go to save a company, and your recommendations lead to 1,000 people losing their jobs, it can be challenging. Even if you are having to chop off an arm to save the rest of the body.
Two years into this, he picked a six-month sabbatical to volunteer with a nonprofit. That was peer to peer microfinance lending platform Kiva. He found it very inspiring and was impressed with the impact that could be created through the consumer internet, and how you could address social issues at scale with technology.
After this experience, he was even more excited about starting a company of his own. Though he didn’t yet have the idea. Nor felt he had the money and partners for the journey. He saw going to HBS for an MBA program as a way to put himself in an environment that would be fertile for incubating something.
While their learning is limited, he says that the network helped open up a lot of doors of opportunity for him.
Building Marketplace BusinessesOne winter, finding himself cycling through the sleet and snow of Boston to get to a rental car Shelby Clark had the epiphany for his first real company.
He passed so many snow-covered cars over those two miles that hadn’t been used in weeks, that he instantly saw where the sharing economy and technology he worked with to connect people before could meet this gap in the market.
This became the genesis for Turo. Effectively Airbnb for cars. A sharing service that enables car owners to rent out their vehicles to others who need to get around.
Turo is a marketplace business. Not always the easiest type of company to build. Founders always face the chicken-and-egg dilemma of matching supply and demand.
At first, they tried to copy Zipcar’s model of rolling out in small local markets first. Then they did two things differently, which really helped them take off. One was hiring a CEO with marketplace experience from eBay. The second was just launching nationwide. It took time to reach critical mass, but their investors were supportive and provided the additional funds needed to keep going.
Today, they are not only across the US, but have gone international, and recently launched in Australia as well.
Eventually, Shelby says that he had to make the decision to step back and hand over the reins. He thrived as a founder, though eventually, at the prompting of his board came to the realization that as a larger company, they needed other management that was experienced at managing this stage of the business.
Startup FundraisingTuro is still thriving and has raised over $500M on their journey so far.
Storytelling is everything which is something that Shelby Clark was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Still, Shelby says that didn’t come easy at the beginning. Even being in Boston, the investor ecosystem hadn’t yet figured out consumer internet.
No one cared about the surveys and data he had to present. So, to derisk the venture and prove his concept, he printed 10,000 postcards and stood out on the street corner to talk to people. Once he had 40 people that said they would sign up for the service, he was able to convince investors to make a bet on him.
For others in this position, he says to ask, “what are the experiments that you can do to reduce risk in the overall like concept or idea that you’re working on?”
Investing In WellnessAfter Turo, Shelby tried a benefits startup that would support the freelance community and sharing economy. Employers just wouldn’t get on board with covering benefits, and that venture didn’t work out as planned.
It was only after taking a trip out to Bali for a yoga retreat and trying his first psilocybin journey that he found the inspiration and clarity for his latest venture.
Today, he invests in wellness startups and mental health, including psychedelic therapies. All from Costa Rica, where he has a retreat focused on the LBGTQ community.
Listen in to the full podcast episode to find out more, including:
- Psychedelic therapies
- Recognizing the right moment to step back from your company as a founder
- What Shelby is investing in now
Alejandro Cremades · EP 541 Shelby Clark On Building Turo Into A $1 Billion BusinessSUBSCRIBE ON:
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What are the important things to look for in an investment contract? What should entrepreneurs be looking at when reviewing investment contracts?
If you are launching a startup or are working on a growing business, you will eventually be looking to take on some form of capital.
Loans and their paperwork may be more commonly understood by the average individual. You know to look at typical factors such as finance charges, repayment amounts, and repayment dates. As well as prepayment penalties, and clauses that may come into effect in a default.
Investment contracts involving equity investors in your company can be substantially different. There can be many factors and clauses entrepreneurs have not had the experience of reviewing and evaluating.
Here are some of the key elements of an investment contract to pay special attention to.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Is An Investment Contract?An investment contract is a legal document governing the investment into a company.
Whenever you accept an investment of capital into your company, you want to have everything in writing. This applies regardless of whether it is a VC firm, an angel investor, or just friends and family that you have known your entire life.
This will save an immense amount of headaches, stress, confusion, legal battles, and financial loss.
An investment contract should lay out every aspect of the investment and agreement for both sides. Both the investor and the company receiving the funds. The more detailed, the better.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
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It is always wise to have a lawyer who specializes in investing and corporate law review your contracts. Even then, always read the fine print. Never be discouraged from asking questions, and ask them again until you are clear on what things mean.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The BasicsThe basics of any legal contract or agreement should include who the parties to the agreement are, and how they can be contacted.
In the case of an investor agreement, this will also include the amount being invested. What is being given of value in exchange for the investment, and the terms?
Be sure to check even these basics for accuracy. Otherwise, they can cost you dearly. And, that’s one of the first important things to look for in an investment contract.
Due DiligenceStartup investors are expected to conduct due diligence before completing an investment in a startup. Many first-time entrepreneurs are not prepared or expecting this.
Often the agreement will begin with an LOI (Letter of Intent), or term sheet. Which lays out the proposed initial terms of an investment. This document also lays out what needs to happen before the transaction is completed, what it is based upon, and includes drafting and signing the final documents or investor contract.
Investors have a responsibility to conduct due diligence and do their homework on a company before transferring any money. VCs, for example, are simply investing on behalf of many other investors whose money they have pooled together. If the investment does not perform as hoped, then you can bet those end investors will look for ways to hold the money manager accountable. Such as if they failed to do their due diligence.
What’s Included?Your investment contract or preliminary documents should lay out what will be included in the due diligence phase of the transaction.
What will the investor need and be allowed to verify, and how, before they close the deal?
Will it include auditing all of your financials? Reviewing your bank account balance? Verifying your users are real? Speaking with your customers and vendors? Background checks on founders and key team members? Reviewing all of your legal agreements and contracts with employees, lenders, vendors, and other investors?
You should also have a time frame for how long this due diligence period will last.
What’s Excluded?You may also be able to negotiate exclusions from due diligence. It is not very well known. Perhaps not even common. Yet, some founders have included this in their investor agreements. Helping to streamline the funding process, eliminating potential causes for delay, and avoiding anything that could derail the deal at the last minute.
Talk to your lawyers and fundraising advisors about anything that you may want to exclude from this process. It’s another one of the important things to look for in an investment contract.
When Will The Transaction Close & Funds Be Received?While there are certainly some exceptions, it often takes a lot longer to close a round of funding than entrepreneurs estimate.
There can be a huge difference between getting a yes from an investor, them providing an LOI, and then getting through signing the closing paperwork, and seeing funds cleared in the bank.
As a new entrepreneur, with a young start, a very short runway, and looming payroll, even being a few weeks off can really destroy your company, or wind up with investors renegotiating because they know you have no choice.
Be clear about when the final documents should be signed. Then when the money should be clear in your account.
Even if you are using crowdfunding platforms, there can be a significant delay between when your campaign is funded, and you get the money.
ValuationHow much is your company being valued in this transaction?
There can be both pre-money valuations, and post-money valuations. That is how much your company is worth before and after the investment is made.
You may want to elaborate on the justification for the valuation, and what could change that during the process, and before the funding comes through.
EscrowsWhat, if any, money might be held back in escrow or withholdings?
Will any of the funds be spaced out over time? Or will they all be sent at once?
Are any funds set aside in escrow for pending taxes or other uncertainties?
Will there be requirements for shares to be put into a pool for employee options or other reasons?
Are there any reasons or situations in which the investor can claw back any of the funds?
Structure Of The InvestmentHow is this investment being structured?
Is this a lump sum cash injection? Or will it be provided in pieces over time, based upon certain terms?
Is this an equity investment? Meaning that you will be giving stock and shares in your company in exchange for the money?
If so, which types or classifications of shares are you promising to provide? What comes along with them?
If this is a debt investment, what are the terms? How much will the finance charges be? How much is the interest, and how is that calculated? Will there be penalties for prepayment? Be careful here. As commercial loans can have prepayment calculations that are pages long.
How much will repayments be? When will they be due? Will there be any security you need to provide as collateral? Will these be specific assets that are liened? Or will you have to sign a personal guarantee, and put your own personal assets and future income on the line?
RightsWhat are the rights of each party to this investment contract?
What rights will you have? What rights will they have? How might this impact your operations and future fundraising and financing efforts?
Board SeatsWill your investors be awarded seats on your board as a right of their investment? If so, how many?
Who will be put in these board seats? The individual who is this involved in your business can be far more important than the brand name of any VC firm or institution. How well do you know this person? How well have you vetted them and built a relationship with them in advance?
What happens if something happens to that person? Who gets their seat?
How many board seats will the founders retain in return?
Voting RightsWhat voting rights will investors be granted according to this investment contract?
What dictates those votes, and the power of those voting rights in the future? Who will ultimately have the controlling votes? Make sure you are thinking ahead through future rounds of funding and dilution.
Control & Decision MakingAs a part of the above, who has the control, and has the ultimate say in making decisions about the business?
This can include big decisions, like taking on debt, allowing equity investors in the future, permitting the sale of assets or the company, and binding the company in partnerships.
It may also touch on things like the ability to hire and fire executive management, including you and your other cofounders. It can mean daily operational decisions, from layoffs to product design choices, pricing, M&A, and more. Be sure you know, and know who you are letting have this control in your company. Consider this to be one of the most important things to look for in an investment contract.
Ability To Cancel The Agreement Before ClosingWhat rights are there to cancel this investment contract before it is finalized?
What outs are there for the investors? What outs do you have? What are the specifics? How much notice will be given? What, if any, are the penalties or liabilities if one party cancels? Who will cover the costs of money expended on the process up until then?
Might there even be rights to claw back funds or cancel the agreement after closing under certain circumstances? What are those specifics?
Drawing up the investment contract is only one of the aspects of fundraising. Successful entrepreneurs must learn how to build relationships with investors for future pitching and series rounds. If you’re ready for more information about how to do that, check out this video I have created.
Liquidation PreferencesThis is by far one of the most important clauses in an investment contract.
Liquidation preferences spell out who gets paid what, in what order, and any minimums involved in a liquidation event or exit.
If your investors get paid out their capital before anyone else gets a dollar, and they must receive a minimum of 4x the capital they put in, you will need to sell for a lot to see a penny yourself. It is quite possible for entrepreneurs to sell their company for a billion dollars and get nothing due to this clause.
What Happens When Things Go WrongOne of the main purposes of having an investment contract in writing is not only to make it binding, but to spell out what happens in a default, disagreement, or when other things go wrong.
This includes if there are ‘bad actors’. If misinformation is provided, etc.
It will also include remedies and their boundaries. For example, which jurisdiction’s laws will be applied to managing these situations? If mediation will be mandatory. As well as who will pay the legal fees in a dispute.
Quick Contract Negotiation Strategy Tips* Get more options and multiple term sheets on the table to pick from * Always use a third-party buffer, i.e. fundraising consultant or lawyer * Be prepared to give and take, so everyone feels they won something
SummaryInvestment contracts are some of the most important and impactful documents you will encounter and deal with as you finance your startup. And, you should know what are the most important things to look for in an investment contract.
It is vital to understand the basics and most important lines and clauses for yourself. As well as getting professional help and representation to navigate and negotiate them.
The more informed you are, the better the deal you can drive, and the outlook for your company.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
The post Important Things To Look For In An Investment Contract appeared first on Alejandro Cremades.
Gurjeet Singh funded, scaled, and sold his first startup. Now he has raised $37M to make IVF treatment more customer focused, reliable, and attainable for those eager to have children.
On the Dealmakers Show Singh shared his fundraising experiences, how he has grown two successful companies, the biggest mistake that startups are making, and why you should start with marketing first. Plus, how his latest venture is changing the science of fertility treatment.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksFalling Into EntrepreneurshipGurjeet Singh was originally born in India, where his father worked with the government. As a single child Gurjeet spent much of his childhood reading science fiction books.
However, as soon as he got a computer, he was hooked. He learned to program, make his own games, and went into engineering.
After spending a year working for Texas Instruments, Gurjeet headed to the US to study and obtain his Masters, and Ph.D. at Stanford.
At Stanford he took a combined program in scientific computing and computation math. He found himself peering into the future working on early GPUs and more early technology that we may use every day now.
Working in an old area of math, and building new research software, Gurjeet Singh stumbled into his first company, right out of Stanford.
One early user was a cancer researcher who used the software to identify a new type of breast cancer. The write ups and publications it got into got the attention of DARPA (Defense Advanced Research Projects Agency).
DARPA offered to fund their research and encouraged them to start a company around it. DARPA helped connect them to a variety of customers and government agencies.
It was used in intelligence, and even helped a German pharma company discover the key to getting their drug through trials and helping patients. It was a $1M a year contract.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Ultimately, their business branched into machine learning enterprise applications for vertices in pharma, for hospitals, and banking.
In addition to Citibank, they helped HSBC in fighting money laundering. Using their software at scale to identify new forms of financial fraud, and appease regulators.
Startup FundraisingIn the end Gurjeet’s first company ended up raising a total of around $100M in funding, including their grant from DARPA, and VCs.
Storytelling is everything which is something that Gurjeet Singh was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!In the beginning he says they struggled at marketing their raise. As well as explaining the technology they were working on. Once they found an investor who really understood it, they were able to bank their seed round. Followed by a Series A with Khosla Ventures.
By the time it came to their Series B and C rounds, they were growing, selling, and the math just made sense to investors.
For his most recent company, they’ve already raised around $37M in debt and equity funding. This time they set out to find investors who were really in alignment with their problem, the strategy, and go to market plan. This time around they secured Jazz and Root Ventures as investors.
In fact, it was in the process of beginning a new fundraising round which ultimately got the attention of Symphony, who ended up acquiring Singh’s first company.
He stayed on to help with the integration, but was clear that he did not want to hang around as an employee after the sale.
Fertility TechSomeone in his wife’s office had been going through IVF treatment. They had gone through an astounding six cycles of treatments, at $45,000 each. Not only was the treatment not successful after all of that, they ended up in bankruptcy.
At this time Gurjeet’s now cofounder happened to be visiting the US. He shared this story with him. A physician himself, his partner invited him out to India to see the inside of a fertility clinic in action.
He went, and was astonished at what he found. It was all very much like a throwback to his high school science lab. No automation. No futuristic machines.
Returning to the US to check out more IVF clinics, he found the same procedures and equipment in use. Not surprisingly, with the same level of success rates as in third world countries.
Oma RoboticsGurjeet and his cofounder set about to bring the world of fertility treatment into the future.
Together they started Oma Robotics. Which applies AI and machine learning to increase IVF success rates and make it more accessible to people.
Today, they have fertility clinics across the US, in Atlanta, St. Louis, New York City, and Santa Barbara.
Listen in to the full podcast episode to find out more, including:
- How Oma Robotics is helping improve the success rates of IVF
- Gurjeet Singh’s top advice when starting a business of your own
- The biggest mistake startups are making today
- Why you should start by building your marketing funnel
Alejandro Cremades · EP 540 Gurjeet Singh On Raising $37M To Identify The Best Sperm With AI And Improve IVF OutcomesSUBSCRIBE ON:
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Phil Libin has already launched and sold several startups. His latest venture is mmhmm where he is working with his team to take virtual meetings to another level.
On the Dealmakers Show Libin shared his journey of creating things, selling his first company for $26M, fundraising, and bringing efficiency to making new products. Plus, his insight on the main thing to unlocking team productivity, remote work, and the future of work.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksCreating Things That You Wish ExistedPhil Libin was born in the old Soviet Union. Then immigrated to the US with his family when he was just seven years old.
On arriving in New York he was immediately impressed with all of the array of different types of cars on the streets. As well as the selection at the supermarkets, and discovering things like marshmallows.
Growing up in the Bronx in the 80s meant he spent a lot of time indoors, and away from the gangs. His parents bought him an Atari, and modem, and he soon learned to program. Which even helped him bring in some money from computer side hustles as a kid
He told the Dealmakers Podcast audience that he never really set out to intentionally build a massive empire or make mountains of money. He just wanted to make cool stuff, and give the world things that he wished existed.
He also said that he just had a hard time keeping down a ‘real job’. He was just always doing his own hustles, consulting, and programming.
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Creating A Better Place To WorkPhil Libin went to Boston for college. While there, he and some of his fellow students found themselves working at one of the first big dot com companies. Where they were inventing a lot of the things which began powering the web.
He says that there were a lot of great people there. Then there were some that weren’t. They were just dumbfounded at how some of these not nice, and lazy people were able to make it through the hiring process, and ended up there alongside them.
So, he and two of his friends decided that they would make their own company. They would only hire nice, competent people. They struck out without even really knowing what their company would be working on, except it would be based on their programming skills and a team of better people.
They each put in $100, for a grand total of $300 in startup capital to seed Engine 5. It ended up being very successful. Resulting in a $26M acquisition just minutes before the dot com crash.
A big lesson he learned here was the need to create real products. They had still been essentially trading their time for money. Working 18 hours a day, seven days a week, for two years straight. Not much of a work life balance. So, they were happy to sell when the moment arose.
Phil’s second startup was focused on cyber security for government agencies. It was also acquired. As was his third company, Evernote.
Evernote was born out of the desire of he and his cofounders to create a product that they would use themselves. It was recently announced that Evernote will be acquired by Bending Spoons, which also recently appeared on the Dealmakers Podcast.
Building Something Bigger Than YourselfLibin rolled together the lessons from his previous companies to build something even greater with Evernote. A company that would grow bigger, and live longer than the founders.
To this end, he always saw his job as CEO, as being to find a better CEO to take over, and continue to the company. If he didn’t, his mission of creating a 100 year startup would have failed.
After nine years as CEO, and growing the team to 450, with hundreds of millions of users, he found that new CEO. Then stepped up to being Executive Chairman. Before long, he realized that it was just better for the company for him to completely step away and allow new talent to take over the journey.
Next Phil moved over to the other side of the table as an investor with General Catalyst. There he spent two years taking pitches from entrepreneurs, and watching investors evaluate them. What really stood out to him from this period when it comes to successfully pitching is the importance of being crisp and clear in presenting and explaining things.
All TurtlesAll Turtles is Phil Libin’s product studio which is designed to be more efficient in developing products and working with creators than he sees in Silicon Valley’s broken model.
They are spinning out successes like Spot, Carrot Fertility, and Sora Union.
As well as mmhmm, a video app for making video communications more clear and efficient. This was born from a need to unlock team productivity, and improve the dynamics of in person meetings.
For mmhmm they have already raised $140 million from the likes of Sequoia Capital. Softbank Vision fund, and GSV ventures to name a few.
They are putting an end to boring, wasteful meetings. Both in person, and over Zoom. Then when you do get together in person, he says you can spend that time really interacting, eating together, walking together, and doing team building activities.
Perhaps most impactful of all, Phil says that he is working towards a future in which we can choose to work in high trust places, with great companies. A future in which we work distributedly, without having to commute, and we no longer have to compromise or worry about work life balance, it’s just life.
Storytelling is everything which is something that Phil Libin was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- Business models
- Making difficult decisions
- Investor relations
- The future of work
- Time machines and top advice when launching a business
Alejandro Cremades · EP 539 Phil Libin On Building Evernote To 200M Users And Now Raising $140M For Virtual MeetingsSUBSCRIBE ON:
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Who are the top service providers for startups you absolutely need? Startup businesses require many different services as they go from ideation to launch, scaling, and through an exit. Some things may be done through team members who are on staff. Many others are best done by utilizing existing expert services.
As you start out on this venture, grow it, and then prepare to move on, there are many vendors and suppliers you will need, as well as a variety of services that may be more efficiently and effectively handled by outside experts.
Let’s take a look at some of these needs, and who some of the top service providers are in this space for startups.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBanking For StartupsBanking is one of the first needs startup businesses have. You need to be able to make payments and track your expenses for tax purposes. You need to be able to receive money from customers and have somewhere for investors to fund you.
Most banks will let any newly formed company open a business account as long as they have a tax ID number. Though not all are really designed with startups in mind, or to meet their needs for flexibility. Especially in the early days when the volume of transactions and balances can change so dramatically.
Silicon Valley Bank (SVB) is probably the best-known bank for startups. Brex specializes in corporate cards, though also offers special online tools for startups. Like tracking your burn rate and runway. While not a bank itself, Mercury offers banking services and boasts 100,000 startup customers.
Business CreditAs you get started, grow your business, seek the best ways to enable and track spending across your teams, and find flexibility in cash flow, and working capital, there can be value found in a variety of credit options, outside of equity raising and large scale venture debt facilities.
Depending on your stage of business, and track record of sales, this may include various business credit cards, lines of credit, specific asset financing, working capital loans, merchant cash advances, and factoring.
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Paypal is big in this space. Capital One can also help those just starting out with basic business cards, and online banking. The SBA provides a menu of loan programs through approved direct lenders. You’re also going to need to look into channels for fundraising.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Business FormationIt is important to quickly formalize your business entity. You will need this to open your business bank account, get paid, avoid extra taxes, to minimize liability, and establish credibility.
True startups will typically incorporate as a C Corp., which is the entity preferred by larger startup investors. Some small businesses may begin with other entities meant for small businesses and may be able to convert them later.
It is possible to incorporate your business online with your state in a few minutes and very inexpensively in most cases. This is not for everyone. Having a good startup lawyer can obviously help ensure you get it right, think through future liabilities and opportunities and get the right language in the details.
LegalZoom is probably the most common hybrid solution for those that want some support, but not the high cost of a big law firm. Whichever route you take, you usually get what you pay for. It’s one of the top service providers for startups you need to engage.
Pitch DecksPitch decks are perhaps the most crucial tool and asset that startup entrepreneurs will have created.
They are not only essential for fundraising, but will help you think through and plan your business venture, inform your team, recruit the best talent and advisors, and keep everyone focused on what’s most important.
You can create your own pitch deck. If you do this at the pre-seed stage, or at any time, then be sure you take advantage of a great, proven pitch deck template to streamline the process and get it right.
Of course, the better the help you can get with this, the better your deck, and the more effective and profitable it will be.
You can choose to pay a lot of money for pitch deck creation services. Sketch Deck might run you up to $4,000. Other San Francisco pitch deck agencies may easily quote you $40k or more.
The hybrid option is to use a proven pitch deck template, then outsource the copywriting and graphic design to expert freelancers. Platforms like Upwork can help you connect with the best on-demand talent for this.
Communication & Team CollaborationEffective communication and collaboration between your teams and team members are vital for efficiency, speed, growth, profitability, and staying competitive.
There are many tools, apps, and software solutions pitched in this space, including those like slack. However, it does not need to be complicated, expensive, or a distraction, and an extra step in onboarding and communicating.
One of the easiest and most affordable is using Google’s suite of services. Including Gmail, Google Docs, and Drive for hosting your virtual data room, and their Slides for presenting your pitch deck.
CRMsIf you are going to build a business, you need a CRM. You need to be able to create lead lists, assemble a database of your customers, document interactions, and streamline and systemize follow-up.
There are countless CRM software options out there. Most essentially do the same things. The key to success here is picking something which is easy to use, so your staff actually uses it. As well as software that is fast to get started with, and can scale with you. You do not want to have to switch CRMs later. This can be very time-consuming, costly, and a real point of frustration. If you need to switch, the sooner, the better.
Integration is key here. Pick a CRM that will easily integrate with your email, phone, documents, website and apps, and other software.
Most new startups and small businesses may find Salesforce too complex, with too many options. Though they may want all its functionality and options once they do get very large.
For starting out, Close.io is a very simple, easy-to-use, and implementable choice. You’ll want to consider it when evaluating top service providers for startups.
Email Marketing ServicesEmail is still one of the most important channels for startups. Having an effective email marketing service is vital.
Again, the key features to look at and base your decision on here include, ease of integration with other software and tools, cost-effectiveness, the right-sized solution with the ability to scale with you, and ease of use.
Most email services do the same things. There may be one or two which offer an extra feature, but most are not very different, except in visual style, and how you use them.
ConstantContact, Get Response, and Hubspot are some of the most common. Yet, Mailchimp is still one of the easiest to use, boasts some of the most integrations, and will do most of the tasks that the majority of startups and small businesses need.
Startup FundraisingFundraising is one of the most important parts of a startup that founders will need help with.
There are many ways to do it. A great pitch deck will be instrumental to this, even if you just plan to wing it and run out there pitching everyone you can.
There are now many crowdfunding platforms that may be an option, depending on your type of venture, the type of capital you need, and the investors you want to reach. There are donation-based, equity-crowdfunding, and debt-based platforms to pick from. As well as more niche options.
Founders who are serious about raising capital for their startups, and want to run an efficient process will also leverage the best fundraising consultants and advisors. They can help you prepare, get vital and powerful introductions, negotiate the best terms, and help you get across the finish line, to money in the bank. Check out AlejandroCremades.com for your fundraising needs.
Startup AcceleratorsStartup accelerators can help with seed capital, introductions to investors, and really get your startup focused and moving fast. They can also add a lot of credibility, which is why you need to add them to your list of the top service providers for startups.
Just remember, they can also be difficult to get into. It is great validation if you can. Though be careful of burning precious time.
The best startup accelerator by far appears to be Y Combinator. Which is notoriously harder to get into than Harvard.
Other top accelerators to check out include Google, Techstars, 500 Startups, Plug And Play, and Founders Factory.
M&AGreat startup ventures culminate in mergers and acquisitions deals.
Some may end up going public. Though M&A can offer many more options to founders. Often with more generous valuations.
The time to get help with your M&A is not when you absolutely must sell your company. It is well before this moment. You can add a lot more value, position for the best exit, and achieve the best outcome with an M&A strategy you are working on in advance.
Then along with your M&A advisory, you can attract the best acquirers, negotiate the optimal terms, and set yourself up for success through the process and afterward.
Check out Panthera Advisors for leveraging 40 years of experience in M&A to enable your company to achieve the best possible outcome. You can’t go wrong when you have top service providers for startups like them in your corner.
Using third-party service providers can help you economize on your business operations. This can be crucial when you’re trying to save every dollar. For more cost-cutting tops for startups, check out this video I have created.
Documents & FormsStartup entrepreneurs will soon find that they need a whole library of new forms and documents.
This can range from HR forms to legal documents like NDAs, to operating agreements, and more.
Some of these may be best created by your legal team. At some stage, your business will need to lean on your legal counsel to protect you across many of these documents and forms.
However, there are also many free or low-cost ways to grab effective templates. You may find some fillable DIY legal forms on websites like LegalZoom, Law Depot, and others. Though, they are not always as simple to use as they are made out to be.
The SBA has some templates that may be worth checking out. Though finding forms and documents specifically designed for startups can be especially beneficial.
Check out alejandrocremades.com/business-templates for a variety of these forms, from hiring to business plans, and more.
Startup LawyersPopular law firms for startups include:
- Fenwick
- Wilson Sonsini
- Gunderson Dettmer Stough
- Orrick
- Herrington & Sutcliffe
- Perkins Coie
- Kirkland & Ellis
Other Service Providers Your Startup Will NeedOther services you may need to find solutions for include:
- Graphic design
- Websites
- Real estate
- Marketing plans
- Accountants
- HR
SummaryAs a startup, there will be many services you need. Scouting around for the top service providers for startups should be high on your list of priorities. As you move from exploring and validating your idea to formalizing a business, launching, scaling, funding, and exiting, you will have many needs.
Some of these needs will be temporary or occasional. Others you will need to plug in for the rest of the life of your company.
Just as picking the best quality talent will help your startup succeed and win your space, the better service providers you invest in using will also upgrade your company, and elevate its potential.
Having the wisdom to know where to save, and where to invest in the best is what will make or break your venture.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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How venture capital investors make money?
Understanding how VCs operate and make their money is important for startup entrepreneurs. When it comes to fundraising and pitching investors, this is like understanding your customers. A good grasp on how they function will enable you to better position your company to attract capital, and position your venture to secure investments from the best VCs, on the best possible terms.
So how do venture capitalists work? How do they make their money? How does this impact the investment decisions they make? How might these factors differ from other sources of financing for startups?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Are Venture Capital Investors?VCs are investment firms that manage capital and investments for other investors.
While what we see as traditional venture capital firms today are perhaps most commonly affiliated with Silicon Valley, we have seen them branch out internationally, with a presence overseas, and similar local entities around the globe. NYC, London, Israel, and other popular tech hubs have seen this ecosystem develop dramatically over recent years.
Venture Capital companies themselves raise money in the form of different funds. These funds often have a timeline of seven to ten years. During this, they invest and hope they generate good returns. While managing their investments.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
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These firms invest the capital they are entrusted with in alternative investments. In this case, startup companies. Which they hope will grow dramatically over the course of the fund’s life cycle.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Popular VC FirmsWell-known venture capital firms include:
- Sequoia Capital
- Kleiner Perkins
- Bessemer
- Andressen Horowitz
- Insight Partners
- Tiger Global Management
- Lightspeed Venture Partners
- Google Ventures
- Khosla Ventures
- General Catalyst
- Founders Fund
- Accel
- Benchmark Capital
How Venture Capital Investors Make Money?LPs & GPsLimited Partners are those who invest their money into venture capital funds. General Partners are those who invest and manage that money on behalf of their LPs.
In venture capital, LPs are often also large institutions or investors. Including pension funds, sovereign funds, family offices, etc.
LPs have limited liability. They are only exposed to financial losses if GPs choose investments poorly, or do not manage them well.
Fees & SplitsTypically LPs are paid out 70% to 80% of the gains made from VC investments. The company retains the other 20% to 30%. GPs also usually collect annual management fees, which may run from 2% to 3% of the capital in a given fund.
Investors in VC funds are hoping for strong double-digit returns. Growth investments that offset other lower risk, lower yield investments.
VC firms must deliver strong performance to retain those funds and to entice LPs into investing in future funds. Especially as this landscape has given birth to many more competitors vying for the same capital.
Lots Of Bets, Few Big WinsStartup failure rates are extremely high. At least 9 out of 10 new business attempts fail in the first few years. Most do not even make it 12 months.
This means that the majority of companies that venture capital investors put their money into will go bust. Even though they may be very selective in the companies they provide funding to.
Imagine if they split a fund into 10 equal investments, one must return at least 10x to help the fund break even at maturity.
In order to deliver 100% return over the life of the fund, they must find some huge winners, without outsized success.
What VCs Do All DayWith the above in mind, you’d think that VCs would spend the vast bulk of their time selecting new investments. That’s not the case, according to HBR, which says they spend just 5% of their time on this task.
In fact, they reportedly spend the most time (25%) serving as directors and monitors of the companies that they invest in. As well as spending another 15% of their time acting as consultants.
With this in mind, it appears that managing and nurturing the investments they make is even more important than the ventures they choose to financially back.
How VCs Evaluate StartupsHow do venture capital investors pick their investments? That’s the first thing to understand before you figure out how venture capital investors make money.
Popular VCs can easily attract 1,000-plus pitches each week. They are bombarded by funding requests from all types of entrepreneurs and companies all over the world.
In fact, a whole new industry has formed just to support this. Including fundraising consultants, pitch deck design agencies, startup lawyers, and more.
In addition to receiving inbound pitch decks, and attending events where founders are pitching their ventures, VCs are also certainly on the lookout for fast-growing companies on the rise. However, the human element is still a major influencer here. Introductions, and who you know are as important as the fundamentals and data on a startup.
What is most important in investment will vary by the stage of the startup an investor is putting their money into.
With early-stage startups, investors may have very little to go on besides the resume and grit of the founders, and the fundamentals of the market they are engaging in.
Traction, and proving that hyper growth is possible, with acceptable unit economics, is also clearly vital in order for VCs to achieve the returns they promise their LPs.
So, having the best team in the space, great traction, and a very large market, with a profitable business model are all boxes your startup needs to check off.
In Later-Stage StartupsIn later-stage startups, the data and numbers become much more important. Including revenues and profit margins.
The location has certainly been a factor in the past too. While it may be less of an issue now, it has traditionally been easier to raise from VCs you are close in proximity to, than those in other regions or continents.
Of course, VCs are human too. Data and AI aren’t perfect yet, either. Meaning that they can make mistakes by drawing the wrong conclusions from data and patterns, and just by falling into trends. Just as Sequoia lost everything on its bet in FTX and Softbank lost hugely on WeWork.
VC PayoutsThe biggest paydays for VC investors are from exits. They may make and take money from profits and dividends as shareholders in companies they invest in. In some cases, they may be cashed out by investors who follow them.
Most commonly, the big paydays come through IPOs, mergers, and acquisitions. They need those big windfalls.
That means once you accept venture capital money into your startup, you are setting your company on a course for an exit. Much of the direction and decisions made in the following months and years are going to be targeted toward driving up valuation, bringing in new rounds of capital, and securing an exit. Often through being acquired. That’s one of the strategies for how venture capital investors make money.
Pick Your Investors WiselyWith the above in mind, it is extremely important for startups to select their investors wisely.
There may certainly be times when it seems that you need to take any money available, at any cost, on any terms.
This can certainly cost you later. Not only in interest or finance charges but in the mission and what you wanted to do for the world, as well as your slice of the pie when the company is sold.
In addition to giving up equity in your company, you will normally be giving up board seats and some decision-making control.
Evaluate potential investors carefully on their track records, and by talking to others about their experience with them. How have they treated other founders? Do they share your values, beliefs, and vision? Do they support their startups during tough times? Or are they fast to take over?
While reading about how VCs make money, you’ll also want to know more about how venture capital works. Check out this video, where I explain in detail how it’s done.
How Other Startup Funding WorksOf course, VC firms are just one type of investor in the startup ecosystem. There are other options to include in your financial stack. How are they different?
Angel GroupsInstead of being mostly backed by big institutions, angel groups are more commonly made up of individual angel investors who band together to make investments in startups.
They may invest at earlier stages, with smaller amounts of capital. They make money in similar ways. They help their members diversify more broadly, lower risk, and increase upside potential. While wielding more power to make their investments a success.
Individual angel investors are high-net-worth individuals who invest their own capital into startups. Normally smaller amounts in the earliest stages of a new venture.
Startup AcceleratorsStartup accelerators can provide seed capital. As well as mentorship and structure for focusing and making swift progress over a few months. After which, the program culminates in a demo day, where founders pitch their companies to a new round of investors.
Great accelerators can help force progress, make introductions, and give startups more credibility.
Convertible NotesConvertible notes are a hybrid form of investment between equity capital and debt financing. They are normally used in the early stages of a startup when the odds of success and size of success are unclear.
This type of funding begins as a loan. Which can then be converted into equity at a later point, should the investor-lender wish.
Loans For StartupsThere is a wide variety of credit options available to businesses.
This can include business credit cards, business lines of credit, and more. There are secured and unsecured options. Including asset-based lending. For example, for real estate or equipment financing.
There are SBA loans for various situations that are made available through approved intermediary lenders.
The upside of debt financing for startups is that it does not require them to give up shares and control in their business. The downside is the impact on their balance sheet, repayments, and interest, which can put a strain on young companies.
Factoring loans, like merchant cash advances, enable companies to take advances on future income. Then repay creditors as their income comes in.
GrantsGrants can be an attractive form of non-dilutive capital for startups. There are various types of grants. They can be available at the state, federal, and local levels. Normally, this money does not have to be repaid. It is effectively free capital, provided you use it properly.
Receiving grants and other award money can also be great for your startup’s resume and pitch deck.
SummaryUnderstanding how venture capital investors and other sources of funds that provide cash to startups is vital for founders.
This helps you get where investors are coming from, their needs and responsibilities, and how they view pitches and pitch decks.
In turn, it gives some insight into how you can expect investors to act after you’ve brought them into your company.
Informed startup entrepreneurs will understand the pros and cons of various types of funding that they can add to their capital stack, and where it best fits in. As well as what to look for in the best funding sources. Take the time to understand how venture capital investors make money.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Court Lorenzini is a true serial entrepreneur. With several successful exits under his belt, including building one company with a market cap of over $11B, he has certainly created an impressive portfolio of startups.
On the Dealmakers Show, Lorenzini talked about growing up in the bay area, how to validate your startup ideas, and how long you should stay with your startup. Plus, strategies for gaining early credibility and pushing growth, and the power of knowing your future revenues
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksBeing Born Into The Bay AreaCourt Lorenzini had the amazing experience of being born in Silicon Valley.
His father may be one of the original founders of Silicon Valley. An angel investor and venture capitalist.
The group he was a partner of would get together at each other’s homes each month. They would host a dinner for the others, and then over drinks and dessert, would have an entrepreneur come in and pitch them.
That meant that as a child, twice a year, he would get to sit in and listen to the pitches, the following debate about the investment opportunity. By the time he was in high school, he had been a part of dozens of pitches and valuations by VCs.
His curiosity and ambition to advance his career took him to study engineering at Duke, then at Stanford and Berkeley.
After graduating, Lorenzini had the chance to move to Switzerland and work there. An experience that he still counts as one of the greatest of his life.
On returning from Europe, he joined Cisco. Still, a relatively young company that had recently gone public. During the time he was there managing software development, they saw sales grow from $200M to $4.5B, in just four years. Making them one of the fastest-growing companies in history.
It was a place where he felt he could learn about management, leadership, hiring, and going fast.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Book a Call
Building Your Portfolio Of StartupsCourt says that he had always aspired to starting his own company. It was when he ran back into a friend from college who had been working at Microsoft, and they began talking about what was next that they decided to team up and start something together.
He moved up to Seattle to get to work on it and still lives there in the Northwest today.
Court’s first startup was what he describes as one of the very first eCommerce companies. Launched right around the time Jeff Bezos began doing his thing with Amazon.
After selling this first company, he spent some time on the other side of the table at a venture capital fund. In addition to valuing companies, he also jumped in to save some of those needing help. He realized that he really loved being an operator.
His next company was Docusign. Which came about from acquiring the IP and name from another business. It clearly turned out to be a huge success. Not only going public but at one point reaching a market cap of the north of $60B.
Among the factors that made it so successful was being able to get cash from its customers upfront. So they had cash flow. Having a very low churn rate meant a high long-term customer value. Which made it possible to raise a lot of funding over many rounds, and still have predictable revenues.
Landing Microsoft As A Customer & Starting DocuSignThey also landed Microsoft as an early customer. Providing great credibility for pitching and selling to other customers. Among those was the National Association of Realtors. Which plugged in the technology as a white-labeled product to their over two million members. That provided ongoing growth.
Still, even having grown that company to such a huge valuation, which now has around 8,000 employees, Court says that he is really most proud of the corporate culture, which has led the company to be ranked as one of the best places to work.
His third company focused on licensing IP. Which he says turned out to be a good business. Though perhaps not as famous as Docusign.
The fourth startup was definitely more of a learning experience than a huge win. Even though the company was growing at 50% a month, their reliance on one huge customer ended up finishing them off. Within just three months of that customer finding a cheaper alternative, they were out of business.
Lorenzini told the Dealmakers audience that according to his calculations, the optimal amount of time for a founder to stay with a startup is five years.
In turn, this allows entrepreneurs to build perhaps five startups over their careers. A portfolio if you will. Like from an investment perspective, it greatly increases the odds of overall success, one of those being a big outcome.
He has applied this to his own ventures. Now embarking on his fifth venture.
Founder NexusCourt Lorenzini loves working with entrepreneurs, and at the early stages of companies. Over the years of investing, he has found that the majority of failures all come back to the founding team.
So, his latest venture is focused on helping founders connect, more efficiently and with purpose, for more effective teams. No matter if this is right at the beginning, or a few years in when someone else needs to be added to the executive team.
Storytelling is everything which is something that Court Lorenzini was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How to qualify your business ideas before you start
- The benefits of greater visibility into your income streams
- More lessons Court has learned through starting and scaling five business
Alejandro Cremades · EP 538 Court Lorenzini On Building Docusign Into An $11 Billion Business By Simplifying eSignaturesSUBSCRIBE ON:
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Chris Maurice has built a disruptive fintech serving the people of Africa. A startup that has already raised close to $60M as it strives to make peer-to-peer payments even more affordable for everyone.
On the Dealmakers Podcast, Maurice shared his experience building a company with an all-distributed workforce, fundraising through your Series B round, the future of crypto, his favorite cryptocurrencies, and more.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksDiscovering EntrepreneurshipChris Maurice was born and grew up in New Orleans, Louisiana. Before starting his business, he had barely been on a plane four times and really didn’t travel to many places you couldn’t get to in a car.
He describes his father, grandfather, and great-grandfather as all being quite entrepreneurial. A trait that first seemed to come to light in fifth grade, when began selling pokemon cards online. A side hustle that even helped him pay his way through college. In hindsight, he says he was probably 10 years too early getting into it. Those cards have become so much more valuable now.
When it came time for college, Chris ventured off to Alabama to attend Auburn University. While he was there, Auburn began a major in entrepreneurship, and some student competitions and incubators. He said that they added the vital encouragement and support needed to foster that entrepreneurial spirit.
Venturing Into New Spaces & PlacesChris Maurice was introduced to bitcoin by his friend and now cofounder Justin. He finally convinced him it was worth exploring.
Together they tried several things that did not work. Then they finally struck on the idea for Yellow Card, which they brought up through Auburn’s accelerator.
The real genesis of today’s company began when they met a Nigerian guy in a Wells Fargo. He was trying to send money back home to his family. The bank charged him $90, to send just $200 to his family.
They talked to him about bitcoin. Yet, what would his mother in Africa do with cryptocurrency? The infrastructure wasn’t there for her to use it to pay her bills with it.
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So he began researching and trying to learn more about Nigeria, Africa, and the situation there. Even running an ad online to find people to talk to over there. He met someone, who invited him out there.
He convinced him to get his passport and take the first overseas flight of his life. Which he did, just four days after graduating. On a one-way ticket. He put all of his money into this trip. Meaning he either had to make this business work. Or he’d be stuck over there.
He found that they didn’t need another Western Union, Moneygram, or Transferwise. He saw the need as being able to have an on-and-off ramp to access and take out crypto. To be able to buy and sell cryptocurrency.
Today, Yellow Card is the largest crypto exchange in Africa.
Their app is available in 16 countries on the continent. Allowing individuals to load cash, buy currency, and then withdraw it.
Building A Remote WorkforceYellow Card is another great example of today’s generation of leading companies that are winning with fully distributed workforces.
They launched in June 2019. Just months before COVID lockdowns meant having a remote workforce was really the only option. Even if it was already the best option.
Yellow Card now already has a team of 200, spread across 21 countries. Including Poland, the US, and the UK. He says that they do have offices available for them, but he doesn’t like going to an office, and won’t force anyone else to either.
They plan to continue to find the best talent in the world, no matter where they are and hire them.
Startup FundraisingThrough Series B, Yellow Card has now raised $57M. Of course, trying to raise capital from Africa wasn’t necessarily easy compared to being in NYC or Silicon Valley. Especially with COVID lockdowns going on too.
Storytelling is everything which is something that Chris Maurice was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Chris says that they found no help from all the time and effort they spent out there pitching investors. He soon realized that he was also spending more time trying to raise than actually building the business.
Instead, he switched his focus to just growing the company. They built it in a sustainable and scalable way. Once VCs saw their user growth and revenues, they couldn’t ignore them anymore. They came knocking instead.
In fact, some of the top advice for launching a business today is to just focus on building a good product and getting it into the market.
He sees one of the biggest dangers to companies out there today as simply waiting too long to launch their product and get to market. Even those that have already raised big money. Saying that, if your product is already ‘perfect’ by the time you launch, you’ve probably taken far too long. By this time, you may not be in a good financial position anymore.
Listen in to the full podcast episode to find out more, including:
- Which crypto Chris Maurice says he wishes he could go back in time and buy more of
- Helping to establish and craft regulation instead of hiding from it
- What will help crypto keep growing as the winter thaws
Alejandro Cremades · EP 537 Chris Maurice On Raising $57 Million To Help You Make Instant And Cheap Cross-Border PaymentsSUBSCRIBE ON:
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Eric Satz is a serial entrepreneur who sold one of his companies for $560M. His latest venture, Alto, is empowering individuals to invest in alternative assets using tax-advantaged retirement dollars, and has already raised $70M in funding, most recently through a $40M Series B round.
On the Dealmakers Podcast, Satz shared the young hustles that carried him into entrepreneurship, how he went from Wall Street investment banker to coffee shop owner, and the three main ingredients for successful exits. Plus, his experience in investing, building a fully remote company, and the advantages of self-directed IRAs.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksYoung HustlesEric Satz was born in Cleveland, Ohio. His father was in the service, and his mother was studying to become a dietician.
During his early years, they moved to Anchorage, Alaska, and eventually to Miami, Florida. Today, he and his latest venture are based out of Nashville, Tennessee.
During high school he found that he had a lot of freedom and autonomy. That gave him a great headstart when he went away to Amherst College in New England. He had already experienced doing a lot on his own, compared to his fellow classmates who were just then getting out on their own and learning to manage their own schedules.
Even in high school, Satz’s first job was really an entrepreneurial adventure of its own. Selling frozen lemonade from a van he drove around Miami, he would get 60% of the money. The more he sold, the more he made. So he learned to optimize his route, identifying the most profitable areas, where he could make the most money in the shortest period of time.
When he arrived at college, he took over the newspaper distribution business for the NY Times and Boston Globe. Again, flexing those early entrepreneurial muscles.
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The Ingredients For A Successful OutcomeAfter college, Eric Satz became an investment banker in NYC. Then made the big transition to starting his first real business venture, a coffee shop.
Before Starbucks was what it is today, Eric loved coffee. He’d be at the local coffee bar twice a day. It was a shop run by three guys from Seattle.
Eventually they asked him for his insights on their finances, and invited him out to their facilities on the West Coast. There they convinced him to take the leap of faith, quit his job, and start his own coffee place in New York.
Within 18 months, it closed. But he learned a lot in the process, including the importance of location in retail. As well as that you learn a lot more from failure than if you get lucky right out of the gate.
He says that if you are going to dive into entrepreneurship, then you need to embrace the lifestyle. Which means a whole lot of ups, downs, unexpected twists and turns, and stress.
He points out that most of those overnight success stories you see in the news and magazines are the 1% exceptions to the rule. From many episodes of the Dealmakers Podcast, we also know that many of those ‘overnight’ success stories were 10 years in the making.
Eric says that you need to have a purpose, and be mission driven. Adding that, “If you don’t have that, I don’t think it’s going to work out really well.”
Fortunately, his next startup venture, Currenex, turned out to be far more successful. He and his co-founders struck on the idea of creating the first online currency exchange business. That company was ultimately acquired for more than $560M.
When it comes to achieving a successful outcome, Satz says the ingredients are:
- Being aware of and adapting to changing circumstances
- Having the perseverance to make it through hard times
- Recognizing when opportunity is staring you in the face
- Having the right people in the right seats
In fact, his top advice for launching a business is all about the team. He says that “Getting the people rightmeans you’re going to get the company right. Better people make better companies.” A part of getting that right is learning to hire slowly and to fire fast.
When it comes to building teams, Eric Satz chose to create his most recent company as a fully remote operation. He told the Dealmakers audience, “I don’t believe being in the same room every single day is required.” Though, teams meet every quarter, and the whole company gets together twice a year. When they do, they focus on team-building activities. Whether that is dinner, lunches, canoeing or kayaking on the river, or axe throwing.
After Currenex, Eric’s next business venture was Plumgood Food, an online, home grocery delivery business he founded with his wife, Kate. There he learned another great lesson about being able to adapt to the changing environment and economy, or not.
We’ve recently seen many similar businesses soaring in valuation, and raising big rounds. Plumgood was pre-2008. They built it up to a $5M business. Then Lehman Brothers collapsed, people got laid off, and people couldn’t afford that luxury anymore. He wound that business down.
Later, as he was investing with his firm Tennessee Community Ventures, he ran into the problem that launched his most recent company, Alto. Satz wanted to use his IRA to invest in a private business alongside the fund. However, the process was anything but easy. And not just that, it was difficult to find a custodian willing to file the investment for him. It was at this moment that he realized the inequity so many investors face in seeking to diversify their portfolios.
Alto is changing that by enabling individuals to invest in a more diverse range of assets, including private equity, real estate, and venture capital, with their retirement accounts. They do this by streamlining the self-directed IRA process and partnering with some of the biggest alternative investment platforms in the country, so that everyone has the opportunity to build a truly diversified retirement portfolio.
Storytelling is everything which is something that Eric Satz was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!Listen in to the full podcast episode to find out more, including:
- How to do more with your IRA and 401k
- How Alto is helping 30,000 others like you to expand their investments
Alejandro Cremades · EP 536 Eric Satz On Raising $70 Million To Help Americans Invest Better For RetirementSUBSCRIBE ON:
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How to control startup burn rate? How can you get control of and optimize your startup burn rate?
Burn rate is one of the most fundamental metrics in startups. It will make or break your venture.
In fact, burn rate, and running out of money are still not only really why startups fail, but consistently the biggest risk.
Understanding your burn rate is vital. As is knowing how investors view it, versus just from your perspective. You must get the pros and cons of high burn rates. Plus, how to control yours, and cut it back when the need arises.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksWhat Is Startup Burn Rate?Burn rate is one of the most commonly used metrics in startups. Put simply; it is how much cash your company is burning.
There are technically two variations of burn rate. Gross burn, and net burn rate.
The gross burn rate is how much cash your company is spending each month. Net burn is how much negative cash flow your company is bleeding each month. Which is calculated by subtracting your expenses from any positive revenue coming in.
Both are important. Knowing how much is being lost each month to stay in business is vital to know. Overall expenses show how you are spending, and what liabilities there are in the business.
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Startup Burn Rate & RunwayA startup’s burn rate is used to calculate its ‘runway’.
Runway refers to how many months a company can continue to keep operating with the money it currently has in the bank.
So, if your burn rate is $100k a month, and you have $1M in the bank, you have 10 months of runway left.
It is critical that startups constantly keep an eye on their runway. It is vital for beginning new fundraising campaigns in time. As well as being sure to raise enough to last until another round can be closed.
When you are out there pitching, you can be sure that inquiring about your runway will be among the most common questions that startup investors will have.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!When A High Burn Rate Is Acceptable To InvestorsWhile it may be counterintuitive to traditional business and mathematical sense, recent years have seen high burn rates being trendy with Silicon Valley investors.
Growth is essential in business, especially for startups. More spending can certainly help spur more growth. That may include spending more on marketing, hiring, the development of new products, and expanding into new markets.
In some cases, a high burn rate in the short term may seem essential in order to make things work and to survive. Such as achieving the minimum required mass to make a platform or marketplace startup work. As can be beating the competition. Either by getting bigger than them faster, or starving them of business.
A high upfront burn rate may also be acceptable if there is exceptionally high long-term customer value. Along with very high customer retention rates. Just be very careful that the value and returns are really there.
Startup Burn Rates & FundraisingWhether you know how to control a startup burn rate is one of the things potential investors want to know. That’s when you are out there fundraising and pitching.
While your burn rate may barely be mentioned in your pitch deck, investors will ask. You need to be prepared to answer well and explain.
Your burn rate can be used to justify a raise. Either because you need more money from current investors in an extension round, or because it is low and you are in a healthy and profitable position.
Your burn rate and the runway are also relevant to how much you need to raise to get to another round. If you forecast you will be burning $1M a month over the next year, then you will likely be raising at least $12M to $36M just to get through.
Pay close attention to your runway, and stay ahead of it. It can take a lot longer to get investors onboard and get a round closed than you might think. If you get down to just a month or two of payroll left in the bank, then investors can demand just about any terms they want.
If you don’t take it, you’ll be out of business. In contrast, if you have a long runway, you will be negotiating from a position of strength and will be able to demand better terms.
When Startups Need To Reduce Their Burn RateWhile there may be moments when a high burn rate is acceptable, there are also certainly going to be times when a startup urgently needs to reduce its burn rate.
Perhaps the most obvious time when expenses and burn rate need to be cut are when there is a crisis or other events, unexpected cut forecasts, and impact income. That may be pandemic lockdowns like COVID, economic recessions and depressions, or disruptive competition and changes in customer behavior and demand.
Lasting through to closing another round of funding is another of these moments. This is tough. This is a period when you need your company to be growing faster and more consistently than ever. Though, if you don’t make it through due diligence and to getting that money in the bank, you are out of business.
Periods of financial crisis, credit droughts, and when capital markets tighten up can make this even more pressing. You may find you have to survive a lot longer without new cash coming in than you anticipated. Knowing how to control startup burn rate can be a huge asset.
How To Control Your Startup’s Burn Rate1. Effective Financial ModelingUse financial modeling and forecasting to accurately anticipate your expenses and spending needs. Especially in relation to the goals and milestones you want to achieve.
Know what it is going to take to hit those objectives, and avoid being sidetracked and spending wildly on things that aren’t directly taking you there.
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Create BudgetsCreate a budget to plan your spending. Be sure to work with your board and department heads to allocate reasonable budgets to each area of your operations. Be sure everyone is on board with them, knows how much they have to work with and not, and what they are expected to achieve with that budget.
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Be Disciplined In Your SpendingBe sure that you rigorously stick to the budgets that you’ve created. If you don’t, your burn rate will get out of control fast. Everything can go downhill quickly from there.
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Be Sure You’ve Built In A Financial CushionOne thing you will quickly learn in business, if you haven’t already, is that everything takes longer than you think, and costs more than you think.
Avoid letting this financially ruin you by building a cushion and budget for this in advance. This will help ensure that you don’t go over your budget and lose control of your burn rate when the unexpected happens. Because you can count on that happening. So, take the time to understand how to control startup burn rate.
How To Minimize Your Startup’s Burn RateWhen it is time to cut your burn rate, there are a variety of measures a startup can take to get it under control.
This includes the following.
- Make LayoffsLaying off employees is one of the most obvious ways to cut costs and your burn rate in a big way, and quickly.
Some have laid off thousands, or even half of their teams, in order to get their burn rate back under control.
It can be one of the toughest things that you’ll have to do as a founder. Though if you look at it as saving the business and mission, and put it in the proper perspective, it will be much easier.
Great and loyal talent is hard to find and even harder to keep. So make cuts wisely. Rather than continue to demoralize the remaining team members, it is better to make big cuts once, and then keep moving forward with the right size team.
One way to do this is to consolidate positions. For example, you may be able to consolidate your SEO, copywriting, PR, and marketing strategy, all into one role for a while.
- Optimize Your MarketingDo not cut marketing in times like these. It will just speed up your demise. Rather optimize it, and focus on what is going to produce the best results and highest ROI.
You may need to start from scratch with a new plan and hire new people. Before you do, be sure to ask your current team what’s wrong, and what could be done better.
Knowing how to run the business economically is only one of the strategies for ensuring success for your company. If you’re ready for more information about why startups succeed, check out this video I have created.
- Optimize For ConversionsMarketing and gaining traffic, or even leads, is one thing. That’s the easy part. Getting actual sales is a different thing.
Be sure to optimize for conversions. Even before launching new marketing and advertising campaigns. Optimize your website, PR, and sales process. Question everything. Don’t just copy others. Be sure the data supports your plan.
For example, TikTok, Facebook, and Google Ads may not be producing any real sales. Nor may you be demanding prospects go through demos before they buy from you. They may not be right for you.
Test before you scale new things.
- Kick The Office To The CurbYou don’t need an office. You do not need an office with in-house employees that waste most of their day on everything else but work and are incentivized to fill seats or clock hours, rather than being their most productive, and doing their best work.
Even Twitter recently announced it was closing its offices in Seattle and had stopped paying rent on its HQ in San Francisco.
If it’s possible to build a $40B plus business without physical offices to cage your team in, then they are just a vanity luxury that you cannot afford.
Instead, when you do get your team members together, focus on team building and bonding experiences. Whether that is archery, kayaking, hiking, glamping, or eating together.
In this process, you will eliminate all associated in-house employee costs and liability.
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Optimize InsuranceValues of things change fast. So do the appetites of different insurers. Review your coverages and potential discounts, and shop around for better deals.
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Cancel All SubscriptionsThere is a great chance that both your company and your founding team as individuals have numerous subscriptions you rarely use. Including a variety of software subscriptions. It may be easiest to cancel them all. Then evaluate the solutions that offer integrated answers to your real needs and daily usage.
Working out how to control startup burn rate gets you halfway there.
SummaryBurn rate is one of the most important metrics in startups. Be sure you know what your burn rate is, how investors view it, and when to burn more or get your spending under control fast.
Fortunately, there are many ways to control your burn rate. As well as to reduce your burn to improve your company’s financial health, and stay ahead of the curve.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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How to use startup capital well? How do you best use your startup capital?
Whether you are pitching investors, and are working on your Use Of Funds slide for a new round now, or you just put a new round of funding in the bank, knowing the best use of the money is vital to survival and success.
As a founder, you must know where investors expect you to spend, and not. As well as where you can best invest the capital you have, regardless of the amount. In addition to the costs of failing to use it wisely.
So, what should you raise for?
FREE DOWNLOADThe Ultimate Guide To Pitch DecksNo Matter What Type, Who From & How Much: It’s What You Do With ItIt really doesn’t matter how much capital you raise, who you get it from, and in what form. It is all about how you use that startup capital.
The vast majority of lottery winners go broke very quickly. Just as many heirs to great fortunes do. Tens of billions of dollars in business value can be erased in a very short period of time.
On the reverse, with great management, fantastic things can be achieved, starting out with very little. Great value and long-running companies can be created.
What Happens When You Raise MoneySomething happens when you take outside money into your startup, Whether you are taking out financing or debt. As well as raising equity capital. Businesses need money to get started and grow, more than many realize when starting out. The number and size of rounds raised while they are still private seem to be extending. If they make it to going public, that’s another major event of taking in money from others.
When you take on debt, you are obliged to repay it. Along with interest. You had better put it to good use, and ensure that you are generating returns on that money that far exceed what the money costs you. It adds pressure and puts you on a timeline to get results.
When you take capital in exchange for equity in your company, much of the same applies.
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You may not have fixed repayments due. Yet, your investors are expecting a return of their capital plus some. They are expecting you to multiply their investment far more than a lender would.
With voting rights and board seats, you can expect equity investors to be much more involved and watch your moves and progress than lenders. You are responsible to them, and they, in turn, to those that provided their capital.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Access The Pitch Deck TemplatePlease subscribe to unlock this content. Just enter your email below.
Your email address is 100% safe from spam!The Penalties Of Not Using Your Capital WellPoor use of your capital can bring a lot of pain for entrepreneurs. Far more than many expect.
Obviously, poorly spent capital can mean stalling growth and progress. No one wants that. While wasted time and money is painful. Though it can get a lot worse than that too.
Failing to get results with the money you bring in, can mean that you don’t get to the next round. Your current investors may not want to back you again. Nor introduce you or recommend you to other investors.
Future investors will also definitely want to know what you’ve achieved with previous investors’ money. It is the best predictor of what you’ll achieve with theirs.
If your investors and board lose faith in you, then expect them to overtly assert their voting rights and control more. If you are not using your startup capital well, then they may push short-term thinking decisions. Those that can subvert your mission, cost you your customers and reputation. They may even remove you from your role.
Even as you’re reading up on how to use the funding you’re raised, you might want a quick recap of how to raise startup capital. Check out this video I have created explaining in detail how it’s done.
How To Use Startup Capital WellPut simply, from a high-level view, the best use of your startup capital is wherever you will get the best ROI on it.
If you are truly a domain expert that knows your space and business intimately well, then your gut instinct may provide some guidance on the places to evaluate investing more capital in your business.
However, all decisions should be based on facts. Not just assumptions.
This means that you also need to know your data. There are plenty of data sets and sources available. Even for relatively new and small businesses. Be sure that you are using it. Don’t blindly ignore the answers in front of you. One of the top skills to hire for today is expertise in deciphering data. That is evaluating true causality, and understanding why the data shows what it does.
Get Your Startup To The Next LevelOne of the most important things that your startup capital needs to achieve for you is to get your venture to the next level.
If the capital you bring in doesn’t get you to the next level where you can access more funds, or at least survive without any more cash injections, then it is essentially all over.
This next level may be:
- Qualifying to list on an exchange, launching your IPO, and accessing public markets
- Being in an attractive position for an M&A transaction that will provide your mission with more resources
- Eliminating enough risk, establishing the performance and size for another round of investor funding, or opening a debt facility
- Becoming cash flow positive, and profitable in a self-sustaining way
Depending on where you are now, and what the next milestones are for your company, this may include proving your concept and achieving product market fit, establishing sales and revenues, and generating actual profits.
Or it may be getting to a certain size of revenues, company value, and users.
What Not To Spend Your Startup Capital OnEqually, if not more important than knowing what to spend your money on, is knowing where not to splurge or waste your precious startup capital.
There are endless ways to spend money. Successful founders and companies are those that are able to intently focus.
That means having the discipline not to spend on anything, but which is absolutely essential. If it is not a must, then you must not waste money and time on it.
Let’s take a look at some of the categories in which startups sabotage themselves, and where you normally shouldn’t throw away that money. They will help you understand better how to use startup capital well.
Vanity ItemsThis should seem obvious, yet it continues to drain startups of their cash and capital that could be used for essential things.
If it is just for looks, vanity, and ego, then don’t do it. Much of this may also apply to things you are tempted to spend on, just to copy competitors. If you don’t know 200% that it is helping them be successful and to generate a good ROI, don’t do it.
Say no to vanity license plates, splurging on personal spending, and perks that don’t have a proven ROI.
OfficesThere are now plenty of multi-billion dollar startups that run on a 100% remote and distributed workforce to prove that it works, and that offices are just vanity spending.
You do not need them. If you don’t absolutely need them, then they are just a luxury. One you probably cannot afford. For decades even the largest tech companies and institutions, including hospitals, have leveraged outsourced workforces. If they can do it, and find it a necessity, then so can you.
If you are still wrestling with this, then focus on hiring HR, managers, and team members that are experienced and thrive in a remote environment. They will be far more productive and get better net results than those you can coax into an office to fill a chair.
Hiring Too FastHeadcount is also largely a vanity metric. Many like to boast about how many employees they have, and how fast they’ve grown their team. At least until, as we’ve recently seen, they have to lay off most of them, and admit they hired too fast and wild.
You do need people. At some point, your growth should require hiring more people. Though revenue or profit per team member is probably a much better metric than how many people you have on payroll.
Hiring too fast not only eats up your capital, but can ruin your company’s culture and reputation. It brings a lot of risks, and extra management. Hire wisely.
Best Uses For Your CapitalSo now that we know what not to waste money on, how to use startup capital well?
This greatly depends on the stage of your venture and company. Though, here are the main categories that you will want to invest in to get the best returns, and really get the most out of the money you bring in.
Finishing Your MVPIf you haven’t yet, finish your initial product. Get that MVP out there in the world.
If you wait until you think it is perfect, you probably waited far too long. Your company will pay the price for it. It is far better to launch it, and then keep iterating and polishing.
This will help you begin to actually start gaining users and making sales. That means money coming back in, not just out.
Having a real MVP, not just a prototype, also substantially decreases risk for investors. Your current investors will be very pleased that you got something done. It will make it much easier to raise the next round of funding and to negotiate better terms when you do.
Sales & MarketingIt doesn’t matter how genius, fantastic, or needed your product is unless you have strong marketing and sales happening.
This is a great place to invest your startup capital. It is one of those that can actually profit and return.
Done poorly, it can also be an area of huge loss. If you just run to do Facebook ads without the right expert help, or just to copy competitors, you can lose a million dollars a month or more.
However, with expert help and making data-driven decisions, you can make sales, hone your unit economics, prove your business model, and create systems and a foundation to build on.
Achieving Product Market FitIt can take some testing, a lot of conversations, and a fair bit of iterating and tweaking to get there. Though, once you achieve product-market fit, you will be in a far better place to attract investment on better terms. You will be far better positioned to keep going without outside money. Even if you still need it to deliver on all of the orders you are getting.
ScalingOnce you’ve nailed the above, you should be able to invest your startup capital into this model to predictably scale your results and multiply your money.
Fundraising CampaignsDon’t forget to budget for upcoming fundraising campaigns. It takes money to raise money. To get the best fundraising advice, to craft a winning pitch deck and supporting materials and marketing campaigns. As well as to get to investor meetings once you’ve hooked great prospective investors. Use the tips listed above to get an overview of how to use startup capital well.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
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Omri Geller’s startup is helping fuel the growth of artificial intelligence, by equipping others to build better and faster.
On the Dealmakers Show Geller shared his love for chasing problems and AI. As well as his journey working through the ideation phase, fundraising, going through a big pivot around the technology stack, and his tips for having the right people onboard, and how to make it through the tough times of entrepreneurship.
Listen to the full podcast episode and review the transcript here.
FREE DOWNLOADThe Ultimate Guide To Pitch DecksStartup NationOmri Geller was born and raised in Tel Aviv. While for many it may be a small country, far from Silicon Valley and NYC, its reputation as ‘Startup Nation’ has certainly helped when it came to capitalizing his venture.
Israel has such a high ratio of successful technology startups compared to its population that it is on top of investors’ radar. Many top investors have a focus there, and are excited about finding the next great startup.
Among them are Tiger and Insight, which have both participated in Geller’s company.
Another unique part of Israeli culture is its mandatory military service. Omri says that it felt good to contribute. He was put in a technical unit, which meant developing cutting edge technological projects. Solving problems that often no one had tackled or solved before.
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Chasing ProblemsLong before the military Geller says he was passionate about both physics and math, as well as basketball.
While they may seem at odds, both certainly helped him later on. Basketball he says taught him about playing as a team. About training and working hard, and investing in yourself, discipline, and competition. He says that in turn it also helped him perform better in his academics.
He wasn’t exactly sure where he was heading when he went to college, but he loved solving problems, and saw engineering as a great next step. Which he ended up following through to a Master’s in electrical engineering. Where he ended up doing his research with his current cofounder.
It is that passion for chasing problems and creating solutions for them that has continued to drive Omri into entrepreneurship, and which has no doubt kept him going where others have given up. After all, startups are really all about solving new problems all day, each day.
AI
The idea of artificial intelligence has been around for decades. Though it has certainly taken decades for the technology to catch up with the initial aspirations.
Early algorithms weren’t enough. Omri says it wasn’t until maybe 10 years ago around the time Nvidia’s GPUs came out that there was enough processing power to support AI models envisioned by early neuroscientists. Only more recently have we also had the volume of data to bring it altogether.
Geller and his cofounder believed that the need for computing power to enable building AI models would only become more important. They saw, and see a future where AI will be everywhere.
A world where AI applications are implemented and running everywhere. From automotive, to finance, healthcare, education, and all throughout our daily lives. Everything everywhere will be equipped to run AI applications.
They saw a need for a revolution in power and AI infrastructure to facilitate all of this. They knew that they wanted to work together. So, they embarked on a year long ideation phase, exploring the different problems to solve.
They spoke to many AI companies. They kept running into the fact that they didn’t have enough of this compute power to build their own AI solutions. Then set to work building their MVP with a few companies. A software which enables them to build applications faster, and get to market faster.
Today, their startup Run:ai has raised $118M, and has been consistently growing quarter over quarter.
Storytelling is everything which is something that Omri Geller was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
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Your email address is 100% safe from spam!Pivoting & Making It Through The ChallengesEven after raising $13M through a Series A round of funding, Run:Ai ran into a new challenge when they came out of stealth mode.
Their limited interaction with customers before that meant they hadn’t accounted for how tied in their customer base was with one specific technology. Instead of tweaking what they had, they chose to pivot, go back to the drawing board, and come back with a new product that enabled this integration.
Once they developed this and were about to launch, COVID hit. They paused that launch until things opened back up.
How do you keep on going through all of that? Well, clearly having a love for problem solving helps.
Omri says that the “first thing that you need to be is optimistic.” There are always going to be ups and downs. Sometimes they are back to back, sometimes they take longer to rotate.
He adds that the only way to keep going is also to zoom out. Something you should be doing in both good and tough times. Look at things in the perspective of the next five years. Be sure you have the right strategy. Be willing to adapt when you don’t. In the big scheme of things you’ll often see that the struggles of the moment aren’t that big of a deal.
Listen in to the full podcast episode to find out more, including:
- How Run:AI is enabling the future of artificial intelligence applications
- Who you need to hire, and who the right people to hire are for new startups
- Omri Geller’s top advice when launching a new business
Alejandro Cremades · EP 535 Omri Gellar Raising $118 Million To Help Teams Manage And Optimize Their AI InfrastructureSUBSCRIBE ON:
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How to format a pitch deck? What is the right way to execute the formatting? Getting the format of your pitch deck right is just as, if not even more important, than the content on your slides, all the details of your startup, and the investment opportunity.
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How to forecast sales for your business? Forecasting sales is an integral part of operating any form of business. You can’t expect to keep operating without knowing your sales forecasts or how to reach your goals.
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Sean Grundy’s startup is on a mission to have a big impact on the environment and beverage industry. During his appearance on the Dealmakers Show, Grundy shared his experiences with for-profit versus nonprofit organizations, testing pricing, and product-market fit, and converting investors into capital. Plus, why not to wait to launch your startup.
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How to forward a pitch deck to an investor after the introduction? In other words, what’s the best way to send your pitch deck to investors after you’ve been introduced? Introductions to investors remain one of the best ways to run an efficient and successful startup fundraising campaign. Getting those vital introductions can make all the difference in getting funding, putting it in the bank on time, and finding investors that fit your needs.
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Craig Hurlbert has been involved in the launch, capitalization, and exit of a number of companies. His most recent venture raised almost $200M before going public in just around three years in business. On the Dealmakers Show, Hurlbert shared his learnings from operating on both sides of the table, how to reverse engineer your business and exit, the four pools of capital for your startup, and the big project he is working on now.
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How do you create an effective executive summary of the pitch deck? Did you even know that your pitch deck should have an executive summary? Some top entrepreneurs, startup advisors, and dealmakers recommend it. It could be the one piece of the puzzle that you are missing in order to get more investors to say yes and get your next round of funding in the bank.
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How to show growth in a pitch deck for your startup? Growth is one of the most important metrics in a pitch deck and fundraising campaign. It is one of the most important data points for internal teams and founding entrepreneurs themselves too.
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Matt Danna went from product manager to founder and raised $100M for his software startup.During his appearance on the Dealmakers Show, Danna shared how going into product management prepared him for entrepreneurship, the pros and cons of bootstrapping your startup, his thoughts on picking the right investors, building a vertical software business, and surviving and thriving through economic crises.
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Leore Avidar is now on his fourth startup. He currently runs two fast-growing companies that he has raised $100M or more, for each. On the Dealmakers Show, Avidar shared how early failures are critical to getting under your belt to succeed later. Plus, the only five things you should be doing as an early-stage startup, the most important questions to ask when hiring for your startup, and the three things you should be focusing your time on as a founding CEO.
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Mission statements have long been a foundational and key element of businesses. That certainly hasn’t changed and is unlikely ever to do so. This is a core part of every startup business. One which will determine the customers you are able to win and keep, perhaps where you can do business, the talent that will join your team and how much they are willing to work for, your fundraising capabilities, and the investors you can attract.
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What to include in the forecast slide of a startup pitch deck? The forecast slide is one of the most powerful in a startup pitch deck. It can be the bulk of your pitch as an early-stage startup. At every stage, it is how you show the vision, potential, and attractive financial rewards for potential investors. It is certainly pivotal in creating the needed sense of urgency required to get your audience to take action.
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Timmu Toke started his first business at 20 years old while still in business school. He has since raised over $70M for his avatar startup. On the Dealmakers Show, Toke shared his journey of iterating to find product market fit. Including his tips for running a startup with multiple cofounders, where to headquarter your company, and running an efficient fundraising process.
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Where to put the team slide in a pitch deck for your startup? The team slide is one of the most important and pivotal slides in any pitch deck. Its placement is incredibly vital to get right. So is understanding what investors are looking for in a team from their perspective. As well as exactly what should go on your team slides, and not. Plus, how to augment and make up for a weaker team when you try to pitch investors. Or how to strengthen and improve the appeal of your team to startup investors.
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Sreevathsa Prabhakar bootstrapped his first startup through selling his company for $20M in cash. Now he has raised nearly $100M for a global customer care and after sales business. During his appearance on the Dealmakers Show Prabhakar talked us through his journey, including when what seems unlucky takes you where you need to be and turns out good. Plus, the two mindsets of bootstrapping versus raising VC money, and building a recession proof career and business.
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What is needed for the financials portion of a pitch deck? What do you need to include? The financials slide is one that investors will spend the most time viewing in a pitch deck. In fact, at least 10% of the total time they will spend on your pitch deck may be on a single financials slide.
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Matteo Berlucchi has started and exited four startups already. Now he has raised $60M for what may be his biggest venture of all. On the Dealmakers Show, Berlucchi shared his journey of launching and selling a variety of companies. Including using a startup to stop a war, the biggest determinants for startup success, and the only two things you may really control as a startup entrepreneur. Plus, AI and self-service healthcare.
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How do we make money slide in a pitch deck? Where does the how we make money go in your pitch deck? What should be on it? Showing potential investors how you make money is one of the most important parts of your pitch. Unless this is a charity, no matter how noble your mission and desired impact, or how much investors like you as people, this is a financial decision. If this is a business, it is about making money.
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What is the why now slide in a pitch deck? The why now is one of the most important parts of any pitch to investors. How can you best convey it in your pitch deck to raise the funding and support to fully capitalize on the potential your startup has?
Nailing this one factor is key to closing any form of sale. Including your end customers, bringing in co-founders, advisors, and key hires. As well as closing investors to fund your business and provide other valuable support.
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Payam Banazadeh fell in love with space at a young age. He has since worked for NASA and has now launched his own space startup that has attracted over $170M in capital from investors. On the Dealmakers Show, Banazadeh shared his fundraising experiences, how his company is creating and managing big data from space, and his take on your team as your superpower. As well as his company's plans to hire a lot of additional people over the coming months.
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How many words should be in a pitch deck for a fundraising startup? Words are incredibly powerful. Even more so when it comes to sales and starting a company. That can apply to everything from your branding, company, name, email address, and slogan, to your ad copy, mission and values statements, and investor updates. It is especially vital when you are fundraising for new capital and financing. Where your pitch deck and the words it contains are all important to get the funding your venture requires.
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Dayu Dara Permata turned her early frustration with the real estate experience into the largest property platform in Southeast Asia. During her appearance on the Dealmakers Podcast, Permata talked about the chicken and the egg of engineering and business, intrapreneurship as a way to learn entrepreneurship, and gain the confidence to take the leap, the 5 Ps of venture building, launching your business in a time of crisis, and diversifying funding to get through the tech winter.
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How much cash is needed for startup costs? In other words, how much money do you really need for a startup? Can you afford to start a business of your own? How much do you need to raise or borrow? What’s a reasonable amount to ask investors for? These are all important questions that aspiring entrepreneurs should be asking themselves. You certainly don’t want to dive in and quickly run out of money. That can be incredibly discouraging and won’t serve those you want to help at all.
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Tess Michaels has found her way to have a big impact on the world around her by creating new financing solutions for students. During her appearance on the Dealmakers Podcast, she provided some incredible insights on how to build a successful startup that scales. Including, honing your business idea, raising debt versus equity funding, plotting your product roadmap, and finding the right go-to-market channels for building a sound, sustainable and scalable business model.
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Wondering what is the CAC in a pitch deck for your startup? This is one of the most important factors and metrics for your company, and when pitching potential investors for your startup. It is vital that you know what your CAC is, how to pitch it, the questions that angel investors and VCs will ask you, and how it all fits together.
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Alexandre de Vigan started out as a lawyer helping to manage M&A transactions before leaping into the fray with his own startup. On the Dealmakers Show, he shared his big lessons from working in mergers and acquisitions and what it is really like to become a founder. Including fundraising, and the journey to finding product market fit. Plus, his take on marketing tech, and the future of merchandising.
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What does traction mean in a pitch deck? In other words, what is traction in startup fundraising? Traction is a very important part of fundraising and startup pitch decks. Perhaps even more critical than your business idea, who you are, and the technology you’ve built. If you want to get funded, or raise another round of financing, then it is vital to know what investor expectations are of traction. As well as where to put it in your pitch deck, and how to show it.
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Corbin Petro has already raised close to $100M to fund her startup venture that is changing the US healthcare system. On the Dealmakers Show, Petro shared how she switched from the public to the private sector and has been pushing for change in healthcare in the United States. Including rethinking substance abuse and mental health services. Plus, how to raise money from strategic investors, and restructure your board.
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Sameer Shariff launched a startup to make a big impact in the lives of 1.5B people that are dealing with the same challenge. On the journey, they’ve already raised $60M and built an international presence.
On the Dealmakers Show, Shariff shared lessons from working at Google, as well as bootstrapping, startup accelerators, and raising money. Plus, balancing building a cash flow positive business with scaling, building a global, yet localized and decentralized business, and the value of learning English.
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How VCs and investors read a pitch deck? When you think about it, this is probably the single most important question that startup founders and aspiring entrepreneurs should be asking. Well before considering any design ideas, bullet pointing out a framework for slides, or practicing a verbal pitch.
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How to show your competition in a pitch deck? In other words, what’s the best way to show your competition in your pitch deck? Showing your competition is one of the core components of creating a pitch deck, and making any pitch to startup investors.
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Noam Toister has raised tens of millions of dollars on his journey to improve the travel experience worldwide. On the Dealmakers Podcast, Toister shared how he took his company through various rounds, how to know when you have a good business idea, the difference between a lifestyle business and a true startup, and his thoughts on choosing partners. Plus how to grow your venture through crises.
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Andreas Thorsheim raised $100M euros for his solar startup before taking it public, and around the world. On the Dealmakers Show, Thorsheim talked about the benefit of starting out in the hardest markets, how fundraising has changed, recruiting, growing, and nurturing talent, and solar.
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How to present your projections to investors? In other words, what is the best way to present your projections when pitching startup investors? Almost no matter what stage your startup is at, projections of what you anticipate to happen and be able to achieve in the future are a huge piece of the fundraising puzzle. It will be absolutely key to opening investors’ vaults and accessing the capital to make your vision a reality.
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Agam Khare is on a huge mission to solve some of the largest challenges that humanity faces. They’ve already made great progress, and have raised $100M on the journey so far. During his appearance on the Dealmakers Podcast, Khare talked about college startups, infinite clarity, fundraising, hiring and doing the best work of your life.
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What is the formula for break-even analysis? Every business operates to fulfill one common goal, and that is to generate profit. However, before a company can start being profitable, it has to cover all the costs. The point where a company's cost and revenue reach equilibrium is called the break-even point.
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How to read a term sheet? Every business transaction comes with a set of terms and conditions that are agreed upon by both parties. Since startup funding is one of the most important transactions, especially for startups, there should be no surprise that it comes with a set of terms as well.
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Sean Duffy has already raised hundreds of millions of dollars for his enterprise health company that is blending technology and medicine together. On the Dealmakers Show, Duffy talked about providing virtual care, innovating in the rigid and highly regulated US healthcare system, making sales at the enterprise level, managing boards, and leadership.
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Joshua Goldbard is on a mission to make crypto easier, more secure, and more efficient to use for everyone. His startup has already made important contributions to this venture, as well as finding a skill for great timing.
On the Dealmakers Show, Goldbard shared how he went from a high school dropout who doesn’t code, to running a hedge fund and starting a well-funded crypto company. Plus, we talk about timing markets, the crypto winter, the value of simplicity, a $1.5M lunch, and how startup funding has changed in the past few years.
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How can startups leverage corporate venture investors to fund their startups? Corporate Venture Capital (CVC) is becoming an increasingly significant part of, and force in the startup ecosystem. It is a source of financing that can come with many other benefits as well.
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How to represent financials in a pitch deck? Financial slides are the ones that investors spend the most time viewing when it comes to pitch decks. They can easily make or break your fundraising efforts. As well as determining how much you are able to raise, from whom, and on what terms.
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Pieter de Villiers operates and innovates at the intersection between communications and commerce. Where he has been creating a world in which we never have to suffer with being left on hold by a brand again. During his appearance on the Dealmakers Podcast, this entrepreneur shared his vision of commerce through chat at scale, what has and hasn't changed in fundraising, how to fund life cycles, the impact on technology adoption, and how it relates to economic cycles.
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Doug Kirkpatrick has already raised tens of millions of dollars for his technology startup, which is transforming our wireless infrastructure in a more sustainable and connected way. One the Dealmakers Show, Kirkpatrick talked about connecting the parts to create innovative new solutions that push things forward. Including seeing the world through new lenses, being on both sides of the table as a founder and funder of startups, and the future of connecting the world.
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What kind of returns to expect as a successful startup founder? There are many reasons to get involved in or launch a startup. Financial gain can certainly be a big one. It is definitely hard to ignore the headlines of so many entrepreneurs raising enormous amounts of funding and rapidly building billion-dollar businesses.
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Carolyn Childers’ startup venture is on a mission to get more women into senior executive positions and keep them there. She’s already found the backing of over $140M to make that happen. On the Dealmakers Podcast, Childers shared how her career evolved from investment banking to corporate to startups. Plus, how she’s built a nationwide professional network and has navigated through a Series B funding round.
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What are the pitfalls of non-dilutive capital for startups and their founding entrepreneurs? There are many ways to fund a startup. Two of the main categories of funding are dilutive and dilutive capital. Each has its benefits and potential detractors. So, how do these capital sources differ? What falls under their umbrella? What are the perks and pitfalls of each? How do you get the money?
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