Fundraising: Plant Your First Money Tree and Raise Your Seed Round | Brian Wang | Skillshare

Fundraising: Plant Your First Money Tree and Raise Your Seed Round

Brian Wang, Cofounder of Fitocracy. Get addicted to fitness.

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4 Lessons (47m)
    • 1. Introductory Lecture

      10:08
    • 2. The Why And The How (Much)

      5:48
    • 3. Finding the right investors for you

      21:15
    • 4. Lessons Learned and Final Words

      10:17

About This Class

As CEO at Fitocracy, I've raised millions in seed financing and have learned that there is a repeatable process to raising money efficiently. This is the class I wish was available two years ago when I was first starting out.

For many first-time founders, raising outside financing is one of the most daunting and confusing parts of building a company. It is a process that can seem like a black-box, where there is no obvious path to getting started.

But there are ways to make the process easier.

In this class, you will learn:

- Why you should raise money and why you should not

- The various approaches to raising money

- How to figure out how much money you should raise and from whom

- How to create effective, compelling pitch materials

- How to build relationships with investors

- Indicators an investor is interested or when they're wasting your time

- How to close a financing

By the end of this course, you will have created pitch materials, have a seed round strategy and have practiced your pitch.

*Get in front of NYC's most active early-stage investor*

We have a special treat for you. New York's most active early stage investor, Steve Schlafman of Lerer Ventures, will be judging the final projects to decide on the best elevator pitch. The winner will get a 15-minute call with Steve for feedback and advice :)

Only pitches submitted by August 1, 2013 will be eligible.

Tell your friends

If 250+ people enroll in this course, we will award the best pitch a $1,000 scholarship to pursue their idea. We will consider all project submissions that are uploaded 1 month from the start date of this class.

Transcripts

1. Introductory Lecture: - Hey, - guys. - My name is Brian Away, - co founder and CEO for Thomas E. - And I'm really excited that joining me for raising it first to see if you're a sort of - hammer who's thinking about raising my investors for the very first time. - And you come to the right place and this course wouldn't remember essentials like - determining how much money you raise your startup figuring out you're raising money at all - because sometimes you don't need to identifying which investors figuring out how to get in - front of those investors and building relationships with. - And then ultimately, - how do you go and close the deal so they can raise money for your start up and take it to - that next stage? - Now I want to start off with the most important lesson. - All kick things off. - But just how fundraising is all about story Fundraising is all about telling a good story. - Your job is a feller is to build a compelling Eric and draws investors in. - It makes them believe, - think about for saying human beings are wired to respond stories. - They create emotional response. - It's inspires that makes believe it ideas that are bigger than ourselves. - they convinced us that we can save the world. - The American literary theorist, - Just Campbell, - but extensively on the theory of stories and narratives. - One of his most influential works was called The Hero's Journey. - The U. - S. - Journey is all about taking the common elements and patterns that were part of all the - great stories across the world across time. - A modern example. - This maybe stores where Star Wars You've got this great big villain, - the evil empire that was causing pain suffering across universe got Scott Walker, - who is the other side of euro rise to the occasion and ultimately becomes victorious over - the empire. - Yet and then he also got the mentors and the guys and the friends who helped the hero in - their journey struggle a long way and contribute to wrap me to that victory. - So, - in your case, - your job is to build this narrative off this grating probable the villain in this story and - how the startup is the here who rise to the occasion to vanquish any and improve the world - . - Because of that, - and when the investor is listening to this, - you need to convince them that their direct involvement really means that they are that - mental or that guy is a hero. - They're investing their backing in their sport. - For you, - it's what you directly contribute, - because investors are just like anybody else that you want to be part of something that's - bigger than themselves and your job is missing. - This is the opportunity to be a part of that. - So ultimately be creating there that convinces investor that this is this is the right - moment. - This is something that they need to take out you're gonna make. - The fund raising process is much easier on yourself, - So remember making investors believe? - Okay, - let's talk about the most basic form of storytelling for your stuff, - which is the elevator pitch yellow beer Kid gets its name from the idea that you might find - yourself in a situation where you're in an elevator with an investor and only have about 30 - to 90 seconds to pitch the business and get them interested in following up in the future. - Remember the entire effective oven elevator pictures to get the next meeting fight the - temptation to fit every single detail of history about company In that pitch, - you want to stick to the most important place. - An elevator pitch is typically structured in a way that's similar to what I was talking - about earlier with the hero's journey. - So you want to set the problem in a scenario that present the solution to that problem. - So the solution is going to be the product that building with your stop. - You also want to talk about the customer. - So, - uh, - who are you? - Sorry, - who is the market going after? - You don't want to talk about the team and who's behind the company. - So this is the hero and the scenario, - and then you finally want to talk about trash. - So traction is really, - really important. - Traction means Do you have customers? - Do you have users? - You have evidence that the market really wants solution to this problem. - Now, - keep in mind, - this outlet of bullet points is nine order necessarily. - Depending on your situation, - they're going to be able to present things in certain ways that make your company look - strongest. - So don't really depend on your most strongest points. - So let's talk about themselves. - So the problem is really about you know, - what is this huge people in the world for consumer that might be okay. - I want to connect the easier with my friends. - That scenario. - If you're a B two b company, - you're you're selling software to businesses and maybe something that's saving the money, - doing them tired, - helping them doing your job. - I bet in some way the solution probably building has to be compelling enough to solve that - problem and make everyone's life better. - There's a saying that you want. - Make sure that you're focusing on building a painkiller that invited another way of saying - This is You want to make sure that the problem you're solving is compelling, - that there's a large enough opportunity there that there is. - So if friction involved in status quo that your problem that you're solution brother is - presenting a way to fix that and handle improve people's lives in some way in terms of the - market and customer, - you have to understand who you're trying to serve because that's going to determine high - glass and how you're positioning yourself and how are you going to acquire customers if - you're really say so. - Hopefully you've already gone and started to do that, - or at least you have a good idea on how to go after that market. - Just remember the understanding that market is really important. - You have. - The team is going to be about the founder, - Fat Rhodes. - Who else? - You have a company that's setting the stage to go and solve this problem so you won't - really put your best before. - Here. - You have a relevant domain experience. - Do you have an academic background that goes and connects very deep into the problem? - Have you been industry for a long time? - You have to figure out what makes it sensible that you're the one. - Solve this, - right? - So remember, - investors employed a focus on the mirror, - so this stuff has to make sense of them into it. - If your background or experience doesn't we connect very well the problem you're solving - that's gonna be a point where you don't have much credibility and finally, - you want to focus on traction. - Traction is one of the most important elements of patients. - Traction really means getting customers getting used, - getting usage. - And it's not enough that you just have a certain user account for consumer startups. - You're going to want to focus on your acting. - You're engaged users. - Some of the most basic elements there are, - You know, - let's your monthly active user greater. - What's your deal yet? - Rated in the levels, - which could be defied in various ways for business focus or enterprise. - Focus Company. - You got a lot of talk about where your customers, - how me paying users customers do you have? - If your large enterprise sort of company, - then you gotta let's see where the marquee clients and customers they already signed up. - Maybe you're piling up polity that program somewhere already a getting feedback from that - So and so. - But remember, - the most important part of all this is traction, - because that is validation from the market, - right? - So the title together, - You want to make sure that you have a problem, - that you're setting up a solution, - which is your product, - that solving a problem. - The market is going after the team that solve this problem and market validation traction. - That's proving that there is real demand for this product and that there's a tangibly large - running up for that. - Okay, - essential reading for this. - A lot for this module. - I wanted to read two main articles from venture hacks, - which talk about the elevator pitch to talk about the elevator pitch in a pair of reform in - . - They also talk about the elevator pitch in Bull Point format venture hacks, - but honestly is able to explain the elevator pitch far better than I can. - I highly recommend that you check out all the all the articles and venture hacks because - entire point of it is to explain the process of raising money and communicating with - investors. - Okay, - you're Simon for you. - No one is to create your own elevator pitch in the form of bullet points. - Remember their five main areas you want focus on. - There's a problem that you're solving the solution that you're presenting for the problem. - The customers that going after the team is building it and finally attraction that you've - been able to accomplish apart with your product when you spend a good amount of time. - This because this is an opportunity for you to carefully consider your company as a whole - and presented in the best life possible. - Each company is going to be different on a case by case basis. - But it's up to you to figure out what's most impressive about your particular startup. - This is always gonna be used later. - Of course, - when we talk about when to employees on their pish and when you gonna send over email - versus delivered in person, - chances are most of the time when you're talking to an investor for the first time, - you're gonna be sending this over in the form of an email. - So remember, - keep it short, - because those investors are going to ignore you. - If it's too long when they hit their bosses, - good luck. 2. The Why And The How (Much): - a really important question to ask yourself is whether or not you should be raising money - in the first place. - Now I know that may seem like a very strange question, - given this course, - but you do have to carefully consider it. - In reality, - many early seats startups are not fit to raise money because they haven't gone an - established product market fit or they're nowhere close to yet. - The only real good reason to raise money is because you're starting to get real traction - and real growth in the company, - and that my judgment of Solomon is they grow faster and get the right people on board so - you can go after the large opportunity. - But many early stage start ups are nowhere close to product market fit, - and I'll talk about that a little bit more in the future. - But if you don't have sufficient traction, - if you haven't really proven there's real demand for that hot, - then money is not going to go and solve a problem. - Sure, - money might help you keep you around longer, - but is that it's still gonna get you to that product market fit faster, - and these days, - the costs of building products have gone so low that you don't need a $1,000,000 to go - close to product market fit. - So again, - think before you really think about whether or not you really need to raise that money. - Remember, - fundraising is very time consuming process. - So you have to consider is worth spending my time on reason money right now or should - really be focusing currently on finding product market fit with company. - Okay, - so the amount of money that is going to raise for your seed round will vary on a case by - case basis, - but a general rule of thumb is 18 to 24 months of runway Runaways is another way of saying - how much time a company has before it runs out of cash in the bank. - Why 18 to 24 months? - Well, - we talked about 18.4 months because that is about the amount of time your company should - need before it generates that next. - A creative milestone for your company. - A milestone might mean you've been able to establish product market fit or you're starting - to really grow the attraction for your company or something. - Montas heavily It generally means that you've reached the point where you can justify the - next finances around in. - So we're talking about 18 to 24 months. - You also need to figure out how much money you're spending on the net basis every single - month. - That's called your birth. - Well, - that comes down to is your heart. - So again it started will be different. - But in an early stage you will be hiring engineers, - designers, - perhaps marketing people, - business development, - folks dependent model. - And you don't want to go and say I'm going to spend $200,000 each month as they burn rate. - That's probably too much. - And the earliest age you still want to stay lean. - You only want to hire just as many people as me to really get to that next milestone, - the last 18 to 24 months. - The other consideration everyone make is that these days, - the pop of in census is that raising another round with venture around syriza Iran is - becoming increasingly, - increasingly difficult. - That's the so called Syria's a crunch. - So sometimes you want to think about not raising 18 this way for months, - where the runway, - but even about 25 50% more on a buffer basis that will create a little bit more position - that you're probably saving for. - However, - I'm seeing tons of seed stage companies do that these days as a protective measure because - of the more difficult market conditions. - For reason seriously, - and to give you some concrete numbers for how much people are raising for their seed round - of these days. - Generally, - you're gonna want to talk about a minimum of 500 K but I would say that's a really on the - low end these days, - I would say the most common amounts that people raising are about 1 to 2 million from the - sea rounds, - in some cases to read about. - Companies are raising a lot more than that, - but those air generally the exceptions that prove the rule, - so aim for about 1 to 2 million. - But that will come down to your monthly burn rate. - Want to get yourself before the next round for this unit? - I want you to read the article that I attached. - Coming from Chris sticks on topic of how much money is right to raise for your seed round, - he explains a lot of the intricate details that are involved in that consideration higher - recommended and this assignment, - I want you to focus on three main questions and write down answers to all three questions. - The first question is, - should we be raising money right now? - You have to be honest with yourself. - Look at where you off your startup and figure out is fund raising the right thing for me - right now, - we should be focusing on something else. - I want to write about 1 to 2 sentences. - That 30 state. - Why or why not? - Should you be raising money? - Seven. - English is your monthly burn rate if you do decide to raise money. - So if you are going to raise your seed round, - how much are you going to expect to spend with that seed money? - And that ultimately comes down to your hiring plan that comes down to your operational - expenses that lead that company Do that next month. - So, - Kevin, - consider that third part is basically to how a student to race. - Remember, - we talked about about 18 to 24 months, - where the runway so basically monthly burn rate, - you can figure out a rough estimate. - How much remains with that? - And you may also want to consider that 25 50% buffer that we talked about earlier. - Well, - we have all three. - Make sure they write them down. 3. Finding the right investors for you: - Choosing your investors is just as important, - if not more important, - than how much money to raise for your Steve around for this section. - I'm going to talk about the very, - very bare essentials on the different types of investors out there. - I'm going to warn you, - this is in no way comprehensive. - I could probably talk about this for our war, - but I just want to give you a quick overview of different types of investors out there. - So start off. - There's the traditional large institutional Vesey. - These are the sorts of folks for managing hundreds of millions of dollars for fund. - These air people typically will write large sues a check suit, - be checks so on so forth. - In recent years, - they also start to become more active in C. - Deals will talk about the dynamics there in a moment. - We'll put a pin in that for a second and move on. - So the second type of investor is historically a little bit newer, - which is the folks were managing lesson on a $1,000,000 per fund. - Those folks will sometimes be referenced as micro veces or just seed funds s. - So this is a small enough money out there. - Managing are also means that they only have as one of an exit for those companies to make a - return. - Money investing the third type of investor that you'll run into our angel investors, - Angel investors something many people who are managing their own money. - These are people who are usually wealthy individuals have either successfully as it in - their own companies and passed. - They made their money in some other way, - and they're looking to invest money into start ups. - The other sorts of models out there are accelerators or incubators. - Also relatively, - you may have heard of organizations out there like Combinator Techstars 500 Startups list - of the idea there is that you go and spend about three months at the incubator Examiner. - Put a small amount of money and you take a 5 to 7% of common stock in the company. - And these days will also offer additional financing options as well, - in the form of convert knows. - And this is the fifth category they might want to think about. - Our is the crowdfunding approach, - and that's very, - very nontraditional. - Especially talk about starting Sunday, - and I'll talk about that yet. - So for traditional large veces. - The important thing to understand about them is that there historically not in the business - of right, - a relatively small check size. - So when they're investing money, - they're traditionally raising or usually putting in about 3 to $7 million or so in a - software company for their first seriously around when it comes to a 1 to $2 million seed - round does that doesn't actually jive terribly well, - the economics of that fun, - because when you're managing over $100 million fund A one a $2 million investment isn't - that long of a commitment from the B. - C. - And there's not a huge expectation that that companies road large ends. - It eventually veces need to spend their time. - Whether putting the most risk so willing to consider when you're talking to our species is - that when they're considering the seeding message, - they may not necessarily offer you as much guidance or assistance as other types of - investors might happen. - The Sufi might not prioritize. - You have company investment as much as other companies that their work. - That's what important factor to consider. - The other important factor is that you know there's there is a concern out there that if - they large VC puts money into you at sea brown and they don't invest in you for your Siri's - A. - That creates negative signalling effects, - which then communicate to the rest of the market. - Hey, - this company, - for whatever reason, - is not getting following invested from there is a lead, - largely. - See, - that's that news that will make some investors shy away. - I think the gentleman senses that the fear of that dynamic has been a little bit overplayed - lately, - and I think that have even been so suspicious of show that large VC lead seed rounds tend - to actually do better. - Follow around statistically for those companies versus cos you raise seed financing from - alternative sources. - So you're Milos Bayberry. - But that is one important consideration to make. - But again, - remember, - attention and guidance factor is a very real thing for species. - How does micro veces I think this is? - They had a really nice sweet spot because when they're managing 10 $200 billion fund and - writing, - let's say $100,000 shack for $500,000 check to you. - That is material to they are going toe care now A lot of those investors also spread their - investments across a large a number of companies in your portfolio as an investment - strategy. - It's almost closer to index investing strategy. - So that is one thing to watch out for. - But in my experience and a lot of other entrepreneurs I know their experiences. - CNBC's will often be a lot more helpful to you. - Do you ask the door rather than a large you see on If it is a good micro VC or received - fund, - it will tend to have a pretty good number of relationships out there in terms off advisers - , - partners feature investors. - So now the third category for Angels is a really interesting topic because that's how old - those people are taking on a very large personal risk. - And as a result, - those supposed also tend to be the most involved in their companies because their money and - they want to make sure that that's rolling in a certain sense, - and that's going to come out to a successful outcome, - really consider about Angel Angel investors. - Is that oftentimes, - interestingly enough, - there not necessarily investing money because they need a huge financial turn. - Oftentimes, - angels invest money because it simply want to give back to the community. - They want to be able to help other founders and guy, - other entrepreneurs and just being involved in interesting adventures. - So my experience, - it's been interesting to see that dynamic play out because angels, - maybe this is just kind of have fun and stay engaged. - You want to be involved in cool products. - It's not just say that they don't want a successful outcome for the company. - Obviously, - they all do. - But sometimes the motivations and sometimes the relationship when comes of celebrators. - That is an interesting round, - I think, - is a really good rap for a lot of early stage. - Companies are not necessarily ready to raid a formal see brown, - but they do want to make some small amount of capital and use the services in the - experience of its elevator to help him get the next stage. - I myself autocracy. - That company is a 500 startups portfolio companies that the company spent four months out - and not a view for between 2011 in 2012. - There was a fantastic experience and in many ways of the value of those accelerators, - isn't in the money that the investments in the experience it's in the network that build. - It's the relationships that before horse investments about condition and may help raise - your seat around. - But it is triple to be realistic about expectations. - Going into the accelerator is not automatically guarantee that you're going to raise a - Acevedo or something or the amount of financing that they're seeking. - So you do want a balance, - that expectation out there and suddenly proud funding. - So I've seen a lot of folks think about Kickstarter thing about Indiegogo and say, - Hey, - you know, - I could start a Kickstarter campaign to raise eat kazillion dollars. - There is obviously most women want it, - and I don't need to talk to be Caesar Angels. - You know, - I think there's only a certain type of start up that well suited for the crowdfunding um, - approach. - Typically those harbor companies that are building novel products out there. - I have seen cases where software also runs as well, - but you do want to make sure that your company fits the mold. - Can your company bill a product that generates a lot of hype that really solve a really - painful need, - a problem for the user and is it could be and help lock or something that's more tangible - than a piece of software because sometimes it's difficult to demonstrate how valuable is - software. - Part is in the form of kicks off campaign. - Eso don't necessarily expect the world. - That's something you want to make sure that that's appropriate for you. - But for the 1st 4 options, - um, - again, - you want carefully, - consider we're going to be working with what value they might offer to the table besides - the money that they're investing and also how easy is going to be to get in touch with - those folks and ultimately get into investing in a company. - Okay, - so you gather together a list of names of investors that you want to reach out to. - The next question is, - how do we go and make first contact? - This is one of the most intimidating questions in the process, - and I know that when I was starting out raising money, - this was something that really, - really racked my brain when I was sorry to some of the process and really is about - operating instructions. - So the one thing that you want to avoid when you're reaching investors is setting a cold - email or, - God forbid, - going and cold calling him in the office right. - Investors still be going at the time for that and is a huge red flag because they, - some people ignore it. - Their in boxes are full of hundreds of thousands of pitches all the time, - so they really need a strong signal to noise ratio to make sure that they're finding - quality deals and not get distracted by the hundreds and hundreds of soaps that are - reaching out that are probably not worth that investors time. - So the best strategy is defined. - A founder that investors already invested in, - or someone else in the community as close to the investor that they trust. - So ultimately, - for you. - What that means is defending those books and building your credibility with them so that - eventually that personal that go and say, - Okay, - I can introduce you to this investor. - I can write this evening and say, - Hey, - I love the introduce this founder to this investor and say it was cool and I should meet so - on so forth. - Now, - the advantage to reaching out to not investors to make introductions. - So let's talking about founders is that the way to get in front of them is significantly - easier. - The founders don't get me wrong. - They're very, - very busy. - However, - as a fellow founder, - one of the things that you could do is say, - Look, - I really respect what do I love? - The product and the company? - That building I'm first started already. - Starting right now, - I would love to reach out by lunch by coffee and just talk about the process. - Ability to come right. - I want trade notes with you. - I want to be able to learn from your wisdom and figure out how to apply it to my own stuff - . - I've found personally that that's a very effective way of building trust with other folks - who may be able to provide valuable instructions on what and, - you know, - I have done that. - Founders are very populist. - They want to be able to help out. - There appears they want to say they want to go and give back to the community and get back - to their fellow founders because it is a very, - very hard process and they understand how difficult ISS so they can take their lessons - learned and offered to somebody else? - Yeah, - that's what it found love do because they just wanted to see other people succeed. - So I would say that one of the most efficient ways that you can go about finding a path - through the investor is finding the founders are connected to them and say, - Look, - I love Bill a relationship with you. - See how that should be thinking you don't necessarily going overly say that, - by the way to get involved, - get in front of them and eventually defined that they can then convert that into - introduction to the best? - Uh, - yeah, - there's a couple other ways to build your credibility and visibility out there that can - eventually convert to meeting. - So I'll hold examine quick. - So I actually recently met Mark's sister when I was out in the West Coast just because I - want Teoh sit down with him and beat him and tell him that talk about what we're working on - and I wasn't doing. - I didn't get in front of him because I knew someone I knew more. - I said they did through having a presence on Twitter over the past couple years by being - very, - very active by posting via content by engaging with Mark in a few different ways over the - past years, - not being intrusive, - not being overbearing, - just simply responding to a couple of the things that he posts or offering thoughts and - just being engaged in dialogue. - And you know what? - I had finally run email tomorrow and said, - Hey, - I'm gonna be in top a couple days in love to meet you He recognized my name. - Is it? - Hey, - you know, - I see the name around before. - Why not? - Let's get, - well, - 30 minutes. - It was great, - respecting human person. - And it wasn't doing. - Introduction was because I was an active member out there in the overall technology - community on I was offering interesting thoughts and I was responding. - I was engaging and that that ended up converted into meeting with Mark. - So that's the other thing. - I advocate that you do it, - just get involved in the community, - and it doesn't have to be just Twitter. - It could be due block those comments and be joining a coworking space where you're meeting - other folks. - You could eventually become your advocates. - It means attending events. - But you want careful. - You don't want to be one of those conference fours, - and those comments is non stop because that's probably the worst thing you can do. - But it just being present is really, - really important. - The technology community is actually quite small, - so it shouldn't take you very long to build sulfur name for yourself. - But ultimately, - when you're making first contact with investors, - you need to be ableto have a reputation, - precedes you and so finding a way to get introduced that founder is the end result, - and that's going to get youth in the door to make first investor and 70. - So make sure you find the introduction and build visibility to build credibility in the - community to help boost that process. - Once you have the initial meeting with investor, - now comes the fun part, - which is the follow and the relationship building process that eventually gets an investor - to say yes and agreed to invest in your company when you have a first media, - with an investor expected to be the first of May, - once you've had that first meeting, - often time. - If the investor is particularly interested, - they'll follow pretty quickly and ask you for more information about the company. - It may ask you about your thoughts on the competitive landscape. - They may ask you about your road. - They may ask you, - you know, - how do you envision this company being a huge enterprise that succeeds in the 200 millions - or billions of dollars in the future? - Many times the investor won't necessarily do that. - All many times. - Investors will actually go radio silent right after and not respond or not say anything to - you after that first meeting. - That doesn't necessarily mean they're not interested. - Important thing to keep in mind is that investors are incredibly busy and their full time - jobs are to evaluate deals. - So chances are that it's looking at dozens or hundreds of other companies at a given moment - and simply don't have the time to follow up with every single meeting that they have. - But don't give up hope, - because that doesn't mean that they are not interested in the company. - Your end as founder, - your job ultimately used to keep them engage, - right? - So shortly after you meet with them for the first time, - writing an email, - thank you for the time say, - Hey, - here's what we talked about a summary and here are the next steps. - Definitely. - What that means is they're going to talk about offering more information, - having maybe a follow up meeting with them to talk about topics, - ability to touch on or diving into certain areas that require further exploration. - But beyond that, - oftentimes this comes down to executing of the company, - as you would in any other case, - your jobs, - the founders of valuing the company. - And as a founder, - you also need to make sure that you're communicating that value to that founder and the - investors. - So the point is what we've had, - that meeting with investor, - you want to keep them engaged and the subject matter around the old English come down to - how much more promises company making, - how much more value are building right now and simple formula for that is state way Want to - do to that investor? - Go on, - execute on it and then say, - Hey, - investor, - here's what we said we're gonna do And here's what we did it. - Now it's seating with flying colors because ultimately your job is to build credibility - with investors. - Need to build trust. - It's like date. - You're not married. - The very first person that go on a date with. - You need to be able to take your time and figure out who that investor is and whether noise - before and they do the same thing as well. - You did maybe with Founder, - the management team product company what your chances of long term success are. - So take your time. - Most investors are not gonna jump out your seat in the first meeting and say, - I would invest right now. - It hasn't know that happened from occasions on occasion. - But don't expect that to happen. - The process will probably take you longer than you expect. - But don't give up hope at the other day. - It really does come down to continually building a relationship with an investor and - building trust and showing them that you could execute if I put over Angel investors. - It was the story of how he end up investing in us earlier last year. - You know, - we had started talking back in early 2012 and you know, - there was a lot of engagement, - a lot of interest in what we're doing, - but ultimately nothing really materialized for most of the year, - but I continually cut that person up to date. - I said Here's what we're working on. - Here's the results of the latest release. - What do you think about that? - And finally, - you know, - he actually went in, - said, - I would love to invest in you guys, - that I don't know what I'm doing already right? - And the reason happens because I was able to build that trust with an investor and say, - Look, - here's a team that's credible We're doing really interesting things. - And at the early stage, - that's really what it's all about those investor investing in T. - So you do your best job to maintain our relationship with investors and update them as much - as it makes sense in practice for me, - I have to do is I'll keep it organized lists of investors with whom I've had an initial - conversation and try to keep them up to date on cadence of about once a month. - You know, - I'll summarize what we've done. - I'll try to demonstrate as much traction as possible and just keep that dialogue going, - because ultimately those investors need to track you over time to see if you're worthwhile - investment off other portfolio for this unit, - I want you to read Mark Sisters block Post lines, - not dots. - Entire topic. - That post was about how investors evaluate investment decisions. - And ideally, - we'll look at them as a serious of data points over time to see the trend line rather than - go invest in the company they haven't really interacted with very, - very much. - And making that on a couple of data points and really gets across that the investment - process in the evaluation process is all about investor seeing the team performing over - time and then eventually building the conviction to them. - Go and be a part of that business. - Okay, - Your assignment consists of two parts. - The first part is to figure out the ideal composition for your seed room. - What that means is you should determine whether you want to go after a large. - You see free around a couple of C funds, - several angels or a mix of all three. - What you've done that I also want to go and choose 5 to 10 target investors that you want - to go after foyer, - See ground now don't have to go and share that with anyone. - You can simply write that to yourself and keep unorganized list for that so that when - you're ready to reject those folks, - you're gonna have that all in one place and track that progress over time. 4. Lessons Learned and Final Words: - Okay, - let's go over. - Everything we talked about put it all together in a practical plan of action for you guys. - We talked about forming the elevator pitch. - We talked about the very idea of whether or not you should raise money and how much. - We also talked about getting in front of investors, - identifying the right ones and trying to close the deal by convincing them to believe in - your story. - I won't leave you with some of the most important lessons learned about my own experience - raising money. - The first that comes to mind is that persistence is one the most important qualities that - you have during this process. - That a couple years ago, - when I was first started to raise money for Fotakis E, - we actually were negotiating a deal with an investor that would be investing a sizeable - amount of money, - the company at a time we were already negotiating the terms. - She had all the assurances that the deal would happen, - and the entire team was probably excited that we were taking this next step towards further - growth the company to hire more people and to really just take the next love. - However, - at the last minute, - the deal got pulled out. - Investors said, - Okay, - no longer do the deal and this was still remember that this was at, - like, - 11 o'clock at night on a Monday and my head instantly just hit the desk. - Once I heard the news, - it was a devastating blow. - And the next day I never gathering my team and talking, - talking to them and saying, - Look, - this financing is not going to happen even though we thought it was a sure thing we may - need to consider alternative. - Okay, - so that was a really, - really heavy and low moment for the company. - You know, - those are the sorts of things that when people talk about starts being roller coasters with - the highest highs and lows lows, - that was a really low point for us. - However, - four days later was when we really started getting a lot more fraction of users and our - user base dull in a matter off one month. - And that was the moment that helped catalyze our fundraising, - and we were able to pull together that round leader year. - So it was just amazing to see that in the space of a few days, - we figured okay. - This company might just go under. - We might not be able to take a through away. - And then later on, - we saw this massive opportunity and things just worked out. - And the only reason that was possible because he kept grinding. - We kept going after gold. - We didn't give up. - We were really convinced that that was that happened, - that we were gonna fail. - And we're gonna have to go shut that company and get jobs in the last thing. - But in the end, - because you were persistent because he kept going at it, - we were able to make things work out yet. - So when you hear about companies succeeding and they seem like blowing up the headlines, - don't tell the entire story. - Not every ship, - every company seems like a rocket ship. - Wasn't always like that. - But the idea that there's no such thing as an overnight success these things take a lot of - time for them. - Teoh eventually develop something valuable. - So the first thing that I would leave you with is persistence really, - really matters. - You're going to get a lot of knows. - We're going to get a lot of rejections. - You're going to get probably when the worst seven responses from investors, - which is okay. - Interesting. - You know, - we'll think about it, - and then you never hear from them again, - which is basically a soft snow. - But the investor really just doesn't want to have to go and outright rejected. - So you're going to go and face a lot of after the process. - Don't be discouraged. - Fire. - You're gonna have to grow a thick skin and you're going to have to be able to read the - signals. - But as long as you keep persisting, - things will work out. - The second thing I want to leave you guys with is you know, - we're talking about out of pictures business. - We're talking about how position different aspects of the company We're talking about how - to get from investors and build relationships with them. - But the most important part of this entire process, - you know, - I talked about then there, - right that the central key structure off this fundraising process is creating a compelling - narrative. - And the most important part of that nerve for early stage company is the idea of either - product market fit or an alternative for that is founder. - In other words, - the investor needs to be able to build conviction that you are the company and primarily - the team early stage team that will go and solve this problem and unlock its huge value in - this world where there's a massive opportunity. - The reason why we emphasize traction and product market fit so much is because that is the - best way to determine if this company is on its way to success in the earliest stages is - the only approximate investors have because sheds are you probably didn't graduate from - Stanford. - PhD probably didn't are decided company to Google or Facebook. - You probably don't already have multiple wins under your belt, - so for them, - it's hard for them to conceptualize. - Whether or not you as a founder are really set to go. - It solves problems. - So there's always been a look attraction. - So what I would advise to do is, - of course, - if you do have the background that's really relevant to the problem set, - you're going to want to go and promote as that's possible. - But for most of you, - the most effective strategy is to focus on building value for your company and finding - product market fit. - And that may seem obvious your your ability to start up because you want to build dying. - Want to find right fit for your for your company. - But a lot of people tend to forget that when they're fundraise, - when they're focusing less on investors. - Oftentimes, - people seem to think that raising money is the end goal, - but it's not. - Raising money is going to start. - Okay, - It helps enable you Teoh get closer to product market fit or two celery if it But at the - end of a your mission, - your job is to build value so your company has to focus on understanding your customers, - figuring out their deepest pain points and understanding how your product can go and solve - those pain points in an elegant manner in a way that makes their life better. - So fundraising, - no doubt, - is a full time job. - But you always always, - always have to keep your mind on. - How is this company going to continue to build value that meets those needs of the market? - And if you go do that that everything else falls in place, - lastly, - don't leave you with this thing about in terms of probability, - right? - So if you were to go and focus for leprosy, - making sure that your company reached 500. - There's basically three possible outcomes. - There's okay, - the company hits part, - might benefit and your investors come knocking on your door, - and they want Invest money company. - The second outcome is you find so much except so much success with the company that you - don't need to raise money because you're able to start generating revenue and having a - business. - Or third the company fails because it doesn't is not able to go and find out. - That's That's if you focus on getting product market fit. - That's if you focus on building value free company. - The second alternative is focusing so much on fundraising and pretty much putting the - brakes on the rest of valuable in your company. - If you do that, - there's only one of two officers there why they raise money successfully, - and now you have more time to build the company or you think so. - Think about it, - you optimus, - for product market fit, - and you're much more likely to succeed versus if you focus all their efforts. - Remember, - your job is a founder is to build value in your company. - Never this ethical and when it comes to fund raising. - If you continue to focus on getting closer to product market fit and you keep investors - involved in that process, - something magical happens that Marable right itself, - those investors will watch you. - Over time, - we'll see how your involving with the market. - We'll see how you're learning more and more about your customers and building the better - and better product to serve those customers. - And eventually those investors will build a conviction to believe in you invest in a - company. - So, - like I said, - before you focus on product market fit, - investment will come. - Believe it or not, - we've come to the end of the course. - Your final assignment for this is to take the elevator pitch that you formed and Unit one - and imagine that you were delivering it to the investors that you identified needed three. - And I want you to record that in a video in less than 90 seconds. - So remember the elevator pitch is all about summarizing the most important essential facts - of the company in a short of time as possible. - 90 seconds isn't very long, - but it forces you to make sure focusing on the most important parts. - This is not gonna be useful for investor pitches, - that it will be useful for you as a founder to evangelize the company wherever you want. - Because no matter what, - you undermined the people who are interested in learning what you're doing, - whether it's an investor, - potential employees, - your mom and dad. - You know, - someone run to in the street. - They're all going to be curious about. - Your job is a founder is to make sure that you're spreading the brand and the company - message wherever you are. - So this will be good practice to make sure that nailed on the message. - You could deliver it very, - very quickly, - snapping finger. - So make sure you spend a lot of time on developing this and uploaded to the product when - you're done. - And as a final word, - I just want to say thank you so much for taking the time to join me with this course on - raising his first seed round. - Remember, - this is just the beginning. - Early stage start ups about persistence there about hard work, - and if you keep going at it, - it will pay off. - Thank you so much.