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

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.