How to Raise Angel Investment in Uncertain Times, ft. Golden Seeds

We're gonna go ahead and jump in and get started right now. So welcome to the How to Raise Angel Investment in Uncertain Times webinar. We've got a really great panel for you today, and we'd love to get to all of your questions. So for those of you who are on, please introduce yourself in the chat, ask any question at any point, and then we're gonna go through and our producer in the back end is gonna submit the questions. and we'll get to it. So my name is Ryan Micholetti. I'm Head of Global Operations for the Founder Institute, and the agenda for today is essentially to talk about the funding landscape, the funding process, and then do some Q&A with, with all the founders that are on the call. And so for those of you who probably already know, Founder Institute is the world's largest pre-seed startup accelerator. Over the last 10 years, we've helped launch over 4,000 companies across 180 cities. Using our mentor network of over 14,000 mentors. So if you're interested in learning more about the Founder Institute, we're currently enrolling across 6 continents, including major metropolitan areas like Silicon Valley, Toronto, New York, and, and literally 100 other cities. So if you're interested, go to fi.co/enrolling to find out more information, and we'll also send a follow-up email at the end of this. So, uh, first speaker today, I'd like to do quick speaker introductions, is Irina Birkin, Managing Director of Golden Seeds. Irina, do you want to talk a little bit about your background and Golden Seeds?

Sure, thanks, Ryan. Hi everyone, I'm seeing a lot of really cool places that people are calling in from. That's very cool to see. So, um, I'm here in right outside of San Francisco on a lockdown, um, enjoying this time. Um, so I, I started my investing career almost 20 years ago, and I started actually with real estate. But about 3 years ago, I got into the angel investing when I invested in a tech company in the DNA healthcare space. Since then, and I was kind of doing that on my own, but then I decided to get some support in that, and I joined Golden Seeds, which is one of the largest angel investment funds in the US. We have about 320 members. All over the country, in New York, California, and a few other states. And we invest on the angel level, primarily in companies that are in the healthcare technology, consumer products, some fintech space. We're a very diverse group. And one of our main criteria is we invest in companies that are led by women, women founders, women executives, and entrepreneurs. We have a very strict investment criteria that we support, and that's why we've been successful for 15 years. It's our 15th year investing together.

Amazing. Thank you and welcome. I would say this to ladies who are on the call, if you're interested in raising capital, Golden Seeds is fantastic. So we'll be providing more follow-up info about Golden Seeds and the partnership we have with Founder Institute. So feel free to write into any of our emails and we'll help facilitate office hours and things like that to help your companies get funding. Next, Adam Spector, why don't you give us your quick background?

Yeah, absolutely. Thank you. So Adam Spector, I'm a 3-time founder actually, based in San Francisco. I've been out here for almost 10 years. I was actually most recently in a senior product position at Twitter, And after kind of was in that role for a while, I realized that one of the things I really cared about was helping entrepreneurs be really successful, a lot of what Founder Institute actually does. So I ended up starting my now third startup, which is kind of crazy, really with a focus on enabling startups to automate a lot of the backend operational processes that frankly distract you from the day-to-day focus that you should have around product, product and sales and getting customers. So that's sort of my day job, is as a co-founder of AbstractOps. But my sort of side hustle, in a sense, and being in Silicon Valley for almost 10 years now, I've done over 30 different angel investments. And on paper, at least, they look pretty fantastic. I would say my IRR, in theory, is far above what even the best top VCs would have. I say in theory, of course, because no one knows, A, what the world is going to bring after the current situation that we're in, and B, many of the companies that I invested in, some of them are getting pretty close to some really big exits, but who knows what will happen. So in theory, a lot of it's on paper, but I have invested in over 30 and seen, I don't know, double or triple that number of potential companies that I've looked at.

Amazing. Well, cheers to hopefully investing in at least 30 more.

I seriously, I would hope so.

Last but certainly not least, my good friend and Managing Director of Portfolio Success at the Founder Institute is Mike Superbici. Mike.

Hello everyone. So my main role at the Founder Institute is that I lead a team that helps the Founder Institute alumni scale. So we basically oversee a portfolio of over 4,000 companies. And one of the main things that we do is that we help founders raise money. So on average, every year I help Somewhere between 500 or so to maybe even a little bit higher, maybe as much as 1,000 companies raise money. That's everything from, you know, office hours to help how to basically interact with investors. I look at, you know, again, thousands of pitch decks. I've seen probably every single term sheet there is to see, and we do this all over the world, right? So, you know, every continent, wherever you are, it's very likely that I've experienced this and Prior to doing this role at Founder Institute, I was a founder just like you, raised money, went through this whole process. So I also have like firsthand experience of kind of like the fundraising process. So I'd love to kind of answer any sort of questions that you may have with regards to process, with regards to kind of how the market is behaving and things like that.

Awesome. Well, we've got a great panel, so thank everyone for joining. So first, let's talk a little bit about the funding landscape and what has potentially changed. So Maybe Adam, you could kick us off. How has COVID-19 affected your investment outlook and your investment process?

Yes, I mean, there's a few things that have been impacted in some ways. In some ways, other things really haven't changed all that much. And what I mean by that is, so my angel investment, we actually do it through a sort of group of people who I kind of lead the group. It's not quite a VC, but I sort of lead that group. And luckily, most of them tend to feel like they have enough liquidity still to continue doing seed investments. And so in a sense, the money is still there. It's of course helped that the market has relatively come back in plenty of ways, so people aren't quite as scared if you have a lot of your money in the market. So that's an upside. There's still capital out there that's looking to be invested. I've actually closed a deal about 3 weeks ago, and we'll probably close another deal next week. So I'm certainly still doing investments. With all that said, probably the biggest thing that's changed is I've seen a lot of companies have to dramatically cut their valuations. With that said, the 2 companies that I've invested in, neither one cut their valuation. They are doing rounds at the same prices that they had before, mostly because their numbers were great beforehand, and frankly, their numbers are at least as strong, if not better, in this environment. which makes them investments that people really wanna do.

So that's really interesting, and I'd love to get Irina's input as well. Irina, how has COVID-19 affected either your personal angel investing outlook or maybe Golden Seeds' investment outlook and processes?

Yeah, sure. So I'll answer it from both sides. So from my personal outlook, I actually did make 2 investments recently also, and one of them was in an industry that absolutely is not going to be affected by the coronavirus and the other industry that is going to benefit from helping people with getting access to tests. So it is, you know, I'm directly investing in a company that, that valuation is going to improve based on the product that they're providing. As far as Golden Seeds, and this is why I really like being part of this group, is we We have about 70 portfolio companies, and we jumped right in to assess their needs first. And we've created different task teams, and, you know, now we have all of our companies kind of on the board, and we're looking at what exactly they need from us to either continue or, you know, maybe get some advising or guidance of how to pivot or whatever else they need to do. And I think that's a very important point about angel investing, that it's, you're not just writing a check, you're really holding the hand of the founders and the companies through the good times and the hard times, and you are really trying to help them. So we are open for investing, and we may be doing some follow-ons on our previous portfolio companies, but we're still holding office hours and screenings for new companies to come in.

That's really great to know. And speaking of which, like, you know, talking about advice to companies and just helping the existing portfolio. Mike, what advice are we giving to founders? They're either part of the Founder Institute or interested to help them kind of navigate the fundraising process in COVID-19 era.

Yeah, so there's basically like 3 types of companies. There are like companies that were basically built like pre-COVID-19 and had a solution before that. Then there's companies that are acutely addressing a problem for COVID-19. So Irina mentioned that, you know, healthcare-related things and things like that. And then there's the companies that are basically gonna be part of the rebuild. Essentially, they're gonna be foundational pieces for the rebuild. The companies that were pre-COVID-19, if they continue their business to do in the same way, they're probably gonna struggle. They're gonna have to figure out a different model that's gonna be relevant for the next 12 to 18 months, just because we don't really know what market conditions are gonna be like. Now, the companies that are solving an acute problem, gonna get funded pretty quickly. And there's actually pretty heavy investment activity for companies that are solving really big issues. So for example, we have a Founder Institute alumni that basically does telehealth in India, and India just passed this new law that enables primary opinions for telehealth, and they were one of the first people to be able to address that, and they're gonna close their round very, very quickly, and they're gonna scale as a result of that. And The other companies are companies that are gonna be part of the infrastructure, part of the rebuild, and they're probably gonna be next up in kind of like the fundraising scene in probably in a couple months. So when companies start to get out of shelter-in-place, start working and things like that, so what does that look like? What does the future of work look like, for example, right? Is that gonna be some sort of hybrid model? And if they're gonna power that, how are they gonna do that, right? And so those are, that's kind of like the next phase of companies. So, you know, if you're not as in like acutely dealing with COVID-19 right now, your best bet is to kind of like build relationships over time. And when you're ready, go back out maybe in a few months when the market starts to open up for like the rebuilding companies.

Yeah, that's really great feedback. I'm seeing a lot of really great questions from the crowd. A lot of them are kind of general funding processes, which we'll get to in a moment. But, you know, now that we're kind of still talking about, you know, the funding landscape in COVID-19, Irina, like, how do you think, like, investment decisions will be made and how is this gonna impact Golden Seed's view on the world and the types of companies that they're looking to invest in?

I think it's going to be very important and this is gonna be the time when the real leaders will really come out and shine. You know, when we look at companies, you know, at an angel stage, you don't know what the product is really gonna bring. You don't know the revenues. You know, sometimes there is guidance, sometimes there's go-to-market strategies, but really we're looking at the people. You know, is this person going to take this idea and really execute it and bring investors and, you know, employees and the company value? So what we look at right now is really this leadership. You know, if some of our portfolio companies jumped right in, they kept us informed about what's going on. They told us, you know, we're the first ones who applied for the payroll loans. We're on top of all of our clients. We're on top of our, you know, China supply chain. So those are the ones that we see really proactively, you know, engaging with us and engaging with our companies. So I think that's going to be the main thing for us to be looking at.

What about you, Adam, from like a solo angel investor perspective? Like, what types of companies are you looking for, and has that really changed?

Yeah, no, I don't think— in theory, it hasn't changed in great depth. I mean, and what I mean by that is my key criteria that I always look for is, one, I really want to get to know the founders. As Irina sort of mentioned, I mean, I really care about it at an early stage. Part of why I'm doing my own company, AbstractOps, but also part of what I like to do in my investments, and I think what has made them successful, is finding founders who are really passionate about what they're building. And every founder, of course, thinks they're passionate, but really understanding why are they passionate, why is this a really big problem, and frankly, one that they can articulate really clearly. I actually looked at a deck earlier today that— it was a really great deck, but it had 5 different things, and I kind of came out of it like, I'm not really sure what they were doing. I mean, what the real value prop they were trying to get by. And so that wasn't really clear. So in some ways, my criteria hasn't changed. Really, it is about the founder, someone I wanna spend time helping and getting to know, and I really try to do that, as Irina also mentioned, try to really do that with the companies I invest in. But with that said, I do think the current world has made it generally more difficult for me to wanna look at I've actually not done any DTC investments, but I'm even less likely to do a direct-to-consumer investment today, just 'cause I also, it's a hard business no matter what. And frankly, it's even harder today when people, really consumers, aren't spending. So it would have to be in an industry that I think is exciting and one that I think has a real chance of doing well in the future. And why, like, what is, the world is changing right now, we're living through this, which is— really scary, but also really exciting if you're a founder and investor. So if you have a pitch and a value prop that makes sense in a future version of the world, that maybe it's a different viewpoint that I haven't seen myself yet, that could be really exciting for me to look at.

So a quick follow-up question to that, because, you know, obviously the public markets are in flux right now. In theory, all of these, you know, publicly traded companies, their stocks are going on sale right now. So From a capital allocation perspective, are you looking at doing more deals, less deals, or are you still allocating the same amount of capital to startup investing?

Yeah, I don't think our allocation has really changed overall from where things are. Certainly, you know, I have a decent exposure to public markets, but I think private markets is an exciting area to be in. And arguably, once again, if you look at historical trends, right, from 10, 12 years ago in 2008, some of the best, most successful companies that we see today that were about to go public or did go public were really started in 2008, 2009, 2010. And there's no reason to think that this time, in that sense, won't be any different. The big difference, of course, would be the valuation will be a little bit lower, but you have an opportunity to build something new in a new world, which means you can build a really, really valuable company for yourself, your team, and your investors.

Yeah, 100%. I mean, we sort of take the approach that, you know, right now is actually one of the best times to start a company because you're at home, you want to do something productive, maybe your day job's at risk, right? So there's no better time to start thinking about, you know, what's your vision and what can you bring to the world to make it a better place. So Mike, question for you. So you obviously see a lot of international deal flow and there's a lot of international companies here. Is there a different outlook in terms of, you know, international companies raising capital versus companies in the US or in Silicon Valley? Like, what have you been seeing and what's some of your advice to the international founders on the call?

Yeah, so there's certain levels of markets, right? So there's like markets that are highly emerging right now with very like early-stage like startup ecosystems. That's one bucket. Then there's companies— there's ones where we're starting to see something a little bit more developed where you do have decent amount of activity of investors. And then there's the folks that are like kind of like top tier. They're kind of like similar activity to the US, maybe not quite like 100%, but you're seeing a decent amount. So let me just start from the bottom and kind of work my way up. So with regards to countries that are like emerging markets, what founders have to do in countries where there is like emerging markets, where you essentially have to educate the angel on why investing in your asset class makes sense, right? Because a lot of the folks that made money didn't make money by running a startup. They usually made money like in real estate or in some other type of project. And you have like the kind of like this really high growth type of product that's designed to scale. So you as a founder have to do a lot more educating, and that's what essentially happens, right? Yes. You have to basically kind of let people understand why this is a good investment process in addition to, you know, trying to convince them to invest, right? So that happens. And as a result of that, it just takes a lot longer, right? Because you have to talk to more people and you have to educate more people and things like that. And then the terms and things like that, you also have to educate people on terms and often they push back. They try to have a lot of more downside protections and things like that. And so you kind of have to educate them why actually that's counterintuitive with regards to startups. Now, in kind of like that secondary market, what ends up happening there is that, you know, you end up just having to basically pitch more people just because, you know, it's a— it's, you know, people are investing on a regular basis, but there's just less, less, less of them and they're a little bit more conservative. So you end up having to just like pitch a lot more people. So you're seeing people pitching somewhere between 150 to 200 people, for example, to kind of close like an angel round. And then, you know, in these— in the top markets like the United States, but there are several others like Canada is another good example of that, where you have a very developed ecosystem with like various tiers of investors that invest at various different stages, the process is not that different. What's different is more just the type of questions that you get. So for example, on the West Coast of the United States, you end up getting a lot more questions around like, you know, how big things can get, like market, whereas for example, on like the East Coast of the United States, you know, a lot of angels tend to go much more deeper into like financial models and things like that. So That's basically what the kind of like the main differences is.

Great, that's really, really good insight. So we were talking about leadership, and since Cynthia from the audience asked, given that there's more diff— it's more difficult now to meet with individuals physically, what are some ways that founders can show leadership virtually and even just kind of make these relationships with investors, customers in this new virtual world? I'll ask that to the panel. Who wants to jump in?

I mean, I guess I can go. The leadership is always a big question, is sort of how you define it, I suppose. But with all that said, I think in my mind, in some ways, the way to show leadership is to project that for your business, hopefully not a lot has really changed, or arguably things are even better now for you because of how— what's happened in the world, and showcase that you can build a really strong pipeline from a business perspective, keep your customers extremely happy, and do all of that virtually, and even maybe learn from the virtual environment that we're forced into on how to build a better, more lean, more effective, and more efficient company. So I think to me, like, that would be a way of showing leadership is keeping your business running as hopefully successful as it was before, if not coming out of it stronger.

Any other thoughts from the other panelists?

Yeah, so I've actually just seen this just from the top portfolio companies in Foundry Institute that are not only, you know, embracing this, but they're thriving. So a couple things. So number one, overcommunication, right? So if we're looking like the top portfolio companies, their investor updates are much more detailed. This is what we're doing, we're on top of it, these are the— this is the plan. Then they're also sharing how they're communicating with their employees. This is like the our shelter-in-place policy, this is what we're doing, blah blah blah, things like that. Then on top of that, many of them are actually already doing a lot of thought leadership around this. So it's rare that you see a company that doesn't address COVID-19 on their website, for example, right? So if you don't have that, you should probably have it just because that's kind of what's top of mind right now, right? What your policy is, talk about it in blog posts and things like that. So that's another one. The other one is basically how they're managing through like various different scenarios with their staff and their employees, whether it's, you know, having to potentially make certain tough decisions with regards to cuts or working really hard to basically, you know, maintain their staff while also growing. Things like that is also another thing. And then finally, one thing that seems to be really interesting is that like all the top companies are able to kind of figure out a way to make it happen, whether it's negotiating with their vendors to basically reduce their cost to zero. We were talking to one company and basically they were able to like get like almost a year-long subscription for this super valuable vendor that they needed to use, and because they were able to kind of negotiate their way through as a result of this. So those are some, just some of the things that I've seen just from the portfolio of founders too.

Yeah, that's great. And just so everyone knows, because we started the webinar about 10 minutes late, we're going to extend it 10 minutes, so we still have more time to, to get your questions. So please feel free to put your questions in the chat. There's some here that I'll get to, but it's a little bit more around process. So one question that came in is, you know, can you give some advice or thoughts on how to run a startup lean, and how would you explain to these investors in these emerging markets, you know, how you could position or why it's important to invest in early-stage startup companies?

So I mean, I think from the lean perspective, I have a really simple answer, which is outsource everything but your core competency. Just stop wasting time on all the other small things. They just— they don't matter. There are ways to outsource them, and you can do it for pretty effective prices with a relatively low drag on your time. So that's kind of the key piece, I think, from that. I'll answer that question. Maybe I'll let other people answer and then come back to the second part.

I can answer the— I can try to answer the second one. So how do you convince someone to invest in emerging markets? So investors, at the end of the day, we, we're looking at returns. You know, we'd like— this is not a charity we're running. So convince us why it is a good deal for us to invest in this emerging market company. And, you know, what— why are we going to get a result out of it?

Mike, you want to add something?

Yeah, I was gonna say, I agree 100%. Like, it starts with the value prop of your company. And in many cases, in emerging markets, you kind of have like this blue ocean where you have an opportunity to really take over things and do it very quickly because there's a lot of things that can be improved. So that's number one. If you can't do that, you don't have any hope anyway. The other one is this concept called like kind of like the barbell strategy, which a lot of founders in emerging markets use. So for example, picture kind of like a barbell. So on one side of that barbell, you basically have investments that are basically relatively low risk. So many would argue real estate kind of falls into that. And then on the other side of the barbell, you have these investments that are kind of like higher risk. So for example, startups are one of them, but extremely high returns, right? So on the right-hand side where you kind of have like the real estate and other types of like less, less, less, you know, risky assets, you're essentially protecting a lot from the downside. Whereas on the other side, you're essentially optimizing for upside, right? So With the startup, you basically can lose 100% of your money, but you can also gain 1,000% or 10,000% depending on how good, you know, the company is, right? So you can only lose 1x your money, right? So under, you know, there's a lot more nuance to that, but essentially you essentially kind of have to go and educate people, investors in emerging markets about this concept.

That's great. And so we'll transition to the funding process. And I think a good question here from the audience is, You know, will there still be a place for impact investing? And this kind of goes to what you were just talking about, Mike, starting with the value proposition. But does every founder have to be a potential unicorn to get attention? Irina?

I think there's always— now maybe even more— Oh,

you're good.

Okay. I think maybe now even more than ever, impact investments are going to matter. You know, there's so much, you know, hardship going on because of people losing jobs and a lot of, you know, I see a lot of people coming together and really trying to see how they can help the world. You know, maybe we are here in our little bubble in the Bay Area and maybe that's not happening everywhere, but I do see a lot of that happening. So I absolutely wouldn't discourage it. I think it's— there's totally going to be space for that.

What about you, Adam?

Yeah, I mean, I think the only thing I'd add to what Irina said is that the— I do think there's potential for an emerging change in how people invest in, frankly, the businesses that will be created around the idea of creating businesses that are more focused on impact and the value that they provide to all parts of society, and not just totally from a Straight-up return perspective. I still think they should have a good return, but I do think there's a potential that one of the changes we'll see come out of this whole crisis is the type of businesses that are created, and frankly, the type of businesses that even corporations today want to be, are a lot more focused on the overall ecosystem that they're a part of versus just the bottom line for their investors.

Agree 100% with Adam. And by the way, you know, that's also just one of the things here at the Founder Institute. We as a whole company agree to that. We, you know, we want in 10 years that for 80% of the companies that come out of FI to have some sort of like an impact angle. It could be like a UN SDG or it could be how you kind of help within the community and things like that because we believe that these are actually gonna be really good businesses because consumers really care about these types of businesses, right? And so, you know, when there are black swan events like this, for example, that we're undergoing right now, a lot of times folks end up still giving money to things that they really, really care about and they have— it actually turns out that that can actually be a

Right. And never forget that the point of investing is to make money, right? That's why the angels are doing it. And I definitely think that, you know, if you can position it as, we have this super valuable business opportunity and we need your money to do this. Oh, and by the way, this is going to positively impact the world in, you know, such and such ways. That's a much stronger value proposition than starting with impact Because even though it is a growing segment, you know, I've spoken with many investors that they're looking for deal flow that's going to return money, not just do good, otherwise they would invest in nonprofits. So make sure if you are doing an impact company that you actually have a very strong value proposition and you lead with that, and then you talk about how it's also going to impact the world in a positive way. So let's get into some of these process questions. This one was asked early on. Mike, maybe we'll start with you on this. How effective are pitch competitions to get an early-stage company noticed by potential angel investors?

I mean, it depends on how good you are in that type of format. So if you are good at those types of formats, you will get it, sometimes get attention, and you'll be able to get leads. But the key with a lot of those is that you want to kind of be at the top of the cohort, right? So if you're going to be pitching along with 10 founders, ideally you win like the top prize. Like the company that's like number 8 generally doesn't get as much attention, right? Not all the time, there might be somebody that finds that idea really interesting and things like that. So it really depends on your— on that, but it's, again, it's more like a lead gen thing, not like a way to kind of close investors, right? You might be able to meet some really good investors that way though.

Any other feedback from Irina or you, Adam?

I haven't seen— I mean, I haven't seen a ton of success from pitch competitions. I think the value, though, from a pitch competition can be forcing the founder to get really good and concise at explaining their value prop and explaining the company, which when you talk to an investor is super critical because frankly, you don't have a lot of time to get across your message and why you're important and different before someone loses their focus. The unfortunate thing with any investor, I would say even more so in some cases with VCs versus angels, is they're getting pitched all the time. And so you have to be able to stand out. And so that comes down to how well can you tell your story, how well can you pitch your value prop. And so frankly, the more times you can get in front of audiences and practice that pitch, the better.

I agree with that, but I would also warn founders not to, you know, to make sure they understand who's putting on the pitch competitions. You know, it should be somebody reputable for you to, you know, even waste your time, because there could be no investors there. You know, if I hear the Founder Institute is putting a pitch competition, I would totally apply, because I know there's gonna be, you know, value there. If it's, you know, just make sure it's not gonna be a waste of your time based on who's putting it on.

Yeah, 100%. It could just be a shiny distraction, right, that wastes time. So, you know, another question here, and this goes to the international audience: how relevant is the US venture funding model for startups outside of the US?

It really depends on kind of where your company is located, because we're seeing a lot more activity in VC just growing across the world, and it's becoming pretty internationalized. And so, you know, There's funds being created everywhere right now, and it just depends on how well-developed the ecosystem that you are in. For example, right now there's a very developed ecosystem in Vietnam, so there's a ton of venture capitalists there, and even some of the folks in Singapore are making investments in the whole entire Southeast Asia region. So that model does work. It's just— a better way to kind of think about this is the kind of business that you have, right? So if you have a business that can become a very large company very, very quickly, can generate hundreds of millions of dollars, if not billions of dollars in revenue in say 5 to 10 years, that type of trajectory, oftentimes venture capital can help you get there and help you get there faster. So, you know, good investors will generally find you if you're able to grow quickly.

So this next question goes back a little bit to COVID-19 and the pandemic. Do you think COVID-19 will cause investors to change their check size or valuations for seed stage?

Yes.

Go ahead, Irina.

Oh, I— yes, it will. I mean, the valuations are definitely going to change, and they could change for the— for higher or for lower, you know. And that's, that's, you know, the first question we ask anyone who comes to us right now, I guess, in the last Let's say two or three weeks—is what have you done to address this issue? And some of them have done, you know, my product is extremely relevant, so I reevaluated my you know supply chain and my revenue projections, and I'm actually going to be selling more, providing more services, or I've scaled back, and I now evaluate evaluating how I'm going to you know get through it and maybe. cut down my costs and apply for government funding. But that is definitely changing for everyone.

Yeah, no, absolutely. Just like valuation clearly once again has changed in many cases, unless you're an amazing business that's doing better in this scenario. The other thing though to bear in mind is, as a founder, I think valuation in the past few years became sort of a vanity metric, and one that frankly, isn't all that relevant to your overall long-term success. It feels like something as an early-stage founder that you wanna optimize for, 'cause it's really cool to be the founder of a company that's valued by an investor at $10 million. Of course, it doesn't mean anything. It's all on paper. So, and frankly, I'd rather be the founder of an Airbnb or an Uber that raised at something like a $4 or $5 million valuation in 2008 than the founder of a company that raised at a $20 million valuation that's worth zero today. So in the end, if you have a great company, find great investors who you care about, who can help you be successful. Don't stress the valuations. Yes, they've gone down. Who cares?

Yep.

Great. So there's a lot of questions here about valuation and things like that, but I wanna skip to something else, which is when you're investing in companies, right, Are there any, like, we talked about leadership, but is there any, like, particular things, like top 2 or 3 things that you look for in the founder that is either a very big positive or also a very big negative? Like, what's sort of like the one really good thing and the one really bad thing that you're kind of on the lookout for during that first meeting? You wanna start, Adam?

Sure. I mean, I think the thing that I'm really looking for is why are they the right founder? to build this company? So what is their experience in that? Why are they someone who has special knowledge or a differentiated bit of knowledge about that space that can make them more successful there? Or what sort of pain or challenge have they gone through to get to that point? So that's sort of one thing I definitely wanna look for is understand that about the founder, and that's the investment I just recently did. They have a very clear story for why they wanna do it. They're also the right sort of founders for the industry that they're building in. Not only do they have the personal story, they also have the right sort of background to do it. Probably the one that might be a bigger negative for me is also just how quickly do people follow up to get things set up? What is their speed around follow-ups? These are small things, but in the end, I wanna invest in teams and in people who can move quickly. And that's— it's a small thing, but respond quickly to emails, especially to investors, but frankly, to all of your customers too. Those are just small things that I look for if I'm looking like, hey, is this someone I want to invest in? Can they move quickly? Can they be effective and efficient? Since you have to make quick decisions to build a successful— quick and smart decisions to build a successful business.

What about with Golden Seeds, Arina? What's sort of like, is there a key thing that you're looking for, and is there something that you're also on the prowl for to make sure like you don't get any founders with bad tendencies or habits or things that are a potential risk for the investment?

Yeah, so the second question, maybe I'll start. The risks are, you know, what is your track record? And it, you know, just, you might have failed at something before, but we'd like to know how you left it off with your investors. You know, we don't want to get in a situation where the founders, you know, just don't care and they won't make the right decisions. And even if you failed before, we'd like to know and understand what happened and perhaps, you know, you're gonna do better this time and we can trust you. One of the things in addition to what Adam said, I look for is how can— how well can you recruit a team? When you're a founder and you have no money to hire anyone, you really have to sell, you know, yourself and your company to your second or third or fourth employee or co-founder or partner. And those people, you know, I'm in it for just a little bit of my money. Some of these people are in it for, you know, their whole career, their whole— you know, maybe they're working without a paycheck. So how did you sell it to your CTO, to your, you know, head of operations? And if you can do that to those people, if you can get a stellar team to work for you at the early stages, then I think for investors, that's a really good sign.

Great. And so, Mike, a question for you. In your experience right now, are funds more focused on triage in the current environment, or are they still actively looking for opportunities?

Yes, they're definitely 100% more focused on triage. So as a fund manager, so as a VC, that means that you are taking other people's money and you're investing it in startups. So therefore, your returns have to be much larger, your risk profile is a little bit different than an angel who can just kind of make a bet, right? And so If, if you're a fund manager, you're looking kind of at the future, and it's, it's just hard to predict what the future is going to look like, just given all the things that are changing on a weekly basis. And so it's really hard to create kind of a thesis. So in general, not all— there's no, there's no, there's no like one-size-fits-all rule, but a lot of funds, I would argue even the majority of funds right now, are kind of taking like a wait-and-see approach, trying to kind of help their companies out. And if there's like a super interesting opportunity that is, you know, taking advantage of the COVID situation, but not only that, it actually has potential to scale post-COVID. This is super important, right? Then they will probably make a bet. So we had an alumni that pulled down $30 million last week, but, you know, they discovered COVID-19 in California and that, you know, they're like an urgent care company, right? And so, you know, that's— it makes sense for the environment, but also in the future, it's very believable how there could be basically a very big need for this new type of urgent care model, right? So it's not only now, but it's in the future. But as a general rule, yeah, I mean, people are kind of scaling back for like the next month or so, and let's kind of see how things go, and then eventually they'll probably open back up again.

That's great. So, and this is kind of a follow-on question, what's the average amount of pitches you have to do in order to secure funding for a company with a product and some traction?

So on average right now, top companies are pitching somewhere between 50 to 100 investors to close an angel or seed round. Now sometimes that happens faster, sometimes that happens less fast, kind of depends again where you are and what your location is. But it's honestly not uncommon for founders to have to pitch 200 people to close their seed round, and the majority of those people will say no. And so this, you know, back to kind of like some of these qualities that were brought up earlier, Right, like, so tenacity is another one that's super important. So when we look at kind of like the folks that go through our programs and end up raising money, you have very, very tenacious folks that just, you know, will just keep going after it, just kind of run through walls to kind of make it happen. And sometimes with fundraising, particularly early on when there's just like a lot of unknowns, you just kind of have to keep, keep, keep trying it a lot of times.

So here's a question, and there's been variations of this question, so I'll start with you, Adam. You know, what are some of the best ways to build relationships with investors? And, you know, what would be a good strategy to approach angels during the pandemic? Are cold emails more acceptable now than they were before?

So maybe start with the last question. I mean, I think cold emails haven't changed in their value in a sense, like, they're good to do, but it's also tough to get through and cut through the noise always with a cold email or a cold outreach. I think the best way to build relationships are almost always, at least for me as an angel, right? It's not my full-time job investing. So I don't have a lot of time to like read through just cold pitches. So generally speaking, I want to get an introduction from someone I trust who can really say, hey, look, this person's really, really good and fantastic, and you should definitely talk with them. I mean, I almost always take those calls. Other cases that I help judge, some of the Founder Institute stuff and have worked with this team and folks that I meet through the Founder Institute, some of them have followed up with me as well, and because I've already spoken with them and they come through a pre-vetted group, I'm much more willing to have those conversations. So, and the last part around building those relationships, I think the best way to do that is, if you find somebody who has some interest, ask them if they are okay with you adding them to your newsletter or your investor update. and send them an update on a weekly, biweekly, monthly cadence, depending how often you're kind of doing— how great new things are happening. And they'll probably read them, right? It's low cost. They can read them, not have to respond. And the moment you say, hey, look, we're crushing it, here are our metrics, you've seen this for the past 2 months. By the way, we're doing our raise and we've already raised 50% of our money. I bet a lot of people will say, hey, let's have a conversation.

What about you, Irina?

Well, Golden Seeds has a process for this, and we digitized it very quickly as soon as we realized we're not gonna be able to see each other and our founders or potential companies in person. So we hold office hours in our New York office, our Silicon Valley Bay Area office, and our Arizona office, I think, and maybe a few others. And our office hours used to be in person, and we very quickly just made them via, you know, Zoom or some other digital way. And, you know, if you cold call me, I will send you to office hours. So it's, it's not really gonna help. And the way the office hours work is there's about 3 or 4 of us who will meet with the people who come to them for half an hour to discuss anything you want. You know, we can talk about the weather if you want, but if you'd like, we can talk about your pitch or your company. And during that time, we will advise you at which stage you should come to us for investing, to pitch to us. And all of that is now online, and, you know, we haven't skipped a beat. So I would say, you know, find out from— you know, make a list of the VCs and angels you want to reach out to and find out how they are accepting screenings, and then go through that process. There's a reason that process

Are there— so to follow on, for particularly Golden Seeds, are there any like stages or KPIs or things that you recommend people have before approaching Golden Seeds?

Well, for office hours, there are none, and this is kind of one of those things that we do, you know, we've done this for the last 15 years, almost like giving back. You can come to us at any stage, even if you just have an idea. So, you know, don't worry about it, sign up, we'll talk to you. For screenings and for investing, we do have our criteria online. One of the most important ones is there is a woman leader, founder, or C-level executive. The rest of them, I encourage you to look on our website.

That's great, especially in the digital era. In fact, Founder Institute is going to be opening up office hours to anyone who wants to to get basic feedback about their company and see where we might be able to help. So everyone who's a part of this webinar will get the chance to do office hours with myself, Mike Supravici, who's on the call, or other people from our Silicon Valley HQ team, as well as our Silicon Valley mentors. And so those opportunities when you can meet face-to-face over Zoom, specifically over Zoom, it's a really great chance to just start building relationships, right? It's certainly harder to get in front of people and it's much harder to do that, but you kind of have to play the cards that you've been dealt and this is what we're all working for. I also see Sunil, you're part of the audience. So we have a guest here, Sunil Sharma from Techstars Toronto. He's the managing director there and he also runs Founder Institute. So if you're up in Toronto, we have a program that's gonna be starting in June. So feel free to go to fi.co. and apply there. He's also very open to taking a LinkedIn introduction. So Sunil, thanks for joining us. So as we kind of wrap up here, like one of the last, you know, questions that I want to ask is, you know, given everything that's happening, what are some of the best next steps? So, Arina, we talked about doing office hours with Golden Seed or Founder Institute, but Adam, on the individual angel side, like is there any advice that you can can give founders who are, you know, looking to make those like 200 individual meetings with angel investors? Like, what's the best way to get in front of them?

Yeah, I mean, I think the best way by far to get in front of folks is— and it's sort of been mentioned a little bit during this call— but I really recommend founders build an Excel spreadsheet of their top 200, 300 investors. There are a lot of ways to do this and people who can help you do it as well. But your top firms, top angels, names of the people if it's at a firm, name of the investor at that firm. Then go through your LinkedIn connections, go through the connections of your current investors and see who's connected to those people, and then have them make a warm intro. That's almost always the best way, at least as an angel, as I mentioned, to get my attention. It's just really hard for me to validate anything that comes in cold because I just don't have the capacity or time to do that. And frankly, I have enough deal flow from people I trust already that keeps me busy. And I also have a day job and some other things I'm doing too. So I can only look at so much. So I think from a cold perspective, for me, it has to come via a warm intro.

Mike, what about you? What's the best way to engage with the FI alumni team and Founder Institute to get some good business advice?

Yeah, so for us, we're pretty easy. So most of the companies that graduate, we take over and we proactively reach out to you and we help you. We have several programs that are designed to help you. So a lot of the stuff we talked about today, as far as raising a round of financing, we have a program called Funding Lab that literally holds your hand through this entire process, that helps you build a list, as Adam mentioned, which is super important. I can't stress how important that is. And also you will be able to basically leverage the, you know, 15,000 mentor network of Founders Institute to be able to find these second-degree introductions to the folks that you need help with. I do wanna stress, 'cause this is really important, I do see this a lot, it is really important for you to get a second-degree introduction if at all possible. So good angel investors that have really a lot of deal flow, right, they're seeing hundreds of deals a week, if not more. And so if it's cold, it's just not gonna be prioritized versus the folks that are coming in through a warm introduction, right? So it's just gonna be harder for you to kinda stand out. So Finding a second-degree connection is really, really important. And then just running a really tight process, you know. You know, this is not something you kind of want to do willy-nilly. It's like, I just want to talk to a couple investors here, a couple investors there. No, you want to kind of like run a structured process where you're meeting 10 to 20 angels, 20 or more VCs a week for a few months until you close your round. And that becomes kind of like your number one priority. It should take you 30 to 40 hours a week, if not More while you're running your business, right? It's super important to do that so that you can essentially create almost like an auction for your business in the best-case scenario.

Great advice. Irina, any final comments from you?

Yeah, well, I'll just make one comment about cold calling. I agree with everything that was said, but if you are following someone and you really don't, you know, have a contact with them— so what happened today is I posted something on LinkedIn and somebody, I guess, saw that post and they reached out to me and said something about that post that was very relevant, and then they related it to their company and asked the question. And this wasn't a super cold call like, hi, I'm inventing this, please invest. It was very relevant to what I was already talking about. So you can do cold calling. I don't know if that's cold, cold calling, but it was semi-warm and it was relevant. So it got my attention even though I had no idea who this company was or the person is, and I responded. So, you know, think about it. You may be in a position where you don't know anyone, but you can learn and be relevant to the person you're talking to. And

I'll actually add really quickly on top of that, Irina, it's a great point, which is there are other ways, like a cold email or cold LinkedIn message doesn't— don't work great, at least for me. But if you respond to something that I've written on LinkedIn or a tweet that I put out, those are really good ways to actually get my attention and I'll be much more responsive there. And I know it's not just me, it's a lot of other investors do the same thing and you can actually have conversations with people who are very famous, exceedingly good at what they do in these platforms if you have something relevant and valuable to say. And then they'll probably say, yeah, DM me. Reach out directly, I'm happy to chat, because it's not— it's no longer just cold and random. It's actually someone who has built at least a small connection with you as an individual.

Yep.

Another way to hack this process, since we're riffing on this now, you know, one of the top introductions that you can get to an investor is a portfolio founder, particularly a portfolio founder that has done well and returned money for that investor. And founders generally like to help founders because All founders have been helped by someone else in the past, right? So, you know, emailing a founder cold about getting advice on a pitch, you'd be surprised at how many folks would basically take you up on that, and that way you could start building the relationship. And over time, maybe you can get an introduction to some of their investors if you're— what you're doing is pretty legit.

Amazing. Well, this has been a lot of fun, and I think we're just about out of time, so I want to thank The panelists and the mentors, as well as everyone from around the world who joined us for this global webinar. We'll be running these weekly, and we also do an event called the Founder Hot Seat, where you can submit your ideas to Founder Institute headquarters. And we'll basically give you live feedback while on the webinar. So if anyone has any questions, they can follow up, they can respond to any of the emails that we've sent out. We will be sending a copy of this webinar over the next few days. So, uh, thank you once again, everyone. Stay healthy, stay safe, and, uh, happy founding. Take care, everyone.

Thanks, everybody.

Bye.

Thank you.