Special: The Vitalize Podcast - Simplifying the Fundraising Process for Founders, with Jordi Hays of Party Round

Welcome to Just Go Grind. Today we have a special episode from the Vitalize Podcast, our show at Vitalize Venture Capital. You can find all episodes of the Vitalize Podcast on Apple Podcasts and Spotify, or go to thevitalizepodcast.com. Let's get to it. Jordy, welcome to the show, man.

Stoked to be back. It's been a minute.

Yes, it has been a while. And yeah, you've been up to a few things since we've last chatted, I think a year and a half ago it was now, a different company. Now you have PartyRound and A lot of buzz around PartyRound, what you guys are doing, raised a bunch of money recently too. For people who don't know though, let's just set the scene here. What is PartyRound, Jordy?

Yeah, so PartyRound, as you may have guessed from the name, is a fundraising tool for founders. So we make it really easy for founders that are doing SAFE financing rounds to come onto our product, create a round, start inviting investors, and the entire process of fundraising kind of goes from, you know, being super expensive, time-consuming, to basically, you know, once you're set up on PartyRound as a founder, all you have to do is invite investors, set how much you actually want them to invest, and we automate the, the entire rest of the process. Everything from documents to collecting funds, the whole experience end to end, and we make it a super digitally native experience, right? So as an investor, it's the same or even potentially better experience than you would get on other sort of fintech and investing platforms. And yeah, so we're pretty focused there at the moment.

Okay, hearing you describe it, and obviously knowing about it before, having the context around it, it's like, okay, no-brainer. Yeah, of course, it should be easier to fundraise. When you started this company, though, you started— what was the idea around that? What did you see in the market? You're like, there isn't anything? Like, why isn't there anything? I'm curious about the starting of this.

Yeah, totally. So a couple things. So one, around the time that we were starting this, Actually, going back to my last company, when I fundraised during that time, you know, I was young, inexperienced. I, you know, while running the fundraising process, I had certain people that I wanted to get involved and realized just like how much, how little fundraising had evolved in basically the entire history of Silicon Valley. And I, you know, one example being I had one of my first investors, a guy named Chris Quinn, who you would have a good conversation with. He at one point was like, hey, I'll put in $500 or whatever. I'm not investing a lot personally these days. So I take that back to my lawyer. And I tell my lawyer, alright, I have this guy who's gonna invest $500. And my lawyer basically like laughed, laughed me out of the room, or at least the Zoom. And he was like, well, you realize that I cost $1,000 an hour. So after I help you raise this money, it's gonna cost you like $1,000, you may as well just like shake your friend's hand and move on, right? Doesn't make any financial sense to raise this money. At the time, like obviously felt that was silly. But I also was little bit stubborn, and I wanted him involved. So I ended up having him invest that money. And soon enough, that investor, Chris, had driven in like $50,000 in attributable revenue from customer introductions that he made. So that was definitely a lightbulb moment to realize that somebody's value as an investor is not tied to the dollar amount that they invest, right? In fact, it's oftentimes quite the opposite. Yet, because nobody had really created compelling software around something like this, it just made no financial sense to take less than sort of a $25K minimum at the time, right? And so yeah, I really felt that there needed to be something that allowed founders to— it shouldn't take any more effort to raise $50K from somebody as it should, or it shouldn't cost any more to raise $50K from somebody as it takes to raise $500, right? And so software is a really sort of compelling solution for that. And then second, I was just sort of looking around the space and realizing that startup people had basically modernized investing in every single asset class, right? Like, if you or I wanted to go invest in wine, sneakers, trading cards, like basically any alternative asset, we can download an app on the App Store and basically be invested in that in a second. Not to mention sort of what goes on in the NFT space where you or I could go spend our entire net worth on an NFT in about, you know, under a few minutes. Yet, if I'm sitting here fundraising and you're interested in investing, historically, that process was entirely offline. So you had to actually get documents out, deal with wire transfers and things like that. When I was starting my first couple companies, I didn't even know what a wire transfer was, right? It's not something— it's something that's totally foreign, right?

Exactly.

So the whole experience end-to-end was super broken. And then when you actually looked out at the space, there's a lot of companies that have tried solving this problem in different ways, companies like Republic and WeFunder and other crowdfunding platforms. And companies like that provide a massive amount of value to the space. And I think they're super important, but they were fundamentally solving a totally different problem, right? Ultimately, companies like that, main role within the ecosystem is to sell investment opportunities to retail investors, right? And so their role was like, how do we open up the private markets and allow anyone to invest. And those companies have been— have found success and have found sort of a wedge in the market. But what the result has been is that, like, the actual needs of companies, especially early-stage companies that don't necessarily want to raise from the whole world, but they just want to raise from their immediate community, those companies have, you know, been left with very few options other than doing things in an entirely manual way.

Yeah. And with that too, so you're seeing that opportunity in this market, obviously a personal pain point. And just more broadly, as you look around, you're like, okay, wow, it makes no sense that it's done this way. We can have a better solution for this. What were those next steps in terms of who you were going to either work with for this? You know, some of the things you're going to build with this, because if you look at your website, and there's obviously the backend of actually pulling this off, but even some of the things you have done to create buzz, it's pretty impressive. But in the early days, like when you're just getting started, what was that vision around like, okay, this is what we're going to launch with. This is how we're going to launch. I'm curious about that.

Totally. First thing that Sarah, my co-founder, and I did was track down Brian and Brandon, who were the first 2 people that joined the team. Brandon spent 4 years at Cash App, and so had intimate knowledge of what it takes to build a peer-to-peer fintech app, which in a lot of ways PartyRound is, right? It's not a marketplace, so it's really about individual networks. And then Brian, who had spent the last 6 years at Cadre. And so as a non-technical founder, we wanted to— we were excited about Party Rounds. Sarah's background as an investor, she's been doing SPVs since she was 19. That's a story for another day. And so yeah, we knew what we had to build, but it was obviously a non-starter unless we had really, really talented engineering and product people to help us pull that off, right? And so after meeting them, and, you know, I think when it comes to, you know, we basically hit the ground running building out the product and everything like that. We knew that with the type of platform that we are building, fundraising is so like timing-based, right? So like if—

Yeah.

And so we knew that we had to build a really compelling brand because we weren't going to be able to rely on traditional paid marketing or sales necessarily, right? Because if I find a founder, no matter how good of a fit our product is, if they want to go fundraise, if they're not fundraising at the moment, there's zero way to convert that person, right? It just doesn't provide value. And so we knew that we were going to need to build a brand that had relatively high profile in the space so that when somebody starts to go fundraise or an investor is interested in them, they're going to know about us. investors talking to somebody that's fundraising, they think party round. And so the way that we went about doing that, and I think, you know, a lot of companies have done this to varying levels of success, is, you know, we looked at tech Twitter as the most important, like, audience for us, right?

Yeah.

And, you know, I talk to other founders about this all the time who are, you know, interested in leveraging it in the way that we have. Usually my response to them is like, stay far away because I think it can lead to a lot of false positives, right? If you're building a consumer social app that's targeting teenagers on college campuses, stay far, far away from Twitter, right? Because Twitter people will think it's cool, maybe you get some downloads, but your users, your customers are not necessarily on that channel. So you should basically stay far away. And so Historically, companies would benefit from having a heavy presence on tech Twitter because it would help with fundraising and recruiting. And I think that's still true. What we knew going into it was that it would be great for fundraising, great for recruiting, but more importantly, it would be great for customer and user acquisition. And so we, I would say, put a more heavy emphasis on marketing earlier in a company's lifecycle in the company's life cycle than I think a lot of companies do. And that ended up working out great. I think we were lucky in a lot of senses because we knew exactly what to build, right? Like, a couple months after we had raised our pre-seed, we had a product that we were able to actually finish our pre-seed on. And then I think there was just this basically When you're building for yourself, you can move a lot faster, right? I think the experience of building with Brandon and Brian and Sarah and the entire rest of the team is like any single time we're having a conversation about product decisions or anything like that, it's the equivalent of having design, product, engineering, and the customer in the same room, right? Because I'm sitting there being like, well, I wouldn't use that. And Sarah's like, well, yeah, you know, I think we should do it this way because, you know, this is what I would want, right?

Yep.

And we're really just like, you know, even when you look at our product and our marketing and everything like that, it's basically like we do things that are valuable to— we build things that are valuable to us, and we do things that are entertaining to us. And the result of that is that other people benefit from the products and other people are entertained as well. And that's kind of core to how we operate.

We definitely have to dive deeper into the marketing side of it. Because that's something where one, one, I'm curious about, 2, I've seen from the beginning of when you launched this and started those drops. And it was like, oh, this is really, really intriguing and obviously interesting details behind that. Obviously, let's go with like the first drop, for instance, like, mine's— did you already know all the drops you were going to do at the beginning? Or did you do one, see how it went, did a different one? You know, take me through that side of it.

Yeah, totally. Drops, we always, you know, I think when we were first raising our pre-seed and you talked to Wenwen, who led our round, when we were first raising that, you know, I remember very distinctly, you know, talking to investors and saying, we're going to do these drops, like, they're going to go viral, like, this is why, this is how we're going to do them. And, you know, ultimately enough people believed that we could pull that off that they, you know, invested and supported us. But I know now at the time that a lot of those people were like, sure, sure, kid, like, you know, you're gonna, you're gonna go viral and blah, blah, blah. And I think that, you know, we always knew that we would be able to execute on that strategy simply because like, we were again, like we were the audience for them, right. And so if we were doing something that we thought was entertaining, We just like, it wasn't like we would never release something being like, we're not quite sure what the response to this is going to be, right? Like, it had to be funny to us, it had to be well done, because ultimately I think your drop, you know, if you're going to pursue drops as a strategy, that's ultimately going to be a reflection of your product itself, right? Like, if people can't trust you to create something, you know, some like funny app or an NFT drop or something like that, They're not going to be able to trust you, you know, to build a super compelling product.

Yeah. And obviously, you executed really well on that with those different drops you had, and a variety of them that you could see were gonna go viral. You know, I guess you guys already knew in your heads that it would, but then, you know, seeing it from afar, me kind of peeking around, like, okay, of course, VCs are going to share that one. Like, you know, the helpful VCs one, for instance, like, of course, they're gonna share that one. And looking at like the startup ipsum was really interesting just to see how it would come up with like, Things that everyone knew you would say in that world. Like, it was just so interesting to see that pulling that off. Like, who did you bring on the team to do that? Was it a collective between everyone on the team? Because obviously it's a big part of your growth strategy, tactically pulling that off. I'm curious more.

Yeah, so I would say that everybody from an ideation standpoint, like every single person on the team, and including people that are, you know, outside of the immediate team but a part of our sort of community, whether they're investors or friends, A bunch of people have contributed ideas. We spend time every single month where we'll block off a couple hours and just talk about what are the craziest things that we could pursue, right? Like throwing a yacht party in Miami, right? Or versus doing something like helpful VCs, right?

Yeah.

No idea is off limits and we'll basically talk through everything and just sort of see where where ideas take us. That being said, from an execution standpoint, we stay super lean there. So Josh and Dylan on our team are the only sort of people on the marketing side, and then we've effectively leveraged contractors to do all the design and development of different drops. So nobody that's really on— nobody on like the core product or engineering or design side of the business really touches them except for from a Just curious what those—

I mean, what's maybe been the most impactful one or one that you've even just enjoyed most? I'm curious. It's been like 5 or so, 5 or 6 so far. I'm curious for your perspective.

I think everybody is gonna gravitate towards one and have their own favorite. And that's why we've tried to make them insanely diverse and not, you know, even if we find something that works, like to not necessarily do it again, right? Like some of these things are best when they're truly unique and sort of in their own category. When I think about most meaningful for me, probably the big tech fellowship where we gave $50K to a woman to quit her job at Facebook and pursue building her startup. And when I look at my own history, the first company that I started out of college was basically that exact experience where I had a few friends that put up enough money for me, you know, that we knew I wasn't— I was building an ad network at the time that, that's still— it's actually been very successful even since I hired a CEO to replace myself. But, you know, at the time, I, you know, had no money. The only alternative to building my own startup was like going to getting a job somewhere or freelancing. And I had a few friends that were basically like, we will put up enough money so that you can pay yourself for like a year, right? It was like a, you know, something like a $50K a year salary or something like that.

Yeah.

And using that, um, using that money, I was able to, you know, by, by having, um, enough money to pay my rent at the time, um, which in LA is not necessarily cheap, but I could go to— I could pay my rent and I could go to Trader Joe's. So I, I had everything that I needed to survive. Um, I was able to go all in on that idea and scale that business to like pretty meaningful profitability, and I was able to pay them back. And that, that business does, you know, 8 figures in revenue today. So I think that that was completely life-changing for me. And I think that there's so many people that are capable of becoming, you know, successful founders that never really get the opportunity because, you know, not everybody is, is ready to like raise VC the second they have an idea, right? Or even raise an angel round. And so I think there's a ton of untapped potential that really is like $50K worth of difference between somebody who's going to stay in their FAANG job or somebody that's going to start a company that has a real impact on the world. And in my situation, the business that I started ultimately is not going to change the world, but today it pays out hundreds and hundreds of thousands of dollars a month to independent creators. And that's a business that like never would have existed in any, in any capacity if I hadn't just had a few people in my life that would bet on me. And so we're definitely hoping to scale up Big Tech Fellowship over the next year and have more, more people go through that.

Yeah, that was an interesting one. To your point, it makes you think like, how much money would it take for anyone to do that same exact thing? Like, is it, you know, $50K, $30K, $25K, whatever, just to have enough runway to actually go after their ideas? And what would they build? You know, it's interesting.

It's It's all about runway. And I think that's part of PartyRound too, is that I think bootstrapping gets so much love publicly, right? People talk about, oh, bootstrapping is this most amazing thing. And I think it's actually pretty damaging to people that want to start companies, because if you tell somebody that has college loans or they have a kid, or things like that, and you say, oh yeah, just like bootstrap your idea until you're ready to raise, that just like doesn't compute, right? Because they're like, I need to pay my bills, I have debt, I have like children that need a roof over their head, right? And so it's sort of, it's this weird thing where over and over and over people say, oh, bootstrap, bootstrap, but it's really like this privileged position to be in where you have enough money that you can not only cover, you know, all of your expenses for a certain period of time, but you can also invest in your business, right? And so yes, it's totally possible to like stay, you know, at a job and earn a salary and sort of bootstrap your company on the side. But, you know, I think PartyRound is also hoping to solve that in a way, because a lot of people, it's extremely difficult to go out and raise like institutional VC right away. But even if you're not insanely well networked, most people have people in their life that would contribute, you know, $1,000 to $5,000 to help them go pursue an idea that's super important to them, right?

Yeah.

I know that's kind of my policy with my friends is like, you know, if somebody is gonna go quit their job and go all in on something they're super passionate about, it's not necessarily— I'm not investing necessarily for the financial upside, but it's more of just like being, for better or worse, being like a— I'm just a big believer in the power of businesses to change, you know, the world in a positive way and change the lives of individuals, right. And so I'm willing to put money down to support that.

Yeah. And even from talking to a number of angels and stuff over the last number of months, and similar thing with a lot of them, you know, obviously, there's the financial upside of it. But also, at a smaller level, even while they get started, it's like to support people they want to support. Who are going after their dreams and obviously going after some interesting companies. Um, and even a number of them, you know, whether it be specifically for women, for people of color, whatever, uh, they want to invest in them. So they're investing and putting their dollars in that, even if they don't necessarily— they want the upside, but also just want to support people. Uh, we're having a mix of that at Vitalize Angels. Like, we— our minimum check size is $1,000. And so we also have people who, you know, are just getting started investing, getting their feet wet. They don't have to be accredited in our group. And so it's interesting to see how that That mix is when you're starting to invest these smaller checks to get a feel for it and start supporting people in that way. But also, you do have the upside if it works out, which is obviously helpful as well. And I want to get your perspective as a founder who pre-seed, you know, you went from Gradient Ventures, other people on board there, and you announced the $7 million total on like TechCrunch and everything from like Andreessen and Packy and Austin Reef and Nick Sharma and all these different people. In that round, you had some optionality, like what did you want from investors? You had a little, I'm guessing, a little bit more of a selection and choice there, just from your perspective, like, what were you looking for?

Totally. I think every, every founder should be going into their round thinking, how can I augment sort of deficiencies, or how can I sort of increase the capabilities of my team effectively, right? And so I think every single person in our, you know, that we've raised from to date played some role, right? That role might be like, they're a friend of the company, and we want them involved. And we don't think we're ever going to necessarily talk to them again, but it'd be fun to have them involved. All the way through people that have large audiences that can provide real tangible benefits to the business. I think what I always tell founders is the reason to raise a party round is not so that every single person is going to be so helpful. It's really because you don't necessarily— if you raise from 50 people, you don't know which people exactly are going to be helpful.

Yeah.

And so you need to take almost like a shotgun approach because the people that end up being most helpful are always up being really surprising, right? I, you know, certain investors come in and make like heavy, heavy promises of like, I'm going to introduce you to customers, I'm going to introduce you to engineers. In my experience, it's always the people that didn't make any promises and then are just in the right place at the right time and can make that super critical intro to a hire, or they can like help convince a hire to join or something like that, right? Or make a really valuable customer introduction, things like that. And so I actually find, you know, I talk to founders all day long, and, you know, I think that sometimes founders actually, like, over— they sort of, like, over-optimize their round in a way where I've talked to founders that are, like, diligencing people that are doing, like, a $5,000 check, and that ends up being, like, a super negative signal to me because I'm like, you're focused on the wrong things, right? If you're gonna diligence every $5,000 going to the company. And yes, it's important, you're starting a lifelong relationship effectively with this person, but at the same time, you should go into it being like, hey, I'm going to get the 50 or so people that I think are going to be most beneficial for the stage that we're at, and I'm not going to stress if some of those people kind of fall off the map and are never helpful or things like that. But I do think that founders pay attention and the people that are helpful You know, leading, you know, after, after a round closes, you know, typically get a lot more allocation in the next round. So it all works itself out.

Yeah, there is, I mean, something to be said for you don't necessarily know which one is going to be the one that helps or has a critical connection to whoever because of their past. And like, that one person, yeah, it's just like so critical and helpful in terms of you getting to that next spot. Yeah, as we kind of wrap things up here, I'm just curious, a lot that you've done already up to this point, but you just raised some more money, obviously. What's next for PartyRound? I'm just curious.

Good question. Right now we're deeply, deeply focused on sort of a cohort of our first like 50 customers, making sure the product is as, I would say, perfect as possible sort of for their needs, right? There's a variety, there's so much nuance to fundraising, and we've just been making sure the product is ready for that next cohort, you know, the next like 500 customers, right? And so we have a waitlist of 30,000 people. We're doing as best as we can to kind of work through that. But yeah, right now, just making sure that the product is ready, ready to scale, because there's clearly an insane amount of appetite.

Yeah, absolutely. And what's the best way for people to get in touch with you, connect with you if they'd like to as well, Jordy?

They can email me jordy@partyround.com or Jordy Hayes on Twitter. Are the best places to find me. Same, same for you, I would imagine.

Perfect. Exactly. Jordy, thank you so much for the time today. I really appreciate it.

Cool. Dude, thanks so much for having me. Looking forward to the next one.

Hey, thanks for listening. If you want to learn more about us, head on over to vitalize.vc. You can also follow us on Twitter @vitalizevc, or you can follow me on Twitter @justingordon212. Have a great day, and I'll talk to you in the next episode.