Consumer Startup Fundraising Q&A: Pitch Decks, VC, Teams, Lifestyle Funding & Exits - Doc Ep 100

Yo back with what is amazingly episode 100 have dropped the journey and I feel like this I should have done some like dramatic compilation videos and maybe I'll do that and post this later or I don't know, whatever hire some fancy editor for that. But the last video I posted was probably like the most, I guess in my opinion like the most uniquely insightful video just in the sense that I don't think it's a topic many people, if any to be honest, speak about on YouTube, certainly not like ones that are currently going through it in building consumer brands etc and I had more comments and DMs off the back of that than usual, like more deep ones. So yeah, I just thought I would answer some of those questions basically in like a high level format. I'll try and make it slightly quicker. Don't expect me to go deep into every question. I basically like chat GPT summaried all the questions combined with like some ones on DNS etc to try and do it over like a few sections. And I will also be using the iPad again which I figured out how to actually record on now. Don't know how much I actually need to show on here this time but I'll track it just in case. And yeah, like I said, high level overview on some of the questions. And then maybe afterwards if anyone's got any more questions drop them down below again drop me a dm, whatever or book a call with me if you want to go through like an insane detail on your own. Because I'm doing a bit of that now and then just on like weekends and because I just enjoy talking about this to be honest. And yeah, I'll probably go through in more depth some of these topics. I don't know where to draw the line on this because I feel like I'm very transparent and I've been more transparent in an area that's probably something I've been less transparent on in the past. But I don't think I've crossed a line there at all. Ultimately a lot of the stuff's in the public domain anyway. So yeah, first section I don't know if I need to draw this, but I kind of Enjoy drawing it. Section 1 Everyone's going to realize that I'm like borderline dyslexic when it comes to fucking writing stuff. Pre rev fundraising fundamentals. Try even fit that on there. First question, how important is a financial model? When should you build it, how does it help, etc etc. I want to whiz over this semi Briefly, Yeah, basically I think a financial model is, you know, basic terms is a fucking budget, right? It's a plan, a spreadsheet, a very fancy in depth spreadsheet of what you're planning to do, I. E. Like next year or in the current year, but like genuinely plan at the end of the year for the next year. So like when I raised money, did we have a financial one before? Yeah, to be fair, we actually did. It's basically just a budget. A lot of people say you can scale without a budget and stuff and to some extent you can, but I think when you get bigger anyway, you're obviously going to have some sort of budget, mainly for like stock, cash, planning, et cetera, et cetera. Give yourself targets because then you don't know what's good if you haven't got target, right? I've heard arguments saying that why do you need a model and stuff? Why do you even need target? It's just fucking scale. There is merit to that mindset and I agree some ways. But when you raise money, especially from less so from an angel investor, but more so later on when you've got revenue and you want to show what you've done, so like management accounts, etc. Then the model is really what a part of what you will be able to raise money on and it's effectively a financial illustration of the business plan next year, right, or the coming few years. So how do you build it? I mean, ultimately I can't do it myself. Unless you're a finance professional, you probably can't do it yourself. We have a fractional FD who I'm not going to say the name of because I don't. I wonder if I can. Gatekeep, I've referred him to a few people, I think he's pretty full anyway. But I'll just go and get a fractional FD. I mean again, like Google, LinkedIn, probably cost you a few grand to get a good one at least. I mean in terms of doing the initial model, I mean, I think I paid ten grand for the first model in one lump sum and then we use this guy on ongoing after that. But yeah, how important is it? I think you need some sort of one certainly to raise money from any bigger ticket investor. So basically anyone other than an angel. So family Office upwards. Referring to the last video, I think it's also just good discipline, good management and good skill set to build in terms of how to understand a proper financial model, slash, budget. It's kind of the same thing. And also learn how to dive in and look at stuff. Right. Because we're currently looking at our 26. 2026. Because our financial year is calendar year, like a lot of ecom brands. I think there's benefit in that 26 planning. And I've, you know, drafted a model which in some ways is like finger in the air stuff. And it kind of is more that when you're newer because you don't have as much data to go off. But yeah, like I said, not going too deep on everything. But I think that's an important one to have. I'd recommend getting a basic version. I mean like Chachi particular probably help to some extent these days in terms of finding who can do it or even just YouTube. But yeah, I wouldn't do it yourself unless you're proper like trained accountant or you know, financial modeler, whatever, which I'm certainly not. But I do understand how to read one in depth now and how to use one. So that's the first question then I'm already drawn here. Second question, how do you pitch pre revenue? Must have elements, team story, problem, momentum. Then this is actually a more interesting question which gives me an excuse to fucking draw on the iPad again, I think. And again, I'll caveat. This video, like all the others, but especially this one, this is my experience. It's a combination of my knowledge, my specific experience in terms of what I've done, what happened to me, what worked for me, what didn't work for me, but also probably more importantly, the curated knowledge and perspectives of much smarter and wealthier and more successful founders and operators than me, I E. Investors I have investors I've met, other founders I've met through my investors that have actually gone on and, you know, built nine figure businesses and exited them for nine figures. Importantly, people on my board who have seen and done this before. So yeah, everything in this video is a collective blend of that. And it's not just me talking or you know, without any context. And it's not just my own context, it's more experience stacked on top of that. So yeah, that said, how do you pitch pre revenue? I haven't rehearsed any of this, haven't planned any of this. I'm speaking completely off the top of my head, which might make me sound stupid or say the wrong thing at times, but it's kind of how I work and how I think and it's how I would pitch anyway. Generally it's not very scripted. How do you pitch pre revenue? This might be a duplicate question later. I Mean, ultimately, I think there's four things when it comes to pitching in general. And then we'll get to pre revenue. I think one is founder. We'll come back to that. And it's arguably the most important one. Secondly is category slash opportunity. Like what is the fucking business? Does it make any sense? Or more like, what is. What vehicle are you in? It's probably a better way to put that one. The next one says kind of vision and story, which is kind of a combination of these things. And then the last one I would say is numbers slash finance model. I want numbers to be actually delivered. So, you know, proving that your concept works financially to your economic extent, and what do you plan to deliver soon? But obviously pre revenue, this one is not relevant. Pre revenue, it's really these three things, right? And they're all easier if you've built stuff before, not necessarily raised money before, but let's assume you haven't built stuff before. Actually, let's ignore that. But just remember that caveat. It's all easier if you've built stuff before. I think the most, like, practical and tangible one is this, right? So the category and opportunity, functional beverage, for example, which is what I'm in, I guess has been quite a popular category because it's had a lot of headwinds in America. There's been major deals that happened in the category, especially in America, which tends to happen first. An extreme example of one that might be less popular with investors and just have generally less tailwinds. I'm trying to think of a good example without saying the wrong thing. Might be, I don't know, fucking teeth whitening. It's kind of happened like 10 years ago, right? With like high smile, other brands. Don't quote me on that because I'm sure there are teeth whitening brands too successfully raising. But to illustrate the point, so yeah, there's that what you're doing, that's the vehicle you're in. Ultimately you've chosen that. At this point, I think there's the founder and I would argue in some ways this is the most important one. In some ways, then why I put an X there. And this is a combination of your ability to explain why you're in this sell, the vision and story of why someone should invest and ultimately why it's why they're going to get a return. Because aside all like the fanfare, ultimately people want to put, you know, easy numbers. 100 grand in, 2 million pound out. That'd be a really nice outcome, right? Simple terms, a lot of Nuance to that. But yeah, easy example. And the founder is really the combination of all these things. And I think it's a lot easier to raise if you primarily have done stuff before, even if it wasn't necessarily, you know, venture backed, even if it wasn't that successful. But you've proven that you have the fundamentals. For me, I built, you know, drop shipping business before. I built a jewelry business to about 4 million in revenue, profitable, no investors, which I sold for a bit of money as I mentioned, not as much as I'd like because of the context. And then I'd also actually in some ways for me this is a great part of the story. I'd had a brand that had grown and crashed and burned and I'd lost a lot of money, got into really poor mental health and actually that became part of the story here, which was like the legitimate story but also the slightly refined version of I got into Functional Ingredient Obsession because I was drinking them, right. I was, I was using them. So basically all these things combined, hot get category, chip on shoulder, founder, at least in my case with some experience, like proof that I can actually build stuff. I think built a good story and my vision was I guess ultimately quite well displayed. So I think you need all these things, these top three things to some degree. Obviously if it's your first rodeo, I think it's going to be harder. But I think you can still raise, most likely from angels, most likely a low evaluation, most likely less cash. But yeah, fundamentally I would say that will come back a bit more to pitch decks and stuff later on. I just realized you can't see my screen with the questions on, but maybe I'll add them in after. So the next question is going to let me scroll. How does this work? Yeah, cool. This is already going to be a way longer video than I had prepared in my head, as it always is. Right, cool. Continuing, I'm going to skip some of these questions. Someone asked third question, how detailed the financials need to be for pre revenue? I think the quick answer that is not that detailed. I think it would come back more to these things. As I said, you probably wouldn't have much of this until you're post revenue or dealing with bigger money, which you would have to be post revenue to be doing. So that's that one. Question four, what do vcs want to see in that first meeting? I mean I'm not a vc. I'm just speaking from my experience. I think ultimately again, cop out. But it's true, they want to See a combination of all these things I think they want to see. I think firstly if they're speaking to you, it's a category they're somewhat potentially interested in because most investors at a VC scale will have a general thesis and a niche to some extent there are like sector agnostic, more general investors out there, there's quite a lot of them, but generally they still have areas that they're more focused on. So assume if they're speaking to you, they've agreed to me. If they've come to you, we've gone to them. For me, initially they came to me, but then I also did to marriage. They're interested in the category. I think they want to see firstly excitement about the category. Why what you're doing is interesting, why you are uniquely positioned to deliver it. Like for me it was the story around. I've done it before. I fell in love with the category from a personal perspective and then I felt like I had a problem to solve and nothing tasted nice and nothing was all in one, no one was doing it in the UK etc. And then a bit around the vision story Ultimately, especially VCs, they don't want to hear you say you're trying to build a 3 million pound a year lifestyle business. Like if that's true, just don't raise venture money basically. So yeah, that's that one. I don't want to spend too long in it. Section three, two, coming down, pitch decks and storytelling. I feel like this is an area I'm probably rusty on and I'll do a longer video potentially and I might even show like the original pitch deck I did back in September 2023, which is ultimately what got a deal done in the first place with a venture investor. High level what to include in the pitch deck. I mean it's basically what I've just spoken about. Like without going into my exact pitch deck, I said the most important parts are and I'm gonna pretend these are slides, maybe like four slides. I'd say your deck wants to be pretty short, but I would say vision, like in a sentence what you're trying to do with the business. Like for me it was I want to build the category defining functional beverage brand, which maybe it wasn't that that was a part of it. I probably had like vision mission. Vision mission strategy. But you get the idea like in a page what you're trying to do. And then I think there's specifics around category and opportunity. Like, you know, is the category growing? Is there a massive gap that you see, for me it was stuff that tastes great, is simplified and is in a growing category that combines ingredients. I felt like everyone in the category was super boring, etc. Vision category. I think especially at early stage, I think you've got to do a bit about the founder, like what's your background, why you, etc. I mean I'm basically repeating myself from the above, but that's because it's all relevant stuff. And then I think ultimately there does need to be some unit economics. Even if you haven't launched, you need to understand this. And financials, even projections. The reality is most people inflate their numbers in pitch decks. I mean I've been sent many and like people saying that their CAC's going to come down when they quadruple spend every month or something. But yes, I think I'm incredible idea of your numbers and it's pretty obvious to any decent investor if you're talking out your ass or not basically. So yeah, that's what to actually include. I think the next question was question number six. What how to tell a compelling problem solution story. I think again, I kind of repeat myself. I think from my perspective it starts with you being the customer first and why did you get into this? For me, I was literally, literally, I'm not exaggerating this, I was unscrewing capsules because I can't swallow tablets and pouring them into a drink. And I thought, oh, these are quite interesting ingredients, you know, too much anxiety from coffee, but it tastes like shit. But I don't want to stack different things. Like a lot of brands are offering, added it to chocolate powder and that was like the first thing. And then I looked at like the story around, I seen what happened in America, blah blah, blah. I wanted to make it pink to stand out because I'm into pink. Like even just a nod to my previous businesses, stuff like that. I mean I can't advise on how to tell a story, but I think if you're going to be successful founder anyway, you probably need to be quite good at that in general. Not even just for fundraising, you know, for inspiring the team, speaking to retailers, whatever it is, how I built my early decks. I mean again, I want to zoom along a bit more here. I used a website called pitch.com in fact I didn't. I used to use Google Slides and realize it was terrible. Use pitch.com that's what I currently use. I think it's like five quid a month or even a free plan. It's just a Good solution. So that's what I use. I actually genuinely think I'm pretty at making decks. I think a lot of bigger brands for bigger rounds and I might do it in the future if we ever raise again or whatever. I'd probably hire a professional deck designer, to be honest, because I literally did it myself. And that there is an art to it, both in the content, you know, the structure, the, the order of it, but also how it looks. And I think mine were okay at best. And maybe I'll show them later. The pitch process before, during and after. I mean, for me, I never prepared for anything. I think my style, as you can probably tell by watching the YouTube, like, I mean, I say I don't prepare for anything. I don't consciously prepare for specific things. I feel like I know the topic inside out. I mean, you should if it's your own business. So I would just go into pitches. I mean, probably bad, but I would even like drop an F bomb because that's how I speak. And it was kind of like, you know, I didn't dress up for any of this shit. I'd rock onto a. I mean, it was mostly in calls. I did have a few in person ones initially, but mostly calls to start with. I'd rock up black T shirt, cap on, whatever shit haircut like now, and just tell the story. And I think if you, if you're authentic and you actually know what you're talking about and you genuinely like passionate and interested in what you're talking about, you know, that comes through. I think it's bad to try and be too prepared and too corporate and too robotic. Maybe there's a market for that. But that didn't work for me. So, yeah, do that, I guess during, I mean, like high level, high, high level. You know, you have a fucking call, you probably have a second call. This is, you know, thinking out loud. Maybe you have a third call. Maybe this is with someone more junior in the team. This is someone more senior. Maybe this is with the most senior. And to be fair, by this point you've probably sent some data. I mean, assuming, speaking to VCs, you should already have numbers and sales. And then maybe there's a meeting in person, maybe there's more data, speak to team, other investors, angels, if you got them, maybe there's another call. Then maybe there's a term sheet which is an offer effectively. And then following that there'd be a very long and painful due diligence, which I mentioned mine was like six weeks. And then, you know, legal Docs and then the final stage, cash and close. So that's a very brief rundown, but yeah, hopefully that makes sense. I'm already 20 minutes in. I'm wasting too much time on each question. So how team structure and dynamics evolves at different stages. If I come right again, this is just for me, so do not take this as gospel, but people are asking, so I'm telling them. I think fundamentally pre, certainly for me, pre venture raising, I just by default thought about doing as much as I could me and very lean basics, right? So like we had a few agencies, didn't have any employees. I had like a few freelancers. So I think the team was like three people when we first rose. It's fucking small. And then I think the biggest change since raising venture and it comes down to ultimately the economics of raising venture money is that you basically have to go big or as big as is like, you know, economically viable, you know, obviously, while remaining efficient, et cetera, et cetera. I'm not saying as big as possible at all cost. I'm just saying you have to think about going bigger. And I think the mindset moved to, I mean, maybe this is obvious, but it wasn't to me it moved to more hiring for where we want to be rather than hiring to fulfill what we're currently doing. So basically investing in future capability ahead of time. And often that can look like heavy opex, at least relative to where you have been as a percentage of revenue. Like, again, I'm not going to say too many numbers because I don't want to shoot myself in the foot by sharing everything on the Internet. But maybe my opex was, I don't know, 3 to 5% pre raise. And then after raise it was probably triple that. Not immediately, but you know, over the next six months to a year. And this bit took me about a year after raising to actually even properly do like we raised in December 23rd. Honestly, I didn't, I didn't. I didn't have a real team like all, not all areas, but like I didn't have the fully fledged team I have now until about a year later. So about eight months ago, like December 24th was when we really fleshed out the team. I spent way too long even after raising because I've not done it before, just thinking, I'm just like, we'll just keep the money in the bank. We just keep running as lean as we were before. But then I realized that had big bottlenecks and you know, we hired ahead of growth. Was the first that's not true. We hired, brought customer service in house as the first employee. Then we hired a social media manager in house. Head of growth was my first, I guess more senior hire. That was like a taking off a big thing for my plate that I was spending. Not off entirely, but obviously initially like working with me and now runs the whole growth team and is doing a very good job. So yeah, I guess that was the fundamental thing, my default being. And this is me plus the situation. I'm not saying this how all founders think. This is my experience. It was me plus whatever I needed to survive. And then it became more how do we get to 50 million plus basically? And people I think naively think they can just do that one person and maybe you can for a month. It's not very sustainable. So the mindset became how can we build the capability and actually hire a bit ahead of growth and then grow into it. So we're prepared. And yeah, there's pros and cons to that, but that was basically how we did it. Bootstrap versus venture back teams was question 10. But again I've kind of covered that in this section. Q11. What to keep in house versus outsource. Yeah, this is like a really interesting age old debate. I'll tell you what we did and what we currently do. And again there's no right or wrong maybe. So what we're doing makes sense. I guess the one thing I haven't brought in house is media buying. We still have an ads agency. I think that's probably one of the few things I would need potentially always not bring in house because I personally benefit in agencies, seeing other accounts, etc. I pretty much brought in house everything else in terms of core function. But then we still use agencies and freelancers for like an extension of the executioner capabilities. So probably sound like I know what I'm talking about and I probably don't to be honest. But think of like the core team. This is employees, employees and like the odd freelancer that we consider like the core team is, I think like I'm gonna get this wrong. I think it's 13 people now, roughly maybe 15. I could be wrong. If you include like all customer service, that's probably 15. And then we have agencies which basically work under key members of this. So like we've got a media buying agency, a creative agency that works in demo, creative strategists, etc. We have the core things in house. We also have a retail agency for example, currently, which may or may not change. But Again they're reporting to someone in the internal team. So someone said it's like a spoken wheel thing. I don't know what the fuck that means, like some LinkedIn exaggerated term. But yeah, that's how I think about it a little bit. I guess that's how we're currently doing it. And then there's the odd, you know, smaller scale freelancer which again just adds into this. I'd say that like in terms of like cost. In terms of cost, bit different in terms of headcount equivalent it's probably like 70% employees now, the rest being freelance and agency. I think it works quite well. Cost wise it's probably more like 60, 40, even 50, 50 because obviously certain agencies there's more than one person so they cost more like so headcount wise, I mean I'm calling them one but cost wise is more so yeah, I don't spend too long on that but that's like high level thing. I suppose the closing point on that might be yeah, I think it may be encouraged to hire in house because. But it's not for the sake of it. I guess it's through the lens of it helps us build a bigger business and future proof and ultimately you want to have people that help you drive the business rather than like agencies that, you know, could leave tomorrow and don't really give a shit. So yeah, that's, that's how I think about that and how I have thought about it. Reporting and accountability after raising. It's kind of a boring question, but I ran over this before. I keep it, I keep it brief. High level model, you agree at the start of the year, monthly finance score, which we'd have anyway by the way, but just with certain investors on basically reporting to the board on performance, are we beating the budget up, down, where are we like, you know, standard and then I guess maybe a slightly bigger one. Quarterly board meetings, which might sound all fancy or whatever but I guess it kind of felt to me a bit fancy at the start. But like basically it's just three hours in a room, even four hours sometimes physically in a room with the investors and key members of the team. Again like stuff you would be kind of doing internally anyway, just reporting on what's going on. Like strategy. More like high level strategy stuff. Run through the course, numbers, etc. Again going back to this model because this is what you've agreed to deliver basically it's not always going to be perfect but like last year we smashed the model this year, smashing it slightly less. But we're still doing well, but I think the model is potentially, like, too ambitious in many ways. And we just, like, decided that would be better to pull back a bit in certain areas to be more efficient. Yeah, that's basically it. I think one thing might surprise a lot of founders, but I think a lot of founders might have to adjust to it is I think a lot of founders of smaller businesses just sort of, how do I put this? A slightly lighter on their, like, legitimacy if certain things they're doing, like, does it put in, like, personal costs for the business, etc. Etc. I suppose that one thing that's changed for me, and we'll get to it later, is I don't do any of that anymore. So I build a big director's loan, etc. Now I just take a salary, like a decently big one, and that's it. Right, because one thing you'll agree to and it's never happened, but you could be audited anytime. Right. And you don't want to be found that, like, I've heard horror stories crazily, like, through the grapevine and founders, like, raising millions and then spending hundreds of thousands on, like, partying. And it's kind of crazy because you could technically do that. Obviously you'd get deep for it. And I've never done that. I never would. But, yeah, I suppose you have to remember, like, it's not your money, it is the business's money and you own most of the business to still. But, like, I think there's a responsibility and a maturity that comes with ultimately, like, looking after money that has been invested in the business and thinking about starting to properly consider your legal obligations as a director of business that you're not the only shareholder in. So, yeah, and that's all stuff that again, might seem pretty obvious, but I think a lot of people would find that a bit of a change. And I guess ultimately this reporting stuff is a big part of that. And I think. I think I mentioned in the previous video, I think it's. It's a good way to learn about proper larger business governance. And yeah, I completely think a lot of corporate stuff. I'm not saying this is that, but, you know, generally a lot of corporate culture, I think a lot of founders would hate. I'm not saying it's that, but it's learning how to manage a business and a larger team with obligations and ultimately shareholder interests that aren't just yours, even though yours will be inevitably the vast majority in terms of equity and, you know, emotional and mental state in the business because obviously funds are invested in multiple brands. So while they care about the business, I would hope that the founder cares most, and I certainly think I do. So, next section. Bit of a personal question this one, but I'm happy to answer it from my perspective. Again, I think everyone's different. The question was, how do you fund your lifestyle? And you refer to not like bougie lifestyle, but just like fucking living. When bootstrapping initially, like low salary, you're not taking it now. And now I'll give you my perspective and then I'll maybe give another perspective. So I'll just tell you what I did. Basically I didn't take a penny out of this business for the first two years. And that's not an exaggeration. That's pretty painful when you're working on something and not taking money out. But I had savings and had my YouTube. I had an E Comm course which did like pretty well. Like I was fine, put it that way. And I guess now. So when we first raised, I started taking a salary which was a decent amount. And then in the last year that's gone up to what is, I guess a more decent amount. I think in general, it's definitely not untrue that a lot of like startups, especially in the London scene. Be careful with my choice of words here. Founders often come from privileged backgrounds. Financially, I do not. You know, the second I was at uni, I had to get a job and pay for my shit. And even the proof in this is when my business failed, like the business went into administration. You know, if I had a multi millionaire parents, they probably would have bailed me out. But I don't. I think a lot of founders do. Not a lot, but like the ones. There's a large amount of that that you read about. Especially like the London Food Bev CPG scene. It's definitely a London thing, which, yeah, I think is frustrating for founders that don't come from that background, but I certainly don't. I think the truth of it is this is why startups are hard. You ultimately want to be, you know, cash flow positive ASAP when you're starting and especially when you're bootstrapping, which I've done before, you need to make it profitable from day one and if it's not profitable from day one, you need to be willing to fund the temporary cash flow negativity of that business either through your own savings or raising money. Like that's as simple as that. And even if you are profitable, especially we're growing quick and you're at the start, you'll be reinvesting vast majority of that cash into stock, etc. So even if you're making hundreds of thousands in profit or even millions, you might actually be seeing much of that, if any. Although I'd hope at that point you're taking like some money out, right? And a salary, whatever dividends, whatever's most efficient. So yeah, the start is hard. I think this is why most people don't choose building a consumer brand because building an agency is less cash flow heavy as in is less, less cash requirements to do that can be more cash flow positive immediately, if not always because you know, ultimately get a client that pay you same with that info and stuff. I think there are better ways to start a business that are less risky cash wise than starting a consumer brand for sure. But if you want to build a brand that's really like in your blood like it is for me, then you figure out and yeah it was a, like even when you have some money and you're not like going to die having, having put so much time, putting so much time into a business and not taking any money out of it is ultimately like the hard part of being a founder, right. I think every founder, no matter how successful they are now goes through a period like that. Especially in building a consumer brand. Whether they bootstrapped it or raise money, I think you still go through that period right at the start. So yeah, it's fucking hard basically. And that's why a lot of people have jobs on the side when they start or they raise some money and even then they probably keep a job or they, you know, I think I've heard of founders, you know, if founders have only raised like a few hundred grand, you're probably not paying yourself more than 20 grand a year. And if you are, you're stupid and you should be keeping all the money in the business. I think it's only when the business is at sort of 10 million plus in revenue and has probably seven figures in the bank that you're going to realistically be taking out like six figures a year. Obviously it depends but like when you're on a growth journey, that's my rough opinion and that's what I've heard pretty consistently with friends and other founders, etc. So anyway, someone asked a question 4 the same as this. So what is you money? I mean I, I don't know, I don't know if I mentioned that in the other video. I think having spoken to a lot of People much wealthier than me that have made a lot of money. I know a few guys that made in the sort of 20 to 50 million personally cash off table after tax range in their 30s. I could name four of them right now, which I won't name but I know them personally like speaks the most weeks etc and I've asked them this question, almost all of them say you don't need more than 10 million personally and that's 10 million. I'm talking £10 million net of tax, like you know, liquidity. Whether you put that in the S P startups, property, whatever, fixed income fund. Because if you're a decent non idiot with your cash at that point you're making minimum like 400k a year passively, hopefully a bit more. Yeah, you maybe need some liquidity if you want to buy properties, whatever, but either way you're making okay, let's round it down. Minimum 300k a year even after you've bought properties, cars, watches, whatever. And that is enough for a nice lifestyle. It's not enough to fly private and it's not enough to fly private, sorry, fly private, you know, have yachts and stuff. But like base level, I think that is happiness. What does you mean? I mean, I mean it's different to everyone ask chat GBT this. I mean even Andrew Tate and stuff have said this. He thinks more than like 20 to 30 million, it just becomes a game. So Maybe it's that 10 to 30 million ballpark is what maybe a lot of founders would like to aim for. I've always had a number in mind, which I'm not going to say, but I do agree that 10 million is probably where I would stop worrying about money. I'll be so paranoid about the next thing. I've made some money. I've not got 10 million personal liquidity yet, but do I see a path to that in the next few years? Yes, I absolutely, genuinely do. I wouldn't be here otherwise and I think actually far beyond that. But yeah, I think as a baseline that's probably my opinion I've spoke about with a lot of people a lot wiser than me and that's what they say. So question 16. Well, it's gonna be a long video yet again, how to know how much to raise, especially post revenue. I think this is an interesting question. How do I answer this one without droning on for far too long? I think there's a few factors here that's a good question. In my case like I touched on, I thought I raised far too Much at the start. Start I was a bit panicked from previous business. People were kind of offering me money because maybe naively the valuation was so low and I didn't realize I probably could, I probably could have. I don't know, I'm not going to put a number on it, but I think I could have raised a quarter or a half of what I did and it would have been fine. In fact, it might have been better because it would have been more strict on where to spend money and maybe went too hard on marketing, like first few months, etc. We'll never know. It is what it is. Easy in hindsight. But I think, Yeah, remember this guy asking the question, so how much do you raise if you haven't raised and you've already got revenue? There's a few things I think there is. Again, coming back to the importance of a model, what is the plan? Right? Except let's say completely Hypothetically, you've got 3 million pound a year business doing 10 to 20% EBITDA. Hypothetically you haven't raised. You know, if you're going to raise any money, I'd probably say you want to be like bumping those numbers up next year, like minimum 6 to 10 million to make it a good growth story, like double, triple, whatever. So let's assume you want to go from 3 to 10 next year, which is similar to what we did. We did 3 1/2 ish 3.6 and it was in 23, just shy of 10 last year, so nearly 3x and then hopefully double again this year. So the pace obviously slowed down. But anyway, so you want to go 3 to 10, you basically, you need a model, right? Because this is the thing, like people have said this to me before, even my own friend is like, oh, I need to like show a use of funds. How do I do that? What fucking funds do you need? Like, because if your model doesn't need cash and fundamentally your model will show you put in your CAC, etc. Etc. Maybe there's a separate video on this, a proper model will show you where there is a cash requirement, right? And you can either fill that through debt, which actually in many cases can be a smart choice, especially if you're highly profitable. But again that comes with pros and cons, different video. Or you can plug it with equity, which is obviously money you don't pay back but you give away part of the company, which is obviously more expensive, potentially long term, but cheaper in the short term in other ways. And pros and cons and nuance to both of those, which I won't go into. But either way, like your model should, a good model should show you there's a cash gap and really, you should only raise if there's a cash gap or there's a cash buffer requirement. That would make you more comfortable in making the bets to deliver the plan, say 3 to 10 million, which might be, for example, launching in Europe, launching online in America, going into retail, where we don't get paid for 90 days. Either way, the, the business generally needs cash at some point, but I think this is where you should start then, how much to raise? I mean, ultimately you should start there. But like, let's just hypothetically say you land on a million quid, you want to raise a million. The other thing is just like, well, if it's a VC or even a family office or even angel, anyone is going to want to have a certain stake. Let's just assume it's a VC, because that's what I did. They typically want 15% or something like that. So if you're willing to give away 15 for a million, I'm not doing the math live on screen, but call it, It's a circus, 6.5 million valuation, right? And then ultimately you've got a. You've got to be able to prove, either through your current metrics and, or the model, the 6.5 million valuation, like it stacks up and is valid and that's usually a combination of your last 12 months revenue and your profits and your margins, etc. But probably more importantly, especially with the VC, what the growth story looks like. Because ultimately anyone investing wants to put in money at X valuation, get out a Y valuation which is much bigger. It's as simple as that, really. Obviously easier said than done, but that is the basic version of investing, right? So, yeah, you need to work out how much you want to raise. I'd probably raise it a bit more than you think you need. So you have a bit of a buffer, let's call it a million quid. Maybe you needed 700k, round it up to a million quid and ultimately the valuation will affect how much you can raise because you're not going to give away half the company. For example, like if someone's only willing to invest at 2 million valuation, which on 3 million revenue is unlikely if you've got a good growth story, but let's just say they are, you're not going to give away half the company. So, like, the economics of the equity have to make sense because any investors Also still want to want, going to want to make sure that the founder or the founders retain enough equity to be motivated. Right. So that's a factor as well. And then ultimately the final point I'll say is like at a good price, depending on your growth vision, whatever, if you can raise a bit more than you planned in a good market, at a good price of good valuations, it's not that dilutive. I would probably suggest doing it if you're going down the path of raising anyway because the process of raising like even just the legal cost, especially with VCS, can be like 2% of the round. I think we spent 50 grand on legal fees on the 2 1/2 million raise, which is pretty ridiculous. But you got to get that stuff done, right? And that's paying for you and the investor. But yeah, when you factor all that in the time it takes for like a big raise, you know, 1 million plus probably. Yeah, just something to consider. But again, just my opinion. Let's wrap this up shortly. Minimum revenue and EBITDA need different exit. I mean I'm not, I feel like answering that. Just pretends I'm an expert. Again, I've synthesized a lot of information from much smarter people like me, like you know, managing directors at Houlihan, Loki Massive Investment Bank, Raymond James, Spain, Lindsay, all these mid market PE deal makers and PE funds, venture funds, etc. So I'll try and give my brief opinion from what I've learned from them. I think basically there's, there's two factors to an exit. In fact let me split this down and try and make myself sound smarter than I am. You have to think about. These are different things, right? Arrays, assuming it's largely primary, which we spoke about and an exit will command different multiples and different mechanics that gets that multiple. Right? So arrays, you're ultimately, it's usually high level, just keeping it vc. And in my experience you will raise on a multiple of your LTM revenue. So your last 12 months revenue, so not your run rate which people like to pose on LinkedIn, which makes it look bigger than you are. Your LTM is your actual net revenue of the last 12 months. That's typically the baseline number they'll use. And then take into account your margins, unit economics, you know, quality of the team, the risk profile, whatever the growth, they will price, you know, the pre money valuation which we spoke about before, the valuation of the round, the price whatever will be, you know, a multiple of this. So let's for easy terms. These are not my numbers. I'M just giving completely Easy on sale LTM is 10 million and you got a nice multiple of 4x which is quite high actually. But if you're highly profitable, growing, good team, you know, competitive round, that would give you valuation of 40 million. Right. In fact, well, key caveat, this could happen on a break even business or even a business that's losing a bit of money. So bear that in mind when it gets to the next bit. So that's how. So I guess what I'm saying is venture valuations and this as a whole, that's how they'll calculate it, but it will come off a foundation of ultimately buying into a future vision. And venture is a lot riskier than say pe, which is where you might like to get an exit. So that's the raised side in my opinion, which is based on other knowledge etc. Like I said, exit fundamentally usually is going to be a multiple of EBITDA as the foundational number. But then that multiple and the multiple is the key thing in almost all these things will fluctuate massively based on. So you could have a 3x multiple which would be small. Let's just say your business is doing a million EBITDA for the sake of easy maths, which is good by the way. If you get to that level, you've got a good business, especially if it's sustainable and growing. Obviously 3x multiple yourself for 3 million. Right. Not 33 million. 3 million. Ignore me, sell for 3 million. Just easy maths, that'd be a pretty multiple on a fast growing brand. Obviously if you got a 10x multiple, you sell for 10 million. If you got an insane 30x multiple, very rare but doable, you'd sell for 30 million. Yeah, in theory. But the other factors that especially on exit, affect the quantum or the actual multiple on your bottom line. Ebitda, which is fundamentally we're going to get judged on, are factors like scale. So if you're a 10 million pound business, you'll get a lower multiple generally speaking than if you're 100 million pound business. Because 100 million pound businesses are far rarer and as a result command bigger multiples. It's just how the private markets work. That is why you will hear bigger exits framed as a revenue multiple. Sometimes they are, by the way, you could have a business that's not even profitable, that sells for revenue multiple, but usually the business is profitable. And like take the wild deal, which again public domains. I'm not saying anything I shouldn't, it's 230 million. I believe because it's on Companies House it was about 70 million in revenue, about 7 million EBITDA. So if you look at that on an EBITDA multiple, it's what, 33x or something, which is pretty insane. On a revenue multiple it's 3x but really it's still being valued on EBITDA multiple. But you're not going to get that kind of multiple on either top or bottom line if you're small, because there's a lot of small businesses, they're lower risk, they are less established in the category by default. So scale is very important. Category leadership or even ownership is important growth rate, you know, if you're growing fucking 100 a year, you will command a high multiple team, I guess in quality of revenue and kind of team and quality of the business rather than just, you know, is it fad with one founder, you know, diversification in terms of channels? Sure. DC only these days that's considered quite risky is you want to be like retail, Amazon, dc, whatever, what else? Yeah, and I guess like kind of the growth story, like is there an opportunity to say that it's a UK only business, it gets acquired. Can the acquirer go and do it in America or have you already done America and that's why you got to the scale and actually you probably command a lower multiple as a result. So yeah, fuck, I sound like I know what I'm talking about. But to be honest, I do just read a lot and speak to a lot of people that tell me this stuff. So maybe I do know quite a lot about this, having still never sold a business for a shitload of money, which I'm working on. But yeah, you get the idea. Basically you can definitely sell a business on a smaller scale. You know, I've had people selling small brands at 3 million revenue, 300k EBITDA, but you're likely to get 3x EBITDA and you know, not even a 1x of revenue probably because of all these combination of factors. Generally the bigger you are on a top line and bottom line perspective will command a bigger multiple. Which obviously combined with the bigger number in the first place is where you get to these big exits. So but it's quite exponential as well. Like you know, Poppy, in America, 500 million revenues sold for 2 billion thereabouts dollars a forex revenue. Don't know the profit, but either way it's going to be big EBITDA multiple if it was 4x revenue and that's at scale. So you know, start to get into Forex 500 mil. That's where you get these crazy exits from and that's from a strategic acquirer which I spoke about last time. This is meant to be a short video. Who buys a brand that someone asked who buys a brand at 5mil rev 1mil EBITDA. Good question. I mean it's quite small but it's a good EBITDA percentage probably mid market pe. You'd speak to someone like a Spain Lindsay who are a broker in the specialize in this might be a bit small actually for them, I don't know but pe maybe there's a secondary deal with a family office potentially even a deal to be done with the VC but they would never buy the full thing or you know, kind of private buyer. I've heard of deals being done where like literally like a wealthy individual will buy something like that. But yeah, I'm not an expert on the smaller stuff because I've people I've spoke to. Mostly it's been about where we're trying to go. So I've been speaking about businesses of 50 million plus in revenue. So yeah, there's options, there's definitely options but again the multiple will probably be smaller depending on the combination of these factors and others. So yeah look, final question because I'm rambling on if I'm not even question right, final hypothetical case study. Someone asked if I had 25k and wanted a 200000 pound a year profit lifestyle brand, what would I start and why? Probably instinctual response that would be you don't make 200 grand a year profit from a brand if it's purely a lifestyle thing because the lifestyle thing implies not working very much and just kind of wanting it to run automated on the side. So I would based on the the way I've interpret the question I probably say go start an agency or go start an info product because I think way better cash flow, much higher margins like info runs at 50 to 70% even higher. I've heard agency I'm not sure maybe 30 to 50 in some good cases. Some people might tell me less. You know D2C probably there's obviously a range but 10 to 30 would be good, 30 being the upper end. So yeah I'm not sure building consumer brand like realistically you're going to get there especially in terms of money out of the business if it's going to be quite small. You only put 25k in and want it to be a lifestyle brand. But let's roll with it. Feel like I'm giving Away all the sauce here. I mean for simplicity I'd have a one product brand, one sku. So like one product, one flavor, one product, one version, literally one skew if you can. I'll be one market, I'll be one channel. Because without mount Cash you're going to blow it very quick if you are not laser focused one channel sales wise that'd be, you know, D2C and then right one marketing channel probably matter. And I would do everything I can to get proof of concept on your basic unit economics for if it's scalable I. E. What is your acquisition cost? Because that's the first thing you need to know. If that's not remotely viable, it's never going to scale. So I probably pick something that ideally is a combination of what I'm interested in because then I'll be passionate enough to grind because it is a grind and something that actually has a market opportunity. And this is a sweet spot. I think I spoke about this in like my previous videos, maybe on my course, whatever. But like this is like the Ikigai zone or whatever it's called like this Japanese term which is like a combination of what you can make money from, what you're interested in, what the world wants or like where you can do good, whatever. I try and find something ideally in this spot and only you know what that is, right? You know, only you know what your interest is. Market opportunity again you should probably just get to know the market, do your research. Trending categories. I think you. You're going to want to ride something that is a good category and that saying of like the vehicle you're in is more important than how hard you push or whatever it is. I think it's very true. Especially when you have limited funds, let's say 25k to start because you're going to need it to be a. It's going to need to be profitable first purchase and profitable pretty soon. And I think to do that with limited funds in any category you are going to want to be in a good one. And also when you care about enough to deliver a product and a brand and experience that is good enough to stand out. So that's what I say on that. Hopefully that's useful and makes sense. And yeah, f up with 50 odd minutes in depending on how much I cut this, 45 to 50 minutes. That's quite. I like speaking about this stuff but I feel like I may be giving away too much stuff. But yeah, hopefully it's useful. I mean if anyone does want to book a call with me or whatever. I do that on the weekends now, now and then I do like a few a month honestly just because so many people ask me. I do enjoy doing it. Yeah it's not cheap but I think you get a lot of value out of it if you are looking to raise whatever. I get a lot of people emailing me saying can we just jump on a call Etc Etc so that's why now made this stuff because I want to give people a forum to chat to me and share my experiences with if useful. But I'm obviously not going to do it for free and I don't have time to be jumping on calls with, you know, jumping on 20 calls every week giving away everything I know. So that's why I did YouTube. But if anyone is interested in doing some weekend consulting with me, I do that now and then for the reasons I've just explained. So yeah, hopefully this was useful. I've just spent the last hour of my Saturday evening early evening. I'm going out soon on a date with my girlfriend. Try and get away from the screen for once. Yeah, I'll dive into anything in more depth. Leave a question below or comment with a question on anything you want to see. Anything you think is annoying in these videos, whatever. Is it too long? Is the format good? Is there anything that I'm not covering that you think would be useful just in the YouTube in general, not just on this topic. But this topic seems to resonate with people because the first time I've gone deeper into something specifically relevant to me that isn't often shared in other forums on YouTube. So yeah, let me know. Hope this was useful. Subscribe to the POD as always, more waffle coming soon. We'll chat in a bit.