Raising Money £££ For Consumer Brands Explained (Angels, VC, PE, My Experience + Story) - Doc Ep 99

Yo. So back with episode 99 I believe and this one's a bit different I thought be useful and interesting to talk about and discuss and basically share combination my knowledge, learnings and context around fundraising, venture capital, all that stuff. Stuff that honestly I feel like is just generally misunderstood and or not understood at all by most people, which is expected. It's not taught in school, it's not generally discussed really as much on like consumer Twitter and so on. I've seen comments on my own videos, even a few recently that just reek of ignorance and incorrect assumptions and I feel like venture fundraising and ventures specifically in consumer has a bit of a not taboo but has a bit of a bad rap I think rightly so because of like 2021 bad investments etc etc. And yeah, I just thought it's an interesting area because it's something that's been in the background of my business like the past 18 months now pretty much or actually a bit longer since December 2023 when the brand is about 15 months old at the time. But I've never really spoken about because I don't know, I just felt like keep that stuff private. But I want to talk about all of that and I think I've learned a lot. This is a combination of I guess my own knowledge because I'm very obsessive about stuff once again to it I want to learn loads about what I'm doing, what the people are doing about the topic as a whole because I knew nothing about really fundraising and especially like venture to definitely not three years ago. And it's a super interesting world. It's a big, quite a big world, quite niche, but quite prominent in places like London etc if you're in those bubbles, you know, any major city really. So yeah, this is a combination of my experience, my learnings, my reflections. I'll go into like specifics on my own journey with it. But then also I've met and spoke to so many great investors, you know, fund partners, private equity as well, which we'll get into founders, people that are on our board, etc. Basically this is, you know, the cure, the curation through me and my experience of a lot of much smarter than me and much wealthier than me people's experiences. So, you know, take it with a pinch of salt. I don't know everything. I'm not a complete expert on this stuff but I think I have a good perspective as a founder who has bootstrapped twice before. One that went well, one that didn't go well and now this One launched it semi bootstrapped, which I'll get into. And now I've gone fully down the venture path, which again, has pros and cons. And I'll caveat by saying before I get into any of this, there is no right and wrong answer. I think far too many people are quite black and white with this stuff like, oh, you should never raise the consumer or, you know, you should never do this. You should always do this. This is how it's done. I think ultimately completely depends on the business, the category, the timing you as a founder, experience levels, other nuanced details. Like with everything, most areas in life are pretty gray area. So I'm gonna actually walk through, try a different style video here. I'm gonna draw some shit on my iPad and hopefully like the setup of this filming one is works. I've not done this before. I think I wanna go through it in like step by step. So I think the foundation of fundraising we'll go through first. I think a lot of people misunderstand that I just don't know anything about it because it's new and I get a lot of DMS about it. And again, like the final caveat before I get into this, and I probably shouldn't have to caveat a lot of things, but I feel like. Cause these, these topics can be sometimes misunderstood or have a lot of prejudice or like incorrect assumptions. So I want to caveat before I get into any of this for the final time. There's no right or wrong answer. This is my experience. What I'm about to present may lack my own nuanced details. You know, it's high level stuff. But yeah, firstly, I want to talk about basically fundraising as a whole. Right, so this is your business, you got 100% as a solo founder or 100% between the founders, whatever. To start with, I think the fundamental principle with fundraising and it's how you should think about it and it's the question you need to ask before you do any fundraising rather than just, oh, I want to fundraise, because that's what people do that are on LinkedIn or whatever. Will fundraising give you a better chance of whatever outcome you want? Right. And I think you need to be clear firstly on what outcome you want. Are you trying to build a lifestyle business? And nothing wrong with that, by the way. That's probably better for 90% of founders. Are you trying to get an exit? How big do you want to make 5 million quid? Do you want to make 100 million quid? Like a lot of people seem to say, without any past achievements or do you want to just go as big as possible because you fucking love the game and you love the category and you think there's an opportunity to build something, you know, generational defining. So I think being clear on that and it's impossible to always be 100 clear on that, but I think I was pretty clear going into this brand, having done so before, I felt like the category and the opportunity and just the place I was at in my life at the time and now was I wanted to try and build a category winning brand that ultimately I could sell and make a lot of money from and secure financial freedom. So that was one part of my goal. But it started with wanting to build a category leading brand in the category I put believe passionately in, especially in the UK and Europe, because that's the market I'm in, that's where we launch, et cetera. Anyways, be clear on that. And then the next lens to look at fundraising from is ultimately is having a slightly smaller slice of a bigger pie going to be better for you and give you a better chance of achieving whatever outcome that is. Right. So founders have 100%, you raise money. Excuse my terrible writing and maybe poor maths, but say you give away 25% and I get into more specifics in a second. But let's just start with this. So founders have probably should have done a different color. Founders now have 75%, investors have 25%. Very, very simple maths. For now, is there a better chance of this business getting to say a 10 million exit? And without raising, you can only get to 1 million exit. So, you know, 100 at 1 million, 1 million, 75% at 10 million, seven and a half million. That's like the basic, very basic watered down fundamentals of how I would think about fundraising. And then I think within that, let's assume you want to go down the fundraising path, which is kind of ultimately what I did. So let's be completely transparent. I raised at the start about 250k from angels, which were all my friends. I don't come from money. It wasn't a family and friends around any of this fucking meme shit you see on LinkedIn. All my friends that I knew and I'd met over the years from building my previous businesses, fortunate to have a good network at the time. You know, my past business had been fucked. I'd lost a lot of money. I didn't want to put the money I did have entirely into the business. Even though I did some of it. So I raised 250k and I will. Yeah, fuck it, I'm just going to draw this as well. All right. It's 250k, I guess you could say pre seed. So like pre revenue, basically on the. Off an idea and the credibility I had from previous stuff, I'm rounding up. It's like 247.4k or something, which was all my mates. And in a way, I actually kind of regret raising that money because it's very dilutive in hindsight and. But, you know, it's easy in hindsight, but at the time I lost my confidence. I didn't need as much money as that. I could have put more of my money and I didn't need that much money to launch at all, by any means. But anyway, that's beside the point. Maybe I'll come back to that in a bit. I raised 250k and then about 6 months after launching, about 3 months, even when we had revenue, we had pure traction. I raised 250k, so I raised 500k from angels, basically. And then to cut a long story short, in December 2023 I raised 2.5 million from a VC fund called Five Season Ventures. Who, you know, go and Google them. I have a great relationship with them, I respect them massively. I think. I'm not just saying this, I'm not being paid to say this. I genuinely think they're a great fund and I like them. I've learned a lot from them. I think it's been very good working with them. And then five months ago, in March this year, we raised another 3.5 million in primary and some extra money in secondary, which I'm not going to share the exact details on, but I'll go into that a bit later on. So in terms of money into the business we've raised. Geez, what's my Math? We've raised six and a half million, call it. I think it's about 6.43 in actual numbers, but that's quite a lot of money. I think. Another misconception, just to close out that point, is that means we must have burnt six and a half million quid. That's absolutely not true. The vast majority of that is on the balance sheet as an asset, either in cash, stock, whatever, but it's on the asset on the. On the balance sheet is a net asset. So, yeah, we can get a bit more into that. So that's just my context, which I was going to come to next, but I think I Want to set the scene and put that here. So I think the next thing to understand is the fundamentals around and then I'll get into specifics and a bit more nuanced details. But I want to set the scene for those who don't understand this and want to understand it. So you hear a lot about valuations, money in, money out, blah, blah, blah. When people don't understand fundraising, and this is surprising amount of people, and there's nothing wrong with that, but I didn't either at the start. They'll say, like I spoke to a fan the other day, I want to give away 10% of my business for 100k. Right? So what they really mean by that is, I want to raise at a 1 million pound post money valuation. But actually what you'll hear say, you want to raise a million quid, let's use simple maths, and for whatever reason, you want to raise a million quid, and I hope you've got a good reason for that and the financial model and so on, and we'll get back into that. But you want to raise a million quid, easy maths, and you want to give away, you know, roughly 10%. Most people would actually say, I want to raise it 10 million pre money valuation. The reason it's called pre money is that's the valuation of the shares before the money goes in, which maybe is obvious, and then once the money's gone in, it'll actually be an 11 million post money valuation. And this is actually the valuation that will calculate the equity you give up. So technically, if you raise a million pound at 10 million pre money, most people might assume you're giving away 10%. You're actually giving away about 9% because it's an £11 million post money valuation. So 1 million pound divided by 11 million, whatever. I'm not, I'm done. The maths live on screen is a circa 9%, actually dilution. So, yeah, that's the basic way to think about how this all works in that sense. Am I still recording my screen? Yes. And let's talk about dilution a little bit. So say you got 100% the business on day one, the founders do. Whether that's individual founder, co founder, it's irrelevant at this point. But the founders have 100%, typically in a, in a pre seed, which is like pre revenue or early stage, typically goes pre seed, seed series A, series B, so on, so on. Most businesses only yet to pre seed or seed. So I raised the pre seed, which was the angel A seed with the VCs and then I guess kind of a seed extension, but I'll get into that. It's got 100% on day one. You typically give up 15 to 20%, maybe 15% more. More realistic per round, typically. So you raise, let's just say for argument's sake, you give away 15% at your pre seed, which was 1 million quid. You're now at 85% equity between the founders. But say that gets you to 10 million run rate, you then give away, and these are rough numbers, say you give away 20% at your seed round, down to 65%. Oh, wrong one. Down to 65% between the founders. Right. But you raised, I don't know, 4 million quid at that round. So you've now raised 5 million quid, business is growing, you've got 65% between you. You might dilute at future round if you keep raising or when you go to sell, sell yourself 100 million. Very simple maths, founders get 65 million, right? Obviously it's 65%. A lot of founders hold on to equity, I think probably too protectively in many ways and I can get onto that in a bit. This might be a longer video than I thought, but ultimately you've got 65% of a much bigger pie that might have never even got acquired had it not raised money to help it reach that critical velocity. Anyway, I'm rambling a bit. This is basics, but I've probably skipped ahead of it. There's basically five ways to five kind of levels, at least from my perspective in raising money. The first one is I guess the lowest ticket and probably simplest and what you maybe hear about most on LinkedIn, that's angel investors. And I'll come back to this in a second. The next one is family officers, FOS for this. The next one is VCs which are bigger and come with more handcuffs I guess in some ways. And this is kind of venture scale getting up to the point where you know you're bigger, more profitable, self sustaining team, etc. Then you've kind of got the next two, which is more where you could raise money into the business, but you'd probably be exiting as a founder, if not fully, at least partially, which is pe, private equity. A lot of people get these two mixed up, they're not the same thing. And then the big one, which is probably what you read the headlines about, are strategic, can't spell today, strategic acquirers, which you know for easy examples is someone like a Unilever or a Nestle or any huge public company that would acquire a brand. For example, Wild got acquired by Unilever, I think it was 230 million. That is a classic strategic acquisition where they will typically pay a premium for a category winning brand that they want and ultimately it'll boost their stock price. And you know, the numbers work in that sense. But anyway, we'll come back to that in a bit. Angels in simple terms this is, you know, wealthy people typically ex founders or current founders or not even necessarily founders, but people that have money that they're willing to put into high risk stuff. This is where I raised my 500k. I'm speaking in layman's terms here but it's obviously nuance and exceptions to all these rules. But just bear with me, this is kind of the lowest tier of fundraising and probably the easiest or at least most accessible on day one to most people. Angels will typically come in at, you know, there's a broad range but call it in a low valuation, a million valuation, you might raise 200k from angels, give away 20%. Something like that is quite typical for like a pre revenue business, especially if you've not had an exit before. And you know, tickets might typically range from sort of 10 to 50K. Obviously there are exceptions, but that's generally the ballpark. So obviously if you're going to raise 200k, you might need 10 people, you might need 4 people. But that's the sort of general range or rule of thumb. And you might heard things called SEIs and EIS a seed enterprise investment scheme and enterprise investment scheme are tax incentives for basically to encourage angel investors. And I've angel invested a tiny bit into a few things. One didn't go very well, won't speak about that. I lost a lot of money on that one is okay and I probably wouldn't do it again for a while until I'm more liquid. But yeah, you get tax incentives, you know, 50% tax break in SEIs I think is 30% on EIS and also downside protection if it goes to zero. So basically angels are incentivized to take a higher risk, but because they're taking a higher risk, typically earlier stage they get a lower valuation. These will typically be ordinary shares and maybe that's a whole other video in itself in terms of share class, but simple terms, they get the same share class, they get a slice of the pie you've got. There's typically they don't get a board seat, there's not, not a lot of restriction or covenants. That come with that money. It's like they buy the shares. There's no downside protection for them other than the tax break and that's that Family offices, probably a level above. Oh, what's going on there? Basically, it's a private venture fund for very rich people. So, you know, typically someone's have a family office, you want to be sort of 20 to 50 million net worth personally, if not more. An example of the family office would be to one I spoke to, called Brian to capital. They haven't invested in me, but just give an example. I think that was the founder of New Look, Tom Singh, that's his personal family office. So he's worth hundreds of millions, I believe, maybe even a billionaire. And this is kind of the bridge between angels and VCs. And they might typically invest, again, I'm speaking in layman's terms, you know, 100k to a million, something like that. But they'll probably come in slightly later. They could come in at angel stage, but they might come in a bit later. So they come in it. And again, this is not a hard and fast rule, it's just an example. They might come in at 3 to 5 million valuation when the business is doing a million in revenue, say, and they will. Typically paperwork might be a bit heavier. You might come in on, on a safe, and I'm not going to go into the legal docs, but a safe is when you get the money up front and then you convert to shares later. It's what you typically would do with an angel investor, maybe with a family office, probably not with a vc. But yeah, this is probably an option to raise a bit more money because if you want to raise a million, it's quite hard to do that actually from an angel. You know, this was 100k example at a million, this might be 500k at 3 to 5 million. So think of this as like the middle of the park. Bit harder to raise from, higher ticket price, probably some more process. Probably need to be bigger to raise from these in most cases. And then you've got VCs. VCs are what make the headlines, I guess for good and bad reasons. Venture capital, they take big bets, bigger bets on slightly more established companies, typically, but not later stage like pe. And they might invest, you know, again, I'm speaking in general layman's terms. It's obviously not black and white. They might invest 500k to 5 million, typically it's sort of seed to Series A. You would get more than that up to 10 million. Is probably more typical actually. And generally, you know, this might be from 3 to 15 million valuation in the first ticket. Follow on as we did, would be a bit different maybe. And yeah, typically with VC money you can raise way more, but it's going to be a lot more formal. They'll get a board seat which as it sounds, they get a board seat. I'm not going to go into all the technical details of that. They'll. They probably also get a 1x liquidation preference, which is all stuff to be aware of, which means they get their money back first. Very typical. Pretty fair. But that is like something to be aware of when raising more money from VCs is, you know, say you raise a million credit 10 million valuation, basically they have a 1x press that means they get the million quid back first. But if you sell for anything less than the valuation, they're going to effectively get more than the equity they have. So if you sell for 5 million, they get their 1 million back first even though they only had 10% of the business, which means they've already taken 20% of proceeds, for example. So it's basically downside protection. But obviously, yeah, that's just kind of what comes with the territory. Pe, private equity. This sounds like it's going to be. This could be an hour long video but I'm going to try and speed up a little bit. PE private equity, how it compares to vc. Typically they're looking for a different return profile a vc. Generally I could just come back to this, might be looking for, you know, I can moonshot like a 20x but they'll try and return the fund. Typically a minimum they'd want from, from an investment is probably a 3X. My investors might say different but you know, you could say 3x or 30x is actually probably the range in BC, something like that. You could get 100x's but it's less common in consumer, maybe more in AI and so on. PE are typically looking for later stage, more established businesses, much bigger tickets, maybe partial founder, cash out and secondary but or full exit but they're looking for maybe a 3x typically. So PE might come in. I've spoken to PE recently just to understand the market more and you know, spoken to a lot of founders that have sold the pe. Again, these are not black and white rules but to give an idea, they might put a 5 to 50 million pound ticket in at a 20 to 200 million valuation. You know, something in that range broadly. But the business has got to be probably minimum 10 million revenue a minute 10 million revenue a million EBITDA to be in sort of PE category ideally probably bigger, more 20 to 30 million in revenue at least from the ones I spoke to and they might typically either come in for a full exit. An example, I'm trying to think of examples that are public so I don't say something I shouldn't. Yeah, I guess a deal that was all over LinkedIn last week was Adenola, the fashion brand in the UK did about 100 million revenue raised money, didn't say how much but raised money at they publicly said a 500 million dollar valuation which is insane and I would imagine if I had to guess that was probably a 50 to 100 million pound ticket and I reckon half of it was secondary to the founder. But I don't know, I don't know the deals on that so don't quote me but yeah, typically it wouldn't all be cash in. So primary is all cash into the business. Cash into the business. Buying new shares. Secondary is buying existing shares, cash out to the shareholder, either the founder, early angels, whatever early team. So PE might typically be, you know, primary capital in. Well I've done that the wrong way around but also secondary capital out to the founder so. Or whoever. So yeah PE is basically later stage and where you could probably find some serious founder liquidity if not a full exit and then a strategic different again. James Davidson on our board founded a business called tails.com so I know, I know this world, I understand this world quite well. High level haven't obviously sold to a strategic. He sold his business to Nestle who are typical strategic public company, 100 billion plus market cap and they will typically come in to either buy the full business or buy some of it with a plan to buy the rest later. And their plan is to buy bigger more established category winners that they can go on and make billion dollar brands like native in America. So I think it was PNG I believe that was 2020, 2021, I believe it's over 100 million. I read something they're doing a billion in revenue now so the brand's arguably worth a few billion. So strategic think of it as this is my picture of a trophy. Not very good. They really not good. They will invest in the winners, they'll buy the winners basically of a category and that's typically where you read about the much bigger exits. So wild sold for 230 million. Native sold for 100 million. What's another one in America, Poppy sold to believe It's Pepsi for $1.9 billion classic strategic acquisition, which is 4x revenue. And in this category you're typically looking at more of a revenue multiple rather than an EBITDA multiple, which is more typical in pe. VC is a bit different again because they're basically betting on the future. So the valuation is more, you know, it's reverse engineered from what could the future value be while also balancing founder equity, dilution, etc. Etc. So this is a bit different, but I think of this as three main ways to raise primary capital money into business initially and then these two are more founder exit, partial exit, full exit, etc. Etc. So yeah, that's really the basics. I could probably go into this for hours and hopefully this makes sense. I don't know if I'm a great like teacher. I've never. This feels like I'm on a, on a whiteboard in a college class right now. Is this still recording? Yes. So yeah, I want to come on to now we set the foundations a bit more about, I guess, my journey, why I did it. Misconceptions. I think I'll start with misconceptions. I think a few misconceptions are it's cheating to fundraise. Anyone can fundraise. You just raise money and spend it on marketing and you buy revenue. A few people have DM'd me, stuff like that and even commented. I think the first thing to say, and this is statistically factual, so you can go and fact check this is out of every hundred, say startups that want to raise money, especially from VCs, maybe 10 get a meeting with the partner because you know, they've gone through a senate pitch deck, they've done the initial call. This is maybe meeting partners, maybe discussing a deal. And then roughly every 1 out of 100 actually raises venture money. So you're talking 1% of all businesses that want to raise money from VCs. Generally speaking, I have fact checked this, but depends where you check, right? It's roughly 1%. Another thing as well, I think worth bearing in mind is the amount of consumer brands that get to 10 million plus in any market is also less than 1%. So it's all very well saying, oh, you raise money, you know, it's kind of cheating. It's easy, but I think it's just not easy. It's not easy for me. It's not easy for anyone. I went through a long process which I'll talk about in a second, but if it's that easy, why not go and do it? You know, I'VE had people comment saying, oh, if I raised millions of pounds from VCs then my brand would be big, but because I haven't, I can't scale my brand. All right, go and raise millions for VCs then. If it's that easy, go and do it because I guarantee you it's a lot fucking harder than you think. As are most things. That's the first misconception. Then the next one I want to be clear on is there's no right or wrong. I in many ways would rather be the completely bootstrapped founder that got to 100 million in revenue and sold for a fuckload of money. Why I chose not to. Well, why I chose not to go down that path. So that's now not the case for me. I'll get onto in a second. But I don't think raising money is good or bad. I think raising money to then burn it at stupid valuation like 2021 is very bad. I think venture can and it has historically attracted poor financial management and basic understanding of unit economics and you know, building a profitable business, which should always be the goal. That's not the mindset I've come out from. I've come at it from a bootstrap background, profit first mindset. And yeah, I think raising can have a lot of positive benefits that I think a lot of people that haven't done it or have just read the headlines from bad ones, bad examples have a misconception on. I think the other thing to point out is there are lots of successful examples with venture backed consumer brands. Wild, as I mentioned a few times, is a great example. I think they raised about 12 million. They sold successfully. Butternut Box, another one that shares my investors. Not sure how much they raised. I believe it's quite a lot more than that. But they sold, they did a deal at 500 million valuation which I believe was. It was Catterson and General Atlantic, typical big P.S. that was cash in and cash out from what I read, which was public, in the public domain. So yeah, there's plenty of examples like Yfood's another one sold 400 million to Nestle that was venture backed again by the same investors that I've got. So I think it's very naive and ignorant to make a sweeping statement of venture backed brands don't make sense and they just plug losses because that happened in 2021. I don't think that happens anymore. And you can't raise money if there's no clear path to large scale profitability. So just to Be clear. So, yeah, why I raised, ultimately I bootstrapped before, I didn't need to raise. I think the fact we raised has definitely helped us grow quicker. I mean, you know, honestly for me, and this might sound like, but it's the genuine truth. I think I was intrigued by what I could learn by raising and going down a path that as well as money could give me knowledge, connections, insight. I think that's the other thing to say, which I didn't say earlier is raising money is not just money. It's not just this, it's fucking shit, pan sign. It's also, this is my light bulb. It's also ideas and connections, whatever the fuck that means. You know, I've been intro to founders that would have never met had I not raised. I've been put in touch with suppliers. I've met our Ned, our non exec who I've learned a lot from. I've met other founders that are building much bigger, more impressive businesses than me. I think it's not just money. I think if you get the right investors it can be a real help in many ways. Ultimately it's still your business and you're the one that's responsible fundamentally as the founder or the founding team. But yeah, I think another misconception is it's just money and it shouldn't be just money, at least from the right venture investors or even the right angel investors. So yeah, for me I decided that raising, I guess like anything at the time, with the information I had, it felt like the right decision. So yeah, a bit about the process. How did it actually happen? Honestly, I never went to any VCs initially. They came to me and this will happen if you've got a good brand, I guess that's making waves in the industry. Start speaking to a bunch of them, started to understand the industry. I'm quite a quick learner. So, you know, went very deep on reading about it. AI AI ing about it. Speak. I spoke to maybe in the end I spoke basically some start reaching out to me. I then spoke to a few. You then get put in touch with others and then think, well actually this could be quite cool. I reckon I spoke to in the end, I'm going to say 50, 50 plus funds in the UK and Europe. I then, I mean this could be a whole other video. I then ultimately got a term sheet from a really reputable one which was five Seasons and then a few others came in and we ended up technically raising from four on our cap table. But we got one lead kind of One secondary and then two sort of fast followers. That's probably the fair way to put it. But yeah, that was maybe a four month process. It's very painful. I had to have, you know, obviously a pitch deck. Maybe there's a separate video on this which is, you know, standard, but really actually quite hard to do. A very credible financial model which a lot of founders don't even have, which I find quite mind blowing, you know, even relatively small scale, because even just without investors, you need this, I think, to run your business properly. And I guess the final stage was, you know, a lot of fucking legal documents, right? A lot of due diligence and so on, which I can talk about a bit as well. So, yeah, once I got all that, I think going through a raise is way harder than people think. Like it takes way longer. Due diligence is painful. Like I've kind of jokingly said before, I think most founders that are flexing on Twitter, if they went through a basic due diligence process, which by the way, you'd have to do probably even more in depth if you sold the business, you would just not pass the due diligence because your tax returns are probably not as clean as you think. And I know plenty of examples of this, naming their names, you know, you're probably not fully compliant a lot of things. And all this sounds like kind of corporate bollocks, but if you want to get a big exit one day, this will all be very relevant. So going through a very painful, in my case, six week due diligence process, you know, going through all supply contracts, obviously the numbers, and I'm not just talking shopify numbers, I'm talking bank statements, zero accounts, having all our management accounts, which we had in place, all contracts with employees, team trademark stuff, physically visiting our factories, you know, compliance, testing our product. And I've had people say before, like again, come back to point around, like, raising money is easy. It's not fucking easy. Like even getting a term sheet is hard, but like closing the money is even harder. So you gotta have all these things ticked off and you know, just getting through a proper diligence process of six weeks long, and mine was six weeks long in December 2023 is like a decent vote of confidence and kind of stress test of the quality of the business you're building. And yeah, like if I didn't have a proper finance guy, we didn't have our accounts and books like absolutely nailed down, like we would not pass this. We had a guy in our zero account for like 4 weeks doing due diligence. Like it's not just like, oh, the pitch deck's good, we'll send you two and a half million quid. It was very, very, very in depth. And I think going through that process, like I said, is a good stress test of the quality of the operation you're running as well as just the brand. Like how well are you actually running it? But also is a great learning experience for future exits. So you're never going to get an exit if you don't have your books in order. You don't have all this stuff thought about. And it's stuff that no one talks about on Twitter. Everyone talks about marketing, no one talks about supply chain, supply chain rigidity, ingredient quality and like auditing, supply chain structure, trademark stuff, you know, all this stuff that's like back office stuff, but it's the stuff that will stop you getting a deal done in the future. So I think this is one benefit of actually going through a venture raise and I think it is genuinely valuable is learning how to go through a strict diligence process. I think another thing that I've learned just in general by having investors kind of going on to the next section is it has pushed me to professionalize the business probably earlier than I necessarily would have done, but now it's paying dividends and I think the few key areas that it's done, that is firstly team, I'll come back to that in a sec. Secondly operations. And I mean supply chain, I guess by supply chain factories we work with even like, you know, making sure our claims are watertight. Even just day to day team operations and like HR stuff which again sounds like fluff. And I'm the first one to say it's fluff. But if you want to get big, it's necessary. I think it's pushed me to think about that earlier. I think the other thing is obviously just financial management. And I don't just mean an accountant fucking submitting your year end. I mean like probably sounds obvious to a lot of people, but it's not to a lot of other people. I know that, you know, proper management accounts, what proper financial model and budget, which we agree with the investors, which I think keeps us, keeps us to account. Proper management accounts every month, live financial tracking like day in, day out, which we have all connected to Xero and stuff. So I can see a literal live snapshot building processes around payment approvals, you know, who's paying what, cash management, any credit line management. Like yeah, basic stuff I guess, but like I've got a fully automated, not automated, but fully self sustaining finance function now and proper financial controls that in the past I might have thought I wouldn't need that with scaling, whatever. But you do need that, especially when you're scaling because it's what will trip you up more than anything. That's a whole other video in itself. The other things I've learned but yes pushed me to invest in team probably quicker than I would have done because when you raise venture money the goal becomes growing the business to a very large scale to ultimately achieve a venture scale outcome. And for me what that goal looks like is probably minimum 50 million plus in revenue and 150 million plus in enterprise value and exit ultimately. I'm not saying we've done that, I'm not saying it's easy, but that is definitely the goal and that's what we have internally and bigger ideally and all these things become more critical. Whereas if I was just bootstrapping I might just say ah, you know, I'll just run it chill like focus a bit more on, you know, hiring less people because less headache. So I suppose, yeah, the pressure adventure is you're going for a big outcome. Here's the target. And these things all need to be in place earlier to enable you to scale quickly to get there. I guess so yeah, I feel like this video is getting too long but maybe there's a lot of things I can go into and a lot of comments that people might want to leave about, you know, certain questions. I can maybe do a series on this and I suppose kind of life after fundraising, if you will. So I'd investors for like 18 months now. Yeah, I think the first thing like I said as I just touched on was it's forced me to professionalize earlier than I would have done and probably beyond my natural personal tendencies. And that's been a really good learning experience. I feel like even if the business was the same size without investors, I think with investors and the process I've gone through and having to report monthly and quarterly board meetings and stuff has taught me a lot about proper governance. And it sounds stupid at this scale because we'll do like 18, 20 million this year. So not huge. But I think it's taught me how to run a business that would be 50 million to 100 million in revenue and I had that structure in place and I guess yeah, that's just stuff I didn't know about and didn't do before. So it's been a big learning curve. Like business is not all marketing. It's especially if you want to go big. It is all this kind of less glamorous stuff as well because this is what enables you to go big and ultimately exit long term or be capable of potentially exiting. Right. So it's taught me all that. Yeah, I think that's one thing to be aware of, especially with venture investors. Definitely not with angels. Yeah, Small, more corporate. Corporate's not the right, but more formal. You know, we have monthly investor reports which I quite like to use me accountable. Quarterly board meetings, which again actually quite like. So get input, keeps me accountable. It's a good cadence to really check in on the business. I think having the pressure of venture investors, it's actually a great thing. Probably most founders, but definitely for me because it keeps me on track and keeps me accountable. You know, I touched earlier, like there has for me been the opportunity to take some liquidity along the way which came in the more recent round. So I think a lot of people think you raise money like, you know, there's never any money for the founder unless there's an exit. And that can be true. But there's also the opportunity when there's large amounts of money floating around from investors that you can take some money off the table in secondary, which I've done, and like a significant amount as well. So it's like a mini exit, I guess, along the way. And I think if you're growing the business, I mean, for me that made a lot of sense for many reasons. Not all investors are supportive of that and I get it, but I think for me it was definitely a win win. Investors wanted to buy more equity. I wanted to sell some of mine, so I did that. I think that's something that you don't get, obviously. I mean, yeah, you can run the business profitably and put out loads of dividends, but I think when you're growing, even if you're making 20% EBITDA, you're not pulling much out. Right. So I think that's an element that maybe people gloss over and don't see as a positive because they don't know about it. But yeah, how else has it changed? I mean, this is the main thing. I think the other thing is the targets have got bigger. That's my graph going up, which for me is great because that's what I want anyway. And I think the other main area is probably just recognizing that while you're the founder, you're not the only shareholder anymore. So like legally you have obligations to shareholders. Right. And you're not the only One still very much my business. I think I made the mistake early on of maybe thinking I've got investors now, like, you know, I have to confide in them for everything. But that's definitely not true. The best investors want you to do your thing as founder because they invested in you. But you know, it's you plus other shareholders. But it's still mainly you as founder or founders leading the business. And you should definitely bear that in mind. Like it's not suddenly like not your business. It is. It's just other people are backing you along the way. And I think another great positive ultimately is I want to win. Yeah. But also other people behind me also want to win. So we're going in the same direction. Like I don't know, I think if you got the wrong investors, this could be a nightmare. But ultimately investors want to make money and I also want to make money. So both want to make money. We both want to build the business to be the best it can be. And the fact that there's other people with experience, connections, access to capital ultimately that want to win, I think that's a competitive advantage in a competitive fast growing space, to be honest. So yeah, what else? Feel like this video has gone gone on far too long and because it's so long and so nuanced, I've probably done my classic style. I definitely have adhd. I mean I do of starting to talk about loads of different bits. I might have to edit this down I think. Yeah. Hopefully high level. This has made sense and you've learned something from it I think as a next step. Anyone that's watched this far, please leave a comment on anything that you thought was interesting or you didn't fully understand or you want me to go into more detail on. Because I think this could actually become quite a unique series in like consumer fundraising and venture capital fundraising. Maybe more specifically from the perspective of a founder that was previously bootstrapped and then raise money in this business and what I've learned from it. I don't think I want to ramble anymore in this video because I feel like I've covered all the basics. I think to do it as a follow up series would make more sense. But yeah, hopefully that was insightful. I've definitely rambled a bit. Probably won't edit this, it's not my style. But yeah. Please do leave a comment below on what you thought was interesting, what you thought was maybe an area you want to dig into a bit more and I will follow up with answers in the comments. But Also, I can make some more like shorter videos on this because I think it's quite a good format. And yeah, maybe this is just the intro. So yeah, to close out final point, like I said, this is all my perspective. I might not present it myself or articulated as well as I could have done. Maybe makes me sound stupid. I don't know. I have to watch this back. Yeah. Disclaimer. Once again, there's no right or wrong way. I truly believe there's nothing inherently good or bad about raising funds. It completely comes down to the nuanced context of you, your business, your goals, your timing, whatever. This has been my experience. Would I do it again? Yes, I would, on the right terms and the right investors. But I also think bootstrap businesses are great and I've done that before. They're just different things. And yeah, like I don't think people should judge each other for raising money, not raising money. I think everyone should focus on their own business and ultimately try and get the best outcome for them, for them, whatever that looks like. And that might always be, might not always be fully financial. It might be entirely financial, it might be something in between. Every business is different. This is my perspective at my current stage. Business is growing, we're profitable, the team is in a very, very, very strong place. Our balance sheet is very, very strong. For me, it's worked out and I think it is working out and I'm learning a lot, which is a huge part of it as well, separate to just like short term cash. And I believe I can get a big exit in the future by ultimately building a category winning brand at scale. I'm three years into that journey with the brand and now 18 months having raised money. I think there's probably at least another two to three years, if not a bit more depending on how things go to get to like that end game. But for now I'm just focused on making the best decisions I can every day, learning from those around me. And I'm a student of the game very much. I genuinely don't believe I know anything compared to where I want to be. I think that's a better way to be rather than people that actually know nothing and think the opposite. That's one thing I'll say. And yeah, I keep documenting the process as I have been. This has been episode 99. Let me know what else you want to see on this topic. I think it's quite an interesting one to dive into. It doesn't feel like there's much of this content on YouTube and I feel like I kind of cut this short, but it's already been 44 minutes so I think we have to draw the line there. So it's meant to be a 15 minute video. It's probably never going to be that. And yeah, hopefully it's enjoyable to watch. I have enjoyed making this and getting my brain spinning and we'll catch up soon. Cheers, Sam.