Investors don’t fund ideas 💸 James Church

But unless you actually do it, unless you actually take action, unless you can actually raise the funding, understand all of the different services you need to bring in to kind of make that happen, unless you have that capability, it's no good getting angry that someone else stole your idea. Founders, investors are looking for the person that can, can make it happen, not just the person who has the ideas. I don't think there's a way of building a successful company. There is no way to do that. By sitting on the sidelines and not being a thought leader in your space, not getting yourself out there. You are going to be under the scrutiny of the public. You are going to be under the scrutiny of your customers. You can't sit behind this, behind your screen. If you really, really can't bring yourself to go out there and put yourself out there to raise, you need to go and find a co-founder who will. You know, you are going to— if you're going to raise investment, you're going to get 99 nos. This is terrible. You should just quit. Why? For every one yes you get, you're going to get lots of brutal feedback, but you need to have that. Relentlessness. You have to build that. You can't get away with being shy if you're out there trying to raise half a million quid in capital. I just don't see a way that that can work. This is much more than about your idea because it is the founder that is driving the investment and who the investor is investing into. Ultimately, they're investing in whether or not they believe you are a high-performance founder, outlying founder, they often call it.

This week's Millennial Master is James Church. He works with founders who are raising capital, and he sees the same mistake again and again. People think investors are backing the idea. They're not. They're backing the signals that say you can actually build it. Most of the decision is already forming before you even get on the call. Your profile, your traction, how clearly you explain what you're doing, and how you show up. The pitch doesn't start when you open the deck. In this episode, we talk about why raising money is a sales process, how to build investor trust before you need it, and when not raising is the smarter move. James, welcome to Millennial Masters. Where are you joining us from today?

Thanks for having me. I am in the east of England in a little village just between Norwich and the east coast.

We're getting closer and closer to home in Lincolnshire here for me.

Absolutely. It's a lovely place, is Lincolnshire. That was where my university was.

And so was mine. And we just reminisced about that. But let's talk about investing, because you've built a business around helping founders raise money. But before that, what pulled you into this world in the first place? Because you studied something totally different.

I did.

Yeah.

I studied graphic design at Lincoln and that led me into the world of branding and advertising and marketing. I ended up doing another degree, a second degree in marketing with the professional— what was it? The Chartered Institute of Marketing. And I really was honed in on branding, advertising, marketing, and that led me to working with— creating my first couple of businesses and consultancies around that. And through that experience, I started working with startup founders who I loved working with, because they were doing stuff that was really cool, really exciting, really innovative. They were sort of pioneers in their space. Much more exciting than working with the local accountant or the local funeral director, you know, it was just so cool to be in that world. So, so I really loved that. And so I started trying to work with more and more founders in that space. And inevitably, they started asking me about, can I help them with their pitch deck? Can I help them with their, with their fundraise? And I said, yeah, I've seen Dragon's Den, how hard can it be? You know, you just, just got to make a pitch look great. So I kind of said yes, because I thought, why, you know, I need the money. And I realized it's actually pretty, pretty challenging. It's pretty difficult. It's a very unique message to a very unique audience. And what I sort of discovered through that process was, it's a marketing and sales campaign, absolutely is. But it's, you know, you've got a very particular product, which is the shares that you're trying to sell, and you've got a very particular audience you're trying to sell them to, which are the investors. But I kind of knew that if if I could figure out and understand the audience we were trying to sell this product of shares to, I could apply the same skills that I've developed in brand and marketing communication to raising investment and get a result for my clients. So I kind of threw myself into that, did a lot of research into the audience we were pitching to, all of those sorts of things. And I got the bug. And then it turned out, you know, the founders I was working with had good successes, raised some capital, and it just snowballed from there. And then shortly after, Well, 2, 3 years after sort of discovering that, I decided to write my book Investable Entrepreneur, which, which really cemented the pivot for me and for my career from sort of brand marketing communication into specialist investor communication, and really just doing that all the time, all day, every day. So that's the kind of brief overview of how I transitioned from—

And it was your bestselling book that I first found out about you almost like 6 years ago. Yeah. In a previous business life. And I knew that it was the moment to have you on Millennial Masters as well.

I'm thrilled that you've made that.

It's all come full circle.

Yeah, I'm thrilled.

So you said that good ideas often fail because of poor communication, and you put it as a communication and marketing strategy for that. Was there a moment early on when you realized it wasn't just the deck and the graphics that you had to make? It wasn't just making some slides look pretty, and it was also a founder problem? Because your book is called The Investable Entrepreneur, not The Investable Startup.

Yes. And that's a really— it's something that I say quite often, actually, is, you know, this is much more than about your idea, because otherwise I would call the book Investable Idea, Investable Product, Investable Business. But I called it Investable Entrepreneur. And that was very deliberate, because it is the founder that is, that is driving the investment and who the, who the investor is investing into. Ultimately, they're investing in whether or not they believe you are a high-performance founder, outlying founder, they often, they often call it.

Let's break it down. What's, what's a high-performance or outlying founder?

Yeah. So this is a founder that they believe can turn ideas into reality and reality into returns. So we can all have great ideas. You know, how many times have we sat there in a bar, in a cafe, talking to our mates and someone said something and they've gone, oh, that should be a business. That would make a killing. That would be massive. We can all have those ideas. We've probably had hundreds of them over our lifetime, but we don't necessarily act on them. And if we do act on them, we have to be able to be good enough to validate the— that there's a market for it, figure out the business model, figure out the growth strategy, figure out the go-to-market, figure out how we build it, sell it, grow it, and ultimately deliver returns for our stakeholders, our investors. So, so that would be the—

a doer. They would be, they're looking for a doer who can show the right signs that they can do that, even though they haven't done it before.

Yeah, exactly. So they're looking for signals that suggest this founder can go on that journey and be successful in that journey beyond the actual idea itself. So the analogy I often give is, is you could walk past a derelict building every day on your, on your commute to and from the station, and you have the idea that would make an, you know, if someone did that up, that would make a brilliant set of apartments and they could make, you can make millions out of that. But unless you actually do it, unless you actually take action, unless you can actually raise the funding, get the architect's plans together, get the blueprints, understand the kind of all of the different services you need to bring in to kind of make that happen. Unless you have that capability, it's no good getting angry that someone else stole your idea if someone else came along and built that apartment block before you. Um, so, so you're looking— investors are looking for the person that can, can make it happen, not just the person who has the idea. So, so that's why I called it Investable Entrepreneur, and it was, it was very much about framing this as you need to communicate to an investor that you're beyond someone with an idea. You're actually someone with an incredible business model, an incredible strategy, you're able to take it to market, you have incredible credibility around you and your team that frame the signaling to investors that you can go, you're someone who goes beyond that, that kind of initial idea. And that's ultimately what, what investors are investing in. And if you can communicate that in the right way, you end up being in the top 1% of founders who successfully raise, raise funding.

So what, how do you communicate that? Because you can be judged by before you open your mouth and enter in the room.

Yeah, exactly. You, I've just been doing some content actually around how you've got sort of 4 seconds to impress an investor. It's, it's, you know, the 30-second elevator pitch is dead. You know, it's, it's 4 seconds to, to impress. And that's really how—

TikTok elevator pitch.

Yeah. Yeah. It's, it's, it's kind of, you know, it starts, we're sort of talking about this backwards. This isn't the way you would build it, but, but from an investor's perspective, the first thing they see is the deck perhaps, or how, or you standing in front of camera telling them about your business. And in those first 4 seconds, the way you present yourself, the way you hold yourself, the way you communicate. Communicate in person is telling them a lot about your confidence and your credibility. But equally, if they're viewing your pitch deck as the first engagement, the way it looks, if it looks like a professional unicorn business, then they're going to feel like the comp— that the information shared is, is much more credible, and they're going to have a much more positive reaction to the information you share than if it looks a bit tired and outdated and dull. They're going to have a small negative initial reaction, and all of the content is going to be seen through a more negative lens. And suddenly you're working 10 times as harder to kind of get the investor on your side. So all of these little things from the design of the deck, from the very first moment you open it to then the communication that you have throughout that deck to the financial planning, to the business model, to the growth strategy, to your, to your traction and validation. All of these things are little mini signals. And when an investor has enough of these signals, they want to then move the conversation forward into a meeting or into, uh, into further conversations.

Because that's how it starts nowadays. You don't just go into cold into a room, give a pitch that's a pitch deck that nobody has ever seen before. And then they start tearing it apart page by page when they first look at it. In my experience, by the time you get to speak to a potential investor, they would have already seen your pitch deck and maybe your LinkedIn or any other online presence research that they've done about you, possibly just the quickest of Google searches and what appears first. So they would form an opinion about you already from your online presence and looking at your deck.

Absolutely. So I think a lot of founders, kind of their only reference point for this is Dragon's Den or Shark Tank or whatever. And so you think you'll, you know, you'll apply to an angel, they'll invite you in for a meeting, and then you'll go and pitch to them. It doesn't work like that. Most angel investor meetings happen in a coffee shop, and it would be weird to stand up and get a projector out and start presenting a deck to them.

So, so most you'll have like a tablet or an iPad with you and you would do that because you won't even take like the paperwork printed out.

No, no, no. And, and you probably won't. You'll be having a conversation and you'll probably not follow it in the order of the slides that you prepared anyway. You're just going to be having a conversation. So yeah, you're right. It's all rather, it's the way that your LinkedIn profile is positioned. Do you have any thought leadership content on there the, you know, I call it a founder brand. Have you started to position yourself as a thought leader in this space and someone that has a different perspective on things to how the rest of the audience? Doesn't mean be an influencer, but it just put stuff out there that if an investor clicks onto your profile when deciding whether or not they want to work with, sort of take the conversation forward, it looks like, you know what you're talking about, that you're a leader in your space.

And it doesn't have to be daily, right? You don't have to get into the rat race of posting daily inspirational content just to look like you're a leader in your field.

Yeah, no, not, not that at all, but just the odd post here and there, maybe a diary documenting your, your journey. All of those sorts of things will really, really help build a picture that you are someone who is credible, someone that they can believe in, someone who's investible.

And then you might make it onto, if they like your pitch deck. Let's quickly touch on pitch deck actually, because I was looking at some of the unicorn pitch decks, and they were all so simple and to the point. There were no fancy graphics, not even fancy charts. I was looking at the one from Uber, for example, example. And a lot of people can get like hung up on, oh, is my logo best in that corner? Or is my logo big enough? Or the color is right? What are the keys to a good pitch deck from your experience before we move on to the next step?

Yeah, so it's all about communication. It's all about the language and the information that you share. So, so In my book, I talk about the 6 principles of the perfect pitch, and I won't bore you all with them now, but there's some key elements to it that are worth talking about. One is structure of the deck, and that's about making sure that you have the right rhythm in terms of the order of the slides and the information you share. And the best, you know, a lot of founders will, you know, they know their business inside out, so they will kind of share information in their deck. That they think is super important, or they're really impressed by, probably because it's really difficult for them to do and they've managed to achieve it or something like that. And they'll say something with no context. And to them, it makes perfect sense. To an investor, they have no idea how this relates or why this is important. Thinking about your pitch deck is 15 to 18 slides, no more than that. And thinking about the story—

with the opening and the thank you one or without?

I mean, I would say with, uh, 15, 15 without 18 max, uh, I think that one of the first things an investor does in my experience is look at the slide count before they do anything else. Like the most investors would be looking at this in the, in, in between meetings with 5 minutes spare between meetings and on their phone, right?

So it's going to be also, they're going to look at it on a tiny screen so that it cannot be small text.

Yeah, in the back of a cab, you know, so, so, you know, these are probably viewed on the go on a small screen or in between meetings. And one of the first things I'll do is look at the slide count. And if they see 30, 40, 50, even 20 slides, they're just going to go, I'll save that for later. And then later never comes and you've missed your opportunity.

So we all know how it is with the open tabs.

Yeah. So keep it, keep it 15 to 18 slides. Really think about what needs to be said, what can be said at a later date. Remember, this is your TV ad. That gets you, gets them wanting to ask more information, wants the full detail. So, so keep it as a TV ad, 15 to 18 slides of just really, and really think about what each slide needs to communicate to get that meeting. And then, then, then you've got the content itself on each slide. And as you said, they're often on a small screen, looking at them on a phone. You want to keep it, you want to keep it short, 50 to 100 words max. Try and use graphics and kind of infographics to try to explain information quickly, use design hierarchy to pull out key bits of information, use something called the setup and score format, which I talk about, which is use the headline as the conclusion of the slide. So whatever you want the one memorable takeaway to be for that slide, that should be your headline. So imagine you then had an investor do something called the flick test, right? And that's where you open these chats. So this is how an investor thinks. I open it, How many slides? 30? Ah, leave it alone. 20? Well, maybe I'll give that a go. 18? Yeah, I'm in. Then I will, let's just flick through it first and see if it's worth my time. Right. And then if it is, I'll go back and read it in more detail. So they've got the slide count check, and then they've got the flick test. And as they're flicking through, if you, every headline is the conclusion you want them to come to on that slide, they should be able to read every headline. And kind of get the business, get why it exists, get where it is in its journey, make a quick assessment as to whether or not it fits their criteria. And if it is, go back and read it in more detail. So you can use all of these kind of communication techniques with design hierarchy, with communication hierarchy, with language, all of these things to kind of drive engagement. And when you do that, your deck becomes, you know, investors will engage at a rate of like 6 times higher. So, so most of my clients are getting 6 times higher engagement rates. With their deck than they would otherwise get. And it's all because you're saying the right information in the right way, thinking about the audience and how they're consuming this content on the other end of the screen.

That was one of the things that was conflicting, and I was going to ask about you next, but you answered it because you get conflicting advice sometimes depending where you read, because they say, oh, people read it via email now, so you need to give more details because they have more time to spend, etc. But then when you You say, actually, they do it in between meetings, they're busy people, back of a cab, and on a small screen, it makes total sense to still have less in there and shorter or more concise than it would be a wordier, longer slide deck.

So it's like a waterfall of content. You haven't got a one-size-fits-all. Think of it as a waterfall of kind of complexity. So here's how it would— here's how we're running campaigns right now. Connect with someone on LinkedIn. Send them a 30-second video introduction to yourself and your business with a permission to pitch video. Right? So 30 seconds, you— this is, remember we said about how you present yourself to camera, instant credibility. If you in 30 seconds can say, this is me, here's why I matter. Here's what we're building. Do you want to learn more? In 30 seconds, in a video, send that to them. You can personalize it, you could record it for each individual investor and drop their name in. But just send a video, it's much more engaging than a piece of text. They get to see you, they get to meet you, they get to hear from you, they feel like they know, starting to know you already, and you've only spent 30 seconds with them. They ask for more information, you could send your pitch deck. Or you could send a 2-minute elevator pitch, a video where you tell them about your business, maybe you cut away to a Loom video where you share some slides, and then you come back to full screen and you, and you give the close with a call to action to say if you want to learn more. Let's arrange a meeting. And then you arrange a meeting with them and you send the pitch deck ahead of that meeting. So they get more information, or they might ask for the pitch deck after seeing your 2-minute video, you've then got the pitch deck that gives them more information, which they're still probably looking at between meetings in the back of a cab, and then you have a Zoom call with them. And you decide whether there's a fit, and then you might have a physical meeting with them. And then they'll go through your full— your full financial model. And then they'll start asking you some questions around that. And then they'll go through your full investment memo or business plan. And they'll start asking you detailed questions around that, and then they might decide they want to invest in you, and then they've got all the whole legal process and all those things. So it's a waterfall. It starts from that sort of 30-second intro to that 2-minute video to that 15-slide deck to that half an hour meeting to that 1-hour deep dive around your model to the, to the 1-hour deep dive around your business plan to any other meetings and questions they want answered. It's a waterfall. It's a pyramid of information. And I think what a lot of founders think is like, I've got my deck, I just ping it out to everyone.

On mass.

Yeah. The communication and the steps that we go through when we make a decision. There's something in marketing called the zero moment of truth. It's something that Google came up with and it kind of, I don't fully understand it. I've had it sort of taught to me, but it's basically to do with the amount of interactions you need to have with something until 'You are ready to buy' on an e-commerce.

Daniel Priestley said 7 times. Yeah.

About the 7-Eleven 4 format, which comes from that Google Zero Moment of Truth. There's other phrases that there's a really old-school kind of advertising kind of, it was like in a poem saying type thing, but it basically, it's like 20 or 30 lines long. And it kind of says the first time someone comes across your brand, they don't even notice it. The second time, et cetera. The fourth time, they just about recognize it. The 10th time they take notice of it. The 30th time they buy something from you. You've got to— you can't go in with the sales pitch, the, hey, this is my great business, do you want to give me half a million quid? Who the hell are you? And why should I care? It's like 30 seconds of like, this is who I am. And this is what I'm building. If it aligns, do you want to learn more? 2 minutes, they've opted in, they've been— they've asked to be sold to essentially, okay, sell to me. Here's a 2-minute overview. If you like that, Let's jump on a call, you know, or look at the full deck, but you can be very tempted to give a lot more away in those 2 minutes.

How, what's a fine balance? What do you advise not to give away in those 2?

For me, the most important thing right now is traction and validation. Don't worry about business model. Don't worry about anything else. The thing that's going to get you through that 30-second and that 2-minute kind of window is validation and traction. Anything you can give around evidence on, this is something the market wants, this is something the market needs, and I've got the evidence to prove it. If you're early stage, that's where the narrative lies to get through that. Like, there is no point then, it doesn't matter how good your go-to-market strategy is, or if there's, if you're building something the market doesn't want or need. So the sooner you can get across to them, this is something of value. This is something that the market wants and needs. We can then talk about market size, TAM, SAM, and SOM, go-to-market strategy, revenue model, business model, all of those sorts of things can come later. But unless you can prove to them very quickly, this is something in demand. This is something the market wants, something the market needs. You have primary evidence, not just something you Googled or asked ChatGPT. You have primary evidence. You have a waitlist. You have an audience forming. You have industry experts telling you that they want this. You have letters of intent, whatever it may be. Unless you can quickly get across that this is something with legs, this is something people want, they're not going to take you seriously at all. So it all comes from that credibility. The other thing is team and experience, right? Obviously, every founder is different. But if you can align your, your, yours and your team's experience with what you're building, and you can kind of dig through your background around what your bragging rights are, you know, how, what bragging rights do you have that make you more likely to succeed than— but let's imagine we're in a situation where they've just received exactly the same pitch. It says exactly the same thing. It looks exactly the same. But the only difference is the team slide and the person presenting it. What makes them choose you over Startup B? You need to, you need to align your experience with how you are going to win, how you are the right person. Of anyone in the world, you are the right person to make this idea into reality, this reality into returns. And if you can do those things, you win.

I had a couple of pieces on Millennial Masters, one from an angel investor who invested in companies that went all the way to unicorn status, and one from a VC as well, who went as far. And they don't seem to have an issue with solo founders, although some churches, so to speak, advise that it's good to have a co-founder that complements your business, whether you are the marketing or the sales lead, they would be the technical lead and any other combos from, from there. What's been your experience in what has been funded and what hasn't?

Yeah, well, this church doesn't preach co-founders, quite the opposite. So there is what— it's a big unicorn myth. It's a big startup myth, I think. And I think it's driven by Y Combinator and Techstars and some big, big kind of accelerators.

They connect people and bring people together.

They want you to have a co-founder. The theory behind co-founders is anything between 2 to 4 co-founders is you get more output from the shares and the equity. So if you have 4 people or 2 people working on this, you have someone who can drive marketing and someone who can drive the tech. You've got a co-founding team, happy days, you get twice as much output without having to buy salaries or pay consultants than, than, than if you were on your own. However, when you look at the most successful companies and some of the top entrepreneurs that spring to mind, when you think of who are some of the best entrepreneurs in the country, most of them were sole founders to begin with. And when you look at the long-term data in terms of who, what companies deliver the most value and survive the longest and have the biggest returns and the highest profits, it's sole founding companies. Because sole founding companies have one thing that co-founding companies don't have, and that's an inability to have a co-founder dispute. So one of the biggest killers of startups is a co-founder dispute, right? So they, they will fall out, they'll have different directions. So you bring someone on to do the development, it turns out they're not as good as they thought they were. And you have to try and get rid of this 50% shareholder who was never adding, wasn't, was no longer adding any value. And it gets messy, and it slows you down. And there's difference of opinion, Whereas a sole founding company has one direction, one focus, they live or die by those decisions, they can move quickly, and they can win. So I've never seen— most investors will say they invest in teams, not co-founding teams, but teams. So there's nothing wrong with being a sole founder and saying, I have these advisors, or I have these technical assistants, or I have this— I employ this individual to do these parts. I've built a team around me. They don't expect you Although with vibe coding and AI and everything, we're not far away from having our first one-man band unicorn, but, but you still have to be good at yielding the AI to do what you want it to do.

So yeah, especially in so many domains.

Yeah. But, but, you know, generally speaking, if you can build, if you can build a team around you, it shows that you can pitch your vision really well. You can get people who, who align with what you're trying to build, want to give up their time, want to work with you with a reduced rate in return for some shares or whatever it may be. To come and build this with you, to be part of that journey with you. And that says a lot again about your credibility and kind of who is it that's presenting to me. Do they have a good idea? I don't really care. Can they get a team of people around them to help them execute this idea? Then I'm in, because if these people who are on top of their game are giving up their time, their evenings, their weekends initially, maybe willing to quit their job when funding comes in to come and join full-time in a consulting role or as a board of directors or as an employee, if these people are willing to be part of this journey, then that says a lot about the credibility of this company and its potential for success. So it's not really about do you have a co-founder, it's can you build a team that could include a co-founder, it could not. But if you can build a team of people around you who all believe in this idea, then you're showing yourself to be a resourceful entrepreneur, someone who can make things happen. And that's, that's what investors want to see, that, that adds to those credibility points that ultimately say, is this an outlying founder? Is this someone who can turn ideas into reality, reality into returns, and those that can build teams around them absolutely have more success.

So that's what an investor looks at a founder when they're, what they're really trying to work out. But does that mean that your presentation and your profile as a person is more important than the business idea? Or the other way around, can a founder with a weaker profile, but with a great idea, raise money.

Absolutely. So we risk homogenizing investors into one hive mind that all speak or think the same. And obviously there's going to be different things that make different investors tick. They're all individuals. Um, so some will really value the individual and their experience and their track record. So you mentioned Daniel Priestley, so I might as well use him as an example. I hope listeners know who he is. If you don't, Google him.

They have. You're not going to be the first one who mentioned it.

There he goes. So, but yeah, he's, he's incredible. But he has a track record to a decent audience of people that when he launches a business, he's launched 7 businesses, I think, and all 7 businesses has gone to zero to a million in 12 months. And 2 or 3 of them have gone on to be multimillion pound in valuation. He's got a track record. He doesn't need to do a lot to go and raise money. He just kind of needs to signal to his audience, I've come up with a new idea, I'm raising 400k to get it off the ground, and people will just start chucking money at him. I mean, it's a little bit more complicated than that.

But, but that took a few years to get there. Yeah.

But he spent a decade building his profile, building businesses, being successful to get to that point now where he can co-found companies with great people and they can raise money very quickly.

But that's, that's way later in your journey. If we're talking about the first time you're raising or your first attempt, then it would be way different. Maybe you haven't had a track record, but your idea is still good and you're still the kind of doer and person that would be able to bring it to life.

Someone like Daniel Priestley or Stephen Bartlett or Elon Musk or whoever with that track record. So the rest of the 99.9% of us, we need to kind of allude to that credibility, that individual credibility by saying, finding things in your past that are directly relevant to the success that you can have with this, with this business moving forward. And if you don't have that, that's where you really need to kind of focus on defining this sort of primary evidence that shows that this is something market wants and needs, because you have to work harder at gaining that trust that you're on to something because you don't have that track record of having built and sold companies in the past or whatever it may be. So in answer to your question, you know, anyone can raise. And what's more important, the profile or the idea? They're equally as important. You can have someone with a really great profile and a terrible idea. Will they raise? Probably not. You could have someone with a terrible profile of really no background, no experience, but a great idea, would they raise? Probably not. But if you've got someone who's made progress, can demonstrate how they can add value, built a team around them, got people excited, got traction, got validation, got a waitlist of people, and they've got a decent idea, those people can raise. So I've worked with people who are 18-year-old kids straight out of, sort of quit university to build their company. And I've worked with people who are sort of 40, 50, 60-year-olds with, with 10, 15, 20 years track record. It's about like, how do you get the 18-year-old with no life experience, let alone business experience, raising capital? Well, the way it worked was that he started going— I coached him and he went to networking events and started rubbing shoulders with all of the, all of the local kind of business people. He demonstrated what he was building. And he, rather than jumping in saying, I'm raising money for this, he would drop into conversations. Oh, we've just launched version 2 of our prototype, and it's just had this success and this result. And he just started drip-feeding information, doing the hard yards of going to physical events, meeting people in person, building relationships, telling them, documenting his story of his, of his progress online and in person to people. Then he managed to secure someone who wanted to come in really early as a local business angel angel that put 10 grand into the business for him to do a few, to advance the prototype. That gave him the credibility he needed to then open doors to other local angels who then committed 200, 250K to the round. And then he took that on to a broader network of angels and ended up getting a million, just shy of a million in commitments for his, for his business at 18 years old. He had no life experience, he had no business experience, but what he did what he did do is build a network of people who trusted him, saw how talented he was. He was very upfront about the progress he was making, and he was dropping in those little pieces of credibility. Our algorithm is 80% accurate, it's 85% accurate, it's 90% accurate. I've just got this co-founder involved. I've just been able to attract this investor who's put in 10K and is helping us open doors. And over time, everyone starts believing in this kid. And before you know it, they're putting a million quid into this 18-year-old.

And that's where you made an important distinction, James, over time, because something you said that I liked, you talked about pitching as a journey of a thousand pitches.

Yes.

And also we, well, I know from my experience and I've seen it quite a bit, so many founders only get serious about pitching when they're already running out of time. And everybody who I've spoken to, all the Millennial Masters who successfully raised and shared their tips, said it was months, if not years, that connections and networking started bearing fruit. When is the right time to start fundraising?

Now, wherever you are in your journey, listening to this now, start connecting with investors now, start sending them the 30-second video now, start saying, this is where I'm at. This is where I'm building. I'm going to need a round of investment at some point. I don't know when. But what I want to do is get to this position, list some key milestones. And at that point, I believe that'll be the trigger point for me to open a more formal round of funding. But I wanted to get connected with you now in preparation for that and just explore whether or not we might be the right fit. See if you can get some conversations going, start engaging with those investors' content if they're on LinkedIn. If you can get those conversations going, see if you can turn that into kind of are the milestones you're heading towards the sorts of milestones that they believe they would need to see to invest. And if not, you can start to map out different milestones that you need to hit to make it something that investors will want to invest into. You can start sharing monthly updates about your progress, saying, here's everything that we did really well and have achieved this month. Here's everything that we cocked up. Here's everything we thought we'd go, but that didn't go right. But here's what we learned from it. And here's what we need right now. Over the next month, we're going to achieve this and just start building that narrative. I've had founders do this as a video diary on LinkedIn every week. They'll say, here's 2 things that went really well this week. Here's 2 things that went really badly this week, and here's what we're going to achieve next week. And they just do that regularly and they sort of build in public and they get people on their side.

What about if somebody's shy or anxious? Because I'm sure you had a bit of that as well. Not everybody is happy to be on camera.

No, you have to do it in a way that, that that works for you. I'll tell you a story. When I first started in business 10 years ago, and I started going to just those local networking events, you know, the ones where everyone sits around a table at breakfast and they stand up and give a 30-second elevator pitch and it never leads to anything, but you go anyway. Well, I started going to those because I didn't know really what else to do. And I was there, I was so nervous about standing up and doing an elevator pitch that I was doing shots of vodka at 6 o'clock in the morning before these breakfast meetings.

Just to try to do what you gotta do, right?

But it's ridiculous now to think that I now stand on stage in front of thousands of people and deliver a talk and don't think anything of it. No nerves, nothing, just get up, do my thing and go. So, so I would say that yes, you may be shy, you may be. The thing that helped for me is that James Church, I'm quite introverted, like at home, I'm just happy with my wife and kids. And I don't really go out. I don't have a huge number of friends. I sort of play football once a week. I'm not really someone who needs a a lot of, um, you know, I'm quite introverted. James Church, the author and the presenter, he's like almost like my Slim Shady. He's like a, he's like a different character. He's, he's someone who knows his stuff, that he, he's got this one particular topic that he's really confident to talk about and everyone, you know, gets a positive response from. And over time, it's kind of, they're two different people. The, the person my wife sees and the person you see on camera right now are two very different people. And I kind of have these two personality. So, so yes, you may feel shy. Yes, you may feel— but you just have to start putting yourself out there. The analogy I use is when you see someone you're attracted to at the bar, 99% of people don't go over to that person because they're scared of rejection. But the 1% that do, the ugly one that you're like, how do they get all of the, all of the men, all of the women, how do they do it? Well, they do it because they're confident. They do it because they don't care for the rejection.

Right?

Every no is one step closer to a yes. And they end up getting all the beautiful people at the bar. So if you can, if you can kind of get over that fear, and start just doing it, you'll realize that actually nothing bad happens. Something that our friend Daniel Priestley says a lot is, is be prolific, not perfect. Just get stuff out there. And you'll realize it doesn't have to be great. You'll get better at it over time. If I look at some of the first videos I recorded, oh, I'm so stiff and so wooden, and it's horrible, and it makes me cringe. But at the time, I felt really proud of myself. And I didn't get a bad reaction. People weren't going, oh God, you're terrible, James, this is awful. People liked it, people got something from it, and your confidence builds over time. I don't think there's a way of building a successful company, not if we're talking get £500,000 to then go and raise £2 million to then go and be a multimillion-dollar business, this. There is no way to do that by sitting on the sidelines and not being a thought leader in your space, not getting yourself out there. You are going to be under the scrutiny of investors. You are going to be under the scrutiny of the public. You are going to be under the scrutiny of your customers. You can't sit behind this, sort of behind your screen at your desk thinking that, you know, someone else can do that stuff. I just want to build. If you really, really can't bring yourself to go out there and put yourself out there to raise, you need to go and find a co-founder who will, because you need to have a public voice. You need to be able to get yourself out there, but get over the fear of rejection. Realize that, you know, you are gonna— if you're gonna raise investment, you're gonna get 99 nos. This is terrible. You should just quit. Like, for every one yes you get, you know, you're going to get lots of brutal feedback. But you need to have that relentlessness I talk about in the book. Like, you have to, you have to build that. You can't get away with being shy if you're out there trying to raise half a million quid in capital. I just don't see a way that that can work.

A lot of what you are sharing is very close to personal branding to a certain extent, but more like hitting certain milestones and making sure that certain signals are out there. And you also said that this fundraising takes quite a while to build the connections. And so does personal branding. Just because you have 12 weekly updates or 12 monthly updates, it doesn't mean that you are going to give the right signals. So I'm wondering then, is social media and LinkedIn, which has become basically some sort of social media, the only way you can do that and reach investors besides these local meetings, so we're skipping those.

I think you need a multi-channel approach. LinkedIn is a really great tool for opening conversations. Like I say, a lot of founders will use it to pitch someone straight away rather than build a relationship first, but certainly connecting with people.

But who has time for that? If you're on the other side of the LinkedIn messages, you know that when you see some entrepreneur or founder starting to message you, you know that there will be a pitch sooner or later.

Exactly. But if you're an investor, you don't want to, you do want to see deal flow. You do want to see great great opportunities, but I think that, you know, if you connect and your headline is founder raising SCIS funding, they're not going to connect. But if your, if your bio is transforming the X sector by blah, blah, blah, just something a bit more like thought leadership or, you know, founder of X raising investors.

So super practical tip, do not put that in your bio. Do not put that you're raising or SCIS.

Yeah. Uh, that little LinkedIn headline, if you're out there actively connecting with investors, it's a bit different if your profile is just sitting there and you want to you want people to find you and know what you're doing, then fine, raising SCIS. I think if, as you say, investors know exactly what the intention is on, on connecting, if you say founder of X startup raising SCIS, they know.

But even just founder of X startup was pretty—

yeah, so, so make it more about kind of what the big passion is, the vision beyond making money, the thing you really care about, and, and then you're more likely to get an accepted connection request. It's about 30% in my experience if you get the headline Right, 1 in 3 will connect, accept your connection request. Send the intro video by all means, maybe just make a note of who connected and don't send anything directly.

That's another question.

Just engage.

How soon? Because sometimes you get people connecting to you and then immediately there you press accept, you get the pitch or the sales pitch, whatever it is in your inbox. Do you let it like simmer a little bit to pop up in their feed or do you do it straight away?

Depends where you're at in your journey. If you are doing this preemptively because you've realized fundraising takes time and you need to build a network of people prior to pitching, let it simmer. No direct contact. Like some posts, comment on some posts. There's a great hack where you can do like a, if you did a search in LinkedIn and you did a people search in LinkedIn and you put, you can then, or no, sort of a post search, sorry, in LinkedIn, and then you can filter by connections. So if you then ticked all of the investor connections you've made and you then copy and pasted the URL and saved the URL as a bookmark, every time you click that, it would load all of the most recent posts from a select list of your connections that would be the investors. And then you can go through just liking and commenting on those investors' posts where you—

yeah, because LinkedIn just sends you a notification anytime something sneezes.

Yeah, all kinds of nonsense. So, so you can curate your, your feed by using the post search function and filtering by individual. And then you can engage in those particular posts regularly, comment on them, respond to them. Don't use AI, use your actual brain, connect with them on a human level. If you're direct in, in kind of, I am raising right now, then yeah, if they've accepted your connection request, send them a personal video note that just says, hey Daniel, James here. Thanks so much for connecting. Look, quick question. Are you actively investing right now? The reason I ask is I'm building blah, blah, blah, blah. Drop a thumbs up in the chat if you'd like to learn, learn some more details.

So make it low effort as well. You get a thumbs up and then you follow up.

Yeah, really low effort. And then you can go and send them more stuff. So just simple stuff like that to engage. So LinkedIn is a great tool. Attending events is a great tool. Local networking events to get into local angel groups, local business people is a great tool. National events, pitch competitions, those sorts of things never do any harm. Leveraging your network. Something that a lot of founders don't do is leverage their existing network, their ex-boss, the people that they met networking 10 years ago, someone they used to work with. These people often can open doors or have or invest themselves. So, so I had a client whose ex-boss invested in them because they'd gone off to build something that solved a problem that they'd identified while working in this, in this corporate. And they, they would, they just reconnected with their, with their ex-boss. Having a chat over coffee about what they were up to, mentioned they were building this startup. They were really interested because it solved a problem that they knew that audience had. And he said, I've been thinking about angel investing for some time. I've never pulled the trigger with anyone. But I already know you, I already like you, I already trust you. I know the— I know what you're building inside out, because you're solving the problem you had while you worked with me. Why don't I— why don't we, you know, you make the perfect, essentially, you make the perfect candidate for my first rodeo. So they weren't listed as angel investor on LinkedIn. They were a CEO, whatever, CEO, CFO, CTO.

They're people thinking of being an angel investor.

And they're high net worth, right? There's the SCIS scheme. I had another founder that went and did a, we worked with them and we, your audience are the people that could most likely invest in this. He was building a platform for locum doctors. They earn a good amount of money. They, they're all above the higher rate tax threshold in what they earn. So the SCIS scheme and EIS scheme become really attractive to them from a tax planning perspective. So he just organized a practice pitch to his existing customers that he was then building a tech platform to scale up his consultancy. He organized sort of a practice pitch event with them to get their feedback on kind of what he was building. And what he was going to raise investment for. 30% of his funding round was committed by the end of that meeting by all of these locum doctors who said, we need this in our lives. Didn't know the SCIS scheme, didn't realize I could get tax back on my investment. This is, I know you, I like you, I trust you. You've been working, we've been working together for years. How do I get involved? And 30% of the round was committed.

So keep an eye open, especially around your current network and existing connections. There might always be an angle to approach it and you don't have to go too salesy on it. It.

No, and there's, there's people I know that have managed to find someone in their network that's written a $5K check into a, into a $250K round. It's like peanuts, but, but they— that individual who, who put in $5K was able to open the door to 3 or 4 other people that each put in $20K to $50K, and that one $5K check ended up in about $150K worth of funding, like So, so it's all about leveraging that network effect at an early stage as well and going, do we need one investor putting in a huge amount of money? Or actually, would we be better off getting 10 or 20 investors putting in 10K each? So it's a lower risk, lower commitment, easier to sell. And it sort of depends on where you're at. Are you pre-seed, seed, Series A? All of these sorts of things come into play, but you can leverage your network. So that's the other big thing. So, so another little thing you could do is, is constantly research all the founders that are in your sector that aren't competitors. That have recently raised pre-seed, seed funding and contact—

look up who—

yeah, ask them, ask the, you know, contact them and say, you know, I've been following your work. I love what you're building at so-and-so. We're building something in a similar space. I'd love to find some time to take you to lunch and pick your brains because we're about to go for a fundraising strategy. Would you be open to that? Suddenly these founders that have been so focused on their own thing are realizing that they're an inspiration to others.

And a bit of flattery gets you far.

They feel like for the first time, they feel like they're a bit of a leader in the space. They've got something they can share to the people coming through. And whether they take lunch or not, the idea of saying, oh, let me take you to lunch and pick your brain, show that I value what you're going to give me, even though they would just tell you over email, and then they'll probably say, well, look, rather than lunch, let's just jump on a Zoom call. But if it's, can we arrange a Zoom call for, so I can pick your brains, it's like, I haven't really got time for that. But if it's like, I've been following it. Let me take you for lunch. I'd love to pick your brains. We're in a similar position to where you were 12 months ago. I know I could learn so much from you. It's like, oh, you value me. But let's do a half-hour Zoom call.

Good old flattery.

Lunch to Zoom call. You know, it's like go there to get there. So, so that those sorts of things, you just got to work it. You got to work a multichannel strategy where you're kind of reaching cold on LinkedIn, leveraging your network, going to events, events. Just build, you know, but don't just focus on searching Crunchbase for a list of angel investors. Because one thing that's changed over the last decade is what used to be an angel investor called an angel investor because they were the first money in, the people that would give you a shot at success. Angel investors, if you've got angel investor as your profile on LinkedIn, if that's your job title on LinkedIn, oh, you will be bombarded, I'm sure. What you— what that really means is I am a sole trading venture capital fund. I act, think, look, and smell like a venture capital fund. And I am looking for high levels of traction, high level of progress. You need to be generating revenues, all of these things before I'll even take a look at you because I'm—

they do, they do. And you get that? Yes. Because sometimes I found that there's a— and I've been hearing as well from some founders that the expectations at angel level which used to be a bit of, um, you know, social proof, go-to-market, and pushing an idea further into the next step, now tend to be pretty much requirements as you would have at like, you know, Series A. Yeah.

Yeah. So what, what used to be a seed round, um, or even a Series A round, uh, a decade ago is now like the benchmark, the entry level for most angel investors. Now, part of that is because you can With the advancement of technology over the last 10 years, you can build more and get further with less. But part of that is due to a change in appetite of, in terms of risk because of the wider economy. But either way, if you're pitching to angel investors at pre-seed, they're going to want you to have post-revenue, post-product kind of levels of traction. If they're listed, their job title is an angel investor. What they are is a seed stage venture capital firm. They're just a sole trading one. One. With one, it's their money, but they act, smell, and think, and their criteria is the same as a seed stage venture capital fund. So how do you get your pre-seed? Well, you contact those people that don't call themselves angel investors. You contact the business leaders in your space, the people where the problem really resonates, the possible customers and clients that you're going to be working with. And you find people who have $10K, $20K, $50K capital to invest in this because they love you, they love the problem you're solving, they really want to be part of that journey, and this excites and they're at that stage in life where they're looking to be, and they have that wealth and that capital to be able to pass it forward. And, you know, you're not then looking for a list of people who would call themselves angel investors. You're looking for high net worth individuals who are high rate taxpayers who can generate—

And that's not on their LinkedIn profile.

That's not so much on there, or the fact that they're interested in investing is not on their LinkedIn profile. Profile. So that's where you have that softer approach. If you connect with them, you follow them, you get their content, you build up that relationship, you do an intro message, you try and get to know them. And often, maybe, you know, there's a great saying in Silicon Valley, ask for money and get advice, ask for advice, get money. Maybe you can approach some people to be on your board of directors in return for some equity. And then they— then you take their advice, you make some progress, and then they become your first investors. But as we've said throughout this whole kind of episode, this stuff takes time. There is no—

it's not going to happen in 3 weeks, 3 months, and definitely not even 6 months.

No, you need to, you know, you can't just switch on and start saying, right, I've created my pitch deck. Now I'm going to contact some investors and get investment. Very rarely does that happen. This is a process of building stuff over a period of time.

Well, James, I want to go into more quickfire series of questions now. Out to get some more practical bits out of you. You've spoken about FOMO, fear of missing out, and you have to create that sense of urgency even though you know it's going to take months, if not years. And that's before you start the legal process, as you said, with due diligence and them starting to look through your accounts and everything else. How can you create this urgency ethically without, you know, BS and putting a fake deadline on?

Yeah, so, so you basically, if you're doing what everything we talked about, you'll start to be building relationships with, with people. And hopefully you can start to get some expressions of interest and you can kind of get them to formally say, yeah, you know, this is not a commitment, but I would be interested in investing in you. And, and hopefully say, well, what would your sort of ideal ticket size be? How much would you be looking to invest? So that, so then you can start telling other investors, oh well, I've got 3 people that are commit, each expressed interest for a certain amount. And maybe you can even get to a point where you get, let's say you're raising $200K, you have $300K committed in expressions of interest, and you can go back through all of those people and say, look, I've got, we're ready to close. We've got $300K in expressed interest. We're now looking for your final commitment. Are you in? I'd love for you to be in for these reasons. One of my top pick investors to be part of this round, but I understand if you've changed your mind and this is no longer the right fit. I've got others in the pipeline. So no, no worries if it's no longer for you. But if you want to be in, I need to know by the end of the week. It's genuine FOMO. It's genuine, I've got a load of opportunities here.

I'd love to give you a bit of wiggle room.

Yeah, yeah. But what you can't do is pretend you're having loads of investor meetings when you're not. So the more you do on building your network early, which is why I said start pitching now, trying to raise now, even if you know you're not ready. The sooner you have the more scope you have to create that sense of FOMO. Another thing you can do is if you've got a big, a big audience already, maybe you already have some customers with some other business or whatever it may be, you can, you can kind of create group-based pitches. So, so I know a lot of people that have built a waitlist, and one of the questions on that waitlist is, would you be interested in investing in this? And then they get 10, 20, 30 people that say yes, to, to that waitlist. And then they put on a group event in person in a boardroom or on Zoom where 20, 30 people turn up to learn more about the opportunity to invest. The whole idea that you've got even 5, 10, 15 people on a Zoom call to hear about it creates the idea of FOMO, creates the sense that, okay, there's a lot of people interested in this. And in itself creates a sense of traction and validation that this is something that is moving forward and going in the right direction and reassures it's social proof that investors are making the right decision to invest in your business. So yeah, that kind of thing.

Moving on, James, you've spoken about dilution across multiple rounds as we progress from angel, pre-seed, seed, etc. What do first-time founders usually get wrong about that? Because the cap table, you don't really understand it at the beginning, especially when you think, oh, I'm splitting something 50/50 or whatever with my co-founder, say.

Yeah, just, I mean, yeah, lots of different mistakes. Sometimes giving away too much too soon and being too generous with their equity and then realizing that after round 3 or 4, they're getting seriously diluted in themselves. But more often than not, it's not being generous enough with the dilution and realizing that actually, if you've got, you know, it's better to have 15% of a billion than it is 100% of nothing. Right. So, so, you know, I keep on hearing that too.

Yeah.

Yeah, give them, give them a couple of percent to advise with you. Give, uh, but not too much, not 5-10%, but a couple of percent for advisors. Make sure that you're offering early investors enough of an incentive, enough of a share to make it feel worthwhile, that they've got really got a stake in it. And don't, don't try and, try and overvalue yourself and kind of hold on to as much equity as possible. So it's a real balancing act. But yeah, just, just expect that you are— if you're going to shoot for the stars, if you want to build something that's multimillion, billion-dollar business, hundreds of millions in value, or more, you're going to have to sell, not give away, sell a lot of your equity in order, in return for something of value, which is advice or money.

And that's what I wanted to go next. What surprises founders when they actually see how much of the company they may need to give away over time, or they, you know, some of them have already realized, but when you think, oh, I'm going to have 50% or 30%, but actually once you go through all the stages, that becomes less significant.

Yeah. I mean, the average is 15 to 20%, uh, around. So I would say sort of 20% more towards the early stage, 15% sort of late.

10%, you, you say for the advisors and any staff? Couple of percent.

Yeah. Yeah. And you might set aside.

All together. Yeah.

10% kind of equity pool for that. Yeah. So you, so you might set aside equity for early employees. They're going to earn less than market rate salary in return for equity to be part of this journey. And that gives them a real incentive to make it, to make it a success. You might, yeah, you might want to put a 10% pool aside for, for that. And then you might be selling 15% per round, you're, or 20% per round. So if you're going to do 3 or 4 rounds of funding, you can quite easily become become a minority shareholder in your own business, which terrifies a lot of, a lot of founders. But ultimately, you know, you're going to be there, you know, as you are growing an enterprise, and investors are going to want to make sure that the right people are pushing this forward to get their money back. And if you're not the right fit, they do have the power to get rid of you. But quite honestly, by the time you get there, most founders are kind of wanting to find a way out because they didn't do this to be the manager of a multi-million dollar business. They did this to build stuff. They love building, and they've got new ideas for new ventures, and they don't really want to have to be the CEO of this giant corporation.

So in most cases, it's knowing when to move on or when the skills that you have—

by the time you get there, you kind of want to exit as a CEO. You might sit as chairperson on the board or something like that, but you're not day-to-day in the business. You know, it really depends on what you want to build. If you're building something small, you might, you know, you might be happy with one round of funding gets you, you know, give away or sell 15 to 20%, you're done. But if you're really going down that fundraising journey and you're really looking to build a venture scale business, you need to be comfortable with ending up with anything between 15 to 30% of the company at the end of the day.

And what point do you think a founder, I'm assuming you've had a bit of that as well, do of them just chase investment when the better answer was to maybe build a calmer or more profitable business rather than trying to scale it to something that would not be reasonable, I guess.

Yeah, I think a lot of founders, yeah, probably think that it's, it can be bigger than, than it is. Or I was speaking to a founder just the other week that was raising, wanted to raise capital because they'd run out of cash flow and they'd put in 250K of their own money in their business and, and they were running out of cash flow and it was all going to fall, it was all going to fall apart if they didn't get some money in. It's like, that is not an attractive investment proposition. You, you know, they're not a stopgap for your failings. They'll be looking at it going, 250K invested, you've got nothing to show for it. Why am I going to allow you to risk 250K of my money to end up with nothing to show for it? So, so, you know, sometimes it's the hard truth and you have to be honest with yourself and kind of go, is this, is this something that I can raise, or should I bootstrap this to a to a point and get it as a profitable business. Most founders— and I saw something about Sam Altman at ChatGPT, OpenAI. I think he has— doesn't have— I mean, this could be AI content, it could be completely false, so don't quote me on it, but he doesn't have shares in the company. He takes a very basic salary because he does it because he loves what he's doing and he didn't want any conflicts. I don't know how true that is, but ultimately, found that the sort of moral of the story is, is that the founders building the big, big companies aren't really doing this to get rich. They're not doing this because they want huge amounts of wealth. They're doing it because they love solving problems. They love building things. They want to make an impact on the world. So if you're chasing the smaller, raising as much money as possible for the smallest amount of equity because you want to become a millionaire or billionaire, you probably have the wrong incentives. If you're willing to give away equity because you realize building a business is a team sport and we're all going to win, and I'm really passionate about solving this problem, and as long as I'm getting the right resources into the company to make that, make that vision a reality, I'm not precious about it, then you've probably got the right attitude. So if this is all about raising capital to keep yourself afloat or to pay the bills or to, to become a multimillionaire, you're probably doing it for the wrong reasons.

And investors are going to see through that at the moment of due diligence.

Yeah, of course they are. So, so yes, we all want to be successful in business. Yes, we want to have a good lifestyle out of it. But really, how much do you need to have a really good lifestyle? You don't need Elon Musk billions.

That was going to be my next question. You led straight into it.

Nice for most people, right? Um, £100,000 a year, or what, you you can do that with a 2-person, 1-person consultancy business. So, so, you know, why are you, you know, what is it that you want from business? Is it a nice lifestyle? Is it the money? Is it, is it immense amount of wealth? Or is it to change and impact the world in some way? And if it's the latter, it's, it's, you know, it's less about the equity, it's less about those sorts of things and more about just getting the resources in to drive change.

You mentioned lifestyle business, and I know you have a clear differentiation between the two of them. Can you spell the real difference so that anybody who has possibly a lifestyle business and are considering moving it into a performance business or just raising for that to understand how the market operates right now? Yeah.

So you're only, you're only going to raise investment if you're pitching a performance business, something that can do multi-millions. In, in revenues and, and, you know, tens of millions in revenues and tens of millions in profit. That's, that's where it needs to get to. Like, 50+ million has to be like the minimum target that you, you're comfortable with of, of heading towards to, to raise.

And in what time frame as well? That, that's important because it's not going to be like in a year's time.

No, 5 years maybe. Um, okay. And, and if you're pitching at seed, Series A, you probably want to be showing progress. You know, what's your path to 100 million in revenues. You really, you know, you're really shooting for big. Anything else is a lifestyle business. Anything up to 10— Daniel Priestley talks about this really well as well. Anything sort of 10 to 12 people strong is a lifestyle business. And it can be doing a few million a year. And there's a nice— everyone earns nicely. There's a small little team and it's a really nice little business and a very profitable business and one in which you have a really comfortable lifestyle. You don't need any investment for it. You're just building something that's— that does a few million a year with a team of 12 people. And you can just— you just bootstrap that. You beg, steal, and borrow. Maybe your investors are some friends and family to get you off the ground. But beyond that, you don't need a huge amount of funding, maybe $200,000, $250,000, that kind of thing, max.

But these are usually service business rather than product or physical product businesses, right?

Yeah, absolutely. So they're more likely to be service businesses. You could, if you're a really good developer and you've found a really good niche, you could get you, you know, with a team of 4 or 5 people and the right digital marketing strategy, you could build a nice little piece of tech, VibeCode, something that solves a real problem in a niche, scale it to a few thousand users spending kind of a couple of grand a year or whatever and have yourself a nice couple of million turnover tech business, but you just, you just know that the market isn't there for it to be a multi-million, billion-pound business. But there is a real problem to be solved for a smaller niche that could do a 2 million ARR tech business. And you just, you know, that's your, that's, that's what you do. So that's a lifestyle business as well.

Yeah. Now with AI, because you mentioned vibe coding, if you can vibe code something in a month's time in a product, somebody else can as well. So the real moat is not now the technical knowledge anymore from that perspective. So that makes the likelihood of such a business being able to thrive for long enough before anybody else picks up on your clients.

Yeah, that's, that's why it's much more short-lived. Yeah, that's why it probably would never become a performance business. If the market, the market may not be big enough anyway, but you, you know, you can still be the market leader. You can still still, you know, drive acquisition, you can still service users, and you can still make a few million pounds a year from it. So yeah, you know, there's all these different permutations, but then you have the performance business, which is the, which is, you know, 50+ employees, tens of millions of pounds a year. And there's sort of a gap in the middle, which is where you need the investment transitioning from lifestyle business or a small team of people working on solving a problem to tens of millions of pounds a year. In profit and 50 or so staff, there's a, there's a point at which you'd be spending money to get there at a quicker rate than, than you're earning it. And you either take forever to get there by investing small amounts of the profit as you can, or you accelerate that journey and you get funding to rapidly progress. And that's, that's why you have this kind of hockey stick kind of venture scale funding. Because you're trying to— you're funding the gap between the two profitable business models, which is huge tens of millions of pounds of profit and 50+ staff and small 10-person team earning a couple of million. And in between, businesses are rarely profitable. So you see, raise the funding to accelerate between one to the other as rapidly as possible.

So figuring out your long-term goals and the revenues is important from the beginning of your journey. And that's why they ask you for the 5-year projection and sometimes ask even for 10.

That's it. You have to know where you're heading, and investors want to see what your ambition is. Is your ambition stopping at kind of— is it to accelerate into this profitable business zone of, of an enter— of a, of a performance business, or is it stopping somewhere short of that, and actually you're not going to be as profitable as you think, and, and, and you're not going to accelerate through that, that, that sort of period as quickly as possible? So yeah, you've got to decide, am I building a lifestyle business? And there's nothing wrong with a lifestyle business. Most people should build a lifestyle business. And you might do something called seed strapping for that, which is one round of funding gets you to, to build tech, to build a system, to hire your first team, gets you to a point of being profitable. And then you can bootstrap from, from there. So you do one round of funding to launch the business to profitability. And then you just scale with your own funding. And most, most businesses should probably do that or just completely bootstrap it themselves. It's only a select few that are really capable of, of being a performance business and raising the capital to get And I think that's quite eye-opening, James.

And I have one final question for you, which is, when does not raising become the smarter move?

In the moments that we just said, if there isn't the market to get venture scale returns, if you can't, if you can't see this being something that's worth, that's doing 50 million plus in revenue, then maybe don't raise funding. If you're doing this because you want to be rich. Maybe don't raise funding. If you're doing this, on the other hand, to, you know, a globally impactful business, it's going to completely transform a sector and you're really passionate about the problem you solve. And none of this is really about making huge amounts of money, although that would of course be very nice. Then go and raise some funding to change the world and make that, to make that happen. But yeah, if it's, you know, I get contacted by people who are on benefits and they're hoping that, they've got this idea for a business and they're hoping someone will fund their idea to get them out of that horrible position of being in poverty and being on benefits. And it's a really hard, hard tale, but it's like, I'm afraid there is no one handing you 250K to go and build a business to get you out of the personal position you're in. If this is about raising— if this is about your standard of living, it's kind of the wrong motivation. You've got the wrong end of the stick that people will invest in this incredible idea. Like, you're going to need to find a way to hustle yourself to a point where you've got traction, validation, some incomes, and, you know, it's unfortunate, but it's the reality of things, right? And so if you're doing it to change your life from a financial perspective, it's not really the right motivation, I don't think.

I don't think I need any other wrap-up of this conversation. You've spelt it out brilliantly, James. Thank you for sharing all of this and some few insider and practical tips and tricks, and I'm sure they will be useful for anybody actively raising right now. And like you said, if they haven't started raising, they should today.

They absolutely should. Thank you for having me.

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