$0-35M: 5 Key Steps to Raising Your Series A During a Downturn with Manik Suri of GlacierGrid

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I definitely think fundraising is an input, not an output. You know, fundraising is not the end of the journey. It's just one of the inputs that enables the journey. So I think it's important to keep that in mind because I think especially in kind of tech and Silicon Valley circles, people think that raising capital is the point. I think that generally if you can get the same results in terms of tech development and revenue with less capital, that's better. I'm always impressed by people that have more revenue per employee rather than less revenue per employee. It's better to be able to do this with fewer resources. But sometimes you need more capital or you need capital in order to do certain things faster or do them better. And so I think that timing fundraising is more tricky. But knowing when you need fundraising, you can go inward, you can look at your business, your ambition, where you are both on the team and on the product and on the revenue journey. I need some traction. You need some traction. Let's get some traction.

Hey, what's up, innovators, entrepreneurs, visionaries and disruptors. This is your traction podcast host, Lloyd Lobo. We're a community of over 100,000 people just like yourself, on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more. Raising your Series A is already hard enough, but what about doing that during a downturn? What do you do when markets are shifting? How do you find the right time when so much uncertainty is looming? Super excited to have the founder and CEO of Therma, a restaurant tech company dedicating to combating climate change by building what it calls the smart cold chain. Manik Suri, the founder, is going to talk about his journey from having four weeks of Runway left to closing a 19 million Series A during a downturn. Welcome to Traction Monik. How you doing?

Doing great. I'm excited to be here, Lloyd. Thanks for having me.

The manic Monic take on raising funding during A downturn or the manic playbook to raising funding during a downturn.

You know what?

Because we talked about pronunciation. Now I'm like, I'm confused.

Oh, it's good. No, it's good. I. My best friend growing up used to jokingly call me Manic in a panic, Surrey in a hurry because I was always running around doing stuff. So it was, I guess it's a condition. And as I said, I grew up at a time when Manic Monday had just come out. The song couldn't escape.

You know, a smart person once said to me that do things that make you stand out for the longest time. We used to wear the Boast hats and everyone say, oh, you're building the Lobo brand. I'm like, no, I'm wearing the Bose brand. But I was out there. I was the spokesperson for the company. And then when I left the day to day, as a joke, one of my friends gave me this hat and be like, you know what?

You can't wear the company hat anymore.

And this actually ended up turning into a brand. And now, you know, anywhere I go, people recognize me. So wear it with pride.

Love it. I love it. That's right. I think that's the key. Wear it with pride.

So you've had a super impressive background and a story dive into how you got into entrepreneurship. What past experiences proved fundamental in your development as a founder and CEO.

Definitely wasn't expecting to be an entrepreneur, Lloyd. I started out my career as an investor at one of the world's biggest and most established funds, called D.E. shaw. I worked for the guy who ran the firm from 06 to 10. And, you know, I think at the time I was really enamored and really inspired by builders. And as an investor, you don't realize how good you have it. You know, everyone took my meetings. I could get a conversation with anybody in the world because that was the world's biggest fund, literally. And you know, when you have capital, you realize when you don't how valuable it is and how much leverage it gives you. But I always admired builders because I thought they were the ones who were out there creating or building the future, creating possibility. My parents were entrepreneurs. They were immigrants from India and had come to the US in the early 80s. They're both physicians. They'd gone to Columbia and then left New York to go to California. And so I'd always seen how they built their practices. And they're both small business people who own their own practices. And I never thought that was going to be me. I thought that was going to be way too much work and way too challenging. And so I went to D.E. shaw. Then I went to work in the White House as a junior guy. And I got into tech accidentally. I thought I was going to be in dc. I got to law school at Harvard and got into college there as well. But I met a woman, she was the deputy cto and she had taught herself how to write code, even though she was a lawyer. And she was basically working on this problem around tech for good. And the idea was that, hey, tech is transforming how we dine, how we date, how we engage in everyday activity. But no one is building tech to solve the biggest social problems. So pizza delivery is getting faster and photo sharing is getting easier. And I love pizza and I love photos, so I can appreciate that kind of technology. But safety, sustainability, governance, no one's working on tech for those problems. And so Beth, the deputy cto, Beth Novak, convinced me to leave government, join her, start a center. And that's how I got into tech. Ten years ago, 2012, this was a civic tech center. Few years after that, our third co founder, who was a former entrepreneur, said, if you're really serious about building great tech, you should actually start a company, put your money where your mouth is, and actually get, you know, in the arena. And that's how I became an entrepreneur.

Fantastic. And you know, we have similar backgrounds. My parents are from India as well. My dad used to be an executive chef for a chain of five star hotels. And I wanted to be a chef growing up. And my mom's like, no, man, I'm not paying for chef school. I never saw your dad all through our years other than the weekends. And your wife's going to hate you whoever you marry. And I went into engineering and I went into entrepreneurship. And the same thing happened 10x worse.

Anyway. So funny. Sometimes you can't escape your own destiny. You know, you try, but good for you. That's awesome.

How did this vast cultural experience help you? Because you grew up in the bay, east coast, west coast, you spend time in Asia. You've pretty much a global citizen at this point. How has that shaped your journey?

I feel very lucky. You know, I feel extremely privileged. I was born in India, came to the US when I was six months old to New York, and then we moved back to India when I was seven for three years. So I lived in Delhi from seven to 10. My grandparents were there and all my grandparents, you know, lived in Delhi at the time. Only one of my grandmas was still alive. But then I came back to the US Right after that, and then we were in California until I went to college. So I feel like I got to experience what life is like in other parts of the world very early, you know, from 7 to 10. And when I got to college, 9, 11 was the first day of undergrad for me at Harvard, and I switched majors from pre med to international relations the next week. So I became an IR International relations major, studied political theory, political science, worked in government and around government. And I think seeing how similar people are, but how different culture and conditions can be around the world really inspired me at a young age because I realized that people are basically humans no matter where they live. And I've been fortunate to. I think, you know, I've visited about a hundred countries at this point, and I've traveled a lot. Really lucky. And at the same time, culture and conditions are very different. You know, people just. Some people are born in places where you have opportunity. Others struggle and societies rise and fall. So I guess I got excited by, but also interested in why things were so different for people in such, you know, seemingly similar places or why people who are ultimately the same everywhere ended up in such different outcomes. And so that got me interested in theory and sociology, and I thought I was going to go into policy and government. That's why I went and applied to law school. And I realized, I think while working briefly in government that people really are similar everywhere. But instead of doing social service in the form of government work, maybe by building technology that could actually be positive for society, I could have an impact. So I guess the international exposure combined with my parents and my grandparents influence. My three of my grandparents are doctors as well. So I had a lot of service, a lot of healthcare orientation in the family just because of the. The culture of our community. And it's also been super fun, Gotten to travel a lot, love seeing different parts of the world. The world is fantastic and filled with wonder, but it's also a hard place. It keeps you motivated to do something positive. Because I live in San Francisco, generally speaking, we're pretty lucky in the Bay Area. We have it pretty good. But it's a reminder that there's a lot of work to be done out there.

Definitely, you know, that diversity of thought and perspective combined with the joy of giving is a great enabler for growth.

Right.

A lot of people, you know, get into entrepreneurship because I want to make money. But ultimately, if you chase impact, the money just follows.

Amen. Couldn't agree more with that. I couldn't agree more with that. That's well said.

Fantastic. So with your vast, diverse knowledge and perspectives around the world, and we're in this age of generative AI, but you've said it right. People ultimately crave connection with each other. But through all these experiences, why Therma? What led you to build this company over everything else you could have done?

You know, again, wasn't planned. I didn't think I was going to work on refrigeration and air conditioning, and I certainly wasn't aware of how big the problem was. I think my dad likes to joke that, you know, life is a journey. You're on a path, you're on a drive, and it all makes sense in the rearview mirror. You know, you don't know necessarily where the twists and turns are taking you, but then you look back and it all fits. I was interested in safety and sustainability. And when I got involved with tech 10 years ago, I was trying to figure out ways to solve problems around safety and sustainability. That was the area or the areas of impact that I felt were underappreciated, underserved. I had gone to visit my parents. My parents still live in Central California, about 2 1/2 hours from San Francisco. And Fresno is an agtown, a bunch of farms and a lot of food production all over the Central Valley. And I'd grown up around the food industry as a result. I was talking to some family, friends, this is in 2015, and a bunch of people were telling me about food production, food distribution, saying, hey, you know, no one from Silicon Valley comes to talk to us about our problems in San Joaquin Valley. Even though it's an hour away, we're all using pen and paper. The workflow, the systems we use are still very legacy, very 20th century. And I realized that food is a huge industry and there's a lot of opportunity to improve both quality and safety and in the process improve efficiency. A ton of waste going on. And so I started a company called Coinspect, which was the precursor to Therma, the first company I started to replace pen and paper with mobile apps. And that product grew to about 5,000 locations in 2016-19. Three years. And we discovered we were solving the right problem the wrong way. Most of what people were checking with our mobile app was temperature. They were trying to make sure all the stuff stayed in the right temperature zones. But we were replacing a clipboard with a digital clipboard. Basically going from a piece of paper to a, you know, a tablet or a phone. People still have to do this stuff four to Eight times a day, check the temperature. No one wanted to do that. And it was really cumbersome. And so we said, what if we could just automate this with sensors? And that's how the idea for Thermo came up, the idea of automating it with sensors. We thought that was going to be our second product. We started working on it in late 19. Therma is short for Temperature, Humidity, Energy Remote Monitoring Application. Team of nerds. And it was an IoT sensor to automate checking of all these temperatures across the food supply. We discovered in the process that refrigeration was really broken. And cooling more broadly. The combination of refrigerant leaks, food waste and energy consumed is like 9% of global warming, which is crazy. And it's just a huge untapped problem because everyone runs cooling the same way they have for a hundred years. We pivoted from co inspect to Therma. My wife jokes that I like to raise money at the worst times. We raised our seed round in March of 20 and you can imagine raising a seed round right as Covid is happening, selling a new product to restaurants and hospitality. Not a super fun time, but we got that done and Therma has gone and started to scale from there. So that was how Therma got started.

Fantastic. What did the first 12 months look like? How did you get your first customers? How did you validate that this could be a thing? What was that driving force?

Yeah, it was a challenging year, to put it mildly. In February of 2020, we had a bunch of term sheets for this new product. We were raising money on an opportunistic basis. We had said, okay, we're going to raise from the best terms we can get. This idea for Therm is really good. And Lloyd, a lot of my friends are VCs. Like half my friends are VCs or PE folks, you know. You went to Harvard twice, worked at the Eshaw, the White House. I have a lot of friends on the buy side. No one was returning my calls. Four weeks later, four weeks later, it's March 10th. The world is shut down. A cruise ship off the coast of Japan is left, you know, with a bunch of sick people on board. And the world is starting to shut down. Yet everyone is saying, hey, we don't know what's going to happen. Restaurants, hospitality might shut for months. And so all the term sheets went away. That's when we were down to a month of Runway. We basically said, should we shut the company down? Probably. I met Aaron Cohen, my co founder and said, do you want to keep going. And we looked at each other, we looked at the early data. We'd been working on therma for about six months and the early interest in the product from our current at that time, CoinSpec customers was really encouraging. What people were saying was this co inspect thing, we like it, but this therma thing, we wanted yesterday that we want for all of our locations. And that was really interesting, the fact that it was much more pull than push. And so we decided to keep going. We recapped the business in April of 20, raised a small round, a 4 million seed round and we were able to grow. It was a really challenging moment because the question was, who do we sell to again? I was visiting my parents in Fresno. I was driving from San Francisco down to Fresno and I saw a line down the block for Chick Fil a and then later on I saw a line down the block from McDonald's. This is, you know, summer of 2020. And what I started to realize was quick service restaurants were actually doing really well because no one could go to a restaurant to eat. You know, it was Covid. And so as a result, everyone was going to takeout for drive through. And so the only people that were growing in this market were the QSRs, these kinds of fast food, McDonald's, Taco Bell, Chick Fil A, they were doing really well. And so I told the small sales team we had, let's try and sell to these folks. And that summer of 20 we were able to sell operators of McDonald's, Taco Bell, Burger King, Chick Fil a and a bunch of others. And so that small market, which actually turns out to be multiple hundreds of thousands of locations, is what sustained us for the first 12 months. So in all of 2020 we basically sold to quick service restaurants. In 21 we started selling to full service hospitality schools. And in 22 we started scaling in other industries. But 20 was a crazy year.

20 was indeed a crazy year because you don't know what's going to happen, right? Covid hit everyone had to go online. How did we deal with these challenges when like everyone needs to transact online and you're launching at this pivotal time, but everything IRL offline is shutting down. But you're dealing with the reality in person as well, right?

It's hard to remember. You know, it feels like we all collectively maybe blocked that year from our memory because it was so traumatic in some ways. And my wife is a physician who runs safety and quality for ucsf. So she was having a very challenging year. Safety and quality at a big health system in the middle of the pandemic was just a disaster. And so both of us were, you know, we've been together 22 years. We met freshman week of college in 2001. So we've been together a while. And I was trying to figure out if I should run this startup or shut it down. I think one of the things that really, you know, became very clear to me, which I didn't appreciate because I didn't come from product and I didn't come from entrepreneurship, is you have to listen to your customer. You really have to listen not just to what they're saying, but to what they're doing. With the first company and the first product co inspect, I thought we knew better than they did. I thought we knew what they should deploy. And so we were trying to replace pen and paper with a mobile app. It took us three and a half years to scale that to 5,000 locations. I think I went to 40 states with Therma. The customers were telling us in their action they were buying the product very quickly with almost no sales and marketing. And they were buying it despite the pandemic. And what we were seeing in their behavior was locations were shutting and staffing was really light because no one knew when they were going to be open or closed. And so they wanted remote monitoring. They wanted to know what was going on in their stores when they weren't there, especially the owners and owner operators. So they were looking for visibility and peace of mind amidst all of this pandemic unfolding. And that made it really attractive for us. And so Therma benefited in many ways and also because the product helps improve safety and catches issues around the food spoilage and food safety. Food safety and guest experience was really top of mind for a lot of consumers in the middle of the pandemic. And so that was another tailwind for us. And the last thing I'll say, and you know, we started to realize how significant the emissions problem was around refrigeration and began to see that we could actually make a dent, you know, by reducing the emissions associated with food and the energy consumed of cooling. And so that's also become very significant for these differences. Sustainability and the climate problem in the last three years has become very top of mind. But yes, 2020, everyone was trying to figure things out. We didn't know if the industries we were selling to were going to be around or shut down indefinitely. And yeah, most of my friends who are investors said, good luck with that. Let's talk when you start your next company, but we're going to stay clear of this one. You know, you learn a lot in those moments.

But how did you then go from that, right, that, you know, friends saying no, who are VCs from Harvard and the network you build to getting this early momentum tailwinds to then translating that into a product with organic adoption. How did it grow from there month on month after?

Yeah, again, I think, you know, the first time around as an entrepreneur I made every mistake you can make. Probably like so many people or founders or entrepreneurs, you don't know what you don't know. And so I think with Therma, some of the things we've started to do differently, you know, and one of the reasons I think we grew is we were, we stayed very close to the customer and we didn't try and change direction or push features or push verticals. We listened for where the market wanted the product. We turned on an e commerce engine and we discovered in 2021 and 22 where the markets and where the verticals were that were opening up. And I think for us, because we were selling to food, retail and hospitality, it was really important to listen to the market. In 2020 we tried selling to all of these different verticals that have refrigeration in them. While schools and universities were closed, everyone was at home, everyone was doing school from home in 20 and 21. So they said zero interest in your product, full service restaurants and hotels. Again, no one was going to a full service restaurant or a hotel in 20 and most in 21 sales were down massively for those kinds of companies. So they were saying zero interest in your product, quick service restaurants and then eventually fast casual started to pick up. First they got all the extra business in 21. Schools started buying Therma on our e commerce website around April, May, June of 21 and we started saying, wow, look at that schools are trying to buy. Let's go to a school conference, an ed tech conference and see if they're interested. By the back half of 21 schools have become our best vertical and now we've sold into over a thousand schools and 30 universities. But that was an example of listening to the market, not trying to figure out what market we should be in ourselves, but listening by looking at the data coming inbound. Same with hotels in 20 and 21. Very hard to sell to a hotel. In late 21 hotels started searching and finding our product on e commerce and we said, oh wow, look at that. Marriott Wyndham aloft. We're signing up operators online. Let's go and try and target them outbound. And so I think we were responsive to the market changing year over year and we're able to sustain a kind of 3x growth rate by being very agile and very humble. Verbs that I would not use to describe or adjectives I would not use to describe myself. You know, earlier on as an entrepreneur before.

Fantastic.

And then that journey, then what point.

You said, man, I think we have four weeks of Runway and then boom, a 19 million Series A happens. Walk us through that journey.

Yeah, I think it was a series of events and we raised about 35 million to date. You know, the first four was April of 20. That was the recap where we reset the business and said, okay, we're going to keep going in 21. Because we were growing 3x, people got interested and said, okay, this product seems like it's getting a little bit of traction. And I think the cold chain got a lot more attention in October of 2020. CNN, 60 Minutes and 2020 all had specials on this new set of vaccines that were coming out that were temperature sensitive, MRNA driven vaccines. And suddenly the cold chain operation warp speed, which was this effort by the federal government to get vaccines all over the country and all of these initiatives to get vaccines all over the world, suddenly people started saying, oh, the cold chain. Oh, the cold chain. Wow, that's actually important. Vaccines need that. And so we've been working on the cold chain for a year. No one had heard about it or thought about it. But in late 2020, because of the vaccine supply chain, people started to take note and we signed a couple of customers in the health care industry. So in 21, we raised a $7 million seed seed extension and that allowed us to grow a little further and faster. And then in 22, we added a new energy optimization product. So we got into the energy business turning refrigeration and air conditioning up and down. Not just monitoring, but also managing them. And because of the attraction and because of the climate impact of the product, I think people got excited. Happy to say, Lloyd, since we got introduced, we've actually closed a little over 20. So the round got oversubscribed and we've opened up a new note because there's extra interest. But the round got subscribed, I think on the back half of 22, the 20 million Series A, because of the traction primarily and then the timing and the tailwinds are secondary. I think the fact that the market and customers want the product and are buying it and there's almost no churn that's really why people got excited. And the rest of it is narrative and timing. But I think it was the underlying interest in the product market fit and for that again comes back to listening to the customer and try to learn from the market, not tell the market what they should adopt. So happy to talk more about the round and we're raising cap. You know, I feel like we're always raising capital as founders unless you're an incredible human like yourself and can bootstrap it. And I admire bootstrapping. My father who was our first investor had bootstrapped his whole life. He's never raised a dollar of outside funding and so he doesn't understand this whole like Silicon Valley BC ecosystem very well.

Indian parents probably don't understand it because in our culture taking money from somebody else is like seen as a negative, right?

Totally. My grandfather would have been very upset every dollar I'd raised. My father said to me a few weeks ago I was with him, he said, so are you going to give all the money back next year? Hopefully we'll give it back with some.

Return, but yes, with some 1020x. But for me the story wasn't like after engineering I'd only ever worked at venture backed companies and all of them didn't work out. And then last two outings were with venture backed companies and so my co founder was a big proponent of bootstrapping and so we bootstrapped and then when it came time to raise money, my wife said, hey, if you're going to go down this history says it, your history says it, that every time you've been a part of a venture backed company it's failed. So if you take venture capital and it fails, then you're getting a job at a Google or a Salesforce that's stable. I'm tired of running the family.

So then we did went the PE.

Route but I think the next one.

I do again will be, you know.

Creating a blockbuster movie, swinging for the fences again. Because then you get to a point of then hey you know what, at least I have some cushion. But let's get into your steps of fundraising. Navigating the VC space as an early stage company during an economic downturn. How do you decide when to fundraise, who to approach? How do you craft the narrative?

Yeah, I think lots has been said and lots of ink has been spilled on the topic. So I'll try and add a little bit of my own editorial, take it with a grain of salt. I definitely think fundraising is an input, not an output. You know, fundraising is not the end of the journey, it's just one of the inputs that enables the journey. So I think it's important to keep that in mind because I think especially in kind of tech and Silicon Valley circles, people think that raising capital is the point. I think that generally if you can get the same results in terms of tech development and revenue with less capital, that's better. I'm always impressed by people that have more revenue per employee rather than less revenue per employee. It's better to be able to do this with fewer resources. But sometimes you need more capital or you need capital in order to do certain things faster or do them better. And so I think that timing fundraising is more tricky. But knowing when you need fundraising, you can go inward, you can look at your business, your ambition, where you are both on the team and on the product and on the revenue journey. And for us, a couple of times we've realized, okay, we have to raise capital to do more. We can't get to where we want to be in terms of the kinds of products we want to build or the kinds of traction we want to achieve without additional resources. And so that's really what we've decided to raise money. When we've said, okay, we don't have enough resources to do what we want to do, whether it's building or deploying. And I think that's a good starting point. Then a lot of it is like a sales exercise. Many people have described fundraising as, you know, very similar to sales. And I think it is very similar to sales. And I've been the sales team multiple times in multiple startups, so I know the sales motion. As a founder seller, one of the best things you can do if you're raising capital is do it as efficiently as possible. It's, you know, it could be, as people describe it, a full time job, but if you can make it less than a full time job or make it take less time, that's better, generally speaking. So you can actually have time to build your business. To do that. I think it's really important to be disciplined and to look at firstly what you're looking to raise and who you're looking to raise it from very, very clearly and very objectively. It's easy to spend time talking to people about raising capital and pitching people. But I think what's hard and what requires discipline is selecting the people that you want to reach out to and try and talk to carefully. And people describe it as sales qualification. There's a large universe of potential investors qualifying or disqualifying those who wouldn't fit is a key part of, I think, fundraising well. And so the first time I raised capital, I Talked to probably 20 times the number of people I should have. I talked to all kinds of investors who were never going to be a good fit because I didn't do a very good job of qualifying. This is, I think, the sixth round of capital I've raised and we're about to open up another. Now, I hopefully I'm a little better each time. When I look at the ratio, both the number of conversations to the number of closes and the number of hits relative to the number of ad bats, I've been getting better. A lot of it is, well, maybe I'm getting smarter or maybe I'm getting better just by practice or less bad. But I think that part of it is knowing who not to talk to. And so disqualifying investors that aren't a good fit because of stage or because of size or because of sector, that's really important. And then once you have that funnel and a set of kind of potentially qualified leads, then the process and the machine starts the actual. And we can talk about the machine and the fundraising process. But a lot of the work, I think, is in disqualifying and setting up the universe of candidates to reach out to first.

You know, a lot of founders, they just go and talk to any vc. And I say this because now a lot of my life is helping other founders, like make intros and whatnot. And this is a typical thing. They don't even research if the fund is. And I don't want that cognitive overload if I'm making intros.

Right.

They don't even research who the VC is. A VC is a VC is a vc. What stage, what is the thesis even like giving. Providing a formal blurb. Right. With the right traction. So how do you go about that? How do you disqualify? What is your criteria to disqualify who you reach out to?

Yeah, I would say a lot of it's not that complicated. It's not, you know, rocket science necessarily. There's some basic criteria that you can use. For example, the first round I raised was a $700,000 convertible note. And I was talking to investors whose minimum check size is 500k or a million. Well, if you're raising 700,000 and you're talking to an investor whose minimum check size is a million, and they say that on their website, it's going to be a short conversation or it might be A long conversation, but it's not going to go very far. Part of it is just looking at criteria around, okay, what's the quantum of capital you're targeting? What's the ideal check size? A lot of the exercises, this kind of basics. What kind of sector are you positioning your company in? If we're positioning our company in the sustainability space as a climate tech player, which we are at Therma, and a fund says we don't invest in the climate space, that's just not a sector we work on, well, going to be a short conversation or vice versa. If the fund that you're talking to as an investment in a company that's on your competitor list or very close to what you're building, it's pretty unlikely they're going to invest in you if they've just made a bet on one of your competitors. So those are the kinds of things that are pretty straightforward and one can figure that out by doing a little bit of Internet research and a little bit of homework. And it's as simple as going on the website, looking at the funds past investments, looking at the mandate which most funds today, because capital is so plentiful, most funds have done a good job of explaining what their criteria are, listing their portfolio. I think the second rung or the second layer is a little more complicated. That's, I think, you know, a more involved effort of trying to understand who are you talking to? You're not talking to a fund, you're talking to a human, hopefully. Maybe some funds are using AI, but most funds are still using human to do their sourcing and their investing and try to understand a person, what motivates them, what kinds of things do they work on, what do they write about, what do they post about? If the person you're talking to is really passionate and really wants to invest in companies that have an AI enabled business model. And that's very clear from the last 20 things they've written posted. If you don't have an AI enabled confidence in your business, and Therma does, we use machine learning that's driven by AI to automate the intelligence around refrigeration, air conditioning, it's going to be hard. You're not going to get as much traction. So a lot of this qualification can come from understanding the fund's basic position and what they care about, what size and stage they invest in, and then looking at your own, you know, needs and your own positioning. But I would say the single most important thing is to know where you are in the fundraising journey. Are you trying to get an anchor investor, a lead investor, or are you trying to fill out a round, or are you trying to get interest in a potential future round? Those are very different moments in different parts of the journey. If you're trying to get a lead investor, someone who can anchor the round, put a price on it and build conviction for others, then it's really important to be talking to people who could be lead investors. That's a classic mistake and something I've done many times is talking to folks who would never lead around before having a lead investor locked in. Because then you're putting cart before horse. You're spending a lot of time trying to get people who would be follow on investors excited when the conversation is going to end by them saying, okay, so who's your lead? Come back to us when you have a term sheet. And it's much better to not go through that process if you don't have to. So figuring out which funds and which investors might be lead investors is key if you don't have one yet. Once you have a lead, you ideally want to talk to people who are follow on investors, not lead investors. Pretty hard to have a conversation with lead investor. Once you have a lead and a term sheet, sign and say, well, unfortunately we've already got a lead, but we'd love for you to join if that's not what they do. So those are also other examples of nuance in the selection. A lot of that can shave 30 to 80% of the time down if you do it well. And some of my friends are exceptional fundraisers. They can raise hundreds of millions and they do it in the same number of hours. So I'm like, how do you do it? Well, a lot of it is careful qualification.

I think I've just released a book from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to gain sight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomena. Check it out at from grassroots to greatness.com the digital copy is on for 99 cents. A lot of what you are is what you say no to, right? The more you take on I think there's what is it? Dave Packard said more companies and people die of indigestion than starvation. You take on more and more versus qualifying and being extremely focused. If I had a dime for every time A founder said they asked, we'll invest as soon as you find a lead. I think I'd have a fund of my own. But tell me for our audience, how do you differentiate lead versus follow on? Because that's a hard thing to crack just from their website.

It is, it is. And that's one of those nuances that sometimes people list it, sometimes people do disclose that. But generally it is helpful to do, to do some relationship building and some networking. It becomes easier to get this kind of color, this kind of context when you talk to people who are in the industry. And if you're fortunate and have those relationships already, then use them. And if you're, you know, like most people don't have those networks, then build them or develop them and cultivate them. And you can get access to a lot of funds through friends who are investors, friends who are founders. Generally, in my experience at least the early stage ecosystem is pretty friendly and pretty pay it forward. So people will make introductions or at least give you time and if nothing else, give you information. So if you're looking to talk to a certain fund, you can talk to investors who know that fund. Go on LinkedIn, go on AngelList, look at syndication partners, look on their portfolio, who else invested, or talk to companies that have pitched them, even if they said no to those companies. And if you can find friends and talk to that firm or that investor and ask them, do you know what their check size is? Do you know what their sweet spot is? Do you know what their man that is? We have a Google sheet with about 2,000 names on it that I've been keeping for the last seven years. And that's like my list of all the investors, individual, family, office and fund that I've come across. And I just keep adding to it every day. Whenever someone adds a name or suggests I talk to someone, a little bit of notes takes about 30 seconds. You know what's their stage, what size check did, it's like to lead or follow a link to their site. And we've got a team that supports that. But basically that's how I keep track. You could call it a CRM Lite. I used to use an app called Founder Suite to raise capital the first four rounds. Founder Suite, Founder Suite, it's like a CRM for raising capital. Now I've gone back to Google Sheets because you don't necessarily need all that functionality, you just need qualification and a funnel. Are we going to say yes to them and take them forward to the next round or are we going to Disqualify them and not pursue them. And, and then where are they in the stage? You can do that with a simple spreadsheet as well. But yes, there's great software tools like, and I'm not paid to say anything about foundersuite, I just happened to find them on, on Google.

I noticed the, the Founder suite, it's a product that a lot of people I know use, but a lot of what you said, right, it's so undervalued, but it is probably the most useful skill is sales. Like, from pitching your investors to getting employees to media to customers to convincing your wife. It's all sales. And like the, the process you described is like, hey, how do I qualify? Somebody research, qualify, put them in a CRM if you don't have a CRM, can't afford one, put in a Google spreadsheet, rank it, and then reach out. So let's define that you've done the research, now you've created this list. You have all the data on who could be leads for your stage based on thesis. How do you start the outreach process? And basically what does that process look like week by week from initial outreach to close? Is that six weeks? Is this three months? So give us a. The Bible on that.

Yeah, I'll give you the best version I can, maybe the Gita, But I'll give you my. Take a couple of other things. One, it's really helpful to go through iterations on the content, both the narrative and the written content. You know, I think that's one of the critical, underappreciated life skills. Whether you're Jerry Seinfeld or Dave Chappelle or Bill Clinton or Obama, these people are constantly testing their messaging and constantly changing their pitch, their set, their speech. And I think the best fundraisers and the best sellers do the same thing. So I have a small group of people that are my like, friendly insiders that I take the first version of every deck to and the first set of pitches and I run it by them and have them destroy it. I have them go through it and figure out every possible weakness, every possible gap, every possible area for improvement. I do that probably for a month of just soft pitching friendlies who are not going to invest and not people I want to invest, just people who see a lot of content. These are usually investors, but sometimes other founders. A couple of them are on my board, a couple of them are just friends that I worked with in the past, and they'll go through and help refine the material and refine the pitch. To get it to a tight 10 to 15 slide, you know, 10 to 15 minute narrative. That's important because the better the content, the higher the hit ratio is going to be. You know, again, whether you're Chappelle or Seinfeld or Obama or any other content expert, you know, Beyonce, I think the best people just do that really well. They constantly improve their content. They don't just settle for V1 or V3. We're on version 60 of our current pitch deck over our latest series A deck. And I think I've done versions of decks at least in the last few years. So it's like a never ending process. Second, have your materials ready if you want to do this fast. The first time I raised capital, it took me a year, the last time three months. Hopefully this next round is going to be six weeks again. My friends who are exceptional fundraisers have raised 10 times the amount of capital as me in half the time. So one thing that helps is have your stuff ready, have your stuff in order. Put a data room together. Again, not super expensive, not super fancy. A former investor of mine who's on our board was a former auditor as well. So he structured our data room for us and he's got this incredible model. It's bullet points for every single, you know, subfolder. So our data room has seven folders, each folder has four subfolders, each subfolder has a couple of links and then in there you've got your projections, your historicals, team org chart, product overviews, customer contracts, all of it. Having all your material ready makes it a lot simpler if a conversation goes well, to say, we'd love to keep chatting. This was great. Here's our link to our, you know, virtual data room, or here's a link to our materials if you're interested. Boom. And you keep going. So having that stuff ready I think is a big part of being prepared to run a really fast and good process. And then I think it's about getting ready for battle, getting ready for the slog. And for that I think it's important to set a mindset around. This is a job. I remember calling my first boss who ran the world's biggest hedge fund on the first day of my job, I was 23 and I called him and I was like, this is really hard. He said, yeah, that's why they call it work. And then he hung up. I was like, and he's a very successful guy. One of the first investors in Amazon, one of the first investors in E Trade, ran the World's biggest hedge fund for 20 years. And I was just laughing afterwards because I was like, got it. Got it. So, like, fundraising is work. Fundraising is effortful. It's not easy unless you're, you know, super lucky and can shake trees and money falls out. For most of us, it's actually like, pretty hard, I would say. And so I think being prepared for a lot of cycles, be prepared for a lot of hey, I'm interested or we'd like to learn more, but we need the following 55 things from you, or we want to talk, but let's find a time next month because my partner is on maternity leave or my partner is on vacation or my partner is taking his kids to the playground today or whatever. I don't have time because IC is not meeting next Monday because it's a federal holiday. All kinds of things will come up. So I think that having a process for following up diligently, effectively and quickly is key. Just like with any sales motion, same is true of your partner, your spouse, you better follow up diligently with them as well. Same is true with your team and your customers. So having follow ups, having material ready, making sure that you're touching investors, anytime you have an interesting business update, send that. And I think that in the backdrop, in the background of all these kind of, I would think of this as all kind of blocking and tackling. This was like the unsexy advice that I wish I had taken seriously six years ago because it would have saved me hundreds of hours over the last six years. But I never took it seriously because I was like, oh, that's boring. It's all about having a good pitch. Well, yes, a good pitch and being a really successful and effective person in the world. It helped. If you're a 3x founder with multiple exits, of course that helps. But it's also really important to do this kind of unsexy, you know, blocking and tackling. And then I think if you can add some emotional hype, if you can create fomo, if you can create, you know, buzz like we're raising capital right now. The fact that the Northeast in the US had extremely bad weather last week, some of the worst weather quality in history. Worse than San Francisco in 2018. Am I mentioning that in every pitch when I start the conversation? Hell yeah. I'm telling a climate tax story to people who care about sustainability. So I want them to know the world is literally burning. It is literally burning. New York is literally smog filled. Worse than Delhi, where my grandparents still live, my grandmother still lives. So yeah, I'm going to tie my story and my pitch to that front page news article or that information that everyone is thinking about in the background. That's the kind of hype or the buzz that whatever you're building and whatever you're working on can be tied to. If you can figure out the right way to generate emotional interest. And I know I'm going long here, Lloyd, so I'll say one last thing, fomo. If you can get some demand for your product, some interest in your story, somebody to bite, then you can create scarcity. So much of selling is creating scarcity. Creating scarcity is a psychological shift. You have to get people to think that what you're offering is, is going to be hard for them to have. And that drives a lot of human behavior. So if you can create scarcity, there's many ways to do that and there's people that are exceptional at it. That's a big part of, I think, successfully raising capital. Talk more about that as well.

What are some tactics for creating that FOMO like that you've used now? I think bang on, right? Creating relevance. Newsjacking. Like you said, the world is literally burning. Find something relevant in the news that connects you to your story, your message. Not only with investors, even with the media, that makes it all the more relevant. But then FOMO is another thing, right? So what happens, like you have the six week cycle or a three month cycle, let's say week one, you got your CRM, you get these intro meetings, they ask for some additional information. Maybe it's your financials, maybe it's customer references or whatever. But then this period we're sitting in is a investor's market. They can easily ghost you, right? And time kills all deals. As you know in sales, how do you bring that FOMO in so it keeps the momentum going?

I think it's hard, I don't think it's easy to create scarcity. And I think it's always a function of supply and demand. You know, like the first economics lecture anyone ever attended. So much of this is about supply and demand. There are ways to be more effective in a down market. One, of course, one lever we all have to work with is price. Everyone can shift on the price side, right? You can imagine price is a lever you have to play with. If you change your pricing, it becomes easier to generate interest. All else be equal. That's a basic economic principle. So if you lower the valuation expectation or shift your messaging around how much you're looking to raise on what Terms, that's one lever. I don't encourage people to use price as the first lever unless you have to. In March of 2020, I had to. In March of 2020, we had four weeks of Runway and I was writing a letter to the team saying, it's been a privilege working with you all. I'm sorry it didn't work out. So I dropped price. I cut our valuation by 80% and people bought. People said, yeah, at that price, this is a good deal. I will invest. Even in the middle of the third week of the pandemic, we got a roundup. So I think in a company selling to restaurants. So I think it's a function of many factors. Price and valuation is one of them. But. But I would start with things that allow you to play from a position of strength. So getting validation or proof points from stakeholders that have influence, whether that's customers, that have significant logos and significant brand presence, hiring or bringing, attracting advisors and consultants around. If you can't afford to hire people, then bring them on as a consultant or as advisor. That's a way to show that, like, really thoughtful, interesting people care about your business. If you don't have a lead investor, then showing the kinds of people you're talking to and getting some of them to say positive things about you in the market is helpful. And of course, once you have interest and people are saying, yeah, I'm actually serious about this, I think we're going to take a hard look or we're interested in coming in, we need to do some work, but like, we're interested. Once you have people biting and saying, yeah, this is something we're seriously considering, then I think one can use that to start generating, you know, that sense of fomo. Part of that, I think, is like using the interest from similar situated stakeholders to get other stakeholders to want to come in. So, for example, if you're talking to three firms, all of whom lead rounds, if you could say to the third firm, I've talked to A and B, they're both pretty interested. They're looking at this at the IC next week. We think that we'd love to work with you because you bring the following attributes. They don't. That's more interesting because firm C is thinking about firm A and B in the shower and when they go to bed and they are trying to compete with firm A and B in their head and in their reputation in their corner of the universe. So that's an example of playing to the psychology of these stakeholders and knowing who you're talking to and who they compare themselves to. Definitely.

And a lot of people make this mistake. Sales and founders. Just checking in. How are you doing with that? Just following up. Nobody wants you to just follow up.

Right.

Because they want to know. Unfortunately, people want the scarcest resource they have.

Right.

Right now you want a scarce resource, which is their money and you want to make them think you're scarce. And if two other people are in.

The play, then they want you all the more.

What do your follow ups look like? So let's say you do this week one meetings, right?

Yeah.

What do you follow ups look like in between meetings?

Yeah, we tried to your point, Lloyd, people generally don't want to just get a passive hey, how's it going, can we talk again Kind of message like they're busy. And that also doesn't excite people. So what I try and do is provide some relevant metric of success. Since we last spoke, I'm excited to say that we closed the following contracts or we added the following people to the team or here's an article in the Washington Post or in the Times of the Journal that's demonstrating how important our tech is. Like a On Friday of Sunday this weekend, the Washington Post had an article about how air conditioning is going to be critical to the future of climate change and how ACs are burning up the planet. 4% of warming is just AC. I sent that to several investors we're talking to saying this was in the Post on Sunday. We're actually working on attacking this problem and here's some of the stuff we've done elevating it to make the problem more relevant to what's going on in the world. Also helpful is if you have commitments or potential commitments. So a lot of times if we get commitments between a conversation, I'll say since we last spoke, I'm excited to say that the round has now been committed up to 70% or 85% or we added an additional million or 3 million or 2. 2 million since we last connected. And there's a little bit of space left, but several firms are looking at it. Those moves and those messaging points I think can help demonstrate that you're making progress and you're not waiting around. You know, you're building your business and it's going well. Again, part of creating scarcity, definitely.

And then in terms of the messaging, you talk a lot about messaging. Most people don't get messaging right. What is the messaging of a perfect deck?

Again, a lot of ink has been spilled on that topic. I think one thing I've learned from some of the best fundraisers is keep it simple and keep it short. And that's something they say and you hear, but it really is true. You know, I've tried to get to the point where our pitches, our pitch decks are no more than 15 slides in the main body of the slide. And the appendix might have a bunch of content, but throw an appendix in and add a bunch of content there, make the core deck short. I think our first deck was 30 slides. Our second deck was 25 slides. Third deck was 20. Now we're at 15. Hopefully we'll get to 12 with the next round. Simplifying the story and thin out the content. Have. My co founder, Aaron, is exceptional at this point. He teaches college at nyu. He teaches at nyu, History of the Internet. To the college. He's an exceptional presenter. He has no more than five words per slide, which I find incredible. I don't know how you communicate with five words or less, but he's very focused on a graphic or graphics that represent the information and very few words. So that's something I've been trying to get better at. Limit the number of words, particularly in a slide that you're presenting. I have two versions of the deck. A version that you're presenting, a version that you send out, the version you're presenting. Very few words, mostly graphics. I think there's good data out there that a human has the attention span of a goldfish, which is about 15 seconds. And most people are multitasking anyway. On a virtual model, you're lucky if you get even 15 seconds of focused attention from them. So you really want to keep it simple and short and then get feedback, make sure that all the core narratives are there. The problem statement, the solution, the differentiation, the competitors, traction, team construction, and how you're going to change and take over the world. All those things have to be there as well.

Definitely.

Yeah.

You know, less truly is more, and it's an art. And if you can't try to maybe convey your message in a LinkedIn post or in a Twitter thread.

Right.

Because constraints lead to creativity. I had Jeff Watson, CEO of Twilio, a while ago, and he said, I can explain all of Twilio in one page. So when people take 10, 20 pages, then that worries me. Right. How do you get your message down? It's like driving on the 101, 100 miles an hour. What's the billboard that you see that sticks when you park? That's very important. Now, closing, a number of things can go wrong when you're trying to close that term sheet, what are some common things you've seen go wrong and how do you mitigate that?

I think the closing processes always are an art, even. You know, I think there's a lot of experience and a lot of skill that can come with doing it again and again and again. I look at people who are exceptional at this and have just very high close rates in life. I think Bill Clinton would be an example of an amazing closer on the other side of the aisle. Donald Trump's probably a great closer. Even if you disagree with him as a politician and a human, he's got many attributes of. He knows how to sell his message. So part of it, I think, is being compelling and top of mind and standing out. And that requires building a relationship, building presence, doing things that get people to remember you. I find that not just pronouncing my name incorrectly, that reminds people of me, although it helps sometimes, but it's also, I think, just punching through with an element of the story or that's important for what's going on to that person or the world. So if you can try and connect your pitch back to the fund, the person, their mission, and of course, tying into your metrics and tying into that sense of scarcity, demonstrating why you're going to do well with or without them and you don't need them, but you'd be willing and welcome and privileged to have them. I think that's an important psychological shift in a closing. When people sense that you're desperate or need them or feel that you need them, it tends to turn people off. It tells to make them doubt whether you really have the substance, whether you really got the conviction. When people feel like, you know, she's got it, he's going to do this, they're making this happen. I don't want to miss the party. I don't want to miss this rocket ship. That's when people tend to jump in and say, hey, let me get back to you in two hours, or, let me get back to you by tomorrow. I'm not going to wait. So doing that requires signaling and messaging carefully. You can't overplay your hand. So if you say Sequoia is about to come in and write a term sheet, hopefully Sequoia is about to come in and write a term sheet, because it's a small world. And if Sequoia is not coming in and writing a term sheet, if you ever talked to Sequoia, that firearm is going to find out and is going to quickly discount you as an entrepreneur and say, this person is full of crap. So you want to make sure that if you're using those kinds of tools, that there is substance behind them. But I think that those kinds of maneuvers and those kinds of messaging points in a closing can get people really excited. Dropping, you know, names, dropping references, dropping traction metrics and being casual and having conviction all help.

Fantastic. As you were building this company to now 35 million in funding big brands using you, what was the lowest point of your journey and how did you navigate that?

I feel like we're just getting started. You know, we're like 70 people. We're small company, small team. Still very early in the journey on the revenue side. But I'd say that the hardest moments, I think, are the moments that define you. And everyone says that. But I think March of 2020, when we were almost out of capital and we had three term sheets in February, they all went away and no one was. Literally, no one was returning my calls. People were just ghosting hard. And my wife was struggling with the pandemic at ucsf and I was feeling like the world was ending for a few weeks. Writing the letter to our team saying it was a privilege to be here and I'm sorry it didn't work out. That was probably the lowest moment when I was feeling like it was all going to end on a shutdown in the middle of the world shutting down. So I'd say that two or three weeks was really dark and really forced me to go inward and ask myself, do I really want to be an entrepreneur? Until then, I think I'd. It was like, yeah, I want to be an entrepreneur. I'm enjoying entrepreneurship. I think this is a cool way to spend time. In April of 20, when we decided to keep going and I pulled around together and rebuilt the company, that was a very different kind of moment for me. And I changed my mindset about building the company and became a lot more, I'd say, serious and a lot more committed in a kind of inner soul level sense. It's a lot more rewarding now, but it was pretty rewarding even then to keep going. I think 2020 and 21 were really rewarding because it was like, okay, we're really doing this. But yeah, March 20th, low point.

Pain is the precondition for growth. As we close out any sort of parting advice, what's the one thing that.

Founders ignore but shouldn't yourself listen to yourself? People listen to many influences. We all have our favorite podcasts, our favorite books, our favorite friends, our Favorite advisors, our mentors, our coaches, our life coaches, our therapists, whoever you work with, your spouses, your dog, your cat, don't forget to listen to yourself. I don't think it's easy to do and I'm trying to get better at it, spending more time with myself, I think. You know, there's a quote that, like a Carl Sagan quote quote, but tell him to be alone often and get it himself. And tell himself no lies about himself. Tell him solitude is creative. If he is strong and the final decisions are made in silent rooms, he will be lonely enough to have time for the work he knows as his own. And that was Bill Clinton quoted that in his autobiography from Carl Sagan. But it's all about being alone and finding the answers from within, which I read at 22 and I didn't understand it at 22. Now I'm 40 and I think like spending time with yourself and figuring out like what you believe and what you want to do, I think that's one of the better, one of the things that I wish I'd done earlier and I'm trying to do now.

The best decisions that you can stand by forever must come from within, from your values. And it comes from introspection. Right. It's a well said, a great note to end on. There's an infinite amount of advice, contradicting advice. This week I had an interview with Keith raboy behind the PayPal mafia and he said startup is like making a movie. You don't ask customers what they want. You cast a script and you produce it and you cut a trailer. I also talked to Basecamp, the CEO of Basecamp who trapped to tens of millions in profits with 80 people. So there's a lot of contradicting views which confuse people. But the end of the day you got to reflect from within and the answer. Find what's right for you, for your journey, for the impact you're looking to create. What a great conversation, Monic. Thank you so much for joining us. Where can we follow you on socials? Where are you active?

Such a pleasure. I wish I were on social more but I'm on Twitter monicvsuri, LinkedIn, Monic Suri, we're hello Therma as well on both hello Therma on Twitter and on LinkedIn. Yeah. And would love to connect. We're hiring. We're always looking for partners and collaborators. I'm based in the Bay Area. Always glad to chat. Thanks for listening in. Lloyd, thanks for having me. Such a pleasure. Great conversation.

Thank you so much. Love and peace my friend. Wishing you a couple more zeros to your valuation and your revenues. Have a good one.

Thank you.

I've just released a book, from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike, Disaster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomena. Check it out at from grassroots to greatness.com the digital copy is on for 99 cents.

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