Build a Strong Financial Foundation for Your Startup with Robert Burnett from Grasshopper Bank

So again, not a tax professional, not a lawyer. My kind of experience has been that with C-corps, basically if a fund, so a venture capital fund, private equity fund wants to invest in you, they do not want the taxes to flow through to them as individuals. So they need the C-corp to be paying those taxes. So they want that to happen. And then really it's so wildly dependent on what type of business you're in. What type of expenses you have, whether or not you're running at a profit or a loss. All of those factors play into whether or not it's going to be advantageous to maybe, you know, work as an LLC versus working as a C corp. Again, in general, if you're operating at a loss and you don't have investors, a lot of people like LLCs because they get to take the losses on their personal taxes, which can offset gains if they do it right. Lowering their tax burden. C-corps tends to be if you're, you know, around breakeven, if you're either profitable or if you're taking on, uh, institutional investors, C-corps tend to make more sense.

How are you doing today?

I'm doing great, excited to be here.

I know, again, like, looks like the audience is too.

Yeah, it looks great. I'm psyched to see people from so many different places, isn't it?

Yeah, yeah, that's what I love about our Founder Institute events, being a global program going on for over now going on almost 16 years, 100 countries, 200 cities around the world. We really are a global network at the truest of senses. So it's exciting to see we're still getting people coming in. So let's get to it. I know, you know, we got some really meaty content from you today. I'm looking forward to seeing this. I'll be taking notes in the back, so I'm going to let you have it from here. I'm going to disappear into the ether. But once we get into that Q&A piece, you're going to see me pop right back up. And hopefully we'll have a good chunk of questions from the audience that we'll be able to dig into.

Sounds great.

We can dive in.

Right. All right.

Well, just—

All right. And here we are. Well, welcome, everybody. I'm super excited to be here with Founders Institute. Big shout out to their team for putting all this together and huge shout out to all of you for being here. I mean, it looks like we have almost 100 and 160 people here today. It looks like from all over the world. Welcome, everybody. For those of you who don't know me, which I think is most of you, my name is Rob Burnett. I'm the director of startup banking at Grasshopper Bank, which is an all fully digital online bank based in the US, and we focus on commercial clients, so startups and small businesses. I'm going to dive into my presentation here in a second, but I'm really here for all of you. So I want to be really focused on your needs. So if you all have questions, if you want to dig into stuff, if you want to go into your, you know, your needs and what you're looking for and the questions you have, please, please, please don't hesitate to throw them up in the Q&A session and we'll get to them as soon as we can or right, you know, as soon as we can, we can do it. So with that, I am going to share a little presentation here. Let me see if I can get it going. All right, so I'm here to talk about financial efficiency, how to use banking and financial management to help your startup grow. So this is, um, a little bit of the kind of nitty-gritty, as Martin said, kind of getting into the slightly unsexy stuff about the kind of nuts and bolts of making your startup effective and efficient. Before I dive into that, let me kind of introduce myself. This is actually my first role in banking. I come from, like many of you, the startup world. So I founded two companies myself. I up until recently was the CEO of a fintech company that I had been part of for over 7 years. Oh no, sorry, just under 7 years. I had joined there when it was a team of 5 people. I joined as a sales guy and I worked my way up through every portion of the organization. We grew to about 40 people, over $1 million a year in revenue, and I was CEO. So I've sat in kind of every— well, not every available, but a lot of available seats in the startup world. And so when I came to Grasshopper, I was brought in to grow their startup banking practice and to help Grasshopper grow their startup banking product and make it the best possible product available for founders and teams and people looking to make their businesses grow and succeed. So I do come from Grasshopper Bank. This is my kind of view of the world. But obviously my goal here is to give you all, all the tools necessary, or at least as many as I'm able to, to help you be successful. So, you know, I'm going to do everything I can to give you an honest breakdown of what the market looks like. I'm gonna try to make recommendations based on your needs, not necessarily what Grasshopper would like. And so I'll try my very hardest to be a kind of neutral arbiter and give everyone the kind of biggest, the best lay of the land as we go. And just quickly, 2 seconds about what Grasshopper Bank is. If you haven't heard of us, as I mentioned earlier, we're a fully online digital bank. So we don't have any branches. Everything we do is online. We're about 5 years old, and we started as a bank built for the venture capital industry to bank funds. We've since had the current management team come in, and they've grown it to include a great small business banking line, a startup banking line, and something called BAS. So banking as a service or sponsor and fund banking. So we do all of that. Again, we're fully online, fully digital, and we're fully— we use and leverage fintechs to make the experience as engaging and compelling as possible for our users. But today, what are we going to get into? We're going to talk about understanding startup banking. Every business needs a bank. What do you need to be thinking about as you build out that piece of your financial stack? Then I want to talk about financial management best practices. How do you, how do you need to be thinking as an early-stage founder about your finances and about making sure that you're organized and ready to go and able to put together financial statements, projections, balance sheets, all that stuff. And then I want to talk a little bit about how to build strong relationships in banking and why that's important. Then we're going to go into a group discussion and a Q&A session. I really want you all to be ready for this. This is what we're here for. There are now 194 of you in the chat. That's 194 founders experiencing similar things, going through similar experiences, but also with all of your own unique challenges. Not only do I hope to be a resource to you all, but you are all a resource to each other. So please, please, please, I'm gonna push you all, like, think of questions you have, think of stuff you wanna dig into. If you have a question about it, almost certainly your colleagues, friends, and peers have the same question. Last note before we dive into the content. I know a lot of you will be adding— you're all welcome to add me on LinkedIn. Please just do me a favor when you add me on LinkedIn. Just say I saw you at the Founders Institute presentation. I get a lot of LinkedIn notifications and I'd love to be able to know where you guys came from and be able to connect with you and help you as best I can. So feel free to add me on LinkedIn. It's a great way to connect with me. I know the link is in the chat here, and you can also find it on my profile through Airmeet. Let's dive in. So all of you presumably have either started a business or are about to start a business. And so we're going to talk about, you know, one of the first things you need to do after you file your incorporation and start your business is you need to open a bank account. Account for that business. I'm going to talk about what are your options. And I know there's a lot of you from all over the world. A lot of these options will translate to many different countries in many different, uh, regions around the world. But this is focused specifically on the U.S. market, and many of you might be looking to come to the U.S. market and open a subsidiary or a company here. That's all very doable, uh, but we're going to talk about how to pick what you want for your startup. So I like to say that there are 3 major options in banking for startups these days. So the first is the traditional bank. For many people, this is the big banks like Bank of America, JP Morgan, Wells Fargo, uh, all those really big, large institutions, but it can also include your local credit union or the local bank down the street, a place where you can walk in and meet somebody and have a personal relationship with. There are some really great pros and cons to each of these, and I'll try my best to kind of— these are not a comprehensive list, but I'll try my best to kind of go over them, right? So with a big, with a big or at least traditional bank, some of the pros are you can typically go in somewhere, a physical location. You typically talk to somebody. They also tend to be fairly safe. They tend to be fairly conservative. They tend to be a very kind of easy place to put your money that no one will question. And that can be really great when you're talking about banking. Oftentimes you want to be boring. But some of the cons can be that they can be slow moving. It can be hard to get transactions done. Sometimes there are fees and things like that. And I'll talk a little bit about that on the next slide. The next group in here is where Grasshopper sits, and this is where I live. And this is what you're seeing a lot more of recently, which is what I'll call a digital bank. These, these are new or neo banks. They are typically either entirely or almost entirely built online and digital. But they are actually banks. For Grasshopper, for example, we own our own bank charter, we're regulated like a bank. That means that we go through a lot of checks and balances. We have government regulators. We also have certain requirements as to how we handle the money, how we keep track of payment movements, things like that. We are actually a bank, but because we're new and because we are built more recently, We've built all of those tools and all of those product features on digital rails. So we're able to link in with fintechs. We're able to leverage our own development capacity to build an online experience that could be pretty easy, fairly user-friendly, something that maybe for a lot of you who are more digitally native, something that feels more simple and easy and more often, at least in our case, able to reduce a lot of fees and make things work really well because of our low overhead. The downside to a digital bank is we're often smaller than, you know, JP Morgan has something like $4 trillion under management. We're a little bit smaller than that. And so, you know, as companies get bigger, as they want diverse sets of products like debt products, personal products, things like that, we might not always have the full suite of options that some older, larger traditional banks might have. The third group here is fintech, and this is a very hot topic right now. Um, fintechs are not technically banks. They are typically not regulated like banks. They're typically actually working with banks in the background, but they are a technology layer that holds and handles your money that is separate from the bank. There can be some really great advantages to working with fintechs. A lot of these companies have invested heavily in their UX/UI and their user, their user experience overall, this can be, this can mean it's a really great user experience for a startup founder who likes being digital and likes being online. They can offer some really, really great products. The thing you have to keep in mind is they, you know, and I don't want to overplay the risks nor downplay the risks, uh, fintechs are not banks. They're not regulated like that. And so there have been some that have failed. There are some that have screwed up. And they also sometimes rely not only on the fintech itself and the banking partner, but often third-party fintechs that help move the money, for example, from the fintech to the bank and back and forth. And sometimes those can fail. There was a fairly public case of a company called Synapse that was used to connect fintechs with their partner banks. It failed and caused a lot of problems. So, uh, that can be, again, the pros of working with a pure fintech solution is it can be a really, really great experience. The con is it can be more risky. So without— through these three, these three options, as a founder, you want to be thinking about what is my risk tolerance, uh, what is my desire for ease of use, uh, and then what features am I looking for. And you might find some combination of those three across these different profiles and portfolios. The one thing— final thing I'll say on this slide is that I want to be clear that you don't have to exclusively work with any one of these types of partners. You can work with multiple. There are plenty of people who have a fintech partner to do their day-to-day, um, money movement, but then they keep most of their money in a digital or traditional bank, uh, and just transfer what they need for day-to-day use into the fintech. That's a very acceptable and quite astute use of building a fintech stack if that's something you are into. So taking some time to think through which partner do I want, what features do I care most about, and what combination of these partners are going to give me the full suite of tools and products that I need as a startup founder to get going— that can be really, uh, it's a good use of your time as a founder. And then a couple of things just to keep in mind as you all are thinking about this, right? Think about fees. To give you all an example, I was chatting with a friend of mine and his head of finance. He just recently bought the business that he's running now, and they've got a relationship with an existing bank, and they pay something, several hundred dollars a month in different fees associated with payments and minimum balance fees and things like that. And they're not currently— the second point is they're not currently earning any interest on their money that they're holding at that bank. And then I had done the math to say basically if they had moved to us, we would have reduced fees and increased interest rates enough that it would be at about $1,000 a month swing to move over to a digital bank like Grasshopper where they would have less fees and more income from interest. And so when you talk about $1,000 a month, $12,000 a year, for many businesses, that is meaningful cash that is important to be thinking about as you build your business. You also really wanna think hard about payments, how easy it is to move money into and out of your bank account. Some people, this is, you know, there's not a lot of payments in your business right now. It might be just to a couple of contractors or a web hosting platform or a couple small things. Others of you, you know, I've worked with businesses that are doing hundreds of thousands of dollars in retail sales every month. In which case they've got 20 different bank accounts and 4 different credit card processors, and all of those payments feed ultimately into their bank. And so understanding if you're gonna have any fees for that and understanding how those things work, you should be very careful. And then the final piece of this is financing options. I would be cautious for any of you thinking about this to see a bank and debt as an easy option for startups. Most banks want to lend to companies that have an operating history, are profitable and usually are profitable for multiple years. But again, in this world of fintechs, often there are, there are a lot of new and emerging debt and other financing, uh, providers that can, that can be accessed via your bank or via your fintech partner, either directly or through a, uh, like a partnership marketplace. And those can be great options for a myriad of different types of entrepreneurs. Depending on what you're looking for, what your experience is, and what the, the kind of stage of your startup is. And this is where I want to take a moment to, to really dig in here. So, you know, I suspect that for 99% of you, the biggest issue in your business is lack of funding. And that is almost always the biggest barrier for startups. And choosing a banking partner may or may not help change that. But, you know, if you need a million dollars tomorrow, banks are going to be a hard place to go. Your fintech partner is going to be a hard place to go. But what a lot of founders underestimate is how long it takes to become successful, and then how much track record you can build up over the years, even as you're bootstrapping or raising friends and family rounds or getting through that first seed round or getting to the first customer. You can take time to build a relationship. So for example, many banks require 2 years of profitable operating history in order to make a loan. If you show up at your bank tomorrow, even if you've been profitable for the last few years, it might take them a long time to figure out if you've actually been profitable. You know, the loan underwriting process can take months. But if you build a relationship from day one with your bank and say, hey, you know, make sure you know your banker, start running your finances through your bank, keep good track of your finances and records, you can show them over the years the progress of your business. So a year or two or three from now when you do really need a line of credit or you're actually, you've reached profitability and you need a loan to finance that next bit of growth, you've built a long history with your financial institution so that they can more easily either point you in the direction of the right products for you or loan directly to you so that you can continue to grow your business. So, uh, to say it another way, and long story short, think of your financial stack, think of your banking and fintech partners as long-term relationships. And many of you might be saying, I don't need debt right now, or, you know, my little credit union down the road is perfectly fine for now. And it might very well be, but if you're thinking long-term about the success of your business, you want to be thinking about what are the especially around finance. What are the institutions I can partner with now that will help me grow and will grow with me over the long term so that when I get bigger and when I'm successful and when I've got cash coming in, they're with me, they've been along for the ride, and then they can help me get to the next level and provide me the services and products that I need. Okay, I hope everyone's hanging in there. I appreciate everyone sticking with me. I know we've got some questions coming in. We'll get Keep them coming. We'll certainly make sure we get to those here shortly. But the final— I wanted to take kind of take the second half of this to talk about financial management best practices. So in my previous role, I worked at a fintech company that was a marketplace, an online marketplace connecting investors with companies. I worked with over 400 businesses helping them raise capital. It's a hard, hard thing to do. And by far the single most difficult thing that every founder had to deal with was putting together financial statements, both historical financial statements of what had been happening in the past with their business and future-looking projections. It was almost always the single hardest thing with the single most amount of taking the single most amount of time and often the greatest single expense for founders looking to raise capital, whether it's through VCs, angels, equity crowdfunding, or any other myriad of, of types of financing. Founders just underestimated how complicated their financial management can be, even if they're not driving any revenue and they basically got no expenses. And so I encourage you all to think about how you can, from day one, from right now, no matter where you are in your business, make sure that you've picked a financial institution or set of financial institutions that can grow with you and provide you the services you need? And then how do you leverage them to make sure that you're making your life easy? At a minimum, what you should be doing is keeping track of your finances in some kind of accounting software. QuickBooks is the 800-pound gorilla in the room. There's also Xero and a couple of— Autobooks, a couple of other big bookkeeping providers. But you should be working with one of those pieces of software from day one to keep track of that, of that financial management. One thing you should definitely be looking for with any partner is do they connect directly with QuickBooks? Many, many banks now have direct inputs into QuickBooks and other financial accounting software so that you can automatically start populating those, those books, file your taxes, prepare financial statements, all of that stuff. That means that when you're ready to go fundraise funds, you've got a full history. You can produce financial statements quickly and easily, and you just have it all at your fingertips and you've kept it all straight from day one. This is something that is a pain in the butt for all founders. Most founders are not wanting to do back office work. I just had a really great conversation with a founder about exactly this. Back office work is typically the stuff that founders don't want to let go of but also don't want to spend a lot of time on. And I encourage you all to either let go of it or spend some time on it. So, and that brings me to my second point, which is hire a bookkeeper or a fractional CFO and/or a fractional CFO. So this is a, a place in the market where I find it very exciting. I nerd out on this stuff. I think it's cool, you know, forgive me, But there are now all kinds of service providers that will do back office bookkeeping all the way up to fractional and almost full-time CFO work on a contract basis. I put some links to some partners we've worked with in the past. Berklyn for CFO services, Levy for outsourced back office work, Doula for taxes and corporation work, especially Doula is one that you guys can check out. If you're from outside the US, they can help you incorporate in the US and do all that crazy good stuff. Take a look at those links. We've partnered with all of them. We think they're great. But I encourage you to think a lot about if you have the budget in particular, finding a way to outsource as a founder, some of that back office work, because it'll probably be done way better than you can do it and it'll actually get done. So that you can keep track of it. This is one of those things that you spend a little bit of money now, it'll pay big dividends in the future. And again, if you can't afford it right now or you're not ready for it, I encourage you to at least connect with QuickBooks, make sure, you know, your bank or your, your fintech provider is doing that work for you of keeping things in order and correct. The final thing here is use a corporate card. The number of founders who are kind of putting stuff on their own credit card, I'm sure a lot of you are. Corporate cards can be great. You might need a bigger balance to get a credit card, corporate card. Companies like Ramp, there's also Brex, there's a couple of others that provide interesting corporate cards. But this allows you to build credit as a business and get cash back, which again, for every business, if you talk about stacking little wins on top of each other, right? You reduce fees, then you get good interest rates on the cash you do hold, and then you get 1% back on the cash you do spend. You know, this stuff starts to add up. This adds up to real money in a business, especially when you get over the long run. And then as you all grow a little bit bigger, as you get a little more growth within your business and you start having employees, this is a great way to manage expenses, make sure people aren't spending too much, and have everything funnel back into one set of books that you can keep track of. Keeping track of where your money goes as a business is super important. This seems like an obvious point, but the number of founders who don't know, I've met who don't know their costs, don't know where they're spending money, don't know where the money is going, don't have good books put together. This is stuff that's going to hamstring you and hurt you financially before you even get off the ground. And then once you start raising capital, you know, people think that, oh, I'll get better at this stuff once I've raised money. But once you've raised money, then you're gonna wanna be spending it. And if you don't spend it wisely, you'll end up running out of it. And you need to make sure the funding round isn't the end of the road for all of you. It's the starting line to actually go build the next level of your business. And if you don't have these pieces put in place ahead of time, it can really slow you down for the future. So I went through a lot real quick. I appreciate everyone sticking in with me. We're about halfway through our time here. I'm going to leave it there for now. There's a million other topics we could get into around finance and, you know, financial management and your financial stack, but I'll leave it there for now and we can go into some questions. But of course, if anyone has specific questions that they don't want to ask with the group, you can always add me on LinkedIn, uh, and shoot a note to me, and I'd be happy to, to work through it.

All right, thank you for that, Robert. I was diligently listening in the background. And, and again, while, and while, you know, you know, as you say, you know, this, this may not be the sexiest kind of topics you want to discuss, but at this point of the year, especially when you're thinking about 2025 planning, especially if you might just be getting, you know, some investor checks coming in. This might be the most important topic you need to be discussing with you, your team, and really, really where you want the future of your company to go. Right. So, so again, the timing couldn't be better in terms of having something like this being presented to our audience. So thank you for being a part of it. Thank you for, for giving that. Let's have a look. I mean, we— I think the last I checked, you know, we were crushing over 200 attendees for this event. So I think they agree with me too. Appreciate it.

Yeah, while you're looking at questions, I just think you're so right. I mean, that is one thing I failed to mention in my presentation is that we are coming up, you know, we're 6 weeks from the end of the year. If you're thinking about making a move or starting fresh, like this is the time of year. This is when you can switch banking partners, get stuff set up, get your books in order either to get this year done or, you know, this year is going to be a bit of a mess. Just make sure next year is looking good.

Absolutely. So again, like, there's still plenty of time, y'all. Still plenty of time. And, you know, if you want to get this stuff in order, you know, certainly our friends at Grasshopper can give you some guidance. I know you are available for, you know, direct kind of, direct kind of consultations, that kind of stuff. We do have a link if you don't mind sharing that in the chat, if the audience would mind even, you know, getting in touch, we can totally do that. So, yeah, we can definitely share that in our, you know, our team backstage. We'll drop that in the chat for those of you that might want to talk to Robert directly one-on-one. But let's dive in to some of these questions. So, you know, you can upvote these questions as you see. So head on over to that Q&A tool. It's that third icon to the right if you're watching us on a desktop. If you are having difficulties using the desktop, just, we always recommend you're using Chrome or Firefox browser. Any other browsers tend to not work as well. So if you are having difficulties using any of our interactive tools, you might want to switch over or download the Airmeet app. But, you know, we are asking, you know, we will have the first question is from Amiral. So he's just asking about slides. We'll be sharing this video online on our YouTube channel. We'll have a follow-up. So you will have access to this content moving forward. So thank you for asking that. I always know That's a big one. The next one's coming from Charles Tan. He's asking about recommended registration structure from a US banking perspective for a startup in Southeast Asia looking to get into the US to raise money from VCs. Now, that's more of a legal question, but I don't know if you had any thoughts to that. I certainly do. I have my own. Not a lawyer, but—

Yeah, so I did mention in one of the first slides, introduce myself. I am technically a lawyer, but don't tell anybody. My background before startups was I was at law school. That was fun. Um, so I know, I know just enough to be dangerous, but you know, the obvious answer here is, Charles, you should talk to an attorney that specializes in, in kind of onshoring into the U.S. companies from Southeast Asia. That being said, for everyone here, there's two basic options for any company looking to come to the U.S. or start in the U.S. Uh, there's LLC And there's a C corp. The basic difference is how they're taxed. An LLC is a partnership. It's an agreement between parties on how to run the business, and the revenue or profits or losses from that business flow through to you as an individual, and you pay your individual taxes. A C corp, uh, is, uh, created by law. It is a little bit more formal of a structure, and it itself is taxed and then shareholders get taxed on any dividends after that. Most VCs will only invest in C-corps. So for most companies that want to move over here and are specifically looking to raise capital from venture capitalists, from funds, from institutional investors, a C-corp is almost certainly going to be the way to go. Typically they're registered in Delaware. But for anyone else who has a smaller business, that maybe is going to operate at a loss for a while, an LLC might be a great option. And you are able to convert from an LLC to a C corp kind of whenever you want. It's a little bit of a pain, but that is very doable. So it's really up to you all, but both are good options.

Awesome. Awesome. Yeah, that's exactly where I'd go on that. But again, not a lawyer. You may be one in a past life.

Consult with your attorney. Get a good attorney. That's another one. Yeah, besides the financial stack, actually having an attorney you like is actually like a really underrated thing. Uh, couldn't recommend it more.

Absolutely. And, and for, for those of you might be in the audience that are looking at that Founder Institute, we do have some great partners. Check out our partners page. Um, you know, if y'all have any interest in that, y'all can kind of message us, email us, and we can point you in the right direction. Um, I'm going to consolidate a couple of these questions because They're all kind of going in the same direction. Yeah, we just, we noticed when, when you join, you saw in our audience in the chat, we got people from all over the world. So, so tell us a little bit more about how Grasshopper, does that Grasshopper operate exclusively to North America? Do they help with, with international founders, especially again, if they are looking to get into the US?

Yeah, so we've worked with founders, so we typically work with US-based companies. So, you know, you're gonna wanna be incorporated here in the US. We have worked with founders. I worked with one last week who are moving their business from, and they are not in the US, but they're moving their business to the US. So that's very doable. Happy to do it. For some of you, I noticed if you're outside the US, given our privacy and our security regulations, there may, you may sometimes get blocked depending on your server. If you're having trouble, just feel free to shoot me a note. We'll see what we can do. Yeah, but yeah, but we can work with individuals from all over the world, but we work with US-based companies.

Awesome. Okay, cool. So, so again, just for the record too, so again, let's say we have a gentleman out of New Zealand. He was having that trouble, as you alluded to, you know, that they are going to want to already have that US entity established before they would want to go in, or are they able to do so in the opposite direction? Are they able to set up an account, then work their way backwards?

Yeah, so you'll still, you'll need a US entity to create the account for. That being said, if you want to shoot a note again to support@grasshopper.com, or sorry, support@grasshopper.bank, we can help you out. And we can also point you towards resources to help your company get incorporated so that then you can open the account.

Right. So, so Amir, I believe, again, you have a similar question that's on Canadian, Canadian dollars. So Same would go for our friends in Canada as well. Correct. Now, we had a good question coming in from— I see her name's called Mal. Loan options. I don't know how you might be on certain loan options for founders and sticking to the US right now. SBA is one she brought up, maybe typically, maybe some that help, you know, underrepresented founders, women founders. I don't think you can walk through any of those options that might be beneficial for startups at this stage.

Sure. So a couple of things real quick. I'll give a kind of 2-second overview on loans. So there's 2 major types of loans that a bank would typically give out. There's a bunch of subcategories of this, but 2 big ones would be a line of credit, which means that, you know, it's just like how a credit card works, right? You can spend up to a limit and then you can pay it down and you can, you can go back and forth. Lines of credit, again, are relatively easy to get, but for a lot of startups without— with actually a history of operating losses, that's just going to be tough to do. The other one is a term loan. Hey, we'll own you $100,000, you pay us back in 3 years. Again, that's typically going to be for more established businesses with longer, um, operating histories and some profitability. For every startup here, you know, a lot of people have heard about venture debt, things like that. That's usually a loan that comes alongside a large invest equity investment from institutional investors. And so it's backed by those people and by that money. So for many, many startups, loans in general are going to be a tough road to go down. That being said, there's two places that people should look, um, besides following my advice of just start building the rapport with your financial institution because you might be able to get loan later. First is the SBA, the Small Business Administration. These are actually getting very exciting. They're available for a wide variety of use cases, and they are generally much easier to get than a traditional bank loan, and they typically have decent rates. They're available to people of all shapes and sizes and colors and all that stuff. The thing that people need to keep in mind with an SBA loan is there's typically a personal guarantee. And that means that you as the founder are going to personally guarantee that you'll pay the money back even if your business fails. For some of you, this is going to be an amazing option and it's going to be something that actually, a way to actually get capital and you believe in your business and you're going to go for it. But you want to be very careful. Most of the reason why you start a business and form a corporation is to shield yourself from personal liability so that if your business fails, which a lot of startups do, you're not personally on the hook. An SBA loan will make you personally on the hook. So that's a, it's a very risky thing. You should consult with your family, be ready for it. But it is a viable option, especially if you're maybe not a traditional startup but you actually have some cash flows and you feel very confident, but you need business, you need some money to grow. Um, the other thing I'll just put out there, I had mentioned earlier about fintechs. I can't really talk to— there's too many to go into specifics, but there are a whole host out there of fintech providers and foundations, community support organizations, things like that, that are trying to fund both just normal startups in unconventional ways through loans and other products, rev share agreements, things like that. And also just foundations that want to support people of color, women founders, founders in certain geographic areas. And there are often grants and loans available to people who meet certain criteria based on what that foundation or what that organization or what that government group is trying to promote. Again, the list is epic and long and there's no one list, but I encourage anyone to look for those alternative financing options because they can be a great way to grow your business and sometimes without even giving up any equity.

I love that. I love that. Very thorough. Thank you, Robert. Again, for those of you that are, again, y'all are digging in, really getting getting your questions answered, let's make sure we're getting those questions in the Q&A function. Seen a few of y'all throw them in the chat and I'm seeing some great ones. But you know, you can tell with so many hundreds of folks in there, it's hard to keep up. So make sure you're using that chat function so that I can see them. You can upvote questions you want to hear answered as well. Maybe you don't have one, but you see one that'd be great. Make sure you're using that upvote tool so that we can get through all of them. The fastest way possible for you guys. I appreciate that. So I actually had a good one that came in on the chat, then bounced over into the Q&A from— let's see, Emmanuel. Emmanuel was actually asking, this might be a good revisitation on your financial stack, right? Seems like you need to build good financial history to get that trust with investors. But how would those books be legit and trusted by them? You know, what backs up, you know, the data that you're putting into those books? So maybe it's a good time to actually walk again through what a financial stack will look like so that you do have that inherent trust.

Yeah, that's a great question, Emmanuel. So there's a couple of different layers to this, right? So the first is simply having your bank statements connected to a QuickBooks. That's going to lend you at face value a certain amount of legitimacy, right? It's going to be, you know, most investors as they get to know you, if you give them your financial statements and it looks like it comes from a bank and they can see all the ins and outs and then all the messiness that's involved with the daily startup, that's going to be a good way to build credibility right off the bat. Then, you know, if you start linking that into QuickBooks and producing history and that history tracks over time. Um, you know, listen, if you're very good, you can replicate those things, or, you know, you can figure out how to forge them. Anyone can figure out how to game the system. But if you're an honest entrepreneur trying to, to show, uh, investors what you've been doing, just having a long history and all the good, bad, and the ugly out there, and it all, you know, weaves up and down over the years, that's a great way to show them. And even just simply showing an investor that you've been around for 5 years and you've got books from day one That shows that you're on it. That shows that you get it. And then from there, you know, one thing I've worked in is the equity crowdfunding industry where companies need to get their books reviewed. And so, you know, if you've put together books consistently over the years, you might get them certified by a CPA to say, I've reviewed these books and they look good. You might even get them audited where you can actually do a real audit from an accounting firm that will put their stamp of approval on it and say, yes, we verified this is all correct. You know, some fundraisers, some funds are going to require you to get an audit. And then if anyone, of course, ever wants to go public, you'll definitely need to be able to get audited financials. And so starting early, again, even if you think, you know, I'll never go public in a million years, you might find you go public in 10 years and having those books put together and, ready to go can be just incredibly valuable. So there's lots of ways to verify essentially that the books you've put together are correct, but the first step is putting them together.

Awesome, awesome, awesome. So, yeah, this is actually going to tie into another question because that Steph is asking, you know, what, what are some ways, low-cost ways, maybe help with that complexity of managing end of this tech stack, you know, and for people that aren't in this industry, you know, myself included, this can be really overwhelming. You know, you know, if you were in that founder position right now, you know, you know, how would you approach it? You know, in a way that again, it's not going to be so anxiety inducing that you're waking up in a cold sweat every night.

Yeah. And Steph, great question. I actually love this one. I really, really do. So I think a couple of things, and if you'll indulge me, a couple of things I want, places I want to go with this. So first of all, I was having this conversation with a founder the other day and we kind of talked about the ideal founding team is a CEO salesperson and a product person, and you put them together and they just go and grow. But what you typically don't have in those founding combos is the back office, make the trains run on time, COO type. And I often talk with all the founders I work with about having a growth mindset and how You know, often what you're passionate about when you start your business isn't back office accounting software, but the reality of being a CEO is that you need to be able to do this wide breadth of, of things in order to make it work. So my first piece of advice to you is kind of take a deep breath, and I recognize that a lot of this is very overwhelming, but I encourage you to dive in and tackle it versus pushing it off. Then some more practical advice, not just some rah-rah, you got this. I would again work on my stack. So the first things first, you know, whether it's your credit card, whether it's your bank, whether it's your fintech, whatever you're using to send money in and out of your business, be thoughtful about that because a lot of it will take, you know, especially these new online digital things, they will take care of a lot of this for you. They will keep track of your expenses. They will connect to QuickBooks, all that stuff. So automate as much of that as humanly possible, uh, at every layer of whatever— wherever money's coming in and out of in your business, try to automate as much as possible. Make sure the systems that you're paying for, the automated systems, are keeping track of this stuff. And then from there, I highly encourage people to find some kind of bookkeeping help. and even some back office help. So what's, you know, most towns have a little CPA firm. There's, uh, all kinds of CPA firms online that offer, you know, a couple hundred bucks a month or even a couple hundred bucks a year, and they'll, they'll do your books and make sure they're looking good. That's kind of the low-tech option. From there, you could step up to— there's all kinds of, you know, as founders, you should be looking into like personal assistants and other things that are virtual and digital. A lot of times those people have the skill set to also make sure they're keeping the books in order. From there, you can go up to like a partner of ours like Levy, which does outsourced kind of back office work. So they'll give you a team member who will do a lot of the back office and make sure that the company's kind of running in the background, HR, payroll, all that stuff. And then you can go one step up from that to like a fractional CFO where you have someone who's not only making sure the books are right, but they're actually helping you forecast and plan and drive strategy around your finances and how you're gonna grow to the next level. And then from there, once you get past that, you're really talking about having your own CFO and your whole financial team. So I encourage you based on your, where you're at and what your budget looks like to be allocating some little portion of that to, again, either just see some CPA help once a month or some outsourcing, things like that can be very, very helpful in the long run.

Awesome. Excuse me. And then, um, I think you kind of tangentially answered another question about how to find a good bookkeeper from Vincent, so kind of knock two, two out at once.

Yeah, yeah. And, and to find a good bookkeeper, you know, it's a lot of interviewing as well. Go with someone you love, get recommendations. Uh, I always recommend going towards someone you actually just like working with, who's responsive, versus the fanciest, shiniest thing on the block. You know, just go with someone who can actually respond to your needs.

Great, great. Let's keep going on the questions, y'all. Again, I know y'all have plenty. Again, some, you know, we've already kind of answered to a certain extent. You know, y'all might have been joining us a little late on this piece or kind of ran, maybe grab some water. But, but again, it's important that, you know, if you're looking to do business in the US that you want to get registered in You know, one of those two options, as Robert recommended, you know, getting consulted with an attorney first. But Delaware C-Corp, if you're obviously looking to raise venture capital, LLC, if you are not. Because there— could you actually explain? So we have a— Anata is actually asking, you know, maybe some tax saving options or maybe what some of the benefits of having a C-Corp, you know, at this stage. A lot of them, again, they're not necessarily getting a lot of revenue in. So they may be getting advice that, you know, an LLC might be better for them, but in the long run, the C corp might be more beneficial. Could you maybe come from it from a tax angle as to why that makes more sense at this stage?

Sorry, I muted myself. Yeah. So again, not a tax professional, not a lawyer. My kind of experience has been that with C corps, Basically, if a fund, so a venture capital fund, private equity fund wants to invest in you, they do not want the taxes to flow through to them as individuals. So they need the C-Corp to be paying those taxes. So they want that to happen. And then really it's so wildly dependent on what type of business you're in, what type of expenses you have, whether or not you're running at a profit or a loss. All of those factors play into whether or not it's going to be advantageous to maybe, you know, work as an LLC versus working as a C-Corp. Again, in general, if you're operating at a loss and you don't have investors, a lot of people like LLCs because they get to take the losses on their personal taxes, which can offset gains if they do it right, lowering their tax burden. C-Corps tends to be if you're, you know, around breakeven, if you're either profitable or if you're taking on institutional investors, C-corps tend to make more sense.

Awesome. Awesome. Let's go into— let's see how many. So we've already— we've talked about loans, we've talked about, you know, again, international folks. Definitely. We're dropping some additional links. And, you know, if you want to keep following the discussion with our friends over at Grasshopper, certainly sign up for their newsletter. We have links for that that are in the chat as well as kind of following stuff through their blog. They're always pushing great content. And of course, you know, if you actually want to get connected with Robert directly, he's being gracious with some of his time.

We're going to—

we have a link that's going to allow you to schedule some direct one-on-one time. So maybe again, you maybe you are one of those folks from overseas right now. You're not US-based, but you're looking to get in here.

Great.

Be great to get some time with somebody like Robert just to see, you know, what are your options? Certainly get— keep in the loop with everything that they're going to be pushing out from now through the hereon end and then everything they have going on. We only have a few minutes left before we go into networking. So let's make sure we're getting these questions count. And so, again, check out what the links that we have, y'all. Some of these questions are getting a little repetitive, but that's okay.

It didn't say—

and you are using the chat piece. Yeah. Anything else that you might be sticking to right now?

Yeah. Sean asked, you know, if you're raising a seed round, what kind of runway should you be shooting for in terms of raising capital? And I think that's a really good question. So whenever you raise a round of capital, you wanna be thinking about two things. Typically you want something like a year to 18 months before you're gonna have to raise again. The biggest reason for that is that raising capital takes a lot of time. And so when you finish raising around, you don't want to have to 2 months later or 3 months later or 6 months later be immediately trying to raise again, because, you know, raising capital can take 6 to 9 months and it can be a full-time job. So you want to give yourself some breathing room to actually build the business. But then the second thing, and this is something that every one of you should be planning on as you break— if you're gonna— if you're going out to raise capital from investors Here's what you need to understand is the capital they're giving you is capital to grow your business, and there needs to be some milestone down the road that you think you can hit that will allow you to either become profitable or put you in a position to raise more capital. Great example, if you're doing a seed round, is if we raise this amount of money, it'll give us— or I'll say it a different way— we need 1 year to build our first MVP and go to market and drive our first customers. So we need to raise enough money to last us a year so we can have dollars coming in the door. When we have dollars coming in the door, then our valuation will go up and we can raise our next round. So every founder should be able to very clearly articulate the lump of capital they're earning and what they're raising in any rounds that they're raising. Where is that going to get you? And if you say you need $1 million to build your product and you can only raise $500,000, you need to be either, either not take the money or you need to be clear with your investors, this is not actually going to get me to the milestone we need, so you guys need to help me raise the full million or else we're not going to be able to get there.

Good points all around. We got about 5 minutes left, so, and if you have, again, it seems like we got really, really engaged audience here, but I want to save some time for you. I want to be respectful of your time. I know we're going to have the networking piece going on right after this. So let's leave it short here so we can close out so we can get into the next final phase for all of you that want to do some networking, meet Robert directly. Again, our team backstage is dropping some awesome links in the chat. So make sure you head on over to the chat, check out their newsletter mailing list, sign up for that. Definitely look at some of the content they have on the blog that expounds on things. Robert was already going on and we just pinned up, you know, scheduling link for Robert if you want to make some one-on-one time with him in the weeks ahead. So I would hope you're looking forward to all these notifications coming in here, LinkedIn.

I'm all about personal, like, I appreciate everyone coming and listening to this kind of online webinar. It's a great way to connect. But I really want to chat with you guys. I really do. I've dedicated my career to helping entrepreneurs. I'm here for it. So if you're really interested in diving in, schedule some time with me. I'm happy to chat. And forgive me if 1,000 of you sign up. Forgive me if it takes me a second to get to you, but we'll do our best.

Yeah. Well, that's the beauty of these Founders to Global webinars. You get a lot of folks all at once. It's that FI bump, as we've been referring to it back back over here. Well, let's do this, everybody. Thank you all for spending the past hour with us. We're gonna shift into the networking function of this. Again, thank you, Robert, for your time. You got a dedicated table first thing that pops up. Once this screen disappears and we go off into the ether, all of you are gonna notice our networking tables. So feel free to have a seat. Robert's, we're gonna have other general networking tables as well. Maybe some of you are looking for co-founders. Definitely saw a lot of those requests in the chat. Connect with each other. You never know who you're going to meet in these. I have personally heard stories of folks starting companies together, joining each other's companies just from these events, from sticking around on the Airmeet and connecting with others. You never know who might just be down the street from you that's in this room right now that you did not know was there. So definitely take advantage of that time.

We'll leave this room.

We'll leave the Airmeet open for as long as y'all stick around. I've been gone for like 12 hours and come back and there's people still in here. But we really do appreciate y'all spending this hour with us. Please, again, connect with each other, connect with Robert, stay in touch with everything that we're doing here at Foundry Institute. We got a whole flurry of events still coming down in the weeks ahead as we wrap up the final 6 weeks of 2024. And we're continually announcing even more moving forward. So for everybody here at Founder Institute, my name is Martin Martinez coming to you from Austin, Texas. You may— if you are in Texas, you're probably familiar with all of our programs going on. I help oversee the operations for our 4 chapters in Texas. Maybe I'll get to catch one of y'all in person if I've yet to do so. But in any case, keep building. You know, we're closing out. We're closing out a wild 2024. We're heading into a very opportunistic time in 2025. And I hope all of you can see the silver lining and take advantage of what is in store for your company and the problems you're trying to solve for the people that matter to you. So you will receive an email link next 48 hours. Definitely stick around for the networking and take care of yourself. Take care of each other. Take care of those that matter to you. And we'll see you at the next one.

Thanks, everybody.