Fundraising Made Easy: Key Strategies with Nathan Beckord

The top 2 or 3 mistakes I see founders make, especially when raising capital, they sound so obvious, but I just see it over and over again. It's like this repeating pattern. Number 1 is probably not doing enough research and homework on each investor, right? They might do a search like in our database and Founder Suite or on Crunchbase or somewhere else and find investors that do fintech. But then they don't go too much deeper. And the more time you spend really researching these investors, um, and A, qualifying them, making sure they actually do your type of deal, your industry, your stage, maybe your geographic focus, stuff like that— the more time you spend qualifying them, the better your fundraising is going to go because you're only going to be targeting good investors. Um, it This research also helps you when it comes time to, you know, either do the warm introduction outreach or cold introduction outreach. You know, if you really understand what this investor is all about.

Hello everyone, I hope you're having an awesome day. My name is Daniel. I'm a part of the marketing team at the Founder Institute, and I'm super, super excited to bring you another AMA. And this time around, we have a really, really exciting guest with us, somebody who is a friend of FI, someone who's been here a while and he really, really knows his stuff. And before I kind of briefly introduce, uh, uh, Nathan, I would just go over a couple of our rules that we have here. First and foremost, if you are new to this platform, this is called, um, Airmeet. So if you'll notice, there is a Q&A button on the right-hand side of your screen. So what we're doing here today, because it's an AMA, we're taking questions from the audience. So if you have anything that you want to ask Nathan about fundraising, early-stage startups, feel free to do that. We'll bring your question on stage and we'll be sure to get him to answer. And before we really head into introductions, why don't you all introduce yourselves? Please let me know where you're all calling in from. I myself am based out of Pakistan. I do see Daniel there from New York. Awesome, awesome. I see more people coming in, and what's really cool about these events is because we have a super international audience, we get people from all across the world despite the difference in time zones, so it's always really exciting to see people who are excited about the early stages of a startup, and it kind of shows you the power of that entrepreneurial spirit. We do have people from Copenhagen, awesome, from Nigeria, amazing, amazing. We have people from Florida, hello, hello, Brazil, Okay, awesome. So yeah, I see somebody asked in the chat here, will you get a recording later? Yes, you will. In the next 48 hours, our team will send over a recording. So do watch out for that. And yeah, let's kick things off. So our speaker today is Nathan Becker. Nathan is the CEO of Foundersuite. He is best described as a wingman for startups. So super, super excited to have him here with us. Fahima, would you want to maybe bring Nathan onto the stage? Hello, Nathan.

Hi there. Good to be here.

Awesome, awesome. Good to have you. And folks, while we ask Nathan questions and while he imparts all this really, really great knowledge on everybody, do feel free to kind of show him some love with the emojis. If you see right at the bottom end of your screen, you have this reaction button. So if you like what we're saying, there you go. I see a ton of hearts, a ton of thumbs up. Awesome, awesome. So what we'll do, Nathan, without wasting much more time, let's kind of start off with an introduction. Do you wanna maybe talk a little bit more about yourself and Foundersuite?

[Speaker:NATHAN] Yeah, before I go there, I'm having a déjà vu moment. I don't know if you've seen the Netflix show Black Mirror. It's like one of the first episodes where the, The girl is like just addicted to the hearts and the likes and stuff, and her popularity plummets and it's crushing. Anyway, I'm having that moment with the hearts and likes. I love it. Um, now, so go check out Black Mirror if you want. Great to be here. Thanks so much for having me. Uh, I am Nathan Beckard. I run, um, as Daniel mentioned, Two Sharps, foundersuite.com, which is for startups raising capital. and that's been around like 9 years. We're kind of the OG in that space. And then our newer platform, fundingstack.com, which is for emerging manager VCs and fundraising consultants, uh, people who are helping companies raise capital. So those are my two babies. Um, but before this, I spent, um, a decade plus in New York with JPMorgan's private placement group, helping companies raise capital, and then out in Silicon Valley consulting business called Venture Archetypes, helping early-stage startups raise capital. So my whole, my whole career journey is raising capital. So hopefully I can answer some, some good questions today.

Awesome, awesome. And folks, uh, before I forget this, we will be reading— oh, sorry, we will be, uh, having a bit of networking right after this event. I'm not sure if Nathan can stick around, but once we're done with this Q&A I'll be there in our networking lounge. There'll be founders from all across the world, so please do stick around for that. And with that, Nathan, let's get into some questions. And as people kind of fill in their own questions, I wanna kind of start off with my own question. You have been described as a wingman of startups, and I think like the really good thing about a really good wingman is they kind of nudge you when you're wrong, right? So my question here is like, What are those really, um, obvious but not so obvious early stage, early stage fundraising kind of mistakes that founders make when they're starting up?

Yeah, this is a nice easy one to start with, right? Um, I'd say the, the top 2 or 3 mistakes I see founders make, especially when raising capital, they sound so obvious, but I just see it over and over again. It's like this repeating pattern Number one is probably not doing enough research and homework on each investor, right? They might do a search like in our database and Foundersuite or on Crunchbase or somewhere else and find investors that do fintech, but then they don't go too much deeper. And the more time you spend really researching these investors and A, qualifying them, making sure they actually do your type of deal, your industry, your stage, maybe your geographic focus, stuff like that. The more time you spend qualifying them, the better your fundraising is going to go because you're only going to be targeting good investors. Um, it— this work, this research also helps you when it comes time to, you know, either do the warm introduction outreach or cold introduction outreach. You know, if you really understand what this investor is all about And I'll just add one little more bit on that. You know, like, let's say you're in fintech. Well, fintech means many different things, right? Some investors focus on like transaction processing or banking startups, right? Like really getting down into the weeds. Um, so that would be mistake number one. You know, spend the time. Don't— the mistake is not spending enough time. The remedy, of course, is spending enough time digging in and researching. Number 2 is, and I know this doesn't apply to anyone in Founder Institute because Founder Institute is really good at grooming you guys, but having a bad pitch deck. I just can't tell you how many startups I see, and some of them aren't our customers. And I'll get a pitch deck review session going with them and they dig into it. I'm like, oh my God, this is awful. Like, it's so hard to pay attention. You know, these will be customers of mine who are paying me money and I'm having a hard time paying attention to their pitch deck. Um, so how do you fix that? Really short, really concise, really crisp, minimalist. Most of the time when I get on a pitch deck review with founders, I say, this is good, cut, go back and cut out 30%. I don't care what you cut, cut out 30% throughout the whole thing, because then what remains will be the the essence of your story. It'll be crisper if you can reduce. And, you know, other parts on this— having a really good story arc, right? Capture my attention right up front with an emotional story, maybe your backstory, why you're building this, and then get into kind of the more logical, oh, here's my emotional story, but here's also why this is a huge potential moneymaker for you, investor. So I'll pause with those two, but Researching investors and your pitch deck are probably the two top reasons these founders struggle or fail.

I just want to zoom in on the story bit that you mentioned. So we have a ton of founders who, you know, they spend a ton of time in that industry and they're like pros at it, right? But they don't necessarily have that emotional attachment, so to speak. So as someone who's creating a story that, you know, resonates with investors? Like, how do you, how do you, you know, put that together? Like, where do you find the narrative, right, in a situation where you might not even be a great storyteller?

Yeah, super good question. I mean, some of the best stories are very personal stories. I struggled with XYZ and I decided to solve that pain point by building this. I could even kind of apply that to Foundersuite, right? I was helping companies raise capital. We were using you know, Excel spreadsheets and like a data room over here and an investor database over here. We're using like 6 different tools. We're like, there's got to be a better way to do this. This is totally sloppy and inefficient. Let's build a platform for that, right? So if you have that backstory, that's great. If you don't really have that personal, you know, solving your own problem story, then I like to use the use case, right? So, okay, so maybe it's not me who's experiencing this directly, but You know, a good way to do that is to create kind of that use case with an ICP, ideal customer profile. Meet Jen. Jen's a 23-year-old college, uh, you know, college senior, um, looking to get her first job. She's facing XYZ problem, right? So kind of telling the story through the eyes of a customer is a really good way to approach that too. Um, yeah, maybe I'll pause there.

Awesome, folks.

I hope you can go dig deeper on any of these. I just want to— I don't want to like go off on a 10-minute rant. So yeah, uh, so let's do this.

Let's move on to audience questions. We have a ton here. I see this one from Clarissa. I'll just bring this on stage for us. So Clarissa asks, is it absolutely necessary to have a functioning MVP with users before reaching out to investors, or would a prototype and a strong pitch deck suffice?

Yeah, really good question. Um, I answer this in a couple different ways. One is put yourself in the shoes of an investor. Investors have lots of choices. They have hundreds, sometimes thousands per year, uh, startups coming at them, pitching them, right? And so if you have two similar type of businesses, one has an MVP and some early traction One doesn't, you know, which one are you going to pick? So an easy answer to that is the further you can get your business on, the further you can get your business before going out to investors, the better. Right. But the other answer to that is kind of more like when should you start interacting with investors? Early is better. And now, so what you might do, though, one of my very favorite little funding hacks we have like a template for this in our product, but it's the permission email. And what you would say is, uh, dear investor, you know, this is what I'm doing, um, here's where we're at, we're, you know, prototype and design phase, here's my background, here's why I'm doing this, uh, here's why I think it's an important problem. And then saying to that investor, you know, I'm not raising money right now, but I plan to be later this year We do a monthly update just talking about our progress. Can I have your permission to include you on our distribution list for that update? And then you start to send these updates to that investor. So you're kind of nurturing and you're showing them you can make progress even before you're funded. Really great way to build a relationship with investors. Fundraising is about talking to a lot of investors. It's a numbers game, but it's also relationship building game. So you can start that process early when you're just at a deck and a prototype. Now, they're probably not going to fund you on that, right? So I guess if your question is, can I get funded, um, with a deck and prototype, it's hard, depends on your background. But should you reach out to investors and start that dialogue and communication when you just have a deck and prototype? Yes.

So on that, what would you say would be the best time to do a follow-up? Right, like you've already established that connection, so when's the next email going out?

And this is another part of that, another part of the answer to that question is ideally you do this sort of initial reach out when there is going to be some repeating recurring news with your business, right? If there's nothing, nothing's going to happen for the next 6 months, maybe it's a little too early to do that reach out. But if you have some repeating news. And news can be many things. It could be, you know, product releases, obviously, uh, user signups, even pre-launch signups, right? Stuff like that. Like you've been doing marketing, collecting interested parties, they're signing up for your newsletter, stuff like that. It could be press releases, it could be announcements of hire. I mean, there's all kinds of news that could be going on in your business. But when you start to have repeating news, kind of a news cycle you can count on, I like a monthly update. I love to send out a monthly update. That's not too much, that's not too little. You know, people who send a monthly— an update every 6 months, you sort of forget about that startup. If they're sending every 2 weeks, that's too much, like you're kind of spamming me. But if it's about a monthly update, or maybe even every other month, that's a good, good cadence.

Awesome. So we have a question here from Imadine, and he asked, do I need to prove my market before reaching out to investors. My product's live, but we're not just looking for money, we need someone who can help us, uh, grow 10x.

Prove, prove your market is an interesting question. Like, what does that mean, right? Is— are you going into a market that doesn't exist yet, or are you going into a really well-established market that you're, you're saying you're going to take out the incumbents? Um, So I guess I'd kind of push back on like, what does that mean to prove your market? You do want to show that, you know, many of the biggest success stories started out in a market that wasn't totally visible when they started. You could even, I guess you could kind of say this about like ridesharing, I guess they could use the taxi industry as a metaphor, you know, but you should be able to prove that people care about what you're doing, whether that's actually people, you know, users people signing up for your waitlist demo. So proving the market that people do care and ideally they're willing. There's a great metaphor I saw that an investor used. It's like, tell me 3 things. Tell me kind of the why now story. Like, why is this the right time for this? Tell me that people are willing to open up their checkbook to solve— to pay for your solution, and tell me they're willing to open up their checkbook now. Not like future, but, you know, people are actually willing to pay. That's a great way to prove market. I know it's like easier said than done, but think of— think about it in that framework.

Awesome, awesome. So, okay, we have this question from Gabriel, and I want to add this— I want to add a little bit to it. He asked, what is the best way to find a co-founder? But what I'm adding here is, how important is a co-founder when it comes to fundraising, and would that be a make or break, uh, for somebody who's looking to invest?

Where to find a co-founder, that's a hard question to answer. When I was starting Foundersuite, I spent some time on some of the sites, like, I don't remember what they were called, Co-Founders Lab or something like that, right? There are a few sites out there that sort of We're trying to be matchmakers for co-founders. I don't know if any of them survived. I don't have any advice for finding, uh, finding co-founder. If you can get one, great. Am I allowed to share screen? Can I share, show something real quick?

Yeah, go ahead, go ahead.

Yeah, I just saw this, uh, talk very recently, actually on Friday. I went to a event. I thought this was super interesting. Let me find it. This is CARTA data. Give me a second. Where is it? It was further up. Sorry, making me see my screen here. There we go. These are two slides I thought were really interesting. I'll just read the headlines. Solo-founded startups become more common. And so you can see in 2024, roughly 35% of startups were solo founders. 37% had 2 founders. Now look at the growth of the solo founder startup. This is pretty interesting, right? It's almost— it's doubled in almost a decade from 2015 to 2024. 24. I wanted to find a co-founder. I couldn't really find one. I decided, eff it, let me go out and build this business, you know. And in many ways, it's— there are advantages to being a solo founder. I can go a little faster. I don't have to make it, you know, consensus decision. Now, the other slide here is that there is a preference among VCs to have, you know, co-founders, um, And you can see kind of distribution of founding team size, including only startups with VC funding. So 34% had 2 co-founders, 25% had 3, and then, you know, but still 17% had a solo founder. So that's pretty healthy. So bottom line, it's gonna make it slightly harder. It is gonna make it a little harder if you're a solo founder to raise capital. but it's completely possible if you're building a good business. Simple as that.

And I think like generally just on the looking for a co-founder bit, like attending events that are relevant to you and your industry are super helpful is what I thought, what I found, whether it's, you know, not necessarily an FI event, something in your area, something within your industry, right? That's where you're, I think, most likely to meet like-minded people, right? Awesome. Okay, so we have a question here from Dor. They ask, what's your point of view about using AI during development phases? Do you consider this to be a part of due diligence? Just so that, you know, we are current, a lot of people are building with AI. Does that raise any red flags? What what's the perception on the VC end here?

Yeah, it's— everyone's doing it, right? So I think it's, uh, it's becoming pretty common now. I think most investors— this is a great question. I mean, you can do a lot with AI. We're doing a lot with AI in Foundersuite. It's, it's becoming a major tool for like updating our investor database and other stuff. So it's becoming very common. I don't think there's a negative stigma about that. Now, maybe another way to think about that is, do you have a technical team? Investors are still going to want to see that you have a technical team, that you're not just a business guy or marketing gal that's using, you know, vibe coding, um, using AI to build a business. That's not like a sustainable way to truly build a business. You need some technical folks. So yes, it's good, it'll help you scale faster, build faster, everything else. You still need kind of a technical team or some sort of technical co-founder or CTO or something like that to really go too far with investors.

And maybe just from your experience, like, what's the right time to start building out, uh, your team? Not necessarily just technical, just, you know, adding more manpower.

Yeah, I mean, it's, you know, it's, it's kind of like the same question with adding a co-founder. When you've got something that's interesting and good, can you, can you use that to attract people to your business, right? Um, a lot of times people get something going on their own, they'll use that as a prototype or MVP to attract a co-founder. Maybe it's a technical person who's built something, now they're looking for a business person that can help market and sell it. Right? And so I guess that's kind of the answer. It's a little bit of a hazy, vague answer, but when you've built something that has some magnetic pull that you can use to attract people, and, and maybe in the early days it's, you know, they're working for equity or they're doing moonlighting, part-timing to help you out prior to raising capital, um, obviously once you raise money, then it's time to start to hire. I mean, that's pretty common, right? We raised We raised our seed round on— we had a working MVP that was— had some traction, early, early traction. Use that to raise a seed round and then use the seed round to, you know, hire a full technical team along with like 1 or 2 salespeople. So that's kind of a common, common scenario.

And we have this great add-on, I feel like, uh, from Charlotte. And from the perspective of an investor, what qualities are they looking for in a team?

Yeah, you know, we could spend a whole hour on this, right? But like, what do investors want to see? They want to see— there's different ways people have said this, but like, uh, founder market fit, right? You're building in, uh, AI for automotive, whatever it is. What did you do at Volkswagen or GM or somewhere, or, you know, to, to have relevance to this, right? So kind of founder market fit, um, is probably the biggest one. Why are you special? Why are you unique? Again, like I said earlier, investors have lots of choices. So if they have two, two companies pursuing the same, you know, marketplace idea for a given industry, What, what gives your team a competitive advantage that maybe other teams don't have? You know, because of your backstory, maybe you've built a community, whatever it is, right? There's a lot of different ways to answer that question. What makes you special and unique in that industry? The other little add-on I would say is in a perfect world, you have sort of a, a perfect like trio, someone who can build it, someone who can hustle and sell, you know, someone who's got marketing and sales ability, and then maybe an operator, someone who can just keep, keep the wheels spinning and keep everyone else kind of operating efficiently, right? Kind of a COO type of person. I would say that's maybe the lesser important. Someone who can build, someone who can sell, super key. If you have a third person, someone who can kind of operate as the business scales, killer.

Awesome. Founder market fit. Okay, so we have a question here from Cherno, and they ask, what's the best way to structure a startup when preparing, uh, to raise a first funding round? Should I hire a lawyer, uh, cap table structure, and other legal groundwork? What are the things that you need before you go out into the wild?

Yeah, so, you know, I know people are spread all over. I really— I thought— I think I saw United States on there, uh, in the United States, or if you want to raise money from outside, from US investors, you really need to have a Delaware C-Corp. Now you can hire a lawyer to do that. It's not crazy. It shouldn't be crazy expensive to just set up a corporation, corporate entity. A lot of big law firms, if they like you and think you're fundable, they will give you, you know, X thousand dollars. I don't even know what the— used to be around $30,000 to $50,000 of deferred legal fees. To help you kind of get set up. And then of course, once you raise capital, you have to pay them that money back. So it's kind of like a loan. So deferred legal fees from a big law firm is one way to get that done. There are also a bunch of sites out there. Gust, I think it's gust.com, don't quote me on that. Stripe Atlas, there are a handful of other ones that will, are kind of like done for you, corporation setup. So, you know, look around at Gust, maybe alternatives to Gust, Googling alternatives to Gust if you don't like Gust. Not that expensive to set up your entity. We did use a lawyer when I was doing it because I just wanted it all done right. Um, what was the other part of that question? Sorry, was there a separate set? Oh, oh, cap table and stuff like that. I mean, most folks are using Carta. Carta is the big gorilla in the space of cap table management, but there are others out there like Pulli. Pulli is pretty common and popular with like Y Combinator startups, you know, for whatever reason. So a few different sources there. Was there anything else I missed?

I think just the general, like, what is it that you need? But you pretty much covered, I think, like the basics. So if there is a follow-up, folks, do feel free to let us know and we'll be sure to answer. Okay, so we have a question here from Muhammad, and he asked, do VCs generally view startup engineering solutions— maybe this could be just general startups, right, that serve multiple industries— as less attractive compared to those focused on a single industry?

Interesting question. You know, the, the answer is yes and yes. I mean, it, it'd be great if you're— if you can demonstrate we're building this engineering solution for this industry. Like, I used to do these football diagrams, so bear with me a minute, but picture like a small football, and then around that is a larger football, and then around that is an even larger football, and each of those is like a separate market. So the diagram would basically showing you're starting in this industry, then expanding into this larger adjacent industry, and then that's going to get you into this even bigger big home run type of industry. So that's the football diagram right now. If you can demonstrate that path, that you're starting in this industry because of your background, your track record, you know that space, but that opens up doors into other adjacent and ideally larger industries, great. But if you're just going out there saying, we've made this tool, we don't really know where it fits, it could apply to any of these industries, that's probably a fail because they're going to see you as too unfocused, right? And you see this sometimes in the business model slide in people's decks. They have like 7 different possible business models. You know, maybe it's advertising, maybe it's this, we could do X, Y, Z, we could make money doing this way. That looks too unfocused. So, you know, I'm kind of giving a double-sided answer there, but I hope that kind of makes sense. Show that you can conquer one industry and then leverage that into others. Great.

Yeah, and I think like one of the things that we constantly repeat at FYI is like as a startup compared to, you know, massive organizations, your biggest advantage is focus. And I think like if you can, you know, focus on one customer with one solution, you know, with one unique selling point, all of that, I think probably for most founders, that's like, uh, you know, that, that's gold.

And, and let me jump one— add a little bit to that. When I very first launched Foundersuite, we were going to be this suite of tools for like PR, raising capital, competitive tracking, idea validation. We had like all these different things, and it was too confusing to people, right? When we decided, okay, let's actually just narrow in on fundraising and kill off everything else, that the business had a dramatic shift for, you know, upward shift, because we were focused, because now our messaging and marketing was all aligned. We're building software for raising capital, right? So it helps you as a founder often too, and you can really focus and nail, nail one thing.

And just from the founder's perspective, right, like, how did you come to that decision with Foundersuite? Like, what what were maybe the metrics that you were seeing?

So yeah, it was, it was— we did look at our analytics. We had really primitive analytics on our tool at that time, you know, because if you don't have a big engineering team, like, every engineering decision is, is important. Uh, anyway, so we had lightweight analytics. We saw that people were using our investor CRM more than the other tools. I think also my background was in raising capital, and so there was founder market fit in narrowing in on the investor CRM tool. We built like a PR, a media and PR tracking tool, kind of a CR, CRM for PR. I don't know PR, right? So I can't really build a good job around that. So part of it was like analytics on what people are using. Part of it was like, you know what, I don't really know that space. I'm gonna give away that, that territory to someone else, right?

Awesome. So we have Basil here. He asks, are there VCs that set you up with the right team or tools that materialize your idea? Maybe like, uh, this question could be better framed as, uh, what should you look for from ABC, right, when you're raising money?

Yeah. The phrase, are there VCs that set you up with the right team? No. Now, one of the value propositions of VCs is they can sometimes help with recruiting. I would, but, but again, I wouldn't overestimate what you're going to get with from a VC. At the, at the baseline, you're going to get their money and just be happy with that. If you can get the money and and you're good with that, great. Now, what else do you possibly get from a VC? You might get some help recruiting a team if they have, you know, a good network, which most of them do. There might be a little brand and credibility. Oh, you know, Daniel just raised money from Andreessen Horowitz. That's a huge stamp of credibility on his startup. You get advice, right? If you're having a tricky decision whether you should pursue this partnership or this partnership, and each one, you know, put that to your VC, put that to your board, uh, which would typically include the VC, and get their advice. Beyond that, you're not— you know, I wouldn't expect to get much more than that, right? Um, maybe you get invited to their annual conference, you get to meet other founders. That's about it.

Yeah. So on VCs, as someone who is raising for the first time— and I lost this question in like the entire sea of you know, so many questions here. How should you think about equity, right? How much should you be willing to give up? Like, how do you plan, you know, forward for like Series A, B, C, so on?

Yeah, yeah, yeah, I love it. Um, listen, you know, on your first round— I, I'll use ours as an example— in my first round with the option pool, I went from owning 100% of the business, or actually I owned like 97% because I had some advisors and people like that, right? So I went from owning, uh, call it 97% to owning 65% after raising our seed round of a million bucks. Now part of that was the equity that the investors got, part of that was carving off an option pool for future hires. I'm going to share screen one more time and I'm totally copying someone else's work. We're going to have him on a webinar in the end of the month, but there's some pretty solid information here. It's like this slide, SaaS founder ownership at IPO. So this is after multiple rounds, the company goes public and you can see that And this is SaaS, so, you know, every industry is going to be a little bit different. But Atlassian founders owned 75% of the business. That's a huge outlier. DocuSign owners own like 2%, and others are kind of clustering in, call it, the 10 to 30% range. This is what the founders— now, if you've got 3 founders, obviously you would divide that 20% by 3. So you're owning 7%. But you can kind of see what the math looks like after multiple rounds of, of equity and financing. And, you know, there's— let me show you one more slide. Again, I'm sort of glad I had this thing open. He just sent it to me. But this is kind of interesting too, right? There's a couple of different paths. So if our outcome is an acquisition or an IPO. There's bootstrapping— you own 100%, right? You get all the money when you get acquired. There's full VC— many of the companies I showed you on that previous slide, we'll call them full VC, meaning they raised a seed round, Series A, Series B. Every time you raise, you know, you're obviously giving up more dilution, more equity. Then there's the seed strap, where you raise a seed round but then don't raise anymore until IPO. And then kind of this later stage where you, you bootstrap for a while until you have pretty meaningful metrics, and then you raise kind of later stage. So that's another interesting thing if you can do it, right? This all depends on like, do you need money up front or can you run off cash flow for a while and raise money later, like growth capital?

And I think, yeah, like it's so dependent on industry, right? I think there's this really great startup that— Buffer, right? Buffer, they— I believe they only raised once and they never raised again. I think that's because of the industry that they're in. And but then at the same time, if you look at all these AI startups, like just because they're so resource dependent, they need to constantly raise again and again and again.

Right, 100%. Yeah, you can't bootstrap a biotech company or a, uh, a solar company, right? Just, I mean, there's, there's hardware, biotech, drug development, you know, there's multiple industries that are just capital intensive no matter what. But others that, like SaaS, you know, if you can get something going and, and use your cash flow from subscriptions to fund your growth. Cool.

And on that equity topic, um, so how do you figure out splitting between co-founders? Like, what's the right, uh, philosophy here?

Hard question, right? There's so many ways to kind of cause harm here with this. Um, a lot of times it's equal. Uh, there's some math I've seen that, you know, I don't know exact ratio, but probably the majority of startups, let's say it's again one guy, uh, who can build it and one gal who can sell it, right? Kind of the classic. A lot— most of the times they'll split that 50/50, or if there's 3 people, you know, a third, third, third. Now other startups are more kind of aware of different roles in the business. Um, if you're someone who's got 11 years, you know, you've worked the past several years at OpenAI as one of their top technical, uh, early team members, and you're pairing up with someone, um, 2 years out of college who's just a natural hustler or salesperson, that's not going to be a 50/50 equity split, right? Because so much of the value is in the knowledge and the reputation and background of the person who just left OpenAI and has all that, right? So if you can be honest about, you know, kind of what everyone is contributing to the business at day one, you can craft an equity split. Maybe it's 80/20, 70/30, 60/40, right? Whatever you do, though, make sure you've got a vesting schedule in there. So You know, if you're coming in, you don't get that 30% or 40% all on day one. It's vested over a 2 to 4 year period so that if you leave or if your co-founder leaves or one of your 3 co-founders leave, that equity is kind of absorbed back into— the unvested equity is absorbed back into the business. You don't want someone walking away with 30% if they worked at your company for a year. So whatever the split is, make sure you've got a vesting schedule and you're good to go.

Awesome, folks, remember vesting schedule. Okay, so we have this really cool question from Shoshanik, and I feel like this doesn't ever get talked about, at least from what I've seen. Uh, they asked for late VC funding, what is the key metrics? What key metrics do investors expect to see? Is there a typical revenue threshold or growth rate that signals readiness at that stage?

Yeah, it's a great question. You know, it is completely industry dependent. Um, every, every industry is going to be different, but just as a generic answer, as you go from kind of pre-seed to seed to Series A to Series B to Series C, you go, you know, the early stages, why are people investing? The team, the vision, the market opportunity. Then why, all that stuff, plus some, some early metrics, some proof of market metrics, you know, some early adoption stuff. As you get into like Series A and then Series B, you know, Series A, if you're in SaaS, it used to be $1 million. Now it's more like $3 million in revenue is what kind of investors expect. So there's different kind of metrics for every industry, for every stage. I don't have them all memorized. But as you're going, you know, later on, it's all about the metrics and less about everything else. Your pitch and presentation becomes basically a financial presentation of historical and your forecast growth. So I know it's a pretty generic answer, but it's— we'd have to go through every industry by stage to answer that.

I think we should probably ask this like right at the start, but a ton has happened in the last couple of years, right? You are very close to the startup funding world. Like what are those changes that you've seen? Like what's the landscape like? Maybe if you could super briefly explain that.

Just general changes?

Like, yeah, general changes. What should one expect when raising funds in 2025?

Yeah. Oh gosh, there's so much. This is a hard one to like narrow down. You know, one thing I've seen, and this is good because I know there's a lot of international people on this call. One thing I've noticed over the last, call it 5 to even 10 years, is a much greater openness by investors for investing in things outside the US or outside of Silicon Valley. You know, so that's really cool. Like that used to never really happen very much, right? You had to be physically headquartered in Silicon Valley or maybe San Francisco to raise money from Silicon Valley investors. That's opened up a lot more, which is really cool. That's kind of what's been changing, you know, very significantly over the past few years. Going forward and today and going forward, it's AI. It's such an easy answer, but like, a lot of investors are using AI bots to scan your pitch deck to come up with some initial analysis on the market and stuff like that. They're using AI to kind of filter your deal. And at the same time, founders are using AI to manage the outreach to investors. And we're building that into our product too. So the joke I made, I was at this conference on Friday in San Francisco and I was leading a panel. And the joke I made is like, my AI bot as the founder is going to be talking to your AI bot as the VC. And, you know, they're going to figure out if this is a good deal. Now, of course, that's being extreme, but it's kind of moving that direction. Um, so, you know, using AI to find the right investors, to craft your messaging and outreach, even to help do the, like, the follow-up and craft your, like, company updates and stuff like that. So you're nurturing. Now, having said all that, it still comes down to building a personal relationship. You're not going to AI automate your way into a totally successful fundraise all the way, right? You still gotta— and I tell founders, have a call or two on Zoom, then get on a plane or drive down to meet that investor for lunch, whatever it is. You still have to forge that personal relationship. I don't think that's going to change.

Okay, cool. So we have, uh, we have another question from Shoshanik. I just wanted to touch on this super quickly. Uh, they asked about what's the perception with maybe institutional investors when it comes to someone who's tried to do a Kickstarter or Indiegogo, you know, crowdfunding? Like, should one even try that, to be honest?

So now there's some operative words there: tried, tried and failed, or tried and succeeded, right? Those are two different things. I think maybe the broader question is, do investors, you know, look fondly or, or negatively on, on crowdfunding campaigns. There used to be a stigma about it, right? It was kind of this stigma from investors like, oh, this Shoshani can't raise money from VCs or angels, so he's going after a crowdfunding campaign. There used to be like a negative. I think that's changing. I don't think there's so much of that anymore. And especially if you're doing a crowdfunding campaign, maybe a consumer product or you have some sort of audience or following that you can pull in, that's okay. I think investors are understanding that, right? Because a crowdfunding campaign can also give you not only some capital but also some, like, promoters and marketers to help you, you know, get the word out about your business. So if you've, if you've got those criteria, I think it's generally a positive thing in investors' eyes. I hope that if you did a Kickstarter and failed, that you got to answer why it failed, right?

So no, for sure, no. Uh, okay, so we have this question from Nick. Uh, so the question here is, what happens if you're offering— if our solutions often requires more than one revenue stream in order to be a better alternative to the current market approach? Or generally, I think, how do you kind of pick the best revenue stream for your startup?

Listen, there are businesses of course that have more than one revenue stream. Like, not everyone is purely ad-driven or purely subscription or, you know, whatever. Um, so that's okay. I think that's generally okay. Where it gets problematic is if you don't know what your business model is going to be, and so you throw all the stuff up on a slide. I've seen this kind of a lot. It's surprising how many startups I see that they're, oh, we, you know, our business model is a subscription, but it's also advertising. We're also taking a success fee or percent of the deal. We're also doing that. And like, that shows you just don't know what you're doing, you know, or you don't currently know what you're doing. Um, sometimes you have to experiment around a business model a little bit until you figure out the right one. And sometimes there are innovations in business models, you know, that's a little bit less common, but sometimes people do have a business model innovation that unlocks a market. Um, so if you can show that, great. Maybe how it changes over time too, you know. But as with all this stuff, be able to articulate why you chose those two revenue streams, uh, and how that might change over time. Maybe you're using one to get started and then the real outcome— like, I could use us. We're just a SaaS model, right? Foundersuite is just monthly subscription, but we've considered adding like a success fee or a kind of a transact, you know, percent of the deal fee. We're not doing that, but I could in a pitch check explain how we go from a SaaS model to a commission model if I want to.

So I think like the pattern I'm kind of getting here is when it comes to investors, uh, is The idea is you should ideally be able to reach those, you know, ideal metrics or goals that you've set out. And at the same time, you should be able to explain how you got there. Like, that's something that really matters to them. 100%.

It's all, it's all story. It's all story. Tell the story of why you— tell the story of why you're doing what you're doing. Tell the story of why you chose a certain revenue model, business model.

Awesome. Okay, so we have this question here from Erjun that we get pretty often. And because most of our audiences are early-stage founders, how do you figure out what to value your startup when looking to bring in investors?

Yeah, so valuation question, great question. I wrote a blog post like 15 years, like 10 years, I don't know, 10 years ago, basically titled something like valuation is an art, not a science at the early stage, right? You can build Cash flow models, discounted cash flow models, market multiple models. I used to— I got my start working in valuation at a firm called Arthur Andersen, right? One of the large, like, big 5 accounting firms. All I did for 2 years was valuation of early-stage companies, and we would do, you know, these, these models to support it. But really, it's an art, not a science, you know. The best way to approach this is to kind of just look at a couple different ways. One is look at what sort of equity the investor's trying to get for a certain dollar amount. Like they want to have 20% ownership and their typical check size is X, you know, you can kind of back into a valuation that way. The other is looking at comps in the space. That same slide deck I showed has some details on like kind of typical valuations at different rounds. You know what, let me, uh, let me pull it up because it is pretty relevant here. This is good. Now, but so, okay, so how— great, let me show you actually like data. But how do you arrive at that? Well, you basically just, um, here we go. Seed round valuations, AI versus non-AI, and So you can kind of see that, you know, if you're an AI startup, your seed round valuations are in the, call it, $8 to $12 million. Non-AI, your valuations are much lower. Here's some current seed valuation ranges. Consumer products, $6 to $21 million. FinTech, a little higher, average of $18 million. So, you know, kind of look at the market, what the market's doing. But at the end of the day, you're in a pitch meeting. The investor is going to say, what's your, you know, what are you expecting? You say, I'm looking for a $1 million raise on a $5 million pre. You just kind of say what you're looking for. And ideally, it kind of maps into what sort of ownership percent they're typically looking to take. And you just stick to your guns. Like, this is what you're looking for. Now, if, if you're— if you're a hot deal, you can even have some leverage on that. That's why you see some of these AI startups with much higher valuations. They're hot deals, so the founders are setting their pre-money higher. Does that answer the question? It's a complicated scenario, but it's, it's both art and a little bit of science, like using comps and industry benchmarks.

No, for sure, because like from my experience a very long time ago when I was with a bunch of co-founders and I was trying to raise a first round, one of the mistakes that we made in one of our earliest pitch meetings was when we were asked like, what are we looking to raise? We didn't really have an answer for that. We were like blank. And I remember one of our co-founders was like, you know, we're, We're figuring the market out right now. And in retrospect, I think that probably killed that pitch because we just simply didn't know what we were talking about there.

It happens, it happens, right? You sometimes don't know what you don't know until you get asked a question.

So yeah, yeah, no, exactly. Okay, so we have a question here from Lisa, and Lisa wants to know, do VCs ever look deeper into the business, for example, the financials Or is it all storytelling, uh, when you're speaking about the pitch deck?

Great question, Lisa. Thank you. Yes, investors look deeper into the business, very much so. Now, sometimes at pre-seed, you really don't have much, and so it is a lot of storytelling and reference checks, background checks. But I'll give my, I'll give my scenario, which is a bit on the more extreme side. But when we were raising our seed round, million-dollar round, got a term sheet from a New York investor. I tell the story all the time. Got a term sheet from a New York investor on a Friday. On Monday, they sent me their due diligence list, which was like 200 items. They needed everything from articles of incorporation to cap table to personal references. To financials, both historical and forecast. They wanted access to my Google Analytics, like literally they wanted me to invite them in so they could actually run some kind of cohort analysis. You know, they wanted to see our analytics. What else? I told you, you said references, you know, market sizing data. Okay, you're saying this market's this big. Show me where you got some of that information. Um, so I listed maybe 10 there, so also 190 other things that I can't think of right off the top. But yes, they absolutely will dig in, um, seed round and above for sure. Now your answers are going to be sometimes a little bit thin in some places, right? And that's, that's okay. You just don't— you might not know your cost of acquisition, your CAC. Cost of customer acquisition at the early days cuz you just don't have enough data. But, uh, still the, the way you think about it and maybe how you're approaching it, they're gonna care about that.

So, so what's crazy is I feel like we haven't spent a ton of time here, but we only have about 10 minutes left. It's pretty crazy. Uh, folks, I hope you're enjoying this. Uh, Nathan's really kind of bombarding us with a ton of great insight and knowledge, so We're just gonna go through like a last round of questions, so don't miss out here. So, you know, just let, add in your questions and I'll be sure to have Nathan answer. So we have a question here from Sandeep, and Sandeep asks, how do you find VCs like who focus in my specific domain? Like where do I find them?

Mm-hmm, I owe Sandeep $20 'cause this is like a leading question. I will give one answer, which is foundersuite.com. We have a database of 210,000 investors, and they're tagged by type of industry or type of investor. So angel VC, corporate VC, family office, industry. So we have like 1,200 or 1,000+ different industries, location, and stage. So that's one way is just go into a, a database and search. Now There's foundersuite.com, there's, um, Signal by NFX, there's Crunchbase. I mean, there's multiple databases out there. PitchBook, CB Insights if you're willing to pay. So that's one way. Um, also looking at companies in your general space, right? Like, who are other companies in your space that are not directly competitive? Go look them up. Google, you know, Acme funding round and see who funded them. Um, often looking at, um, industries and conferences in your space, you know, investors will often like get out there, speak on those circuits, uh, and you're just kind of tuning in. I know it's like, like this is a generic answer, but people share lists on LinkedIn and, you know, kind of tuning in. Like we've published things like 200 top deep tech deep tech investors. We publish lists like that on LinkedIn, stuff like that. So if that's your space, you know, you might find some pretty good lists. Um, yeah, and ChatGPT. Sorry, I forgot about ChatGPT. Like, asking ChatGPT, tell me a list of like all Austin-based e-commerce seed VCs. It's going to report something back. Whether it's accurate or not, you know, that's something else.

But awesome, awesome. So here we have this question here from Imad Imad asks, as a bootstrap startup, we're cautious with spending and currently lack financial cushion. We are evaluating whether right now is the right time to, you know, put resources into marketing or should we grow organically? Like how do you make that decision?

Yeah, it's hard. I mean, we've wasted lots of money spending ads on Google Ads, on, we hired a PR firm, don't do that. That was like, The worst money I've ever spent was hiring a PR firm thinking that would drive organic traffic. Um, you know, there's a lot of stuff you can do as a startup for, for cheap or for free, right? Creating content, creating LinkedIn posts, blog, podcast. Start a podcast. Start a podcast with some really specific focus. Use that content, you know, to drive organic traffic to your site. So there's tons of stuff you can do for free. When is it time to actually start spending money? When you've got something that people will pay for, right? When you start to get some feel around, hey, our value on a per-unit basis, for us it's like a monthly subscription. Our lifetime value of a customer is around like $1,000, right? We know what a customer is, is worth given their kind of average time on the site and how much they spend per month. And so if it's, if, if the value of the customer is about $1,000, I know I can spend, call it $200 to acquire that customer. That's a profitable spend on marketing. Now you might not have all that, you know, really nailed, but you'll start to get data like that. You'll start to understand what is a customer valuable to you. Therefore, you can back into like, what can you spend? Call it hopefully getting like a 3 or 4x return on what you spend. And then you can decide, where can I spend that money most effectively? Is it ads? Is it sponsorships at a trade conference? Whatever it may be, right? You can start to kind of figure out, we can make a profitable spend on that. If you can do profitable spend, it makes sense to spend. Simple answer.

Awesome. And with that, Nathan, we are right at the end. Uh, Nathan, thank you so much for taking out the time to do this. I know, I don't know if you noticed, but the place was filled with emojis and you have a few coming in right now as well. So Nathan, I do see a question here. What if somebody wants to reach out to you? What's the best way? Should they just hit you up on LinkedIn?

Yeah, absolutely. So LinkedIn is great. Maybe mention you're part of FI, you're part of this. Oh, I just love all those little hearts. It's like Black Mirror. Yeah, find me on LinkedIn, Nathan Beckard, and, uh, maybe just mention, because I get a lot of, a lot of invites and stuff there, so maybe mention you're part of FI or you're on this. Happy to connect. And we do publish a pretty decent amount of stuff on LinkedIn, just all fundraising related, a lot of pretty good valuable stuff. Uh, the other way, Nathan@Foundersuite. Um, I get a ton of emails, so I'm pretty bad about it, but happy happy to, you know, chat over email. And then I guess I would make two very quick plugs. We have a podcast called How I Raised It— How I Raised It— which has interviews with lots and lots of founders and some VCs. We're like 300 episodes. So if you want like more deep dive into fundraising, check out How I Raised It on Spotify, YouTube, SoundCloud, iTunes, all the good stuff. And then of course foundersuite.com if you're thinking about raising capital, give us a look.

Awesome, awesome. And folks, with that, we are done for the session today. Please do stick around, uh, for the networking. You'll get to meet founders from all across the world, so that should be awesome. And as for the replay, we'll be sending it in the next 48 hours. Uh, so Nathan, before we head out, any parting words for our audience?

No, it's a little bit of a tricky market right now for raising capital, it's, you know, it's unless you're a super hot AI company, it's everyone else is, some people are struggling, right? Just keep in there, hang out, stay in the market, keep building relationships with investors, keep building a target list of a couple hundred investors and reaching out, nurturing those relationships, sending out those monthly company updates so they can see your progress. And the metaphor, I'll leave you with this metaphor. You know, it's hard to time the market if you're looking to fundraise, but I use this surfing metaphor. You kind of have to be in the lineup waiting for when the waves come in to get a good, you know, spot at surfing. You can't wait for the waves to come in and then paddle out. So be in the market, be out there in the lineup for the next set of waves, the fundraising waves. Be ready with your pitch materials, all that stuff I talked about. And, uh, when things, you know, pick up, you'll be good to go. I'd love to hear success stories. So Nathan@foundersuite.com.

Awesome, awesome. Uh, thank you so much, Nathan. And with that, folks, that's it for our event. If you want to join us for our next event or any other events, uh, check us out at fi.co/events. I hope you all have an awesome day ahead.

Thanks, Daniel. Appreciate it. Thanks, everyone.

Bye.