How To Fundraise Successfully During a Pandemic with Will Sacks

Alright, so thank you everybody for joining. So here's how today's gonna work. We got an awesome topic today, and it's about how to raise funding for your startup, not only during this, this interesting time that we have right now, but afterwards as well. And we have a great speaker here today to go through a presentation and answer any questions that you have on that topic. But really quick, let me just give my quick spiel about the Founder Institute. So we We are the world's largest pre-seed startup accelerator, and we are enrolling right now in more cities than we ever have in our 11-year history, because these are the kinds of times when there's a lot of disruption going on in the world. It's a great time to start a startup. So if you wanna learn more about FI or see any of the cities that we're enrolling in, and every city starting, every program starting in 2020 right now has gone 100% virtual as well. You could see all the cities that are enrolling at fi.co/cities. /enrolling. All right, well, with that being said, let me introduce our speaker. So I'll give him a quick introduction, and then I'll give it over to him as well. Will Sachs is a— he's a grad of the Founder Institute New York, built a pretty cool company. It'd probably be harder to get a more laudable mission than what he was working on, and that was to help women fertility and help them get pregnant and all that kind of stuff through a company called Kindara. That company was sold in 2018. Will Will has raised several rounds of funding and he sort of had to learn it the hard way. And so now he has started a funding accelerator called Get Funded. And Will, hopefully I did you a little bit of justice there, but do you want to fill anything in?

No, that's great. You know, I'm an entrepreneur myself, Founder Institute grad, loved my experience in the Founder Institute. Yeah, now I'm concerning myself with helping other seed stage companies and seed stage CEOs get funded because it is, it's a difficult thing in the best of times. And, you know, now we're in a very different kind of period. So trying to help people's ideas come to life.

Yeah. And one of the, it was funny. So the founder, Scott Painter, he's an FI mentor and he's He started, was it called fare.com? Huge, huge company right now. He's raised over $1 billion in funding in his career. And the way that he explained it to some of our founders was, you know, that what's that movie with Tom Cruise where every day he's trying to get a little bit farther and then he dies and he lives the same day over and over again? You know that movie? It was Groundhog Day. Well, it was sort of like Groundhog Day. Yeah. But what he was saying was that literally it never gets easier. And this is a guy who's raised $1 billion in funding for their startup. It never gets easier. You're always just trying to get a little bit and a little bit farther. And having a good process is extremely important, right? So that's a little bit what Will's gonna talk about today. And I'm gonna hand it over to Will for a second, but here are Israel. Edge of Tomorrow, there you go, Carson. Yes, Edge of Tomorrow.

Edge of Tomorrow.

Yeah, right? It's a game. Every day you're just trying to get a little bit farther and then you die and then you start again. That's what he equated raising funding for a startup for. So for anybody in the audience, it's not easy, okay? So it's not just you. And Will's gonna talk about some ways that can potentially make it a little bit easier today, but it's still gonna be tough, right? But process helps a ton. So for everybody joining, Will's gonna go through a presentation, and then after that, we're just gonna go through all of your questions, okay? So please don't be shy. And it looks great here. People aren't being shy. We got Zagreb, Barcelona, Istanbul, Montreal, Pittsburgh, Austin, Ivory Coast, Cologne. Awesome, guys. So don't be shy. Even during Will's presentations, please, you can throw any of your questions into the chat. We have somebody in the chat from the FI team right now, and they're going to serve up all the questions for us. And then afterwards, we're just going to go through them one by one. OK. With that being said, Will, if you want to queue up your presentation, and we can get going. And I'll hide my face here.

Yeah, let's do it. All right, so welcome everybody, and welcome to How to Fundraise Successfully During a Pandemic. You know, Jonathan, thanks for the introduction. At Kindara, I raised, I think it was something like 6 rounds of funding. We did a friends and family round, we did an angel, a couple of angel rounds, $300K, $600K, $700K. Then we did a venture round of around $3 million. Then we did an equity crowdfund round, we did another bridge round with VCs. So made it through a whole bunch of different rounds of funding. And now I'm running a fundraising accelerator called Get Funded with the mission to help 100 companies raise over $1 billion. So I'm gonna give you from my perspective today, how to raise successfully during a pandemic. I'm coming at this with a lot of humbleness because I have never lived through a pandemic. I doubt, or a pandemic of this magnitude, and I doubt anybody on the call has as well. So this is my advice based on my conversations with founders, the founders that are in our accelerator right now, and conversations with investors. So I'm looking forward to discussion afterwards and hearing about what some of you are dealing with and getting smarter myself. So the agenda for today, I'm gonna talk a little bit about crisis and opportunity. Then I'm gonna talk about the landscape that we're currently in. What is different now? What is the same as it's always been? And what is in flux currently, you know, this week? I'm gonna give you some stats that I was lucky enough to be able to get from the Seed Angel Forum on how angel investors are viewing and thinking about their portfolio and investing. And then finally, I'm gonna end it off with what can founders do? You know, what would I do if I was raising money right now? What am I counseling founders to do right now? So first, crisis and opportunity. You know, one definition of a crisis is danger at a point of juncture, and the key word there I think is juncture, is that the world was headed one way and now it's headed in a different way, and that's created a lot of opportunity, a lot of crisis, a lot of upheaval. Winston Churchill said, "Never let a good crisis go to waste." And what he meant is that in a good crisis, there's always opportunity. So something negative or bad is happening that's impacting people negatively, well, there's also opportunities built into that crisis to change the way that things are done to create a world that works better than it used to. Brad Feld, one of the VCs here in Boulder, wrote an article where he said, "We actually don't have one crisis, we have three crises in one." We have a health crisis, a financial crisis, and a mental health crisis. And then I would add to this, we also now have a social crisis with the murder of George Floyd and the protests here in the United States and around the world. So this is a time of unprecedented upheaval right now. And we've got a new landscape and we don't know how long it's going to last. It could last a couple months and then go back to normal, or it could last for the next couple years and never go back to normal. So the thing to realize there from my perspective is that previously good ideas and investments might now be bad ideas and investments, and previously bad ideas and investments might now be good ideas and investments. So it really is a shift of the entire landscape. So let's talk about what is different now with the landscape having shifted. Whether you're in, healthcare or travel or tourism or hospitality or real estate or social media or sports or retail or gaming or food or agriculture, et cetera, it seems to me that we're headed into a new future now, a future that is different than the future we were headed into. And I think this future we're headed into is more sustainable, it's slower, it's more distanced physically, it's more focused on essential, the things that are essential to us as humans. It's more work-from-home-based. And so I think the central question that founders have to answer right now is, how does your startup fit into the post-COVID world? Given that we're headed towards a new future now that's altered from where we were, what's the way that your startup fits in or your opportunity supports, accelerates, becomes a part or assimilates into this new world that we're headed towards now? I think that's the critical question for us to answer as founders. And for all these different markets, there's gonna be different answers. So some people are doing online, like e-commerce, and their sales are up because people aren't going to stores. Some people are doing travel businesses and they've got to really adjust their approach. And so how does your startup fit into the post-COVID world? What is the story that you can tell? For some people, it'll be obvious, and for some of you, it's gonna take some major adjustments. So that's what I think is the first thing that's majorly different. And then here's some startups founded around the last crisis. You know, these startups had an answer. There was a financial crisis in 2008. Uber and Slack, or sorry, Uber and Airbnb and Groupon They all made things more affordable, like hotels and limousines and shopping. They made things more affordable during that time when people had not a lot of liquidity. WhatsApp and Slack gave people new ways to communicate. Venmo and Square gave people new ways to move money and maybe get compensated for services, you know, trade services. And Instagram and Pinterest maybe gave people hope and more connection during that dark time. All these incredible companies were founded in the last crisis, and I really do believe that we're gonna have a slide like this in 10 years saying, "Look back in the pandemic in 2020, here's the companies that got started." And my hunch is those companies will fit into this new future that's being created. What else is different now? Relationships are getting started and deepened on Zoom. So I know I'm spending more time on Zoom now than I ever have before, and I was already a heavy Zoom user. People are raising money on Zoom. And so what does this mean? One thing it means is that people are more accessible. So people are at home, their calendars and their engagements, their social engagements have been canceled or changed. So people are more accessible. And in our program, we had somebody target Scottie Pippen, the basketball player, the Hall of Fame basketball player, as a potential investor and get him on the phone because he was at home, like, just chilling. So people are more accessible. Founders have to travel less. There's more time for relating and less time to getting on planes, in airports, more time on Zoom, on video, on calls, texting. So you have more relating time. And then probably the most important for founders raising money is that rapport and trust need to be built remotely now. And a few tips on that. Somebody once told me investors invest in lines and not dots. Which means if an investor has a number of touch points with you and those are all positive and leading towards something that's more exciting, they're much more likely to invest than in one Zoom call. So my advice there is really invest in having lots of touch points. People invest in people they know, like, and trust, and trust is consistency over time. So it probably is the case that you're going to need to do 4 Zoom calls where before you might be able to do one face-to-face face and a handshake, that may take 4 Zoom calls now. So my advice is reach out frequently, use different mediums that are available to us, and use video a lot and build that trust, consistency over time, build that rapport. So that's what's different. Now I'm going to talk about what is the same. At its core, fundraising is pretty simple. It's not easy, but it's simple. You meet the right people, you get them excited, you keep them excited, and then you ask them who they know. And if you keep doing this process, you'll get a group of people that are excited about your opportunity and you can bring a round together. Another thing that's the same is the best founders and the best companies will get funded and the ones that aren't the best are unlikely to get funded. But the thing is at the seed stage, what does best mean? Like in Series A and later stages, best is mostly a traction of your revenue and your growth rate. At the seed stage, best means a whole lot of different things. Best can mean, you know, you have a really great story, a compelling story for how you fit into this new future. You have a compelling demo, you have great traction, you have excitement and charisma that communicates your opportunity in a way that gets people excited. You're able to communicate your idea in a way that people really get it. And start to grok it on a deep level. You have a really tight fundraising process, so everyone, all the investors in your process understand where you are and when the process is going to conclude and when the round is going to be closed. You've got access to the right people, and you've got a really tight and dialed presentation of the way you look, the way your deck looks, the way your website looks. Maybe you have some video assets that show what you're doing. So for me, these are the 8 success factors or fundraising factors, and I thought it'd be interesting to put them on a little chart here and just talk about which of these are controllable, which of them do you have control over, and which of them are kind of out of your control. Okay, so story. Your story is fully in your control. As a founder, we have ultimate control over how we tell our story and the words we use, the way we do it, and we can practice it as much as we want and dial it in so that it's really strong and tight. Same with the demo. We can make a really impressive demo that communicates clearly what our product does and the opportunity that it creates for the investor and for the market. Traction, not so much. Traction is somewhat uncontrollable. There's some things you can do that we can talk about during the questions, but I would say it's somewhat controllable. Your charisma and excitement is fully under your control. The way you communicate your opportunity is fully under your control. The fundraising process that you run is fully under your control. The kinds of people you have access to, I put somewhat. You know, you can definitely expand your network, but it's not everybody has the same level of access. And then finally, presentation, how everything looks, it's fully under your control. So if we take these 8 factors, 6 of them are fully under our control as founders. Getting those as tight and as dialed as possible is what I, you know, it's the same advice I would give to anybody raising money, but especially now. I would say make sure all of that is as good as it possibly can be, and then you're going to stand out and be perceived as the best, head and shoulders above the rest. What else is the same? Allocations. You know, some investors are protecting their current investments and investing in companies they've already invested in. And some investors are looking for the next Airbnb or Uber. And I would say at the seed stage, it's relatively the same as it always is. I've got some stats for you guys. This is from the Seed Angel Forum. You can check them out at seedangel.co. It's a pitch event that happens around the United States. And so the Seed Angel Forum surveyed their investors and asked them a few questions, and then I, I know the people who run it and I got the stats. I'm gonna show them to you now. So they surveyed 100 angel investors and I think they got like 55 responses. So the first question was, how has COVID-19 affected your appetite for angel investing? And 63% hasn't changed, and actually 16% increased, 14% decreased, and 7% other. So it's a bit surprising to me. I was expecting maybe a bigger decrease, But no, it looks like, you know, 16% increase, 14% decrease, and 63% hasn't changed. So it's not like this market is completely dried up. How has COVID-19 affected your ability to make angel investments? On this one, 78% hasn't changed. We've got a decrease of 18% and an increase of 4%. So here, maybe 4 out of 5 haven't changed and 1 out of 5 has decreased. So the market's tightened up a little bit in terms of ability, but still, 4 out of 5, you know, hasn't changed their ability to make angel investments. And then lastly, has COVID-19 prompted you to change your investment thesis or focus area? And on this one, we see a bigger shift, 24% yes, 20% don't know yet. So almost half are either a yes, a solid yes, or I don't know yet, I'm gonna see, I'll find out soon. And then no, 46%, and 10%, other. So again, I think this highlights the need to be able to tell a compelling story of how your opportunity or your startup fits into the post-COVID world or fits into the future that's being created. So that's some data for you guys. Something else that's the same, and this is really like an internal factor for us as founders, You know, some founders will close shop and point to external factors and decide either there's no more market for my business, which might be valid, or it's too hard to raise money right now. And I would say, you know, as Jonathan said at the top of this webinar, it's always difficult to raise money, and there's always going to be people who don't succeed, but other founders are going to invest in themselves and their raise and hustle, and make sure they succeed. That's what I had to do when I raised my rounds, that's what the people in our program have to do. It really does take focus and hustle, and there's some things you can do to help make sure that you succeed. You can join accelerator programs like FI or Get Funded. Mentorship programs are great, networking programs, pitch events, research. You can spend more time researching and finding the right people and how to get to them. You can just spend more time on your fundraise, and you, of course, can spend time on working the fundamentals. All those fundraising factors that I presented, making them really, really tight and really impressive so that you stand out. And I believe that founders that do this can raise money in this environment. People are still investing. One of our companies got a term sheet recently, you know, in mid, early April, kind of in the craziness, so There is money moving, and I believe for, if you have a great story and you really focus and hustle, it is definitely doable. And then lastly, I wanna spend a minute on like, what are the unknowns still? What is shifting? So I think what's shifting right now in June is that people are starting to get their bearings in this new normal that we've got. 60 days ago, people were like, oh my God, what the heck is happening? How do I think about this? But I think people are starting to establish a new equilibrium in their personal lives and their financial lives. And so there's like this new normal setting in. And 60 days ago I was telling people, you know, people in our program were asking like, what do I do? Should I call investors right now? Should I follow up? And I was essentially saying, just chill, like wait. It's so crazy right now. People are trying to figure out keep their families safe and keep their businesses going and cancel holiday plans and get their families back to the countries that they live in. So I was saying, you know, just chill. But now it seems like things are relaxing, at least here in the United States. And I believe that things are going to get better as people acclimatize to this new normal. So there's this saying, you know, the best time to plant a tree is 20 years ago, the second best time is today. I think now's a good time to start planting the seeds of a successful fundraise because it does take time. There's a new normal being established. And so the work that we put in now as founders, I think it is gonna get easier over the next coming weeks and months. So in conclusion for everybody, you know, we have a new game board and the question is, how are you gonna play it? How does your opportunity fit into this new future that's being created? I think it's crucial to have that, the answer to that question. Number 2 is you can't control the pandemic, but you can control your success factors and your fundamentals and how good you are at meeting people over Zoom, getting them excited and asking them who they know. You know, it's the basics of fundraising. And then lastly, you can give yourself every advantage to stand out and succeed in this environment. You can be excellent at the fundamentals. You can get a coach or mentors or support, you can join an accelerator, you can join online groups, you can build your network. There's so many ways now that we as founders can grow our network and grow our capacity and skills to succeed at this. So I do believe it's possible and I believe that, you know, maybe somebody on this call is gonna be the next Uber or the next Airbnb, founded in this uncertain time. So lastly, we have some free resources for you guys. I wanted to give you some stuff that I thought might be useful. We've got some free email templates that'll show you how to raise money over angel investors, give you some tips about how to do that. And we're offering a free pitch evaluation right now. So if you want to give us your pitch, either a few sentences or send us your slides, we'll give you a free evaluation and some feedback on that. Just to help you hone your pitch and help it get better. And all that can be found at foundersgetfunded.com/FI. So head over there and grab that free stuff. And then if anybody wants to email me, my email is will@foundersgetfunded.com. Feel free to send me any questions if you need help or you're struggling. I'm happy to help you out. And the link is there, foundersgetfunded.com/FI. And I'd love to answer questions anybody has.

That was great, Will. Thank you very much. So, all right. So why don't we— we got a ton of questions here, and I want to start on something first because there were a lot of questions just in terms of like the sequence, right? So you want to do the list of the number of different types of rounds that you did there? So you did— what was it? You did an Did you do friends and family as well?

We did, yeah, we did $100,000 friends and family, and then we did a $360,000 angel round coming out of FI, and then we did a $600,000 angel round, and then a $750,000 angel round, and then I got tired of raising angel rounds, 'cause every time I would finish the round, I'd have like 2 months to relax, and I'd have to start raising money again. So then I decided, well, I'm gonna raise $3 million, or I'm gonna shut it down. I gave myself that challenge. And then I raised the $3 million, and then I transitioned out of the CEO role, but I stayed on the board and we hired a new CEO and he had never raised money before, so I helped him raise another $4 million. So it was about $9 million in total into the business.

Right, and a lot of different rounds. Do you—

Yeah.

Do you wanna just give maybe like a quick minute as to like the different, you know, what that means? 'Cause we're seeing a lot of questions just like, you know, first round of funding, like that kind of stuff. Like what, you know, what was the impetus for each of those and just kind of a quick definition on just like that sequence. So I mean, your sequence was maybe a little abnormal, but still just from the beginning, it usually starts friends and family, angel, right? Yep.

Yeah. So friends and family are people who are investing in you. You know, they know you, you maybe don't have a lot of traction or or much to show yet, but you've got your relationship with those people. So our friends and family round actually included some mentors that we met in Founder Institute and other people, like it wasn't all family. It was people that knew me and Katie, my co-founder, and were willing to write us a check for $5,000 or $10,000, you know? And then angels usually come next, and they're wealthy individuals who believe in, usually I would say the product, the market, and the founders, and think that there's something exciting is gonna be created there. And then as you get further and raise bigger amounts from more professional investors like venture capitalists, well then they're gonna take a more structured approach, I think generally, and look for more traction, look for more revenue, look for more customers. So that's usually the ramp, and I think, What I've noticed, John, is like, if you've already built a company and raised money and exited, you can probably skip the friends and family and the angel and go straight to the VC. But if you haven't, you probably can't.

Yeah, for sure. No, it makes a lot of sense because a lot of times they're just investing in you. And then one of the other things before I start getting to the questions from the chat, and please anybody, we have a whole bunch of questions here, but we got some time to throw in any other questions into the chat and we'll queue them up. I thought one super, a couple of super interesting things that I pulled out of that. So those stats from seedangel.co were really, really enlightening. So basically it's not changing their appetite, it's just changing a little bit their thesis, right? And then the other thing that you said there was that investors invest in lines, not dots. So how would you, and I know you touched upon this a lot in your presentation, but the things that are in the founder's control are things like the narrative that they're telling, the story, the people that they're reaching out to, you know, just any advice that you would have for them to position themselves a little bit more as a line, so to speak, right? Like skating where the puck is going versus where it is now, right? Versus a dot in the eyes of an investor.

Yeah, totally. Well, I think a great tool is the monthly update. Like one thing that I counsel everyone that is in our programs to do is to write a monthly update and send it to everybody, essentially send it to everybody you know every month. You know, you send 3 of those, you can send 3 of those in 3 months and people are gonna start to know and like and trust you if you're consistently making progress and you're talking about your business in a way that gets people excited. That's a great way to build a line. Out of dots. Like, I would do that at Kandara, send these updates, and anybody I would meet at a networking event, at, you know, a social event, anywhere, I would add them to my update list and I would start sending them updates. And I was always amazed, like, I would send these updates and then stuff would come back that I didn't even expect. Like, I'd say, I'm like, you know, we're about to raise a round, and some person I met like 3 years ago at a networking event would be like, hey, you gotta talk to my Uncle Joe, like, he loves healthcare, he loves women's health, or his wife just, they just paid $200,000 to get pregnant, you should talk to them, you know. So I think that's a good way to establish dots. I think understanding who the investors are that you're talking to and what they're interested in is a great way to help build rapport is find out what people are into and then start getting into that stuff as well and find, send them articles or reach out and say, hey, did you see the news about whatever? Like fundraising is really a relationship game. And so how can you build the relationship? It's a lot like dating actually. Like there's so many times when dating analogies work where you don't want to seem desperate. You want to seem interested and confident, right? And you want to be present. And, and if you're interested and confident and present and people like what you're doing, there's going to be a rapport and a trust that gets built over time.

Right. And that monthly list is a way to be present and open.

Yeah.

To sort of show a cresting wave, so to speak, of trends.

Totally. And just to be top of mind, like just to double-click on present. If you don't send the update, what's the chances that these people are going to be thinking about you?

Right.

Like, it's probably pretty low. But if you send the update, then you're right there. Someone's thinking, they're thinking about you and you can call them up. Hey, did you get my update or whatever it is?

Yeah. And I also think too, like, yeah, you obviously don't want to seem overeager, but once a month, we have a lot of founders too that are like hesitant. They're like, really? Do they want to hear from us once a month? And I'm just like, you know how many emails people get in a one-month period? Like, it's okay. Like, just keep them abreast of what you're doing. And yeah, somebody will know somebody, right? It's like, yeah, like you said, if you're working on something that's related to contraception and stuff like that. People are gonna know other people and then you're gonna be top of mind. I'm like, hey, you should talk to this guy, Will. He's doing something that's solving the exact problem that you guys are having, right? You might be interested in.

Not to mention, sorry, just one other thing on that. Not to mention, sending an update every month forces a founder to be organized in their thinking. If your update is we're working on this and then the next month is we're working on something else and then the next month is we're working on something else, well, that's gonna— I mean, it does amazing things for the founder, just even if nobody reads the thing, right?

To look at the last one and be like, okay, I can't— you have to stay.

It's like, what's my— what's my consistent line that I'm building for people that builds momentum? It forces better thinking.

Yeah. All right, so I'm gonna start jumping into the audience questions. Keep, keep them coming, guys. We're gonna go through all of them. So let's see here. So, um, Barcelona, which was the name has asking, what's the right stage for angels? So, you know, so you did the friends and family, right? And as you said, as a first-time founder, that's sort of a necessary thing, honestly. For most of the time, we've seen that be a necessary thing. When were you— when did you think you were ready for the angel investment? Was it pre-customer and prototype, or was it something a little bit different?

Yeah, we had, we launched our app, so friends and family, we had slides, that was it, you know? And then we built, with that $100K, we built the first version of our app, and we started getting customers, and we started getting reviews, and we were showing like a little ramp. We even had a little bit of revenue. And then on that, we raised our first angel round. So I think, I think you need something like that for an angel round. Again, if you're a first-time founder, you have to show some validation, and it doesn't have to be expensive to get the validation. It could just be 100 customer surveys and a list of 50 people that are willing to buy the product or try the product. But I would say, like, for angels, you gotta show something, something that's up and to the right, or something that's exciting. And as a founder, honestly, I think, you know, to be raising money, you have to be excited about what you're doing and to be excited, you need to have done your homework and have confidence that what you're saying is gonna happen. So I think it's useful for founders too.

Yep, for sure. And Keith was asking, and this is always a common one that we see as well in FI is, you know, do, so, For angel funding, do you— he's asking for seed funding. Do you think you need co-founders and a team? And at least my answer to that would be yes, but I'll bring that back also to the angel funding aspect as well. What's your thoughts on that?

Yeah, I would generally say yes, like unless it depends what you did before. I'd probably add an asterisk on that. If I think you need a team, you don't necessarily need co-founders. I think co-founders are tricky. They're either kind of there at the beginning and you found the business with them or they're not. And then you as a CEO can build your team out. But I would say, yeah, you probably need either a team or proof that you've built a team before.

Right. Yeah. And a way that I always like to explain it to people too is, look, you're just, You're an investment, right? Like you're trying to de-risk that investment however you can. And if you can't recruit a team to work for you for a little bit of money and just equity, which is sort of normal, right? With any seed stage or pre-seed startup. Like if you can't convince just those people too, that what you're doing is valuable, where they're not investing money, they're just investing time, then an investor who's investing money is gonna be like, all right, well, I'm not gonna be the first idiot, you know? Like who's like—

Yeah, I mean, that's one of the, That's one of the crazy things about fundraising is for certain companies that are going to need to raise a lot of money, the skill of fundraising is a key skill for the CEO to have. And the skill of fundraising is very similar to the skill of recruiting because you're essentially selling a future that doesn't yet exist. You're trying to get people together and support the creation of something that doesn't yet exist. So, hire— getting a team is kind of the same skill set.

You're going—

you're identifying people that would be a good fit. Getting in front of them and telling them what you're creating and why it's going to be so awesome and asking them to join you.

Yep. Yeah, you're conjuring something out of nothing and you're going to have to pitch that to team members, to customers, to all the stuff. Investors are a couple, a couple steps up that ladder. Yeah.

And it really is. There's nothing else that I've found that's really like that. It's— yeah, conjuring something out of nothing is a great way to put it. I love that.

It's, uh, Yeah, fake it till you make it's another way, but I feel like that is sort of, uh, makes it seem like it's some sort of a con, which it isn't, right? Like, you have a vision and somebody has to, has to bring that vision to reality, and it involves bringing other people on board with that vision. Yeah, right. So, uh, Nick was also asking here, um, how, how did you go about reaching out to the angel investors? Where did you find them? Um, was it just cold emails, LinkedIn invites, you know, did you meet them at events? Like, so just sort of the basics on how do you start finding finding these people?

Yeah, the answer is yes, yes, and yes to that question. You know, it's like, you got to be like a dog on a bone, like searching for the bone. Where are the angel investors? You know, they're affiliated with the accelerators, they're at pitch events, they're at networking events, they're mentors at coworking spaces. They've invested in startups. So one thing that I think is a great way to meet angel investors is to befriend the CEOs of non-competitive startups in your space. And then if they like you and they like your company, they might introduce you to their investors. AngelList, LinkedIn, now there's Signal, there's one called Pioneer I just saw the other day. So there's like, these people are out there and the way that the method that we teach is, identify like 200 people who would be a great match for your opportunity. And then you start networking towards them and you're gonna get to some of them, you won't get to some of them. But the way the world works now is you can identify people online, you can find people through all kinds of events and through companies. And then you can meet people that they know and, or meet people that might know angel investors and you just start expanding your network. And as you do that, It'll go faster than you think. At the beginning, it'll feel like nothing is happening and you're not meeting anybody, you know, and then a month or two in, you'll start to understand, okay, I've actually met 20 people. Those 20 people have introduced me to another 40 people. Like, it starts to go geometric. And Founder Institute was great for that for us, by the way.

Great. Yeah. And even, I mean, I'm probably devaluing Founder Institute here, but I even see, so David in the chat in all caps. So I'm assuming that you're screaming, David, how can we find a list of resources for angels, accelerators, et cetera? There's a great tool, David, called Google.

All right.

Like a lot of this information is super, super easy to find. I don't know where you're located, David, but look up accelerators in X, wherever city, angel investors in X, and within a half an hour of kind of digging in there, you can find some people, you can find the email addresses. It's usually, you know, it'd be pretty easy to guess Will's email, right? I think it's Will@angelinvestors.com. Foundersgetfunded.com using that. What are you?

Are you, are you jonathan@fi.co?

I mean, yeah, that's one of my aliases. Yeah, it's not that hard, right? Or you could go like j.grechen or jgreetch. I mean, you know, probably 98% of emails in the world follow some syntax or syntax, right? So it's not so much about finding them. I think what, you know, what Will is saying here and what we see all the time, it's about building those relationships, right? Those cold emails, you can cold email anybody and it's the same thing with journalists too, by the way, right? People are always asking us for journalists' emails. I'm like, it's their name at TechCrunch or whatever, right? Like, that's the easy part. It's building those relationships and actually having something of value when you do reach out to them.

Yeah, I have something else to say on that. So, you know, the best foundation for a relationship of this type is alignment with whatever it is that you're building. So, one of our angel investors at Kindara was a herbalist who ran a clinic in New York City and it was all about fertility. So, she was just super interested in meeting us. Like, she super wanted to meet me and Katie and talk to us about what we were building and see the product because her interests in life were so aligned with what we're doing. Those are the type of aligned interests that turn into investments. If you, if you just like, nobody should just be looking for angel investors. Look for angel investors who have some sort of interest or alignment with whatever you're doing, whether it's crypto or agriculture or food or retail or whatever.

Yep. And if you're kind of, if you're blogging about it, if you're at events, if you're doing all this kind of stuff where people are interested in that space. Yep. That opens up a lot of doors, right? That's kind of— those are kind of the things where people are like, I got lucky, right? But you sort of create your own luck where you're screaming sort of loud and far what you believe in, and then yeah, people that are interested in that sphere start to present themselves. Yeah. So, all right, let me get through some more questions here. How much time— so Pranay, sorry if I'm pronouncing that incorrectly, but how much time would you generally expect to close? A two-part question: angel and then a seed round, and is there a difference between the two?

Like a difference in the amount of time?

Yeah.

I mean, I say 6 months. If you really put your shoulder into it and you're spending the majority of your time as a founder, I mean, that's the thing that nobody likes. Nobody likes the reality that it's It's like a full-time job raising money. You know, I would tell my team like, I'm going to raise money, so you guys got to keep everything just going. Like, I'll attend our weekly meeting, but otherwise I'm raising money. So I do believe it's a 30 or 40 hour or 50 hour a week thing. It works best actually when you're doing it full-time. And if you're doing it full-time, you know, 6 months is a good benchmark. You might get it faster. There's somebody, a CEO I know who got a yes on his first meeting for half a million dollars, but that's, you know, that's the exception. If you spend 6 months and you really push into it, at the end of that 6 months, it's likely that you'll have the round done. It might take a little longer, it might be a little faster, but I think that's a good benchmark. And after you raise money, I'd always say like, okay, we've got 12 months of runway to execute, and then we've got another 6 months to raise the next round. If you think you're gonna need to raise another round. So benchmark 6 months, and I'd say maybe friends and family could go faster, probably would go faster.

Sure.

Yeah.

And how many nos do you typically see? Just along the same lines, right? People always underestimate how much time it will take. And honestly, that's what weeds out a lot of the people that don't get funding. Yeah. Right? They just, they don't understand the time required and they give up too quickly, right? If you understand what you're getting into ahead of time, you'll have a better chance of success or you'll choose an alternate route maybe, right? But yeah, like how many nos do you think you'll generally get within that 6-month period?

Yeah, so one of my investors said to me, you gotta— when I was talking to him about raising another round, he said, you gotta do 50 meetings. And I now have doubled that to 100. So In our program, we have this thing called the 100 meeting game where it's essentially, can you do 100 meetings? And I tell people, do 100 meetings and by the 100th meeting, your round will be closed.

Probably, yeah.

I haven't seen somebody get to 100 yet. When I raised this, when I raised the $3 million, I got to like 68, I think, or 66, something like that. And I got like 8 yeses. And like 58 nos.

Right.

And those are hard, like, and the first 20, I think, were nos.

Yep.

And those are hard psychologically to take and to believe that, it's hard for us to get told no 20 times and then go back for the 21st, the 22nd, the 23rd. So a lot of nos is the answer to that question. Somebody once said to me that fundraising is a matching game. Or a matching exercise. And I like that because it takes the pressure out of it. It's not personal, it's just you haven't found a match yet. If your pitch and everything is dialed and tight and you have a good opportunity, then you gotta find somebody who's a match. Again, it's like dating. If your hair looks great, you got a beautiful shirt on, you're respectful and confident, well, you still gotta find somebody that's a match for you. And that takes time.

But if you don't get out there, you never will.

If you get 3 nos and quit, then you're not gonna get it done.

You're assuring yourself failure.

Yeah.

So there's a lot of questions here and I know I almost don't wanna ask this question, but I will. You know, in terms of percentages, all right, do you wanna give people like just a general understanding? Like, okay, a, you know, an angel round, a seed round, you're generally speaking like, window of the types of percentages you're going to be giving up. Now, I'll also give that my own caveat. I think a lot of founders pay a little bit too much attention to those things, right? Especially in the earliest funding rounds. But yeah, what are your thoughts on that, Will?

My thoughts are in every round, I gave up between 10% and 30% of the company, and those are kind of like extremes on the bell curve. So the middle of that is like 20%. Maybe it's 25, maybe it's 17. In there somewhere is what I did and what I see normally. If you give up too much of the company, it puts the company in jeopardy because the founders eventually don't own enough of the company to motivate them to keep moving forward. If you give up too little of the company, then your investors are not going to see the return that they're after. It's a balancing act. But the rule of thumb that I see is like 20% in every round. And the weird thing about that is the more money you raise, the higher your valuation, which is counterintuitive.

Yeah, it's very counterintuitive because that's not a fixed percentage, right? That doesn't mean you can only raise 5 rounds, 20% per round, right? You create more shares and that's what is known as dilution. But so let's see here. How did you structure the friends and family around in the beginning?

We did a convertible note, and now there's the SAFE note that is pretty standard. Yeah. You know, one thing to watch out for with convertible notes is you don't want it to convert. You don't want it to become due where you have to to pay it back in cash. And I think in the early days of convertible notes, that was more common. And now it seems like with the SAFE note, generally, it doesn't come— you're never going to have to pay it back in cash. It'll just convert at a given valuation. And yeah, that's what I would recommend.

The SAFE note for everybody, it's the Simple Agreement for Future Equity by Y Combinator. You should take a look at that, but that's sort of become a standard for some of the first rounds of funding that people will raise, whether it's from friends and family or early angels or things like that. Marcelo and JC were both asking on the crowdfunding side. Now I know at that point, what was the platform you guys used? Was that one out of New York?

We used SeedInvest.

SeedInvest, yep.

And we set out to raise like $3 million or $3.5 million, and we ended up raising like $750,000. And I've seen that happen quite a bit. So my thoughts on equity crowdfunding are it's a very different— it's a different animal than raising from private investors.

Yeah, it's got—

it's more like a consumer marketing push that's going to determine whether you're successful or not. Like, you're going after retail investors to put in $100 or $1,000 or maybe $5,000. So if you're great at marketing and you have a list and you have an audience and you're really good at that, I think companies can succeed. If you don't have that yet, I think it can be hard just to get in front of enough people.

That makes sense. So even though structurally they're different, a lot of people will call like Kickstarter crowdfunding, but it's really like pre-sales kind of thing. But you see the same dynamic where it's more of a marketing mechanism with— because there's— what is there? There's Seedrs, SeedInvest. I mean, there's a lot of these.

Republic, WeFunder. I don't know if WeFunder does— I think they do. WeFunder does equity. There's a lot of equity crowdfunding now. Yeah, and I think it's great if you're— if you can get in front of people and get in front of enough people. But I would say it's different. Like, I probably wouldn't tell a founder to do them both, to do raise from investors and do WeFunder. I'd say like, pick one and do that. Because it's gonna take your full focus to do either.

Okay. So we got about a little less than 10 minutes left here. So I'm gonna do a last call for questions in the chat. I got a few more in here, but anybody else, last call, put it into the chat. And FYI, we are, everybody who's registered for this event will get a video. I believe it sends in exactly 48 hours. So you will get the video of this event. As well, but any last questions for Will, throw them in there and we'll try to get to them. All right. So let's see here. A bunch of people have been talking about like non-US opportunities, right? So I guess essentially raising money from investors that aren't, you know, in your geographic locale, right? Have you— is that something within your accelerator that you caution people against or how do you sort of deal with that dynamic?

I definitely don't caution people against it. I think that there's different cultures. That's kind of what I've been learning is it seems like in Europe, the rounds are a little bit smaller and the investors seem, tend to want more, like a bigger slice of the pie. It seems like in the Middle East, there's more a culture of people taking the entire round instead of having a party round that's got 50 investors. I've got, we have one company in our program right now that's raising from the Middle East, and he's telling me that the culture is different. So I would say just appreciate the differences in culture and work within them. And then I think the process is very similar anywhere you go. It's meet the right people, get them excited, keep them excited, ask them who they know, you know, bring together enough excitement and then the round will come together. Right.

And for a lot of these people that I'm seeing here, because a lot of it, it's kind of US-focused, right? It's like, I'm in Germany, can I raise funds in the US? You know, just on some of those cultural things, generally speaking, even between the US, there's pretty big cultural differences, right? So investors in New York are going to be much more what you would think a New York investor is going to be like. They're going to be very focused on your financials, right? Whereas investors in Silicon Valley are going to be very focused on like finding the next Uber, right?

They're like, I don't care about the financials. Like, don't show me what's happening now. Show me what's What's gonna happen in 10 years? Yeah.

Yeah. It's almost kind of funny. It's like, yeah, they don't— they're like, wait, you're charging your customers already? Why? Like, you should just grow, right? So even within the US, there's cultural differences, right? So I think, yeah. And when you go around the world, I mean, those things are gonna be even more and more different, right?

Yeah. And that brings it up another really important point, which is what's the company you wanna build as the founder?

Right.

I think that's so important for founders to get clear on that. Like, do you want to raise $1 million and never raise more money and just build a $10 or $20 million business? Or are you like moonshot or bust? We're going to be a billion-dollar unicorn or die trying. I think that's really important because different investors are going to want to invest in different types of plans and different trajectories, and not one is better than the other. What's best is going to be what feels the most aligned for, for you as the founder. So I think that is crucial.

Right. Okay. So a couple of last questions here. I mean, Joe Doyle was asking, you know, all the nos that you were getting, and we were saying before, you're going to get a lot of nos. Um, you know, do you think most of the time those nos are because it's not a a match, or do you think those nos are just because they think what you're doing is not going to work?

I think it's a smorgasbord of like, I analyzed my 58 nos when I raised that $3 million round and tried to make a graph of like, why? Yeah. And I found that graph to be mostly useless because it was just like all over the map. People are like, you're too early, which can mean anything. Like, you're too early can mean so many things. Can mean I don't believe you have the team put together yet. I don't think you have enough traction. I don't think you understand the market well enough. Like, that could mean so many different things. Yeah, I mean, it's like dating, like trying to analyze the nos. You just got to move past them.

And yeah, it might just not like, you know, your hair.

Yeah, they might remind them of their fourth grade teacher or something. Who knows?

And David had a similar question, was like, and this is diving a little bit deeper, right? So from the feedback from your investors, and he didn't say including the nos, but from anybody, you know, actually have you pivot or adjust what you were doing as a business, not just as fundraising, but just as a business in general?

Yeah, 100%. I think that's one of the great things about doing 100 meetings is you're gonna, you are gonna see patterns in the questions people ask. People are gonna point you to things you weren't aware of, like other companies in your space or adjacent, or other people that are writing or talking or thinking about your market. Like, you know, you'll get better. Every meeting you get better. You either get better at accepting a no and moving forward, or you get better at answering a question you never got asked before. It's like an annealing process of hardening and adjusting and making the business and the story and everything more more connected to reality. So yeah, 100%.

Okay. Ludovic's asking, fundraising, or at least what we've been talking about, seems to exclusively target quote unquote disruptive products, mostly high tech. You know, what about services? Now, I know that's pretty general, but, you know, like, do you take any kind of services companies into your accelerator, for example? And how would you recommend that some of those types of companies raise operating capital?

Yeah, well, services are a bit different because you can just start selling the service and making revenue. There's not like this thing with technology where you have to spend a whole bunch of money to make the technology and then you can sell it. So it is, it's like a different animal, I would say. I would say if there's a, technology component in there, like TaskRabbit, for example, is like, as a platform of service providers, or Uber is a platform for service providers. But if you're like a, a straight service company and you want to raise money, I might ask the question, why? And then if the answer is to build this technology, well then, okay, now you're a technology company, right? Yeah, what would you say? Like, what does FI say to that one?

I, yeah, no, I think it's, we're saying the same thing, but it's, you know, when in, from an investment realm, when people say services companies, what they're meaning is that if your company requires, if it doesn't scale, right, it might receive this label of being a services company. And what that means is like, let's say I'm running like a web development shop. That's not gonna scale because for every client I take in, I'm gonna hire, have to hire more people to build these websites, right? But if I build a product, AKA, you know, I don't know, like a Squarespace or something, right? That's something that can like scale, right? And that's generally what startup investors are gonna be interested in because with their math, they know that most of the companies that they invest in are probably gonna either fail outright or just not give them a financial return. Right. So they have to try to find something that has the ability to sort of 10x, 100x. Yep.

But then again, I would say if someone on the call is running a services company and wants to raise a little bit of money and like pay their investors back out of revenue over 5 years, I would say there's definitely new models where that makes that possible. And yeah, to not get fully discouraged or like they have to bend themselves into being a technology company if they really are a services company and they're building, you know, something slow and sustainable and growing.

Agreed. Agreed.

But tech investors aren't going to be interested. Yeah, like 100%.

Yeah, yeah, yeah. The tech investors, their math is, you know, if they— if they'll, uh, even an angel, it's like, you know, they have to invest in X number of companies. Um, it's probably somewhere around the realm of 10 to 20. For it to make financial sense because they know that a lot of them are just going to be a zero investment for them. And that doesn't mean, again, that doesn't mean those companies fail. Those companies may succeed, but as an investor for them, they're not going to get anything out of it. So they have to sort of bet on a lot of companies that can sort of achieve that venture-style growth.

Yeah, that's it. That's actually— there's an interesting point there is if you look at it from the point of view of an angel investor, they've got to invest in 10 or 20 or 100 companies a lot of these people, if they're sophisticated, are investing in a lot of companies. Their benchmark to invest in you is, do I believe this company could be a home run? Right? And not that you have to convince them you will be a home run, but do I believe this company could be a home run based on the demo and the story and the founder and the presentation and all that? So that's good for founders to realize is, You've got to feel aligned in yourself that you can be a home run, that your plan can produce a home run, and then you just go and tell that story and people start to get excited if you're talking to the right people.

Yep. Okay. So I'm going to do 2 more questions here. Sorry, I'm keeping you for an extra minute or 2, Will. Sure. But, um, so Patrick asked, you know, what about traction? Like before you are able to go, and you were talking before, right? Like you have to show some sort of validation when you're going to angel investors, right? When you're going beyond this friends and family round. Any guidelines that you would give there in turn? And I know this will vary depending on the type of business, but it's a common question we get. It's like, okay, I can't raise money until I have traction. Like, what does traction mean? At least the initial traction.

Yeah. So this is a great question. And I think it, it comes down to storytelling. So What kind of traction would be sufficient for you if you were an angel investor and you were going to invest in your company? Like, what would you want to see? It could be something as simple as like 100 customer surveys, or it could be like your first 1,000 downloads, or your first 1,000 users. Or I think what Airbnb did is they went door-to-door in Chicago and signed up people to be hosts and then got their friends to fly into Chicago and stay at the Host or something like that. You know, that it didn't scale, but that was enough traction for them to show, hey, look, we've got this, this is working. Now we need to build the tech. So I think founders can get creative and figure out, like, what's the cheapest, fastest, quickest way for you to de-risk your business? Do that and then call that traction. And then you can probably go and tell that story to people and and hopefully be successful in getting more money to de-risk it further.

And in some cases, it could even be like hiring, right? Like, if you have some badass people to join your team, um, like, that's a form of— that's de-risking investment and form the investor, right? Because the investor would be like, oh wow, this person thinks there's something here, and then I got to dig a little deeper, right? Yeah. Because in some cases, you may not be able to release the product right away. Whether maybe it's hardware or biotech or something, right? But yeah, I think it's just— I like that thought. It's just like, if you were the investor and you were looking at this objectively, what— how would you look at it as being less risk, right?

Like, before I give you money, go away and do X, and then like, what would that be? And go do that. I like the team one. That's a great one.

Yeah.

Yeah.

All right, so final question here, and this is what we always, we always ask at the end, you know, any, any final final imparting thoughts that you want to give to people on the line? Obviously, a lot of these people are, you know, probably in the earlier stage trying to get that first angel round of funding, and, you know, COVID's thrown a little bit of a wrench into everybody's lives in some way, shape, or form. You know, any imparting thoughts you want to give to anybody as we sign off?

Yeah, I think my parting thought is that this is, at least for me, and I think for a lot of people, has been a giant wake-up call, this pandemic, and showing us how fragile our society is in a lot of ways, and how we need to shift a lot of things. And one of the major forces that's gonna shift those things and create a more sustainable future is entrepreneurship and business. And I'm sure that there's lots of people on this call that that are building something that's part of this new, more sustainable or slower future, whatever, however you understand this shift. And so I would say, you know, we need you and your company and your energy and what you're building and that you're part of the solution and part of the future and to, to keep at it. And if you keep at it, you know, you will be successful.

I wholeheartedly agree. And that slide you said in the beginning, like like the defining companies of this upcoming decade are either being formed or gaining their initial traction, like right now or in the next year. Right. And the same thing happened for the 2010s. Right. And I loved the Winston Churchill one. And I've read like Winston Churchill's book and stuff. And I missed that quote that you had. What was it? Never let a good crisis go to waste. That's amazing. Yeah. All right. Well, thank you so much, Will. For everybody on the line, thanks for joining. Learn more about Will. His name is Will Sachs, S-A-C-K-S, and also foundersgetfunded.com. It's a great program and we've had some of our companies go through as well. And as Will said, I mean, he's raised about every kind of round you can think of and he knows how to do it. So thank you again, Will. Thank everyone for joining, and have a good afternoon or evening wherever you're signing in from.

Yeah, thanks, Jonathan.