S2E23: The Diligence Mirror: Truth, Data, and Post-Acquisition Reality with Dr. Denise Bronner.

You don't want your data room to be in complete opposition of what you've been presenting as a company, because that's where I hear a lot of things falling apart. It's when they get into that data room and they're like, this doesn't match. You're presenting one thing, but I'm seeing something completely different. And that's where I think that with due diligence, it's really digging into that risk. But your due diligence can come up in a couple of different times, not just with fundraising, but if you're going into mergers and acquisitions, you know, there's going to be a different rationale for why they're going into your data room and what they're going to be looking for. So you really want to keep that in mind on what's going to be in there, but keeping that relatively up to date is the most important thing.

Welcome to Startups Decoded, the show that gets real about what it takes to build a successful startup. I'm Andy Walsh, 2x exited founder, strategist, and your host. Each week I talk with top founders, investors, and operators to unpack the plays that drive real traction, not just headlines. If If you're building something bold, this is where you'll get the honest insights to scale with clarity and confidence. Let's keep growing together. Hit subscribe and share with your community. It would mean the world to me. Morrison Foster is the legal edge behind the world's boldest innovators. They go by Mofo and are the team behind Startups Decoded. For decades, Mofo has helped startups turn complexity into freedom. Learn more at mofo.com. Hello and welcome back to Startups Decoded. My name is Andy Walsh. In the life of a founder, you go through lots of stages, and in life, period, you go through lots of stages. And today we're looking at the evolution of a career, but also how that plays into the startup journey. And joining me, I've got Dr. Denise Bronner. Welcome, Denise.

Hello. Hello.

Welcome. Can I call you Dr. Denise all the way through, or is that going to get a little bit— All the way.

You can always call, you can even call me Dr. D-Nice, whatever you want.

Okay. Dr. D. I had a lady called Cheryl Kellan from Play Money, shout out. She's a legend. And I call her Shezza for, with the Australian piece. And she made me say it all the way through, which I love.

I love that. I love that.

Dr. Denise, welcome. It's been a long time coming. I love that we've got to do this. I love what you're doing. You've had quite an interesting journey in your career that when went down one path deeply and then jumped from one straight into another, but I think the context makes a lot of sense once you get to know your stories. Basically for you, scientist working in Big Pharma to be an investor advisor, that's quite the path. Can you fill in some blanks for us a little bit as far as one, I'd love to know what you're a doctor of and two, then how that started into pharma for you.

Oh man, I'll tell you, when I was about the age of 14 or 15, um, I had a science class and my teacher was talking about bacteria and viruses. And to me, it just blew my mind that you could have something that was microscopic that you couldn't see that actually could take down a human. And I was like, this, this is insane. Like, what is this? So I started doing this deep dive and that's when I knew I wanted to get my PhD in microbiology and immunology. So of course, did my PhD at the University of Michigan, cuz I am a Midwest girl. And I thoroughly enjoyed investigating cell stress pathways and how they impact immune responses. But, you know, during the time of grad school, you start to learn a little bit about what does it actually mean? Like what type of career you can have. And I didn't really wanna become a professor cuz I didn't wanna be limited to the lab. I wanted to have greater impact beyond just my students, my postdocs, but they don't really tell you about the careers that you could have outside of the ivory tower. So, and if you pursue anything outside of it, it's kind of seen as going to the dark side. And I was like, well, I like Sith Lords, so okay, that's fine. But I went on ahead and still did an academic postdoc because I was unsure. And I'm glad I did. I did my academic postdoc at University of California Davis, and I worked within a huge salmonella lab and really started to understand the dynamic of the microbiome in regards to different types of pathogens within the gut. And I did a business development fellowship. And that's what really opened my mind to the world of business. And I was very taken aback by the fact that you had huge strategic business decisions in science being made by people who had an MBA and not from people who actually had a science background. And I thought, wouldn't it be nice to be able to marry these two together? And that's what propelled me to go into consulting where I work with pharma. I had a chance to work with them on top pharma companies on their feasibility program. So how do you choose the right sites, the right countries? How are you designing your protocols to be more effective with recruitment? And during that time, in a up being headhunted by one of my clients, J&J. Stayed at J&J for 4 years, but again, wanted to have more impact on the industry and not just at one company. So I bounced out, started my own consulting agency, Impactful Ventures, where I've been able to work with startups, investors, and other organizations and universities to really think about health equity as a whole.

It makes sense to me, and that's why I wanted you to tell it because you're going to do a much better job than my recall. When we met the first time. And there's something though that I want to raise. I had just did a really interesting episode with a gentleman called Casey Wu. He's based out of San Fran, has a membership group called the Operators Guild, and operators are textbook generalists. They have finance skills, operating skills, marketing skills, and they're becoming the new superhero of sorts when it comes to startups because right now you can do a lot of things automated. And the topic that we talked about was how do you end up being that person that can help with many things? And to be a scientist and be at the frontline of, let's call it, petri dishes, microscopes, all the things. I'm making myself sound like a fool, but I'm happy to go down that path. But if you think about that and what you learn and then how it applies to human population, you have to be human first and scientist second because you're dealing with things that have a large impact and Obviously the pandemic in 2020 taught us a whole bunch of things and people overnight almost became experts on all sorts of things I never would've thought about before, like drug approval process and how long that takes and testing.

And clinical trials, yes.

Yeah, it's a lot. But to then, for me, it's a natural progression to then connect the dots and sit alongside someone who's got business skills and thinking about how do you turn on what is research and results into a product? How does that roll out? What's the impact on society? And to do that, but be able to do it in a pragmatic way where you can understand both sides of what's happening. And the name, I want to go into that. If you didn't catch it, it was EMPACT with an E. Yeah. Tell us a little bit about the— I'm reading into that empathy and impact. Is that the origin of the name?

It is. And I thought about the fact of when you think about business, a lot of times it's very, it's kind of portrayed as a very cold process, right? Where you're looking at just numbers, you're looking at projections. But I think there's a piece, that human element, that I see missing a lot in business because, you know, you have people who are creating companies to address a gap, right? And these gaps are impacting human lives. And so how can you not think about business without thinking about the human element? It's just like with science. I mean, when you think about clinical trials, yes, you start them off in a preclinical stage with Petri dishes and cells, but then they transition into animal studies and then into humans. And so all of this is trying to find a way to think about risk and safety and dosing for humans. Same thing with business. You know, when you're thinking about investments into a company, when you think about setting up the right infrastructure, you're thinking about the humans that are involved, not only the end users, but the people who are building the business, who are working at these businesses. You have to think about them as well. So I wanted to keep that empathy piece, but demonstrate that even if you're being driven by passion, that you still can have impact financially on society as well. These passion projects are nice to have, but they can still be very profitable in the end as well.

It's an interesting take on data storytelling. Like, data can be cut up in different ways to tell different kinds of stories. And, and from a clinical trial perspective, it's all around FDA approval, which I don't want to unpack too much because that's a spicy topic in itself as far as money flowing in different directions and approvals and Yeah. What clinical trials you present to get things approved versus all the information that you have. But let's, let's park that one for today. It's not the focus, but if you go the other way though, and you think about what that data tells you from impacting humans and having an empathetic approach to how you test, who's been tested, how that rolls out as well. I love that as a name from Impactful Ventures. So in that day-to-day, when you first started doing consulting, how did you start off? As far as the type of projects you were doing and the type of work that you're doing?

Yeah, I, so my last job I had at J&J, I was a director for DEI and clinical trials. And this was the main role was thinking about how do you increase representation in clinical trials? And I was a part of the immunology portfolio. So, everything from inflammatory bowel disease, rheumatology, dermatology, and maternal health. And many thought that that would be the only thing that I would kind of focus on is health equity, but I wanted to kind of pull health equity up to a larger story, to a larger umbrella, so to speak, and say, when we're thinking about health equity, we need to think about it from a business perspective of how are we translating this to business imperatives? So yes, it is important from a scientific perspective to enrich your data to be more representative of the general population. And yes, we do need to think about the fact that these are going to be individuals taking your therapies on the other end and marketing to them to show that it works. But I also think, too, that market side, that these are individuals that can actually expand your market share. That's the part for me that I really want to focus on. Because a lot of times, we think about health equity, it's always focused on from a scarcity mindset of, oh, we're missing these types of people being represented. It's a moral objective. It's not a, hey, we could actually capture more of the market for these individuals who are more prone to this type of disease or condition. And so when I took on certain projects, I really wanted to help help people or founders that were in the health equity space to think and change that narrative on how they're positioning themselves with investors, with potential clients, but even their end users or customers who may be patients to say, you guys are directly impacting strategic business decisions within this industry. So I've worked with a number of different clients from startups to investors with also working with universities to think about how they're utilizing data in their academic centers, medical centers, and even just thinking of working with them to encourage or impart knowledge onto the next generation of individuals who are looking for careers. So I've had many different types of organizations that I've worked with, from very small to very large multi-billion-dollar companies, and it's been great having that type of flexibility. To date, I've had 16 clients, which has been phenomenal.

Such a fascinating way to look at the world and the data storytelling element. And I rewind a few years now, I'm not going to tell you how long, for me at university, but I did a lot of research and in the sports science base and even just the flow of a report. And you've been published from an academic perspective. I never had that sort of impact, but I remember the process so well as far as thinking about hypothesis, what you're testing, your protocol, right through to how you actually test and report into then writing up abstracts, everything all the way through the results and conclusions, level of significance. And that's quite a, I guess, a unique approach to storytelling because it has to be well-rounded, right? You have to think about the human story. Telling, the data storytelling. So from a founder perspective in the health space particularly, or, or something even adjacent that has a lot of data and a lot of information that you're trying to distill down.

Yeah.

If you're pushing that out to market, there's different people that need to understand that story in different lenses, right? You have an investor that's looking around scale, growth, market share. They have one view. You have a customer that wants to feel like they're being treated like a human and that they can trust you. Strategic partners who may join you. You have staff members that are looking at purpose and wanting to understand who you are, how you operate. Yeah. So it spreads across all of those. Let's start with the investor lens. You touched on it there a little bit. If you're coming from a medical background, it's an easy example to start on, and you've, you've created something, you have research, and you're trying to find a way to articulate. What process would you run through with someone who's a founder? Who's completely green when it comes to storytelling what they're doing. Investment is hard enough as it is. I assume translating data from a medical perspective would be even harder again.

Yeah, I think the biggest thing, and I tell a lot of founders this, is that a lot of times you see them put together these very long decks and it's like, you need to be short and sweet. And I think most people have this perception about scientists, and I experienced this when I was going into consulting, that scientists just aren't able to be concise and that they have terrible, you know, public speaking skills. And I think that that's kind of the thing that you're always kind of battling against if you have an advanced degree. It's like, well, okay, well, are you going to be able to sell the story? And charisma plays a big part. So, I always tell teams, founding teams, you know, who— let's practice through and see who's the best speaker because each person's going to play a role. And a lot of times, you know, it could be a different person on the team who really just knows how to tell that story in a way that can capture people. But investors, you know, of course, you know, if they're investing in this space and they have a decent portfolio of companies that they've previously invested in, they kind of understand the story already. So if they're, you know, investing in clinical trial enablement, you know, they already understand that, you know, trial operations, it's a terrible, it's hard to do. It's very fragmented. You know, we understand that patients don't trust, we know all these things. So really what you need to get into is how are you addressing addressing that problem quickly, right? And you can set the stage up really nicely, but get into how are you doing it and what makes you unique. And investors, you know, depending on where you're at, are going to be looking at, have you done your customer discovery if you're doing early-on investments? And if you're a little bit later on in later stages, you know, it's going to be looking at, you know, what is your trajectory? How consistent has your pipeline been? You know, are we seeing an ability to kind of expand or scale your, your market, or are you kind of in this one, one bucket? And so I think it's really coming down to that story of are you hitting the things that they're interested in, of, you know, proof of concept, you know, are you able to show that there's customers who are biting and ready? Are you able to show that there's a pipeline that still has continuous flow and it's not drying up? And are you thinking of ways to continue to be innovative? Because there's always going to be someone else coming up. And so how defensible is your— is your product or service? And so those are things I really try to tell them to focus on because that's what's going to get them to say, okay, I can see, I'm putting a bet on your trajectory. And I think that I, you know, and I believe in a team because they really do understand the story.

So fascinating. And I go even further as well into that. And if you are teaching a founder to think about their outreach and their story and who they're talking to, what you summarize is a very elegant way to do it. The next step then is to understand also who you're talking to. The person that you're talking to, like you're very unique in that you have the academic and science background, but also the business background. So you can translate both. And, and for me, looking at you, that seems to be your superpower is to be able to, to spread your brain equally in both and be able to add value. So understanding the person that you're pitching to. Is critical. Do they come from a medical background like you? Are they a pure VC that has only done investment and has no medical background, but they've learned enough in their time in their career to know the, the key green flags and red flags, so to speak, of that category of business, what's involved, and the things that they have to have as a checkbox. Do you have a way of working with founders to understand who they're talking to, to adapt and curate that narrative?

Oh yeah, I would definitely say social media has made it extremely easy for you to do, you know, searches on people. And a lot of VCs will actually demonstrate or show what their portfolio companies are like, who have they invested in? Because I also tell, I tell all founders, just like they're doing due diligence on you, you need to be doing due diligence on them. So like you said, you need to understand what is their background, who have they previously invested in, you know, are you something that's completely outside the box for them? Because if it, if you are, you're wasting your time as well as theirs, unless they've actually put out specifically like, hey, we're moving into a new area. But I think the other thing too is, is just really reading up on, you know, who they are, what's their, their thesis, who the person is behind that thesis. But then also saying, if you had the ability, and I've had a few founders actually reach out to other founders who have had investments from certain VCs and said, how is it? Because even though on paper they may understand it, they, you know, invest in your space, how are they as an investor? And that's a lot of things I think Just like VCs talk about founders, founders talk about investors and VCs as well and chatter on who is actually a good investor. Are they pushy? Are they hands-off? You know, do they actually really understand what you're trying to get into? Are they help— are they pushing you to scale faster than what you're ready for? So these are the type of things I tell all founders to really pay attention to because it's not just a, a, here, here's a check. This is an individual who might end up getting a board seat or a board observer seat, right? They're gonna be, you know, heavily invested in what you're trying to do. Some Some investors are more hands-off than others, but you need to do that type of due diligence and to understand, one, am I talking to the right person? Do they understand? And if I want this person to come on board, how are they going to be able to be integrated into my ways of working? So it's even beyond just to check what value are they adding. And I tell founders all the time, pay attention to that.

Effectiveness is king. And I had a great chat with Katie Dunn, who's an angel investor, and she ran through her process. Of the most basic things that are so easy to find. She talks publicly, it's all on her website, but the amount of founders that still come to her and have not even looked at the most simple things that they need to do. And if I equate it in my model is to a go-to-market program where to be effective in driving sales in a business, you need to understand the person that you're talking to, how they spend their time and get context accurate. And if you're doing 100 people but only 10 are relevant, you've got 90 people there that you didn't even need to talk to. And a little bit of research ahead of time will allow you to be more effective and have a higher conversion rate. It's just simple math and people overcomplicate it and have this urgency to do so much work to get it out there when they actually don't need to. It's like this desperation and there's almost a norm that exists out there that is so far off the mark.

Yeah. I mean, time is money when you think about it, right? Like it is when you are a founder, you know, you're running a business, you know, you have your day-to-day operations that you have to do. And when you go into fundraising mode, you know, that's, that's a whole nother job in itself. So you want to maximize your time and not just like a number and volume, but it's like, how effective are you being with who you're meeting with? Because every time you meet, You know, yes, you may have a deck and you, you will have to tailor it a little bit depending on who you're talking to. So that's time, right? And as time goes on and a, and a business is continuing to grow, you're gonna have to update the slides with newer numbers. And so you wanna be very, very particular and also just be very effective in who you're communicating with, who you're reaching out to, who are you pitching to? Because that's a lot of time. And the more time that you spend on having to raise, there's less time that you're focusing on actual business. right? So depending on who your team is, yeah, they could probably run it, but you as a CEO or the C-suite, you're going to have to still lean in and make, you know, some decisions. So you want to try and be as protective of your time as possible and really be diligent on who you're going to be, you know, pitching to.

It's common sense, but the chaos that surrounds it, it's like, come on, people, just pause and reflect for a moment of how you can do this more effectively. And that journey, best case, unless you're completely blowing up and everyone knows about it, like 3 months would be as fast as you could do it. Yeah. It's more likely for people to run 12 to 18 months in a fundraising cycle to be able to close out. And in this market particularly, and the thing that people forget as well, and I want to have a look at data rooms and just understanding your business, is in that time of your business, that information changes on a daily basis.

Yeah.

And being able to keep that up to date is also another job. So when you're looking at a data room, like any structure or any advice you have around how you keep things up to date as well to make sure that you're buttoned up because you can get someone on the hook. They may be interested. They get into your data room, but it could be 3 months out of date and you're missing something there that could close them and they disappear. And more often than not, they won't even tell you why. It'll just be, it'll be a ghost. Or it'll be, uh, I'm not interested. And that's as far as it goes. So you don't have any feedback. So how do you stay out in front with that situation? If you're building the future, you deserve a legal partner built for it. Morrison Foster, the legal edge behind the world's boldest innovators. They go by Mofo and are the team behind Startups Decoded. For decades, Mofo has helped startups to turn complexity into freedom. They combine deep market insight, tailored legal strategy, and a Mofo passion. Discover how Mofo can support you. mofo.com.

I mean, honestly, you have to stay ready, like always, right? Because you never know when opportunities would come up. And I've seen a lot of founders who will only create and kind of update their data room when they're like fundraising, right? And it's like, well, why? Why would you do that? Like, let's say your last raise, if you're lucky, was 12 to 18 months ago. There's a lot of things that have changed since then, right? Like your branding probably has changed. Your, you know, what your scope is, your focus has changed. You know, you might have— a lot has changed. You know, team dynamics have changed. So always stay ready. And I think having it where it's not just on one person, but saying there's different owners for different things. Helps with that, right? And you're putting that ownership on these individuals, these leads to take care of that, right? So if you think about your product lead, you know, or your head of product, you know, they should be the ones that should be able to very quickly and update, you know, if you've had user insights or user profiles, what does that look like? What is your product roadmap? Because that's constantly changing as well. You know, what are some of the risks that are involved with the product, right? Or if you think about your finance person, you know, are they updating those trajectories and what's your burn rate, your forecast, you know, what's your runway You know, things along those lines, like keeping that up to date. You know, I think it's the most important piece, you know, whether you're doing it, you know, on a quarterly basis or on a monthly basis. But when you're having these major things happening, you should be checking in and saying, okay, if we, you know, had someone go into our data room today, what's missing, right? Because IP could be changing. Maybe you've got new patents, maybe submitted new patents. So you need to kind of keep that up to date, not wait to the time where you're like, okay, we're about to fundraise because then it's just a mad dash and that's how things can get missed. Right? Because you're like rushing to try and put this together. And then when they start to dig in there, they're like, well, this is missing, or this doesn't make any sense because you didn't update it, right? So I think that's the part there. You don't want your data room to be in complete opposition of what you've been presenting as a company, because that's where I hear a lot of things kind of falling apart is when they get into that data room, they're like, this doesn't match. You're, you're presenting one thing, but I'm seeing something completely different. And that's where I think that what due diligence is, is really digging into that risk. But your, your due diligence can come up in a couple of different times, not just with fundraising, but if you're going into mergers and acquisitions, you know, there's going to be a different rationale for why they're going into your data room and what they're going to be looking for. So you really want to keep that in mind on what's going to be in there. But keeping it relatively up to date, I think, is the most important thing.

Yeah. And it's amazing how people can forget just the tiniest details and how, how things change and and now there's been a real shift towards Notion depending on what stage you're at, because in Notion you can have APIs from third parties that plug in your most recent data. And if, if you're drawing from the same source and populating everything off that central source, it's much easier to be relevant and up to date. And you just have a simple checklist of what are the numbers that we're reporting? Is this up to date? What date was it updated on? And you can even nominate the date. And if you do it monthly, an investor's not gonna be mad at you if the numbers don't line up because it's got a date on it that may shift a little bit with numbers as well. But it's, it's being a step ahead of what you're doing. So think about your tech stack, think about what numbers you're reporting, and find a way to keep that up to date. Because one, as a founder, you need to know those big numbers anyway. And if there's any variation in that, but two, it just makes that DD process so much easier.

It does. And I think the biggest thing too is when you think about the purpose of due diligence, it's like I said, there's, there's multiple moments, but most people will think about it during the time when you're raising capital, you know, and that's going to be a little bit different, right? Like that's where investors, when they're going into that data room, they're starting to do, you know, they're thinking about underwriting potential. So when you think about what's the upside of this, you know, what's your growth, what's your momentum, you know, Can the company actually become bigger than what it is today? And they're thinking more of your forward state. When you think about due diligence during an M&A, that's a little bit different because that's more certainty-focused, not the potential. It's going to be, you know, we're thinking about integrating this. So can it integrate into our systems? Are we going to find any surprises that might cause problems for us down the road? Because once we take this on, that's on us now, right? It is not a separate entity. This is something that's going to be impacting our brand, our customer base, our business. So it's a very different view on what they're looking at for due diligence. So they're going to be looking at, yes, your current portfolio, your current pipeline, but then what's its ability to be sustainable beyond? Because once you're out of it, because of course there's a transition period, right? But once you're gone, are they able to really continue to push that arm of business that they've integrated or acquired? And so I always tell people, when you're thinking about who is going into your data room, what is their purpose and function of the due diligence? right? Yes, you may have similar sets of data that's going in there, but they're going to be asking different sets of questions and you might have to have different things added in that data room for that.

Stage specifics are critical and you could be pre-product, pre-revenue and fundraising, but there's data you can have there as well as far as the segment, competitors, market size, ICP, all the things that you have to help quantify and validate what you're doing and, and qualification lives in that as well. But the story at that part is quite often focused on the founder and who you are. And being buttoned up is so important because you need to present yourself as someone that they get inspired by and want to invest in. Then as you go further through, you have more data. It's easy to quantify, but that journey closing, if you do get acquired, M&A, D&D, I mean, sorry, DD, not D&D. We're not playing Dungeons and Dragons. I don't know. I'm not sure where I've never played the game. I'm not sure where that came from, but, but let's call it DD. We'll stick with the lingo. But I, as far as that process too, is that they are looking at things in the sense of how they integrate into your business, which you touched on there. It could be as simple as what accounting software you're using to where your CRM system lives, what rights you have over that data, what you can push out to people and quite often they acquire your business sometimes not to make money, but because you're sitting on IP or an asset and it, it could be something that's a patent. It could be a database of all the right people they need to be able to market to and allow themselves to scale. Correct. So you just, you just don't know what they're actually seeking in that process.

Exactly. And usually you can tell by some of the questions that they're asking and who they bring in to, to have those questions. But I think the biggest thing is for them, they're looking at You know, if we're, if we're going to integrate this, you know, how likely is this going to help us? Right. Like you said, expanding our customer or market share, right? Is it adding something that we had a major gap? And if we had this filled, it would be great for our business. And I think that's a part of it is, you know, a lot of times companies are, you know, founders are looking at this as, well, what leverage do I have? And it's like if you do your, your, you know, research on this company, you could probably figure out how you being integrated into their stack is going to be very valuable, right? And when you think about how you're presenting yourself in your data room and you're showing, hey, here's the value that we can add, I mean, that, that speaks volumes. But a lot of times people think you need to be flawless, and it's good to have a clean data room. Don't have it be messy. But I do think it's going to be, do you understand the risks that are involved, right? Are there things that they need to be made aware of, right? Because they don't, they don't like surprises. And if you're supporting them with stuff, that, that can have a deal fall apart very, very quickly. And so I tell them, you know, during this time, founders, you know, being transparent is important, right? Because this, this is going to be the part where you're helping them to understand, I see where we may have our gaps, right? But this is where your company would fill it in because you're more established, right? And these are things that if we just overlay, this would be an easier integration, right? But you're talking about, you're not hiding it, you're not trying to hide the areas of risk. And I think that's the part there where they're interested. They know that risks are involved, but they need to understand how big is that risk and is it something that's going to be causing them financial or reputational type of, you know, impact down the road. So I always say, don't hide in diligence. You need to be transparent. And I've seen some founders and you're like, why? Why would you go in there with— like, it's just interesting to see what people do. And I think even with more seasoned founders, right, you can still see that happening as well. So it's just more of, you know, you need to be marking— You need to make sure that what you're presenting matches. And if it doesn't, why is that?

100%. And statistically, the average at the moment is about 4 months, DeeDee. And if you think about that timeframe of what happens to that point and how much effort you have to put in, and if you got to the 11th hour and you didn't show something that is critical to that and the deal collapses, if you just burnt not only an acquisition, but 4 months of your time, which is a lot of heavy lifting. It's It feels counterintuitive, but you need to be able to open the closet and let them see all the outfits.

Yeah. You know what's also interesting too that I've seen is even when founders are going through due diligence, because like, you know, of course there's interests, right? We're moving towards, you know, kind of, you know, sealing the deal. I've seen sometimes teams just kind of take the, you know, take their foot off the gas and they're like, oh, we're getting acquired, you know, or we're getting, you know, we're getting it. And it's like you start letting up. Up, right? And things start to impact revenue, right? You start to see things kind of fall through the cracks, and investors are looking at that, acquirers are looking at that, and that can really change the terms, right, of your deal. So I say, yes, it is a pain, and yes, these are two full-time jobs that you guys are doing, but you cannot let off because that is a signal, right, that this is a mature company— not in a sense of age, but the fact of how you are thinking, that you guys are mature, that you're disciplined, that you are trying to still mitigate risk even with this potential of you having some type of financial gain, that leadership is really paying attention and saying, for the whole picture, we still want to see this move forward. That's the part that I don't think we talk about enough, is that there's this idea that, oh, well, I've got this deal, you know, I got this term sheet, but it's like, there's a lot of things until everything gets signed and sealed, you still have the opportunity for that to change. And you need to make sure that you're continuing to push those signals that got them interested in the Absolutely.

And if you're not continuing the same trajectory that you had when they first looked at you, then it's going to be red flags in that you have checked out and it's tough. And if a good way to think about it and to do some research is to look at a company prepping for IPO.

Yeah.

You can, you can look at all the trends of the things that they do from being really focused on cost cutting, not approving new initiatives. They're looking at ways to stabilize their business because they know that any variance in that time is going to spook people in a way that has such a huge impact. And if you're going to IPO stage, you've got a lot of people around the table with vested interest in that from a return on investment from your first angel check through to a Series C, Series D investor. And their expectation is high. So you're gonna have those stakeholders holding you to account. So I encourage any founder to research some of the things that large corporations do prepping for IPO and take some principles from that and how you think about growing what you're doing, but be ready for 4 months of heavy lifting to grow and go through the DD process.

It's an ex— that's what I said. It's a whole nother job, right? Like it's a whole nother thing that you're taking on. And I think this is why by the end, besides the, the horror stories that we've heard of founders, you know, selling their business for a large amount and not walking away with anything, it's It's also just the emotional and mental toll that it takes on founders, right? Like, this is— because you're thinking not only of yourself, but let's say you've had people who have been with you from the beginning, right? Your founding team or your day one employee that you hired, right? Like, these are people who have believed in you, who are still with you, and you're thinking about them of like, what is the best deal that I can get where we all walk away in a much better financial position than when we started? You know, when you think about, like you said, the investors, there were angel investors, family, friends, you know, angel investors that, and who believed in you and gave you your, you know, their, their check. And you want something for them as well. And that can be a heavy toll on a founder. And it's very lonely in that space as a founder, right? People think it's glamorous. You know, you're making these executive decisions, but it's very lonely because you see everything that's happening with the business, the good, the bad, the ugly. You're engaging with people trying to demonstrate why this business is important. You also have the weight of your supporters on your shoulders because you want something for them. And so you end up sacrificing pieces of yourself. And as a leader, you have to be seen as this all-imposing sage, I am unbreakable type of person, and you can't really show the emotional piece of it, right? You have to have that separation between you and your team because you are the final executioner, right? So it's very hard on founders. And I think this is why talking to other founders who are a couple steps ahead of you is very important, or finding that investor who you have had a great relationship with with to kind of get that other perspective so that they can— because they've seen it, they've invested, they've acquired, and they can give you pointers. And I think that's something that doesn't really get talked about a lot, is that, that empathy side, that, that humanity side, um, how lonely it can be for founders. And it's, it's not an easy thing to do, but you push through. And I think that that's something in itself should be recognized. But I think also more and more founders need to share those pieces, the ugly side of it, the hard side of it so that more people can understand what they're getting into.

Absolutely. And they also go into the next phase, which is typically a lock-in. And it's not the focus of today, but just from a mental standpoint, you could be CEO and founder of a company one day, next day go in as VP of sales, reporting into somebody else, and all of a sudden working as part of someone else's mission and vision and operating process. Culture could shift. Shift. There's a lot of change that happens. And if that's 2 years, 3 years, which is typical in a lock-in to earn out 100% of what you're going to get paid because they're buying obviously your company, but they're also buying the IP of your brain and you as a leader and founder as well. So being prepared for that shift to come out of those 4 months, get money in the bank, but then changing gears and being open and pragmatic about that journey, which for a lot of people is humbling, would be polite way to say it, but I think it squashes a lot of egos very quickly.

Very. And I, and I think that that's something else too. When you think about even when you're going through like acquisitions or you're fundraising, sometimes founders have to ego. When you think about ego, it's going to be sometimes you have to delegate or allow other people to run certain things where you're focusing on this, right? And that alone can also be a little scary for founders. It's, well, I know how to do it. It's like, yeah. Yes, but you can't do everything, right? And like you said, that shift afterwards, you know, when you have that transition period where if you were merged in or acquired by the company, there is that transition period when you're getting things integrated. They're going to pull you and maybe a couple other people in. And like you said, you're now, you're reporting to someone. I haven't had to do that for 5 years, 7 years. I don't, I don't, I have a boss now. And I mean, technically you still had a boss, the board, but it's not in this type of sense, right? So I think that's something else to think about as well is you know, is there a way for you to transition out where you're not having to go as the founder, the CEO, but could your C-suite be the ones that continue on? And I mean, there's many different ways I've seen deals kind of play out, but it just depends, right? But that, that is another shift that they don't really talk about. How do you deal with that piece?

Be ready for that, founders. Absolutely. The, the other trend that we're seeing come to life now is a highly, highly fragmented market where you have one business doing one thing using AI, and then you'll see the headline of Perplexity, ChatGPT, you know, name the AI model that releases a feature and kills 1,000 businesses in one day. And like, that's on repeat right now. But what's also happening is that I look at someone like Stripe, who's become a huge global leader on the finance tech side. And then you compare it to someone like Chase, and Chase have got such power because of the capital that they sit on, but innovation is not part of their culture like Stripe does. So what happens is that Stripe either catch up and then go into full banking, which is a minefield in itself, or they retain where they are, or someone like Chase then in this timeline builds something else or acquires a smaller competitor and does the same thing and rolls it in. So 2026, I forecast that are going to see a lot of M&A activity in a fragmented market where large corporations are playing catch-up through acquisition.

Yeah.

Or they just fall away because it's impossible to sustain such a fragmented market when there's so many competitors and lookalike businesses as well. So I think to be prepared for a shorter time to acquisition or a merger in that case is something to be prepared for. And that operational process that happens is such a big job, and people are so busy building and scaling that they come into that completely underbaked.

Yeah, I mean, last year was tough, right? Like, across the board, there wasn't a lot of investments, right? Like, there were some, but it wasn't like how it was in previous years, right? And even in my space of pharma and clinical trials, I mean, we saw some pretty decent acquisitions, but not like how we've seen in previous And there were a lot of companies that were struggling, right? Because it was just, everybody was very tight with their pocketbooks last year. And so you're now going to see, you know, when you think about these acquisitions that are gonna happen this year, a lot of times you're probably gonna see them at a discount because a lot of those companies were struggling last year, right? So the value that they had going into 2025 may be much lower. So you're gonna see some pretty decent deals happening, but it's really gonna be on the side of, you know, whoever's acquiring that, hey, you know, we might be able to get in and clean this up pretty quickly and actually come in at a nice deal. For the ones who survived last year, I think they will have a higher buying power, you know, you know, buying point because of the fact that you were able to survive. And if you were still able to get contracts, if you were still able to, you know, secure new strategic partnerships, you survived in a very volatile period. And so I think in many cases across many different industries where it's fragmented, you're going to see this consolidation event happening. But it's going to be very interesting to see, you know, who's going to be getting acquired and where. And AI and the technology that we're seeing, it's allowing for more to pop up. But it's, it's, I think it's one of those where even if you are being viewed as an acquirer, you know, or being acquired, you too can be an acquirer of some of these smaller guys, right? To kind of say, okay, I'm creating a larger piece here. So it's kind of like those, those those games that you see on mobile where like you're a hole and you're going around trying to eat everything that's on the screen. It's like, that's what it feels like is happening. It's like smaller holes are trying to stay away, but you know, there's always a bigger hole that's there trying to eat you. And I think that's what we're going to see next year is this kind of like Pac-Man effect of things eating something else. But I do agree with you, I do think that this is going to be a year where you start to see more of an upswing in, in acquisitions. But some of these may be not full acquisitions, but more like asset acquisitions that we're probably going to see because companies were struggling last Absolutely.

And I'm doing some work at the moment and we are looking at an acquisition model based upon a long history of data and numbers as far as revenue, profitability, et cetera, to look at if we were to buy a company for $1 million, how long would it take to make that $1 million back? And can we sustain cash flow for that period of time? Because ultimately you're buying market share if it's a competitor in that space, which is a really interesting territory. And the, I'm not gonna focus on it today, but if you look at the amount of, look at like businesses that are being created, trying to own that category is really hard. It is. So, so sometimes you might need to buy market share around that and you can kill a product, but you're basically just buying customers ultimately. So understanding the math on that is a whole nother piece that if you're a young founder, you wouldn't know where to start on doing those analytics.

Yeah. And I mean, I think it's interesting too, because when you think about Lovable, right, you have Base44, right, that's out there, right? And then you have others of like, you know, you know, ChatGPT and Claude, but then even Canva even had their own coding that they're having, right? That you see all these different players coming in from different angles and you're like, okay, how are we, how are we going to play with this? And it's going to be interesting to see who partners with who and how does that actually work out. But I do think that you're going to see, you know, the— it's really going to be— and I think this is where marketing also comes down to play with it as well as Do you really understand the base that you're marketing to? Like, do you really understand your customer? And I hate to say it, but like a lot of times that marketing is really what can help separate you. And you would think it's not your product, it's just how did you market it to people so they understand what the product is. It's sad really. And this is where it comes back to what we talked about in the beginning, that storytelling, right? How are you doing the storytelling to separate yourselves?

We bonded over that last time. I'm a brand strategy guy. I love storytelling. And for you as a human being, how do you meet new people? You be vulnerable, you share passions, you talk about your purpose, and you unite over things that are common between you. And that's not going to change. AI can't change the way that humans connect and unite. And if you've got 10 products that all have the same features, the product that has the most empathetic and understandable brand story that makes you want to choose them over someone else will gain market share and get that unfair advantage. And right now the unfair advantage is to be ahead of someone else because a competitor can be tomorrow, the next day, like they're going to be there because it's become really structured. There's a democratization. I hate the word because it gets overused, but I'm going to for this context is that becoming the founder has never been easier, but the ability to know what to do once you get there is, is not solved far from. So you're, you're just free falling and working things out as you go.

It's interesting when you think about just the impact that storytelling can have and how you're able to hit a nerve or spark a memory with people and how that can influence their behavior. And I think that's part of the reason why, when you think about some of the stories of founders who had great charisma, Ozma, and they're able to get all this money to get these type of partnerships, but the business was just terrible. And you go, well, clearly it's not that. It's like, it, it is to a certain extent because it proves the point that humans want something that they can identify with. But at the same time, if your business is terrible, it's not going to survive. A story will only get you so far. So I tell people all the time, you need to focus on both because they feed into each each other, right? The operational piece of the business is important, but if you've got the greatest scientific discovery of all time and you can't explain it to people to say why they should care about it, it's not going to go anywhere. It's going to die in that lab. Same thing with your business. You could probably have the best thing that's going to improve billions of lives, but if you can't prove why that is the case or tell the story to get people to be convinced of it, it's not going to go anywhere.

Beautiful way to wrap up the conversation today. If you want some more of that gold from Dr. Denise, she is Impactful Ventures, E-M-P-A-C-T-F-U-L Ventures. How do people reach out to you and, and what are some of the ways that you're helping founders at the moment?

Yeah, I would say the easiest way is LinkedIn. I'm, I'm active on there. You can see me all the time posting about my own journey as a solo entrepreneur to some of the clients that I work with and the events and, and conferences that I go to. But another place that I also make it very affordable for founders, especially if you're in the early stages, is on Hubbell. I'm one of their experts that's on there. I absolutely love using that platform. It's been great learning about new different types of companies, even outside of my background of clinical trials and pharma. But so tell people too, if you're willing to kind of invest a little bit more and have someone who is a strategic partner and not just someone who's going to, you know, spit a bunch of insights at you, but who can actually point you in the right direction with connections and things along those lines, they can also work with me and have as a fraction lead with them as well. So I have many different models that I work with based off of budget and their availability.

So worthwhile. And if you've got even an instinct as a founder that based off the last 45 minutes of this conversation with Dr. Denise about her power and how she can help you, like it gets much bigger and goes much deeper. And also as a fellow expert on Hubl, that's hubl.social, shout out to Kevin Urovich. She's been on the show as well. I've got a session tomorrow. I love those 15, 30, and 45-minute blocks of time. It's like power sessions to get through as much as you can to solve a problem quickly, but it's a lot of fun. Dr. Denise Bronner, this has been a treat. I'm glad we got this booked in. We had some tech issues at the start. We got over that. I think that was maybe user error on my part, but we did it.

We did it. We did it, but thank you for having me on here. I have always enjoyed your previous shows. I'm very excited to actually be a part of it now, and I look forward to seeing what your future episodes will be.

Thank you. You're a real star. Thanks for listening to Startups Decoded. If today's conversation helped you think differently, share it with a founder in your network, and don't forget to subscribe for real-world startup insights every week. We really value your support. If you're interested in partnering with us, email hello@startupsdecoded.com. I'm Andy Walsh. I'll see you next week.