In this talk William Santana Li explains why his security‑focused hardware company deliberately avoided conventional venture capital. He argues that early‑stage entrepreneurs must treat investors as their first customers, yet the vast majority of US VCs specialize in software and lack the expertise to back hardware, robotics, law‑enforcement, or security ventures. Because VCs operate on 5‑10‑year fund cycles, they often pressure founders to exit early, which conflicts with Li’s vision of building a long‑term, $30 billion‑a‑year security business. He therefore pursued capital from angels, strategic corporate investors, and corporate venture arms that provide evergreen, balance‑sheet‑driven funding without premature exit pressure. Li then shares his personal motivation—rooted in the 9/11 attacks and his background as a former Ford auto executive—and outlines the company’s early history: incorporation in April 2013, unpaid early team, initial attempts to secure VC funding (rejected due to hardware costs), a small seed check from a corporate CEO, participation in the State Farm Insurance Accelerator at Plug and Play, a prototype demo in December 2013, and ultimately raising a $1.5 million seed round in 364 days. The narrative underscores the importance of aligning capital sources with long‑term strategic goals in hardware‑intensive security markets.
Chapters
So why did we not raise VC money is the question. OK. So a lot of you are working on your companies, and you're focused on the end user, the end customer. What's not so popular to say is you as an entrepreneur at this stage of the game, that is not actually your— those aren't your customers. One of your customers is you need to sell a financial security, a piece of debt or a piece of equity, to the investors. Those are actually your first customers, and you need to figure out how to get them enticed. I think long-term— so you saw half a billion, $500 billion a year spent on security. This is not an— some will say not an investable thesis. Like most VCs are set up to focus on mobile, or we focus on IT infrastructure. But there is not on Sand Hill Road— so there's about 700 VCs in the US. Half of them, 700 VCs, they dole out, it's changing a lot, $15 to $25 billion a quarter into startups. 97, 98% of it's in software. Okay, so one of the reasons VCs can charge a premium for their capital is their Rolodex and their experience and all that good stuff that can help you build a company. So, can someone name me, out of the 700 VCs, which one has, not a partner, a firm, that understands hardware, robotics, law enforcement, and security? Who should I call? Who's the subject matter expertise that I should pay a premium for their capital to help? Doesn't exist.
Doesn't exist.
Putting a VC in your cap table can be very helpful. So let's say Mark Zuckerberg had a fund and it was focused on mobile and you're doing social media mobile stuff. Like, why wouldn't you take a check from that fund? So one, it didn't have a good fit. Two, control is really important to me. I want to make sure that, you know, $500 billion a year gets spent on security, probably $300 billion addressable by what we plan to do or our aspirations. And us building a long-term $30 billion a year company is, to me, commercially reasonable. Most VCs have 5, 7, 10-year funds. And depending on when they write your check into your company, if they're on the 5th year and the fund needs to get the money back to their investors, the limited partners, the LPs, so 2 years into it, starts knocking on your door. Hey, um, Can we sell the company? Can we do an IPO earlier? Can we somehow get me out of this because I need to get money to my LP? I don't have any patience for that. So, I want long-term, evergreen, balance sheet-driven capital that's not going to call me asking that question. Because I want to make sure that we set up the capital structure to deliver what we actually are trying to accomplish. So, what fits in those buckets?
Angel investors.
that it's their personal money and they understand what the management team and the guys are trying to do, or long-term strategic investors, corporations. About 25% of the capital gets— what's called VC is actually corporate venture capital. And so we've got 5 strategics in there that in some way or form in the short, medium, or long term will be helpful to us. Long-winded answer, but hopefully it— No, it's great. I hope that answers your question. Thank you.
Can you explain a little bit about the story of how you went from being a CEO, I think, somewhere else and then wanting to build this? Did you guys have prototypes or did you guys have a vision and an executable plan or were you guys working already on the robots before you started actually trying to get large with investors? And then you got your venture capital. Or if you could just explain that story.
I'll do a really quick what happened the first 9 months, basically. So motivation is really important. So I like to see either recruits, founders, or whatever have some passionate tie to what they're trying to get accomplished. Having a really smart person that's slightly irrationally and emotionally attached to something, that is probably one of the most dangerous, in a positive way, combinations. So I was born in New York City. Someone hit my town on 9/11. I'm still really pissed off about it. So my life I'm dedicating to better securing our country. Second, as a Ford Motor Company former auto executive, I think self-driving cars, autonomous technology, is going to turn the world completely upside down. I believe the way that Tesla and Google and Mercedes-Benz and everyone's going about it, it's going to take 5, 10, 15, 20 years to actually commercialize that volume because there's no regulatory environment, there's no insurance, legal kind of clarifications, and it's gonna just take a long path. So I saw a path on how to fix the problem using technology. We're not, I don't perceive ourselves as a robotics company, that's one piece of technology that'll help our clients fix the problem. So we incorporated the company April of '13. I hired the first 6 or 7 people. And we paid them a grand total of zero for almost a year. People pulling all-nighters to just try to get this thing done. And for the first 6 months, I tried the traditional VC route. And all the people were like, you're out of your mind. This will never work. There's hardware involved. You're going to need all kinds of money. You'll need $15 million just to build the first prototype. Like, OK. So like most good entrepreneurs, it's like, OK, well, I'll show you. And then we got our first small check from a CEO of a big company. And it was just barely enough money to build the first prototype. We got into the State Farm Insurance Accelerator in Sunnyvale at the Plug and Play Tech Center.
Excuse me.
So State Farm paid our rent for 3 or 4 or 5 months. We scrambled with half a dozen of us to go build the first prototype, unveiled it December 13th, won the demo day there. Then the media went absolutely nuts. And then the money followed. So it took me 364 days to raise our $1.5 million seed round.
