Manny Fernandez explains why founders and investors in private tech companies need liquidity plans. The JOBS Act lets companies like Uber and Airbnb stay private longer, leaving shareholders with valuable but locked-up shares. He shares how a hair-product entrepreneur raised $600K using DreamFunded's pitch deck.
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I was going to talk briefly about DreamFunded and why liquidity is important. One thing I think you guys should know is that you guys are going to create companies and hopefully become the next big thing. At one time, the average company went from zero to IPO in 4 years. Let you know about it, IPO is really a fundraising event. It wasn't an event for investors, retail investors to make money. an event for a company to raise money. And at one time, if you had 500 investors, 501, you were forced to go public. Now with the JOBS Act, it's up to 2,000. So companies like Uber, Airbnb, Dropbox, Zenefits, Lyft, and many others, Palantir, they're raising a tremendous amount of money without having to go public. So employees that are there early— one day you guys will have employees— have a lot of money on paper, but there's no liquidity for them. They can't sell it. Same thing as you guys are as a founder. You're going to eventually have shares that are going to go up in value. But where do you go to be able to sell some of those shares to investors that are interested in your company? This is a trick question. Anyone know? Huh? The little logo on the bottom right-hand side there. Dream Funded. So if you look at this chart, it's an interesting chart about the timing that we're here in Silicon Valley. And it's important because you guys are going to be raising money. And if people say, well, you know, it's not the right time to invest in you because of the market, this and that, look what's going on here in 2004. This orange was the private wealth creation. That means investors making money, trading it to other investors in the secondary market. And as we went to the right, look what happened with Twitter. Very little public creation. I mean, they had 1,600 new millionaires here in Silicon Valley based on Twitter. But if you look at the stock today, it's greatly dropped. And I think that This is important when you're building your startup and interacting with investors to think through some of the things they're looking at. It takes a long time to get liquidity in this market unless you get acquired. Anyone thought about their acquisition strategy? How are you going to be— how an investor is going to make money?
Yes.
What's your acquisition strategy? How is an invest— how are you going to get liquidity for the investor?
Exit to a bigger publisher.
Exit to a bigger publisher? Very good. How about you? Anyone else?
So we're in a very competitive industry.
Yes.
So there are big competitors that could acquire us.
Very good.
We do something different.
Okay, good. As long as you think about that in advance, it's important. So I'm going to give a quick slide out, but I'm going to kind of tell you a story behind it. There was a guy that He came up to me. I really didn't understand what he was saying. He was investing in his hair product. I tell this story a lot because to me it's fascinating. If he can do it, anyone can do it. And I said, sorry, I invest in internet and software companies. And, you know, I walked away and he kind of grabbed my arm and I looked at him and he was real sincere. He was like, hey, can you show me how to pitch investors, how to raise money? And something about that look reminded me when I was 19 because I always wanted to understand how do you raise money? How do you be able to build your vision by using other people's money? And so I— what I said is, you know, let me give you my business card. You put PowerPoint on the headline. I'll send you a PowerPoint that's been used a lot in our angel group. I've seen many people raise money and went on to raise over $40 million outside of our angel group. And he sent me an email and I sent him the PowerPoint. And about 45, about 50 days later, he sent me an email, an exclamation, I raised $600,000. And I said, wow, that's amazing. So what I did was I used to give out my email address, manny@dreamfunded.com, but I always was slow getting back to people because people would refer to others. And so now what you do is just email getfunded@dreamfunded.com. getfunded@dreamfunded.com. There's 2 purposes of it. Number one, to help you with things that we're looking for. But number two, then you have our attention. So maybe you can figure out how to get it back to us. Does that make sense? So I'm essentially pitching you guys all because I want to know about what you're working on. Thank you.
