Startup Fundraising Office Hours Replay!

Our free Startup Fundraising Video Office Hours help early stage company founders raise money for their startups. 

The fun, friendly live video Q&A sessions answer financing and strategy questions from entrepreneurs from all over the world with FREE expert startup advice. 

The latest free lunchtime session hosted by our CEO, Scott Fox, was April 23. 

To watch the new Startup Office Hours replay click here. 

Startup Founder Discussion Questions This Month

Watch to enjoy friendly, free, angel investor feedback on real questions from real startup founders, plus entrepreneur questions about raising money from angel and venture capital investors. Watch to enjoy all that and more in this free video edition of Startup Office Hours from StartupCouncil.org.

Watch the free video replay for:

• Maurice asking about "accredited" angel investors vs friends & family
• Jay's question about VC investors influence on the science and control of his company and its funding
• Bhavi's concern about showing her intellectual property and designs in a competitive market (drones and flying cars!)
• David asking how important design of the presentation deck is
• Jesse seeking team members and resources for his startup based in rural Appalachia (The free virtual events calendar at StartupEvents.org can help connect him!)
• Yael's looking for investors in the US edtech market
• Kn842 wondered when to incorporate - before or after hiring developers
• the huge importance of signed IP transfer agreements with all staff and contributors

+ Jesse practiced his (first) pitch for his breakthrough new insulation material

To watch this month’s Startup Office Hours replay click here. 

And see a complete TRANSCRIPT BELOW.

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MasterMinds Startup Fundraising Office Hours TRANSCRIPT for April 23, 2024:

0:00
turn on the camera the live button I've done that before so we're going to inviting so far we've got a great group
0:05
and it's going to be bigger so we'll be starting with people from all over the world coming into the chat room shortly
0:10
welcome glad to see all of you and um in a moment we'll be um taking these questions so let's get on let me look at
0:16
what we've got um Jay from DC Maurice well let's start um with Maurice
0:25
I think Maurice because you sounded like you had a fairly specific question and then Jay we can go on and um discuss
0:31
further uh more detail kind of what you had in mind so if you're just tuning in welcome I'm Scott Fox you're part of uh
0:37
the startup fundraising office hour show and we're here trying to help you build your community build your fundraising
0:44
relationships and um move farther faster in the world of innovation and I do this
0:49
to help people around the world trying to help you um get up to the next level really a lot of the information and
0:55
expertise that's been created has been kind of gated off in Silicon Valley and other places so I'm here at lunchtime
1:01
turning on my camera to enjoy the company that we're creating together and have you join us as well so while I'm
1:07
talking with Maurice here um Maurice you just disappeared there you go okay okay
1:13
so this is Maurice and Maurice is from uh St Augustine Florida beautiful town in Florida and um Maurice what you had
1:20
some questions about accredited versus unaccredited investors I'll do my best to help and hopefully we'll try to um
1:26
get some people in the chat room as well also with some expertise that might be able to help you so go ahead the floor is yours
1:38
Maurice I think you need to unmute my friend yeah yeah I just had you know some general questions uh nothing really
1:47
specific I know there's like a limit on the amount of the amount
1:54
or the income a person can be making before they could actually invest with your comp company or I really don't know
2:01
how it works you know cuz I know like starting out in fundraising they say you should start with the friends and family
2:08
round so I didn't want to get things all confused where you start taking
2:15
investments from people you know small Investments and then when it's time to take the bigger checks there's you know
2:24
some some uh issues there because basically
2:31
sure no it's a great question so the what you're talking about I think is accreditation so there are laws
2:37
Securities laws you know all kind can get complicated and ugly but you're right most companies start with friends
2:43
and family money because um the people most likely to invest are
2:49
those who already know and like you and trust that you're doing reasonable even if they don't understand it right a lot
2:55
of us do techy sorts of things and they may not really know what we're talking about but it's your mom right so so she's going to give you the benefit of
3:01
the doubt and so that's where a lot of people start or of course you know self-funding from savings or credit
3:06
cards even you know I've done that in the past um not successfully but um but
3:11
the real the real question then is professional sort of funding so the latter is kind of friends and family
3:17
first then Angel Investors then Venture Capital investors As you move higher up
3:22
that ladder the people are going to be more sophisticated and that's really what you're looking for is sophisticated investors who have a lot of money to
3:28
help you scale the business quickly the trick is and this is the heart of your question I think is accreditation
3:34
the laws in the United States say that everybody can't invest in everything if you want to have
3:39
accredited investors and you're offering like a real investment you have to give a lot of disclosure but you also have to
3:46
work mostly with accredited investors and accredited investors are those as defined in US law is I it changes a
3:53
little every few years it's more or less this um $200,000 annual income or
3:58
$300,000 jointly I think and then at least $1 million in net assets um I think not
4:06
including your house so you're talking about people who are not like the super super rich but they're people who have
4:11
done pretty well or are doing well currently and they have got some level of sophistication now that's not really
4:18
an accurate measure necessarily because you can be a knucklehead and inherit a bunch of money and not know anything
4:23
right or you can be somebody who works really hard like maybe in finance and you really understand the space but
4:29
you're junior and you're young you only make you know a smaller amount of money so the rules are not perfect they're
4:35
constantly under debate uh they the idea is that maybe the the there should at least be an exception for people who are
4:41
for example fin Finance professionals they they get this more than other people even if they don't have a lot of assets built up and then there are there
4:48
are restrictions if you go out for crowdfunding type offerings or any sort of public offering when you start
4:53
marketing Securities the government is very concerned that you're promoting things that uh the people you're talking
5:00
to may not be sophisticated enough to understand and that's where there are limits there's all kinds of laws we
5:05
don't have time to go in today and it it's honestly a question for a lawyer um but there's reg D reg C there's 506
5:13
offering there's a bunch of numbers I can't even keep track of um that you are smart to investigate so I can't give you
5:20
a much better answer than that except that you're on the right track and be a little careful at the beginning stages
5:25
if you're just working with friends and family this is not legal advice but most people just get 10 grand or 50 Grand or
5:31
100 Grand whatever you kind of budget you need from friends and family those people tend not to be accredited but
5:37
then once you get kind of going and you've proven you've got something going on you've got some customers some
5:42
momentum then you're going to start moving out to people you don't know and that's where you're going to need to be
5:48
talking more to accredited investors and to do that you're going to want to ask people you know are you accredited or
5:54
not and means that you have different obligations in terms of how much you tell them or don't tell them them also
6:01
um a good way to do that is Angel Investors often are in clubs like I'm part of tech Coast Angels which is a a
6:08
big um now National Group there's about 400 of us like we're all accredited
6:13
investors right or if you have a local University there in Florida where you could go and they have an angel club
6:18
like those people would have done a lot of the the vetting to make sure the members are accredited and that should
6:23
be able to get you connected with people more quickly than than individually interviewing people about accreditation
6:30
status because people are naturally a little guarded right you know am I accredit or not is that your business I'm not sure right so if you go to
6:37
places where people are actively alreadyinvesting they probably are more open at talking about that and they're probably
6:42
already uh been checked essentially so is that helpful is that give you that
6:47
yeah yeah that kind of sums it up that kind of gets gets at everything that I was concerned about excellent okay well
6:54
nice to meet you Maurice I hope we'll see you again nice to meet you too definitely all right next up Let's see
7:00
we got to get that chat room going here so let's talk about that so if you want to chat go ahead and come on in at um on
7:08
YouTube or on LinkedIn and those comments will post up uh so other people can see them and then you all can start
7:15
talking Yale is here looking for U some in the edtech field excellent and uh
7:22
Yale I think you even sent in a question didn't you about uh yeah you're based in gadera Israel right and you're a doctor
7:29
you're being being modest Dr Yale Epstein so if you have more to say about that Yale you could come backstage and
7:35
talk about it on camera or just put it in the chat room there and we'll try to um help you out so let's just uh talk
7:42
about this a minute and then let's we're going to bring on Jay next and Jay is gonna ask I think I'm guessing a little
7:48
more some broader questions about uh investors and finding investors so am I on track Jay is that kind of what you
7:54
were thinking more or less um maybe not quite that broad but uh let's give it a
8:01
shot so um I'm getting conflicting information from people with either like
8:07
uh government and scientific focus and their experience has been to startups in that space and people with more uh just
8:15
general business and investment Focus um so I'm a scientific founder with a recently proven new technology which is
8:21
currently being entered for provisional patent uh I need to build out my team and get development moving forwards
8:27
that's why we're here um um my plan is to apply for an NSF Grant and do some
8:33
sbir which I see Jesse mentioned in chat and I believe those funds will be enough
8:38
but I'm concerned that I won't be able to get the funds fast enough to keep things running and rolling
8:45
forwards um my concern is that because the technology is truly novel uh and
8:50
requires additional Focus that a VC with voting rights will interfere with the
8:55
important parts of development and the advancement of the science itself um the business folks seem to think it's
9:03
it's good stuff so just go to see uh do you have any thoughts about prioritizing the funding in their time time scales
9:11
yeah okay um thanks for muting you're it sounds like you're in a coffee shop or something pretty loud um so yeah I no
9:18
wor that's all right well you know you're getting getting some work done that's cool um so yeah I mean that's a that's a
9:24
large topic and I think you're you're right to be concerned but I get this kind of question a lot so let me broaden
9:30
it out a little bit and then we can get more specific I meet a lot of Founders who are very concerned in fact overly
9:36
concerned about VC's taking control or stealing their Tech or any of that stuff
9:44
the fact is that's way overplayed by the media you got to get the money so you
9:51
can get going uh so I'm not talking to you specifically Jay but if this is helpful you you know the shoe fits where
9:57
it right but a lot of people get so concerned about how am I going maintain control or how I going to maintain my secrets and this Bobby this is a bit for
10:03
you as well um if you don't get out there you're not going to get anywhere and you just have to give it up a little
10:08
bit but what so that's one you've got to get out if you can't if you don't go to
10:13
the events you're not going to grow that's one of my things if you don't go no grow right so you got to go out and
10:18
share you got to tell people period but of course you got to be judicious about that right so as I
10:25
was just saying to Maurice um you might want to find an angel group where people have some track record some reputation
10:31
um a VC conference that has some you know good reputation that they're doing vetting I mean this is like you know
10:37
it's just like if your toilet stopped up and you're finding a plumber you're going to call a few references before you repipe your house right um maybe you
10:44
wouldn't if it was just a plunging job but if you're going to repipe the house you're going to check references that's the same Vibe here right so um that and
10:52
I I just want to stress that for everybody don't be so concerned about give sharing your information because if
10:59
you don't share you're not going to go anywhere I'm repeating myself um okay so if it's a truly novel technology now
11:05
you're in a different boj that was the General topic right I'm glad to hear you're filing for patents of course
11:10
that's the the number one thing we can do of course as you know once it's a trademark filing sorry patent filing
11:16
everybody can see it anyway so there's this weird window of when are you g to commercialize right so uh oh the clock
11:22
has started um again it's a lot about the partners and I think you're right in terms of thinking about building the
11:28
team so that you can execute as quickly as possible but you're in a chicken and egg situation where you can't build a
11:34
team without some funding so that you can be ready once the funding comes in right and that's that is a legitimate
11:39
challenge um that's a thorny enough bunch of stuff I don't know we can cover it all but I sympathize I validate if
11:46
people in the chat room have suggestions please share that because I know a lot of you are similar um technology
11:53
Founders um looking for you know how to commercialize and it is difficult I would also recommend um you said you
12:00
were in DC right okay so um Georgetown George Mason you know American you've
12:06
got all these great UVA there's all kinds of great schools around there they will have technology transfer offices
12:12
that um specialize in this kind of stuff they are 100% focused on commercializing the patents that come out of their own
12:18
research programs not you but they're probably having programming and events that you could go to and maybe learn
12:24
more about this I do a lot of this work U for example UC Irvine I'm in Southern California USC um I go to stuff like
12:31
that or Michigan I'm speaking at University of Michigan next month um so there's a lot of tech transfer services
12:37
um so quick question if you can onite are you associated with any particular University or what's your Tech uh
12:43
Network look like um I do have associations with Georgetown and Cornell
12:49
my particular research has nothing to do with the academic research organizations
12:54
though I have worked with them in the past um yeah so I'm beginning to reach out rud those vectors being in the DC
13:01
area most of my connections are DOD Etc so that's not quite as useful yeah yeah
13:07
okay fair enough I just yeah that makes sense the other uh example places I would be looking is um the small
13:13
business administration there's something called America's seed fund um that runs all kinds of programs I get
13:20
more emails than I can keep up with now once you get on those lists um the easiest way I found to come up the speed
13:27
and that's what it sounds like you're doing you must be a brilliant guy you're inventing new scientific discoveries so that's impressive but you're stepping
13:33
into my world where I know more probably than you do and the way I learn new stuff is I sign up for a bunch of newsletters and then I read them and
13:40
it's like learning a language right you learn five new words a week and then a year you've got a basic vocabulary right
13:45
and hopefully you can go faster than that right go to some conferences practice your vocabulary just like you go to Spain you know on a trip and you
13:51
practice your vocabul it's the same kind of vibe and it sounds like you're on that cusp as a good CEO you've got the
13:57
tech thing now you're moving into essentially my coming over to the dark side come over to my world right like so
14:02
you got to meet the people and mingle and and and uh try to figure that out I would say there are a lot of Angel
14:09
Investors and Consultants uh actually those are two buckets right Angel Investors want to help Consultants want
14:14
to charge you so you got to be careful and sometimes they're the same thing um but people that know a lot about sbir
14:19
and SBA and DOD grants those are that's a whole world the sbdc this is true for everybody listening who's in the United
14:25
States the Small Business Development Corporation is a US government uh taxpayer funded our money U that offers
14:33
free Consulting to uh entrepreneurs and if you're not already involved with the local sdc's then you should find them
14:39
because they have again are offering free Consulting and often it's about commercialization so that might be another resource um that's kind of where
14:47
I got is that is that helpful it's very helpful um I Am brand new to this platform Christina Bowen had some uh has
14:55
had some experience in that area uh I don't know how to reach out to her though I don't know where the chat is I
15:00
don't know who Christina Bowen is is that somebody in the back somebody in the chat if you look uh to the oh there
15:07
yeah how do I access these individuals okay Christina can you um one of you
15:13
post well for you J you need to go over on YouTube or LinkedIn you're in the backstage chat uh but Christina if I
15:19
don't know how public you want to be with your contact information but you can post it um I'd suggest LinkedIn is a
15:25
good way to find each other you can post LinkedIn maybe that would be helpful we'll do thank you very much all right
15:31
yeah nice to meet you Jay oh there you go Christina at same thank you Christina excellent nice to meet you Jay all right
15:38
moving right along here okay there goes Jay Okay cool so if
15:45
you're just joining us I'm Scott Fox and you're welcome to our show we do this once a month I turn on my camera at
15:51
lunchtime to help you get farther and faster with your startups and this is true worldwide so if you're coming in um
15:57
in the chat room looks like room is filling up finally I forgot to turn it on my apologies but please tell us where you're from and if you have questions
16:04
you can put them in there uh if uh if you'd like to join us backstage the uh
16:09
URL is posted in the RSVP emails that we had sent out earlier and it's full right now it looks like but we'll um I'll get
16:16
to the chat room as well let me point out a couple more things and then I think I want to talk to Bobby because
16:22
she had a similar question to um to Jay there so let's see let me find Bobby
16:31
okay there she is hey hey Bobby and you said you were let looking at my notes
16:37
all right nice to see you okay so you've got a cool drone technology that sounds very cool are you an engineer or are you
16:42
more on the business no no I'm mechanical engineer I've worked in the
16:48
industry for three years uh like Applied Materials justs a chip manufacturing
16:53
company and then I worked at satellite company and I've also worked at a flying car company you know area is pretty
16:59
crazy with startups yeah yeah that yeah that really inspired me to um create my
17:06
own technology and Company but yeah I sorry go ahead no go ahead yeah I just
17:13
see so have you heard of like Archer Aviation they're uh vertical takeoff so
17:19
very cool there's only sorry very cool company yeah yeah yeah I was very
17:25
inspired by them but the thing is after they started their technology they were
17:30
kind of the first ones and now all of these other drone all of these other VTO companies they look exactly like them
17:37
there's only one company that is actually better and that has better range than them too and it's lilium and
17:44
their plane looks nothing like Archer and so that's kind of my thing is when
17:49
you put it out there when I because my my drone doesn't look like normal drones
17:55
and so when I put it out there I'm I'm very concerned like I mean with investors it's still okay but when
18:00
you're pitching in in front of large audiences yeah and there are definitely people in the audience who could try to
18:07
replicate what you're doing just by the way it looks yeah um yeah and I I I
18:13
don't have a good answer for you you heard what I said to Jay I think you got to get out there in order to attract
18:19
attention but something as specific as Vall by the way for folks is vertical takeoff and Landing right so these are
18:25
these she's literally talking about flying cars which super cool um so uh
18:31
yeah design things is Archer the one where the platform is it's like a car and then it rotates up when it takes off
18:37
and it's got like a pod in the middle is that the Archer one no no Archer is the
18:42
one where it's uh it stays still its propellers rotate 90 degrees oh um so
18:49
it's it's like a drone when it takes off and then it has like eight or nine
18:54
propellers wow and they all uh they yeah they be they become like a normal plane
19:00
when it's flying in the air but when it's taking off it takes off like straight up like a drone super cool um
19:07
yeah so I guess you know I don't I don't have a good answer for you it's a chicken and egg and you're smart
19:13
obviously gotta show them something enough to get them interested right the you know the key thing maybe this will
19:19
be helpful when you're meeting with investors and this applies to everybody not just Bobby you're really not you're
19:25
never going to get a check on the first date right the whole thing is like it's it's like a bar you meet somebody you
19:30
just need to say enough to get the next date right and then you have the first date and you tell them a little more and then you get the second date you know
19:35
and and it it's a slow reveal but you know how much you reveal is up to you
19:41
and and um you know you don't want to give it away I so yeah I wish I had a better answer so maybe somebody in the
19:46
chat room have suggestions here it is it's not an easy question um there's got to be do you have a good
19:53
attorney no but I have other VCS that I'm talking to and they said the samething like you know they there's just no
19:59
way around like not showing your technology because you don't show they gave the same answer as you it's like if
20:06
you don't show your technology you're not gonna get funding good I'm not crazy
20:11
then good no no no yeah I yeah I'm working closely with a couple other
20:16
people and they said the same thing I guess the only thing I would do is uh be
20:22
careful when I when I'm pitching in front of large audiences and not show the actual pictures and yeah that's the
20:29
only way to go about it yeah as you know a picture is worth a thousand words and video is even more so that is but um I
20:36
guess the other thing I would say so two things one if you need good startup attorneys I mean you're in San Jose so they're probably everywhere but um I can
20:43
introduce you to people that's one of the services startup counil because we work with a lot of people who really are startup attorneys you know not like your
20:49
your brother-in-law who does divorces you know and car accidents and then wants to help you right like actual startup attorneys um if that helpful and
20:56
then the other one is you probably know this but since we brought it up I'll just tell everybody one thing you don't want to do is ask investors to sign
21:03
non-disclosure agreements because that just shows that you don't know how this works real investors like VCS we see so
21:10
much stuff we can't sign non disclosure agreements because it will just lead to a lawsuit that we didn't anticipate even
21:15
if we're even when we're completely ethical people just it just gets messy right so in your case you have a very
21:21
specific um visual communic I me this visual will give away a lot of the pitch
21:27
right so there might be a stage for you to sign an NDA but it wouldn't be the first meeting is what I'm saying you no
21:34
yeah fourth yeah that's that's the other thing I've heard it's bad faith to have a VC sign and NDA don't do it yeah and
21:42
even more than bad faith it just shows you don't know how this works and that's not the impression you want to give right you you want to yeah act like an
21:49
adult right so yeah all right well I'm glad I wasn't the only one that gave you that answer sorry I didn't no no yeah
21:55
thank you so much nice to meet you hope to see you again keep us posted that's exciting that's exciting right flying cars man that's cool um okay so that was
22:04
Bobby and we're moving along here let me take a couple of the questions from the the chat room and see what's going on uh
22:12
in our chat room so let me just run back here um let's
22:18
see so Christina thank you for volunteering to help Jay um how do you
22:25
join the video yeah the the I've back stage is is already full guys so um the
22:30
way to join the video is next time to uh sign up early or be here early at the on the show and I put up the URL but we're
22:37
just going to talk to the people who are here I'm sorry there's only so much time but I'll be here again next month and you can go over to Startup council.org
22:43
and get on the newsletters and we cover all kinds of stuff and offer all kinds of services that I think would be uh
22:49
interesting to you um okay that looks like the only real question we've got backst on the uh chat so far so let's
22:56
look at the backstage um okay Jay great thanks for doing that
23:05
and okay Jesse Jesse okay so you're building a team in a rural area okay that's interesting let's talk
23:13
to um let's do a pitch hey Henry so where's Henry are you still here Henry
23:19
did you want to practice your pitch do you think you can do a two-minute no slides version or is that too uh is that
23:24
too different than what you had in mind uh I I think that'll be difficult for me not
23:30
having practice at to minut fish but I do have a question for you okay uh so
23:36
you know you know I have we have a no code uh application Builder to help businesses build application faster yes
23:43
uh I decided with the Advent of AI and the impact it has on everything that we're doing I should update my my deck
23:53
to show that we are active in that space uh initially we went too much into AI we
23:58
not an AI company we're a company that is incorporating AI to make our product
24:03
better so my question is from your experience you know how to how to what's
24:10
the proper balance to still sell the the the idea that we have which is more
24:15
traditional but we're adding AI elements in it and and since all investor today
24:21
want an ai ai start off yeah we think it's going to
24:27
help us but what not the pure AI company right yeah it's it's a challenge right
24:33
the I think the pendulum has swung so far now that I think you're wise to be wary of being overly AI everybody's
24:41
claiming Ai and those of us that see a lot of deals we're getting tired of it to be honest we don't believe it everybody's AI right um and it's just
24:48
not believable and in many cases it's it's either it's exaggerated let's put it that way right think you're wise to
24:55
kind of dial it back a little because as we all know it's moving so fast but a year ago anything AI was amazing and now
25:02
it's getting more amazing but we're also seeing the the evolution of the market to realizing that AI isn't one thing
25:08
it's lots of things right so are you building an agent are you building a large language model are you you know where what piece of this are you doing
25:14
are you going vertical into some industry you're going horizontally you know and and kind of you know you can
25:19
create this whole chart or or scatter plot you know of like where are you so I think if you can restrict or limit as
25:27
you were applying I I think I'm understanding what you're saying you know what you're doing so that it sounds
25:33
well frankly so it sounds reasonable like we have thought about this we're not claiming craziness we are we realize
25:38
that AI is a tool it's not a screwdriver it's not a wrench we've got we're using a hammer because of this and this is how
25:45
it fits into our model and hopefully it's incremental Roi in terms of revenues and sales you know um I think
25:52
that is the way to do it these days especially if you're not a full-on AI company you're not creating the next you
25:57
know cloud or llama or whatever um I that sounds smart to me and that's what at least I as an investor would be
26:03
interested in like I'm interested in hearing like anybody that's building their own large language model you got
26:08
to raise billions right it wasn't even wasn't Elon Musk even talking about raising a trillion dollars recently I
26:13
mean some some craziness like so that's not realistic for an early stage company
26:20
right so um understanding how you're going to use it as a tool to um accelerate and augment the capital that
26:27
we're giving you that that's interesting to me yeah that's okay that's what I've done thank you for confirming yeah is
26:34
that okay good we got the same answer all right awesome well nice to see you Henry thanks for joining us and
26:40
I'll see you somewherenearby I'm sure again soon um okay let's try uh David
26:47
David's waving at me what what you got can you hear me okay I one for you and
26:52
and I've heard uh multiple versions of this in putting your pitch deck together right how
26:59
how I've heard I've heard SAS startups right I I don't care about the fancy
27:04
just give me the you know what do you do who you serve the T right projections right I I don't care about things
27:10
sliding in or you know I don't care about I'm probably looking at it in an airport anyway and then I've heard the
27:16
other is like hey it's the pitch deck for your company uh it should be awesome
27:21
right yeah you you know invest in having somebody do it for you even right yeah
27:26
so do you find one better or is it just a personal thing um no I I think U like most advice
27:35
the answer somewhere in between uh the the reality is that it depends on who you're approaching right if you're
27:41
approaching your mom standards aren't as high if you're approaching a group or a VC that does this a lot like me you
27:48
better have it designed a lot of Engineers think it doesn't matter it does matter sorry and it doesn't matter
27:53
because we care about design per se it's because it shows that you are playing the game and we need somebody who's
28:00
going to play the game because we're giving you our money and we want to know you know how to play the game right so
28:05
um the fact is we get dozens hundreds of pitches and the ugly ones are not as impressive right we need to know that
28:11
you have thought about this from all aspects we're not funding nobody funds ideas anymore so you being a brilliant
28:17
you know solo preneur just not kind of a thing anymore unfortunately right I wish it was right but there's so much
28:23
competition it's so the barriers to starting business are so low that you need to bring your AE game on all fronts
28:29
and that includes I think pitch Tech design um I will balance that of course with the people that say you need that
28:35
the most are the people selling those Services right yeah that's true like
28:42
like most things you know these Consultants are actually salespeople so you know they're not wrong but you know
28:48
you got to be a little judicious about how you spend your Capital that's your job as a found I get it yeah I'd be in
28:54
between the hardest part I think if I can elaborate a little is the length because there are many
29:01
different use cases and like you saw just now with Henry like we had a conversation to adults um I want to help
29:07
him he wants to be here but the timing and the format just doesn't quite fit so you got to have multiple versions
29:13
depending on the amount of time available and the connectivity right will it work offline is it 12 minutes
29:18
does it need a video does it not need a video can you do it in 60 seconds verbal only you know that these are there's lots of versions of a pitch so um that's
29:26
where a lot of Founders struggle understandably because you're so concerned about doing you know presenting yourself well you memorize
29:33
the thing or or so many Founders end up you know getting in front of a group and then and then they stand and they read it you know and they look at the camera
29:38
and they read it and that's awkward so um practice practice practice practice got it yeah no that make yeah that makes
29:45
sense yeah okay all right multiple vers got it okay thank you all right yeah nice to see you glad that was helpful
29:51
all right um I wanted to go to Jesse Jesse are you still backstage okay I saw your question something about rural
29:59
R there he is hi Jesse where are you from hi Scott I'm so glad that you do this um I live in the rural Appalachian
30:06
Mountains of North Carolina cool excellent well yeah I'm doing this because yeah to meet you right because
30:13
there are people in the rural Appalachian Mountains who deserve to be part of the party so thanks for being
30:19
here thank you your mind um well I um am
30:24
a pretty uh strong inventor and always right now I got a manufacturing startup
30:30
that I'm trying to use for self-funding for larger things that just applies to a kids toy but um you know I'd like to
30:37
consider all my options and maybe break out of just traditional patterns that I've tried to pursue doing everything
30:43
myself so um you know venture capital is and Angel Investors and all that is a
30:49
fantastic Avenue of course um but you know even um for something as big as um
30:57
a vacuum insulated panel technology I've developed for uh a new type of greenhouse agriculture that could really
31:04
take things to the next level uh in many many ways of uh production and massive
31:09
Energy savings and everything it just really for someone like me that's on the technical side often so overwhelming um
31:17
there's a particular uh researcher at the uh A&M University of uh Texas that
31:23
was thinking about maybe we could work together with one of those um
31:29
uh grants from the federal government um you know the sbir or sttr and I forgot
31:35
which is which but yeah it's just so much time to look into that but you know doing that kind of thing you do need to
31:41
obviously build a team so I was curious I guess first of all if you are aware I really need to look into it more of
31:47
course but more strategies or networks to kind of maybe remotely build a real
31:52
capable team because it's just tough in a sleepy town you know I and even Asheville nearby you know it's going to
32:00
be hard finding real qualified people for that and and the funding and everything is like you said chicken egg
32:06
problem but right right yeah um I wish I had better answers for you I I don't
32:13
that's why I do this I'm trying to trying to drum some of that up I think you're on the right track uh SB and
32:19
other Federal grant programs the sbdc that I mentioned earlier there's probably not an sbdc office in your
32:25
smaller town but there certainly are somewhere in North Carolina um and really um you know I do have an idea
32:32
actually hold on let me pull I have a URL for you and this here it is okay I I thank you we
32:41
built this for you actually um startup events.org is the only calendar I think in the world that promotes um it's a
32:49
calendar it's an free email and we just list events that are um for Founders
32:54
it's startup stuff only and only remote so these are only virtual events so uh
33:00
you know invitations to the latest happy hour in Chicago aren't going to help you right because you're in Appalachia um
33:06
but this calendar has all events that are virtual so that might be a place for you to start and sign up for the ones
33:12
that are interesting to you and you need to go and meet people in terms of building a team that's really not done
33:18
easily remotely but it's a lot easier than it was before the pandemic right it's one of the few benefits of the pandemic so if you go and show up I
33:25
would participate in whatever looks interesting to you and and just try to make friends that's harder to do
33:31
virtually than in person but you know you're play the cards you're d right um so that's a suggestion and yeah we built
33:37
this specifically because I'm trying to help people who are rural or in second or third tier cities or who are in um
33:44
outside the US right to to connect so you'll see events actually from all over the world we get submissions from you
33:49
know Germany and India and you know Philippines whatever um so and you there's no reason you can't participate
33:54
in those through the beauty of uh video conferencing so maybe that's a thing and
34:00
I would also look there are specifically some rural incubators I don't know if you have um Googled that kind of thing
34:07
but uh the phrases would be rural incubator rural accelerator rural VC um
34:13
and uh find what programs they're having again especially virtually and see what you can get involved in the uh that
34:20
brings to mind another one I do have answers at least I don't know if they're good answers but they're fly air time right um we have this other thing yes so
34:29
we built this as well startup investors directory so this is a directory of
34:34
about 3,000 early stage investors and they're all looking at startup deals the
34:40
reason I bring this up in your context yet is because it's the first directory I know of that includes categories that
34:47
you can search on which include um veteran female Founders immigrant
34:52
Founders rural Founders um uh lgbtq
34:57
or you know like Latin or you know all the African-American like we put all
35:03
those categories in there and it's not perfect but it it is it is a thing at least and that might give you the the
35:08
ability to search on Rural as far as I know have you ever seen anything like that is that not really no I'm I really
35:14
appreciate the effort to because yeah there's so many smart people in this world of course and if we can have societies that support um really
35:23
inventors and um entrepreneurs that don't have all the kind of yeah I just
35:30
obviously people tend to kind of be gifted in one area or another and it seems like it's hard to find a person
35:37
with both business savvy and like Tech invention savvy so yeah that's right you
35:42
could have a whole new economy if that gets more and more supported I think yeah I agree and there are organizations
35:48
trying to do that um like I was telling someone else earlier I think Maurice or
35:53
somebody or Jay um sign up for a bunch of newsletters and just click on their
35:58
articles and get like the first level of newsletter is good but then go to the events get on those newsletter lists and
36:03
it's going to take you a while but there are people that do this it's it's not my specialty I'm doing what I can but there
36:09
are people that are specifically interested in rural Founders um and there's a bunch of money coming that way
36:14
too President Biden's signed in a bunch of bills um and there's money coming your way so the sbdc and the small
36:22
business administration in North Carolina or your adjoining States or wherever or even just online um I I
36:28
would it's worth your time to look around oh here's another good one uh challenge.gov
36:34
challenge.gov is a government website this is for everybody challenge.gov is a
36:39
website that lists all kinds of challenges from the government and these
36:44
are opportunities um this would be good actually for Jay or for Bobby as well
36:49
they list things like from the Department of Defense or you know the Department of Agriculture all kinds of stuff and they're challenges they say
36:55
like whatever we've got $50,000 for people who can invent this or you know $100,000 program for this and they're
37:02
posting stuff constantly and again I don't know what's out there needle and a hay stack but there is stuff since there
37:08
are programs coming for Rural Founders that's another thing to subscribe to and just you know just read the newsletter
37:13
until you see something that's helpful and I think that might again get you headed in the right direction fantastic
37:19
thank you for the information and support yeah you're welcome nice to meet you Jesse I hope to see you again keep us posted and good luck it's not easy
37:26
building a startup anywhere but try doing that out in the mountains uh you know in in Appalachia right that's good
37:33
for him that takes some guts and that's why we're here it's guts right guts and grit I'll make this happen all right so
37:39
I put up the um put up the URL there a second ago Yale if you wanted to come
37:44
and Pitch I don't know if you're still here um but uh founder office hours.com
37:50
will get you backstage and um let's let me see let me review here the chat a
37:58
little bit more um
38:07
okay yes yes okay we took Jesse um do investors in the US invest in the edtech
38:13
field so Yale yes um they do I got your question earlier uh you Yale was one of the one of the fancy people I really
38:21
appreciate who emailed in beforehand we have an RSVP box that really helps me prepare so next time if you want to join
38:27
us again please RCP if you have a question and I'll be um try that much harder to get you on camera um she's
38:33
actually the only one today who's backstage who did that so thank you Yale and I'll get you on camera if we can
38:40
excuse me a second I'm gonna mute okay I'm back so yes do um us
38:48
investors invest in edtech yes I like this um I like this question because um
38:53
John sorry I see you have to go we'll see you next time the question is a good one because there's a Nuance to it so do
39:00
us investors invest in edtech absolutely of course you know it's a it's a field that needs
39:06
disruption however uh that market has been saturated and investors are very
39:12
leery of it these days because there's been so many attempts and so many failures it has been a market that I
39:18
think um well maybe like a lot of our education system has not reached its potential and I personally even have
39:25
lost money in edtech there are so many good ideas and so many people that care
39:31
that want to help and yet the commercialization has not reached the audiences and led to the adoption and
39:36
most importantly the revenues that support that space that's a fancy way of saying investors are interested but
39:43
scared so I think you need to pitch and figure out exactly I don't know enough
39:48
about your company to give you more specifics than that but I would really look hard at the competition the competitors and try to look back a
39:55
little at failures because so many things these things have been tried and
40:00
they just died and a lot of us are just frustrated and I'll give you some insight um hopefully that would be
40:07
useful probably the most well there's a bunch of factors I guess but the most common problem is that edte if it's a
40:15
company that is selling to Consumers that's you know like directly to parents for example or students that's
40:22
challenging because it's expensive and people anything more than zero is not
40:28
ideal because people are used to most people get public education for free and even if they can't get a better version
40:35
they're happy with the free version so it's really hard to convince people to pay for head Tech consumers on the B2B
40:41
side which is much morepromising because you have school districts and lots and lots of federal and state and
40:47
local money big budgets big budgets it's really hard because um the sales Cycles
40:53
are really long and a lot of companies die there's this Valley of Death right
40:58
you have all this enthusiasm and you raise some money and build a team and go go go and then oh this is really hard
41:04
and know we're running out of money and this is taking longer than we thought and that kills a lot of edtech companies
41:10
because school boards are really hard to penetrate and very political and there's
41:18
staffed with people who know education already and have also probably been burned by the previous edtech failures
41:24
that I mentioned so not trying to discourage you but you asked that's kind of the edtech market it is hard and
41:30
harder than you think that being said the US education Market is huge so it's worth another try but you really got to
41:37
um have your act together and really look at the comparables and differentiate yourself why is this
41:43
different and how are you going to sell it quickly enough to fund your growth because investors are very leery I think
41:50
I think my opinion right this is just one guy on the internet um like I said not legal advice this is entertainment
41:56
only um but investors are scared of that space so unless you can really differentiate yourself you have a real
42:02
Secret Sauce that is going to lead to growth I think you can get you can find money but if it's unproven and um it's
42:10
not clear that the value proposition is attracting growth it's going to be hard so there you go um I hope that's helpful
42:19
and um like appreciate you guys being here let's see here okay next up so
42:26
let's talk about Jesse you want to pitch Jesse well you could come back um and try that if you want we got a few more
42:31
minutes and um the uh founder office
42:36
hours.com was the um was the URL so let's try let me ask the um she says
42:44
thanks okay yeah yeah you're welcome come on early next time and Pitch as well happy to hear your pitch um uh
42:50
Israeli startup scene is awesome and um happy to support that and love to hear
42:55
more about it right so um let me look at the chat room here and see what I can questions we can scoop up
43:02
here and Jesse if you wanted to actually Pitch live we could do that as well uh founder office hours.com it's where you
43:09
just were but you got to go back backstage because it looks like you left all right looking at these questions
43:15
when is a good time whoops where' that go KNN 842 says when is a good time to
43:21
form your C Corp before or after starting work with a developer great question so this is a common stumbling
43:26
block block understanda for early stage Founders which is when do you start actually spending money right isn't that
43:32
what you're really asking I've been there I understand C Corp is a type of Corporation for those of you who don't
43:37
know it's a type of Corporation as opposed to an es Corp or or an LLC or
43:43
501c3 like a nonprofit a C Corp is what you want if you're trying to raise money from investors you need to have a C Corp
43:50
and it should be headquartered in Delaware that's just how it works even if you're not in Delaware and have no plans of doing business in Delaware they
43:56
have a stand set of laws and corporate formation packages that investors like it just makes the conversations easier
44:02
so Delaware C Corp before or after starting work with a developer well that's up to you and this is where this
44:09
is your one of your early decisions as a Founder how and when are you going to spend the money and are you really sure
44:16
you are ready to do that so um the factual answer is sooner is better but
44:22
that's balanced against the cost and expense you don't really need a Corporation to do business in America I
44:29
get this question a lot from people who are outside the states we you don't need to be authorized or file something or
44:35
get permission America is full of people doing their own thing and and you're
44:40
allowed to start businesses now of course in your local jurisdiction you might uh need a business license from
44:46
your town or something especially if you're running a business out of your house I'm not suggesting you violate any tax or licensing permit issues right
44:53
what I am saying is you have a limited amount of time energy and money to get going and you should focus on building
44:59
the company rather than paperwork so if I were in your shoes I would talk to
45:06
some customers get that developer on board build something that you can get reaction to to see if anybody cares
45:14
right that's the real challenge here it isn't having good ideas the challenge is finding other people who care and care
45:20
enough to pay you so if you have the choice between uh spending money and time on a a corporation in Corporation
45:27
or on a developer I would go with a developer every time because then you might actually have something to build
45:34
and to show and to get customer interest and maybe get some revenue and to prove whether incorporating was even worth the
45:40
time and trouble now that being said if you need incorporation help we have some great attorneys as I mentioned earlier
45:45
happy to give you uh introductions you can contact me through um startup
45:50
council.org we can do we do it all day happy to help but I would really focus on making happen
45:57
and that being said one legal note you should have that person sign something for real you don't necessarily need to
46:04
be incorporated um I again this is legal territory so you should talk to a real lawyer I'm just spitballing here okay
46:12
but trying to help I would what you do need before the corporation is you need a full intellectual property assignment
46:19
you need to make sure that you have in writing let me say it again in writing from the developer and anyone who is
46:26
involved in your company that they are transferring All rights and interests to any contributions they make to you and
46:33
that's you today you your company in the future whether the name changes or not it's all rights title and interests now
46:39
and in the future for all successors some language like that and um real attorneys can sort that out for you but
46:46
that's where we see as investors we see a lot of people stumble they got things going and they Incorporated but they
46:52
don't have intellectual property assignment agreements from their staff and that's where you can really get held
46:58
up things are just going great and then some guy who worked on your code for like six weeks three years ago shows up
47:03
and says hey remember me I want 30% of the company and that's going to kill your company right um investors don't
47:10
want to be involved in that kind of nonsense and you don't have 30% of the company to give away so you need to get them to sign paperwork um and I would
47:18
put that even higher on the list than um than incorporating so yeah good question
47:23
and I hope that was helpful I don't know that I've heard anybody say that before so you know I'm going to write that down you know what thank you I'm going to put
47:29
that in my next book let's see IP assignments before incorporation I don't
47:36
know I'll have to think about that like I said I just kind of made that up but um it's a it's worth thinking about
47:42
especially because you have limited budget right I mean how many things you got to spend money on pain in the ass
47:47
okay we're gonna bring Jesse on for a pitch here he's going to do a couple minute Quick Pitch but Jesse give me one
47:52
second I just want to um catch up with the um chat room a little bit if you're
47:58
uh still watching us today uh the national startups directory is our sponsor this is a service that we built at the startup Council and startup
48:05
council is H it's a directory we built it for you so that people could list there and get more attention from
48:11
investors and you can do a quick blurb or you can do the full thing and show your whole deck and everything and um
48:17
there's a code on the screen for free listing and hopefully that is useful to you also have did not mention we have a
48:23
LinkedIn group that's going to be hard for anybody to type in but um yeah it's a linkedin.com
48:30
group14 30941 they don't allow you to give
48:35
pretty names to groups so this is a group for all of us to keep in touch and
48:41
um if you're watching on YouTube later and you want to promote your startup go ahead or you have follow-up questions go
48:47
ahead and post there on YouTube and I'll try to answer them or somebody from my team will and I'm happy to help you
48:53
there and while you're there please like And subscribe because that's the uh it's the only way we get paid just trying to
48:59
help you but it's nice to know that somebody is paying attention um let's
49:05
see okay okay so here comes our friend Jesse so Jesse you just met a minute ago and he's
49:12
back okay so if you'd like let's hear your pitch minute or two
49:19
right everybody in the chat please Jesse and if you have questions um or comments
49:25
really we won't have time to do a lot of questions right this isn't so much about his strategy it's more about like what
49:31
did he say or what should he say more of or less of or you know that kind of things help him with the file business
49:37
I'm sure it's an amazing business Let's help him with the pitching that's the thing we have all right Jesse how's that
49:42
sound sounds great Scott thank you so much sure go ahead and yeah this is this
49:49
is an entirely new Venture I mentioned with this um new type of insulation technology especially for for green
49:56
houses because it is clear of all things which seems impossible but um I
50:01
definitely interested to um you know maybe get some NSF funding uh because
50:06
it's so applicable to many concerns with uh Energy savings and um food security
50:13
and all that but I think I've read that NSF uh funding can further help secure
50:19
uh Venture Capital because that certainly um reinforces the viability of
50:24
the tech but yeah being a physical Tech also it's of course quite a challenge with the whole manufacturing side of
50:31
things um I'm currently building a a prototype Greenhouse that demonstrates
50:37
the feasibility of the tech but um of course scaling that up to to mass production is a whole another thing but
50:43
basically um when you drink your hot coffee out of a thermos bottle um it's
50:49
miraculous how it's able to keep that warm or hot or cold pretty much all day long and the Miracle of that is an ultra
50:56
high vacuum that resides between the outer and inner structure of that thermos spotle and because there's
51:03
essentially nothing there heat is very uh ineffective to move through nothing
51:10
but if you replace that stainless steel Thermos bottle with basically a polymer
51:16
membrane that is then got some type of internal structure to it there is an existing um vacuum insulated panel
51:24
Market um that's currently kind of in its infancy for housing construction and
51:30
whatnot because it's very Compact and offers extremely high insulation value however it um is definitely struggling
51:36
to find a real niche market um but with this um being able to basically
51:43
drastically cut the costs of commercial Greenhouse production and expand its um
51:49
applicability and even various new climates um for more types of produce I
51:54
feel that could be kind of the perfect application for vacuum Tech also they
52:00
tend to use cores that um are quite not very environmentally friendly to make it
52:06
clear this vacuum panel needs to have a very systematic engineered structure to
52:12
it which is kind of the secret sauce how you accomplish that and also employ
52:17
modern um barrier kind of properties but yeah I definitely would there's of
52:23
course all kinds of facts and figures as to the um the scale of the market around the world in
52:29
this greenhouse Fields but um that's basically the gist of it excellent well
52:34
good job so when I do this in person this is the point where I say everybody give him a hand because that's not easy
52:41
to do um and especially you know in an in front of an audience either virtual or in person um that takes guts so so
52:48
thank you for sharing that with us that sounds very interesting um I have plenty of feedback on the pitch of course
52:54
because that's what I do but everybody else who's watching please go ahead and comment and like um sorry comment
52:59
discuss um in the chat room and offer him suggestions I'm going to do mine as well um but uh that was good and a great
53:07
start so okay so how could it be better is really the question right so fascinating material sounds like you
53:13
know your stuff excellent um clear insulation I like the thermos analogy that makes sense because as you know
53:19
with a lot of tech stuff it's hard for um people to relate if they don't relate right so we all know what a thermos is
53:25
so that that's very good um one of the mistakes that technical people and I'm not saying you this is the opposite of
53:31
that technical people often make when they pitch is they they presume a certain level of knowledge among the
53:36
audience and investors tend to they're kind of differential to us right and we tend to be I'd say on average a little
53:43
fairly smart people or educated or at least experienced but that means we have kind of broad experience and if it's in-
53:50
depth anywhere it's usually Finance it's not in materials engineering for example or space Tech or edtech or or you know
53:56
any of the things that we hear about so it's really important for technical Founders especially everybody but
54:02
especially technical Founders to back up and make a simple analogy and Jesse did that like the thermos thing I got it
54:08
right um so that that's really important in terms of bringing as my dad you say bring the hay down where the horses can
54:13
eat it right like we've got it okay because that context is important for us it may be really obvious to you guys
54:19
what you're G to talk about because you spend all that time we've never met you before we have no idea what you're going to talk about you got to lay the
54:25
foundation otherwise we're just lost and this is even more important when you have like a 12 or a 20 minute pitch if
54:31
you don't get us understanding where you are in the first 60 seconds the other 15 minutes are a waste of time you see
54:37
everybody's phones come out even see people falling asleep right I mean it's like good time take a nap because you lost me so I'm not saying you did that
54:44
I'm saying you didn't do that so that's cool I'm just supporting you okay so
54:49
more specific to him so what you did is also typical of early stage Founders especially uh technical Founders is you
54:55
told us a lot about the product but nothing about the business and that
55:01
proportion needs to be you did like 9010 it needs to be like 40 30 40% business
55:08
at least because I have no idea how you make money who your customers are um what the commercialization opportunities
55:14
are and um you said you have numbers and I'm sure you do but we need the numbers right away that's what we do investors
55:21
eat numbers otherwise it's all pie in the sky so the sooner you can get to some numbers the better better so I
55:27
would suggest and you can what's cool about this is It's recorded you can go watch it on YouTube you did a fine job especially for somebody who hasn't done
55:33
this is this have you ever pitched this before no no was that was great so I'm really not throwing stones I'm trying to
55:39
help um but go watch right and you'll see that from an Investor's perspective I didn't hear anything about how I'm GNA
55:45
make money and that's my job right I didn't hear anything about that so as a as a scientist person you're interested
55:51
in the concepts the concepts to us are secondary to the business opportunity that's just the job right especially for
55:57
Venture Capital firms their money is raised from insurance companies and Pension funds and endowments and
56:02
Foundations their job is to make more money so they can't be interested in the concept until the business makes sense
56:08
so you just got to kind of reverse you know turn the telescope around and tell us about the business um I would also
56:14
suggest um let's see part what will lead to that is sort of a problem solution so
56:20
I would try to be a little clear what the problem is it's obvious to you it's not obvious to me because I don't know
56:25
your business right I don't know your space or your research so you know what is the problem and then who's the
56:31
customer and then why is your solution the one that's going to solve it and how does it make money that kind of
56:37
structure problem solution um business model and then
56:43
hopefully you know let followed by explosive growth is what we want to hear so um yeah that's kind of the overview
56:49
who does that helpful give you some context very much I appreciate that yeah and just being able to get it out into
56:55
the world helps to uh kind of feel like this is something I can do so I appreciate just the opportunity yeah
57:02
yeah totally man it's it's like you hear it coming out of your mouth it practice helps right even if it's just to your
57:08
mirror or to your kids or whatever like your dog you know hearing it you're like oh I I like the way I said that or I
57:13
didn't like the way I said that or and that's why pitch competitions are so important and this is just pitch practice nobody's writing checks but
57:19
yeah doing that with a little bit of pressure from you know knowing people are watching is is absolutely critical the fact that yeah had actual awesome V
57:26
venture capital guy in out out east or west I mean in uh um Silicon Valley
57:33
that's not every day you get to do that awesome well thanks for thanks for appreciating me too cool well that's
57:39
Jesse oh let's let's let me just look in the chat did anybody put anything in the chat for uh suggestions let's see
57:47
[Music] um Christina says interesting problem
57:54
interesting solution each one could be one to two sentences only yeah um way too much detail and you're pitching the
58:00
product not the that's what I said yeah how can you pitch the business yep um uh okay good feedback Christina um
58:08
okay yeah I think that's helpful the um I think she's right too the one to two sentences only and you and you did a lot
58:15
of setting up and a lot of people do that if you practice and this is for everybody if pick your time frame is a
58:21
minute three minutes 10 minutes whatever it is almost everybody will try to spend the first 30 to 60 seconds kind of
58:29
warming up you know like so I got into this and we knew this and this and this and then finally it wasn't until like
58:35
three quarters through that you actually said the magic words to me which were cut costs that that's because that means
58:42
money right and that was way down the list in terms of your priorities and pitching you did a lot of warm-up so
58:48
again not throwing stones but move that up right if the business model is that you were cutting cost by providing this
58:54
you know revolutionary material that's what investors need to hear because that means revenue and that's what gets
59:00
customers excited too right so that's the hard part These Days ideas are cheap it's it's distribution and customer
59:05
adoption is hard so okay perspiration there you go perspiration exactly great
59:11
well nice to meet you Jesse that was fun and I think you're our first time caller from rural Appalachia so that's awesome
59:17
to know that we're reaching people out off the coasts um Inland as it were okay
59:23
Jessica says how often are y'all investing in startups that are not tech-based
59:28
products well the y'all is very general there I represent several different groups and different opportunities um
59:33
and so I'm trying to speak for all investors but I really don't you're right you caught me I'm mostly a tech
59:39
investor why because Tech scales faster right you guys have seen it in our
59:45
lifetimes right social media explodes AI explodes Uber right there's once it's software can be just recreated and
59:51
spread across the globe so quickly compared to say you know a t-shirt shop or a restaurant or a a car repair place
59:59
or you know any kind of traditional business or even service-based businesses right you might have a a spa or you're a chiropractor or a dentist or
1:00:05
something like you need more bodies for that software if you figure it out boom
1:00:11
you know instantly available worldwide on the internet so yeah Tech is The Sweet Spot most Angel Investors not Venture
1:00:19
capist but Angel Investors like me we're fairly agnostic meaning we're just kind of looking for interesting opport
1:00:26
unities and I'll give you some insight actually we're looking for opportunities where we can make money because that's
1:00:32
what the money is for we're trying to make more money with the money but we're also looking for places we can help most Angel Investors do this because they
1:00:38
want to add value often based on expertise we've built from our own careers or causes that we care about um
1:00:47
so if you have a mix of that angel investors are probably the way to go VCS on the other hand are very different
1:00:53
like I was saying earlier they tend to have their money given not given but invested in them by big institutions but
1:01:00
that's based on a thesis every Venture Capital firm will have a thesis and it's usually on their website or at startup
1:01:07
investors directory.com this thing I was telling you about the um their thesis
1:01:12
will be on the page right we've make sure that that's there and it will say we invest in late stage aerospace
1:01:18
companies or we invest in women Founders at the seed stage or whatever it is
1:01:24
right they'll have a specific mission and that thesis is important for you to pay attention to because it's a waste of
1:01:29
your time and theirs if you're pitching your seed stage Cosmetics company to a
1:01:35
late stage uh you know Aerospace firm right it's just you're not going to mix
1:01:41
right so research is the number one thing that I recommend that's why we actually that's why we built this was to try to put in one place a bunch of um
1:01:48
early stage investors in one place and you can actually see what their um portfolios are so you can see other
1:01:55
things that they've invested in and that is really critical because if you're going to reach out to them and you don't know them already you need to have
1:02:00
something in common and a good one is oh I see that you invested in this company
1:02:05
well my company's the next one of those and we're going to be huge right you can at least have something to go on and I
1:02:11
would recommend also of course checking them out on LinkedIn and personalize don't be creepy don't stalk them but be
1:02:16
as um helpful and friendly as you can to personalize it because we get flooded with stuff and we can't answer
1:02:22
everything so all right so I think we're near in the of our time together today
1:02:27
um this has been really cool and I'm glad you guys are here and um let's see
1:02:33
one more let's just press can's got some good questions if precede investors how
1:02:40
to best structure a deal or loan well that's up to you this is a good uh place
1:02:45
to do a lot of reading online or to come back to our office hours happy to talk more about that there's plenty of videos
1:02:52
and a lot of attorneys have blogs about this I could introduce you to attorney as I mentioned most preed deals And precede
1:03:00
means there's no company really yet still kind of an idea this is the first money in usually the first check most
1:03:07
preced deals are done friends and family and like you said they could be Al loan totally legit that's honestly the way
1:03:14
the world really works in Tech circles in startup the startup world we don't
1:03:19
talk about loans much but honestly debt is the way the world works and has for Millennia right Venture capitals a fair
1:03:25
new invention and it only applies to a vanishingly small percentage of companies that actually raise multiple
1:03:31
rounds of venture capital and go public and become a Facebook right that's a tiny amount of the world but it's the
1:03:38
one that spins off lots of millionaires and gets everybody excited that's why it's in the media all the time but you need to kind of understand the
1:03:44
difference between those because again they're tools one's a screwdriver one's a wrench both are important but at different times so loans are usually
1:03:51
given once you have some Revenue already but if this is a precede you could have friends and family give you a loan just
1:03:57
based on the potential and that's lovely of course fantastic more often if you're getting actual investors like me uh or
1:04:04
the tech Coast Angels or the Thai Global Angels or the Stanford angels that I run here in Orange County California um we
1:04:11
look at um actual uh quote unquote real Investments and that these days is
1:04:17
usually done at the preced stage in what's called a safe note safe stands for simple agreement for future Equity
1:04:23
you can Google that safe note and a safe sa note is kind of an agreement to you actually invest but you didn't figure
1:04:29
out the price until the company gets going so for example your company you're
1:04:35
raising some money I you know me and my friends were really interested so we're going to put in say $50,000 we'll sign a
1:04:40
safe note it's only a two or three page document that basically says you've got this happening we're going to own a
1:04:47
small piece of it $50,000 worth but we're not sure how much of the company that is until you hit some milestones in
1:04:54
terms of whatever is appropriate you know building a team building a prototype signing some customers generating Revenue you kind of agree on
1:05:01
like at some point this is going to get better and at that point real investors are going to come in like a VC firm and
1:05:07
they will set a price which we call a valuation so we're going to put in 50 Grand now um and we'll probably limit it
1:05:14
and say that it's worth no more than say three million or five million so that we know we have a a uh some kind of
1:05:22
ownership percentage small but not not too small small not too large just right
1:05:27
but when another company comes in real investors come in and they say okay we are going to put real money in the company's doing well we're going to put
1:05:33
in whatever $2 million and we think the company's worth eight so on a pre-money valuation we're taking a quarter less
1:05:39
than that once you do Post money this gets complicated quickly talk to your lawyer but um then our our our 50 Grand
1:05:47
will convert at that price but no higher than the cap we said so that's probably more detailed than you need but a safe
1:05:54
note is the short answer loans are cool Safe Note would be the other the other forms you hear about are um convertible
1:06:00
notes which are much more long much longer documents and and then actual
1:06:06
Equity with people you actually issue shares in the company or options those require a lot more lawyering and you can
1:06:13
spend 10 easily 10 if not 20 or $30,000 on those that's why the safe note was created because you can literally print
1:06:19
the template out online and uh fill in the blanks and be done like in 10 minutes you probably should a little
1:06:25
more attention than that but that's kind of the idea so safe notes is the concept
1:06:32
okay so excellent um nice to see all of you um we're
1:06:39
uh let's see yep about time I got to go I got to go to a tech Coast Angels meeting we're ramping up for some fun
1:06:46
more more fun activities and we're looking for deals Tech Coast angels.com and if you actually are interested in
1:06:52
pitching me or my friends let's see I should put up this link this can be our finale I guess um I mentioned already I
1:07:00
think that uh I love doing speaking if it's helpful and you're having a conference in your town let me know I
1:07:06
travel a lot I might be in your town anyway and if not um you want to fly me in I'm happy to if it's someplace
1:07:12
interesting I'll even come for free um but no that wasn't what I was trying to show you it was
1:07:19
the funding I have a link here for funding my recommendations for funding
1:07:25
and it is hiding from me there it is okay so if you're looking for funding
1:07:31
recommendations a lot of you when I do these shows you LinkedIn message me or you find our contact form you email me
1:07:37
directly this is where I'm going to send you so you can save a step I don't have time to engage with everybody personally
1:07:43
unfortunately but I'm trying to help a lot of people so go to this page and this outlines several of the groups that I'm involved in some of the um Angel
1:07:50
groups and services I've mentioned today are listed there and most of them are open to to online application honestly
1:07:57
you hear a lot about wanting and needing um a warm introduction that certainly
1:08:02
helps but fact is you know good ideas are hard to find and we're always
1:08:07
looking for good ideas and you can use my name if that helps um don't pretend we're like best friends but you know just say that you were on U startup
1:08:14
office hours or that you participa in startup Council events and that may help a little bit and happy to help if we can
1:08:21
and then I guess while we're on that if you um really do want to talk personally I have so so much demand for this that
1:08:28
um I I have to charge for it but this is a page it's scotf fox.com workwith Scott
1:08:34
but I do do a limited number of private calls each month or we can re I can review your pitch deck or your um I can
1:08:41
do a video of like reviewing your pitch deck I do that for people uh these are not cheap but I'm happy to do it when I
1:08:46
can fit it in my schedule and I have to charge because that's otherwise I lose control of my schedule and um I have
1:08:52
other things going on in my life too just like you do so if that's helpful to you I hope it is so I'm Scott Fox thank
1:08:58
you for tuning in you've been watching startup office hours we do this every month so if you're watching the replay go ahead and stick in a comment and uh
1:09:05
or question of course likes and shares and subscribes are always appreciated as well and if you haven't joined the
1:09:10
startup councel yet please join us over at startup council.org it's this URL right here behind me and this is a bunch
1:09:17
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1:09:24
go sign up on email list over there so we can keep in touch and always open to your feedback thanks for watching
1:09:29
listening and tell your friends hope to see you again next month byebye now