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 Oct 26. 

To watch the new Startup Office Hours replay click here. 

Startup Founder Discussion Questions This Month

Watch the free replay for expert discussion of:

• what is a SAFE note and what alternatives are there for seed funding (convertible notes, equity)
• Pre-money vs Post-Money SAFE deals, and which investors prefer
• how to find angel investors who will be interested in your startup
• how to show traction before you launch
• what to focus on in your pitch to investors
• choosing S corps vs C corps vs LLC as the entity for your new venture
• and of course much more - including 4 startup practice pitches from real #entrepreneurs

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

And see a complete TRANSCRIPT BELOW.

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The Startup Office Hours livestream is the 4th Tuesday of each month at 300pm ET / Noon PT.  Questions and practice investor pitches are hosted LIVE by Scott Fox, CEO of the Startup Council/Angel Investor/Serial Founder/Author/Startup Expert.

You can watch LIVE here later this month on November 28:

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Submit your Question in Advance >> Win Free MasterMinds Workshop Tickets:

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MasterMinds Startup Fundraising Office Hours are a free community service of the Startup Council. 

MasterMinds Startup Fundraising Office Hours TRANSCRIPT for October 26, 2023:

0:00
so I do this each month uh for an hour or two to take questions to try to help people it's my lunchtime here basically
0:05
so I'm taking a little break uh volunteering some time to help you uh move your startup along I've been doing
0:11
this a long time like I said um and if you want to know more about me you can go to the startup council.org or or just
0:17
go to Wikipedia there's a page about me there uh stuff like that uh there's not going to be any sales pitches today
0:22
except from you you can tell other people about your startup and get some Pitch practice in and nobody's writing
0:28
checks today but this is a good chance to practice your pitch and to get some feedback that can be helpful and
0:33
constructive with a lot less pressure than when you're actually at a pitch competition or up in front of a group of
0:38
investors right so this is meant to be fun I want to also encourage you all to use the chat room go ahead put your um
0:44
put your URL for like your LinkedIn page in there or your website or or something project that you might want help with
0:50
what are you working on go ahead and use the chat room what I'm really trying to do is build a community here not just for me I can't help everybody or talk to
0:57
everybody but you can all talk to each other and that's the way you get ahead in this game you build relationships and
1:03
you find more people to work with and some of those will probably include investors if you do things right so
1:08
here's my LinkedIn Earl I'm going to put it in right now and you're welcome please say come over and say hello
1:14
please don't just click and say hi though I mean don't just click give me a little note because I I literally get
1:20
hundreds of these messages and I really I'm one of those old school people I only like to collect with people I have
1:25
at least some connection to I know obviously we're not going to be best friends uh today immediately but just say hi you saw me on the show on the
1:32
office hour show or something like that and I'd be happy to accept your um your uh connection and we can uh keep uh keep
1:39
building things together so who we got here uh Cynthia from Orange County Ron is working on next fan Athena hey from
1:46
Anaheim nice to see you Athena and uh Portland Oregon great uh North Georgia
1:51
San Clemente all right so so far we're only on the west coast and San Diego
1:58
yeah only in Las Vegas that's a little Arlington for there we go Rob's in Arlington La Berlin thank you Chris I
2:03
was looking for an international one there's Berlin that's the beauty of the internet here uh we can all get together
2:08
remotely Istanbul hello Dimitri all right there we go so now we're spreading out across the Ottawa yeah I thought so
2:15
this is the this is the internet thing you know that's the one thing that I really liked about the pandemic and it's probably the only one is that we all got
2:21
way better at this whole uh internet thing right uh the global uh
2:27
conferencing zoom and all these tools that we have now and it's great to see you guys and have you here so let me do
2:33
a couple quick um a couple quick uh sponsors and disclaimers so let me
2:40
say first uh this is a public forum this is being recorded and is being shared
2:45
online obviously so if you do come on or um don't say anything stupid uh that you
2:51
wouldn't want other people to know so ask your questions but don't want to give away anything too confidential U
2:56
probably more important this is not qualified legal or financial advice I'm a licensed attorney in California I have
3:02
an investment banking background and a bunch of uh used to have a bunch of uh Financial qualifications and uh
3:08
credentials and stuff but this is not about that this is more like strategy and I'm just some guy you met on the
3:14
internet so if you are listening to this uh don't take it too seriously check with your own qualified legal and
3:20
financial advisers as well as your friends and mentors and employees and everybody else right I'm just one guy
3:26
you met on the internet so don't uh don't take it too seriously this is for entertainment purposes
3:31
only okay now let's talk just quickly about our sponsors and then we're going to get to our questions so sponsors we
3:37
have some cool sponsors and the number one of which is here my friends at cake
3:43
cake Equity so cake is a uh Global stock options management platform so every one
3:49
of you folks I don't know how early you are but if you are you're going to set up a corporation if you want to raise
3:55
Venture Capital you need a corporation and then you're going to is need to issue stock options to your team team and to your uh well mostly to your team
4:02
right and Cake makes that a lot easier than it used to be it used to be a real uh difficult and often expensive process
4:08
because lawyers would get involved and uh tracking all the people that invest in your company you manage the capitalization table and then the
4:14
options and cake is a great easy to use uh tool and much much cheaper for example than Carta uh and um plus
4:22
they're really nice folks and un fold disclosure I'm an investor in the company that's why I'm a big fan of this company I actually invested because I
4:28
think it's such an important service for all of you and and me too right I'm I'm a a customer and a user and an investor
4:35
so cake Equity also wanted to point out let's see um a couple of our others here
4:41
the main thing is is startup Council right so this is this is my organization here startup council.org so I started
4:47
this a few years ago I started here in Southern California and it's been very helpful in getting the community
4:53
together we have lots of sponsors and lots of events and we have a newsletter and a directory and you know all the
4:59
stuff that helps people find the resources they need to build companies so we're expanding nationally and even
5:04
internationally as those of you from um Hearn Virginia and Florida and Ottawa
5:09
and DC and Berlin and Istanbul um you're all invited here and you can be a member
5:14
for free and what we have is's a bunch of services basically you know what I actually have a Graphic for this okay no
5:21
not that one sorry I turned off the chat that was my mistake um come on chat come
5:26
back um but the design here we go okay so here's a bunch of logos now this is not necessarily pretty but it gives you
5:33
the idea so startup council.org is the mothership essentially but these others are all services that we offer to help
5:40
you if you're an early stage founder startup investors director you there's thousands of early stage investors
5:45
categorize 48 different ways so you can find the right investors for you National startups directory.com you can
5:52
list yourself there so those investors can then find you it's it's the same search engine but in Reverse so one is
5:58
to you can go find invest s and the others is you list and they come find you startup events.org just what it
6:04
sounds like it's the only world's only uh Global calendar uh well mostly
6:09
english- speaking of course um but the only calendar of only virtual events
6:15
only for startup Founders so if you don't live in Palo Alto or London or a
6:20
big startup City this is a list of events for you trying to help folks in Rural and non- coastal cities for
6:26
example find the free education that need so it lists all kinds of networking and educational events and fundraising
6:33
events and Pitch competitions and all that kind of stuff so that's startup events.org it's free and then our our
6:39
workshops our masterminds workshops run those once a month and um those are designed they're kind of like this but
6:45
smaller groups and I run them in person here in Southern California and also online every other month so you can come
6:51
and join us if you want to work directly with a bunch of cool folks uh with similar mindsets and needs okay so room
6:59
is full okay so we're going to get started with questions here but the uh room is full so there's only room like I said for 10 people backstage so I
7:06
apologize if you can't get right in right now the folks that are there will be um will be cycling out as we answer
7:14
their questions and then new people can come in especially like if you want to pitch we're gonna do some pitches later in the show okay so let me um my last uh did
7:24
the chat break or did people stop posting when I click on it it goes away so if somebody could post something
7:30
again hopefully that will feed through um out there on YouTube or LinkedIn I didn't know is anybody on YouTube
7:36
actually is the YouTube not working I can't monitor everything at the same time when I do this um there we go
7:42
testing thank you Nicholas very much appreciated um where are you from Nicholas I don't recognize your name all
7:48
right so we're going to uh okay keep saying we're going to get started we are getting started let me just check my
7:54
notes here okay I told you about that told you about that okay okay cool all
8:00
right so now we really are going to get start it is okay verto parking services and Arduino and Cynthia thank you
8:07
Cynthia enjoying the show all right cool we're hardly even started yet here we go okay so folks backstage like dangu
8:13
hakeim is from Malaysia Hey Mimi Malaysia babani is from Ireland excellent Eric from Berlin and Sandy
8:20
you're local I think I met you and uh Eric from San Jose and uh Nick Randy hey
8:27
Randy and okay a bunch of folks there we're going to bring those folks on camera so if you're backstage please
8:32
turn on your camera for a minute I want to bring you all on for a minute I'm going to turn off the chat so we have more screen room for a moment uh but
8:39
your uh your questions will show up and we'll go back through them don't worry so go ahead and keep posting and while you're at it go ahead and um please like
8:45
And subscribe go ahead and invite your friends um you know send them over to the YouTube channel it's easy to find um
8:53
okay bring folks on from the backstage and yeah backstage is full folks so we're going to bring this first group of people on see what they want want to
8:59
talk about and we'll try to do this in some kind of logical order yeah Full House here today okay cool okay so here
9:06
we go one two three ni
9:13
Sandy dong sry I don't know how to quite how to say that dongu but I'm sure you'll help me just hang on a second let
9:19
me bring everybody on and Troy and hakeemi and Nick my goodness
9:26
Full House hi everybody good to see you all um okay so welcome to fundraising
9:32
office hours so we're going to talk through and what I'd love from you right now is um mute if you can somebody in
9:37
the car there maybe you mute until we until you're talking please thank you um
9:42
you know you all know how this works so I'm going to take some quick notes and tell me each what you want are here to
9:48
talk about and I'm going to just the quick version okay just like the 5-c version and I'll try to uh Stitch that
9:54
together into some kind of uh coherent program for everybody else to listen to so let me start um just in you're in the
10:00
order on my screen here uh this uh let's see who do we got here Troy hey Troy
10:06
what did you want to talk about today hey Scott uh I was we uh apply to
10:14
pitch to pitch our our company called gamut Tech and our Hardware tech product
10:19
that gamifies the toilet cool all right nice to see you um we'll do that a
10:25
little later in the show okay um then we're going to go over to who's this
10:30
hakeim hi Hakimi nice to meet
10:36
you kimy can you hear me you're Frozen okay I'm Gonna Keep moving we can come back to you though Kim if you if you
10:42
come hear last time I was here you you look much much older
10:49
Scott I'm just here to check things out okay cool well nice to meet you
10:54
we're we're in Malaysia can you hear me out and clear
11:01
yeah can okay well nice to see you again my microphone looks really
11:07
fine yeah you're good right okay how about
11:12
Nick yeah hi Scott um on my end I want to discuss about uh early stage
11:17
investment and safe agreements and what's the best route in order to do so excellent
11:24
okay fundraising document cool thank you and then above him uh Randy I don't I
11:32
didn't put you on Randy sorry there we go there's Randy there we go hey what's up
11:38
Randy you gotta unmute my
11:43
friend from I had similar questions about safe I I'll let the other person ask the questions and follow up with
11:49
that but and I did have a question about uh transitioning the business uh just an opinion really okay that sounds
11:57
interesting that was a good teaser now you got me curious is okay and then d d
12:02
dongu how would you say that uh yes it's
12:08
Don okay hey D where are you calling from I come from Tampa
12:14
Florida oh okay nice to meet you yes so actually um my our co-founder so
12:21
UB okay so attended your private uh meeting last week so so you were and I
12:29
we are the co-founder of our uh of the sound AI the today I would like to
12:36
practice our investor page and uh get some feedback and also ask some uh
12:43
information about how to get the investor for the preceding uh stage
12:48
thank you okay yeah you're welcome nice to meet you I remember you about yeah we was in our last masterminds group uh
12:55
last week I think it was yeah nice to see you glad you're here and uh n
13:00
ni hey Scott uh good to meet you I had a bunch of questions about uh well Nick
13:06
kind of cover this in terms of like finding investors maybe just an organic way to meet Angels but honestly I just
13:12
look through your background in in the world of broadcast so if you have any insights in terms of uh the nuances
13:18
there like in getting started do you want to go to the Agency Route do you want to develop content on your own I'd
13:23
be I'd be curious about that as well okay specifically in the broadcasting world
13:29
um yeah I would say you know giving a kind of verbal presence coming from your
13:36
company so from a brand standpoint if you want to put things out to customers who are members for example what would
13:41
be a good way to get started in terms of delivering content that's brand specific okay maybe industry specific I
13:49
don't know if that's too General but um well we'll come back to it okay nice to
13:54
meet you and Eric uh hello Scott yeah uh connecting
13:59
from Berlin um I have a just a small question on what the right uh or the
14:06
next steps would be after having developed an MVP and getting to launch it not necessarily finding investors but
14:12
more so um the right people to connect with to test um the system to test the
14:18
MVP basically oh interesting okay operational question great that's some variety cool thank you that's good and
14:24
thanks for staying up you're what time is it yeah not too late but still night time for you thank you for being here
14:30
and then Eric yeah I'm Eric piie nice to meet you Scott um based here in San Jose uh first
14:38
time joining this group so really uh um glad I found it um I'm with AI for pet
14:44
we U help parents uh scan their pets Health through um AI technology um my
14:50
question or two questions really is um one how to navigate the uh kind of the
14:56
US VC space or or investment space um coming from a a South Korean um based
15:03
company um and the second one is uh more around the problem um slide uh or slides
15:11
uh in our pitch deck and how to really focus in on is it the the size of prize
15:16
that's most important or the impact that we can make for pet parents in general um so understanding is it really
15:22
quantity or quality that we're trying to solve and how we should approach that for for which audience um so so
15:29
specifically for the the investor audience um when talking about the problem of what we're trying to solve uh
15:36
and and how to how to think about that and what might say okay that's interesting okay that's insightful
15:43
question even the way you frame that okay and I think I missed Sandy Sandy you're right in the middle there that's why I missed you
15:48
sorry hey Scott how are you I am an Aliso Vio yes we have Matt um I think it
15:54
was actually about two weeks ago tonight actually okay um and my question is
16:01
um about raising money doing fundraising while you're still an S corporation I
16:07
want to postpone becoming a C corporation until next year because of
16:13
the way that California administers the minimum Franchise Tax and so I'm trying
16:18
to avoid paying that for a while longer and wanting to know if I can fund raise as an S corporation and then just
16:26
transfer everybody to a cc Corporation as soon as they form that on January 2nd
16:31
okay interesting okay cool all right well thank you all since I have you all here
16:38
um I appreciate you being here can you all give me a quick H smile or wave and I can take a little screenshot is that
16:46
you know how this works right this is the this is the internet so it didn't happen unless we take pictures so there
16:52
we go so cool thank you okay so let me um let's see here let's let me take a
17:00
second here I'll let you guys go for a minute and uh see what uh what
17:12
our what here S I got a bunch of people here today thank you all for Shilling up
17:18
the backstage there somebody needs to mute too is that me no there it goes
17:23
okay I think it might have been backgr there if could mute that
17:29
would be super um okay cool it only matters when you're on camera so if that's a problem
17:35
go ahead we'll just take care of it when you come on camera okay so there you go so that's what we're going to do today now you know the table of contents uh
17:41
the friends from all over the world here um trying to uh move their startups forward farther and faster and I do this
17:48
because I used to be you and I didn't have a me so I'm trying to uh we're
17:54
going to go through those questions together and if that sounds interesting to you please invite your friends uh right now tell them to come on over and
17:59
join us on YouTube and places like that we've got a lot of different um uh
18:05
venues uh this is on Facebook and YouTube and Blog Talk Radio and Linkedin
18:12
all at the same time so if you want to contribute and participate please do let me run through the chat room real quick
18:18
and just uh see if there's anything that I missed uh real quick and we'll um sorry did I turn it off again I did I
18:25
keep doing that okay now chat this there we go okay so now I have your let
18:31
me look through the chat for a second and then we're going to get to our questions so okay I said hello to you folks hello hello hello
18:38
um let's see Portland Oregon Anaheim Berlin Istanbul Ottawa Florida hearen
18:45
DC um let's see uh let's see testing
18:52
YouTube is working okay okay okay there we go okay good so it
18:59
looks like we're caught up there you all are just talking to each other and that's perfectly legit please do uh go ahead and make friends uh LinkedIn seems
19:05
to be the operating system for entrepreneurs these days so if you're not active there you should be go on over in fact you know we started
19:11
recently a LinkedIn group for uh Founders and um investors who want to
19:17
accelerate their their startups and um I'm trying to remember what we called it if you go on LinkedIn you can search
19:24
startup council.org accelerator group I think that's what it
19:29
is anyway uh you can find that if you connect with me on LinkedIn then I'll invite you anyway so um yes Josh go
19:36
ahead and put questions in the chat and we will try to get to that all right so let's get to our live questions though
19:41
first those get priority so um let's see here we got some pitches um early stage documentation
19:49
safe and investing um preedee uh
19:55
fundraising content post and VP launch pitching how to navigate the usvc
20:03
system okay raising escorp okay let's start um let's see how about we start um
20:11
I don't know how about we start with with uh Eric here so Eric are you still around your question was kind of the
20:17
most General one we had so uh but your camera's off so if you're busy eating lunch that's fine I'll move on to sandy
20:24
uh but Eric there he is okay you want to join me okay he's eating lunch I caught too you you EXA you knew exactly what I
20:31
was doing nice okay so um I gather so we can maybe um did you want a pitch later too
20:38
I think you send in a pitch didn't you that'd be great yeah please okay we'll try that later but um so your question
20:44
let's talk about the landscape for uh Venture Capital fundraising first and we can talk about your investor problem
20:51
presentation maybe also later um it it's interesting to me because you're coming at this it sounds like with fresh eyes
20:56
your your company or you are from South Korea and you're new here is that kind of the background uh the company company
21:02
is coming from South Korea um I'm actually from uh the stes and uh here in California um but the the the company
21:09
because of our technology we've uh developed this with our researchers and our engineers in South Korea and um
21:16
we've tested it and kind of proven Traction in Korea and now we want to officially launch this in the US uh and
21:24
so our big kind of Challenge and our goal is to connect our our company to to
21:30
the Right audience uh make sure we have the right fit uh product Market fit uh and then understand I guess the VC
21:36
landscape um because we haveraised in Korea but now we're trying to raised here in the States and what that kind of
21:42
landscape and dynamic might look like some of the challenges and hurdles and maybe some tips and advice uh from you
21:48
Scott would be great yeah okay so how much have you raised already so in South Korea we've raised
21:55
uh $2.4 million oh great um in series a and we had uh you know an actually an
22:03
approval from the go the South Korean government um as the first medical uh
22:08
device uh for for non-face-to-face uh telec Consulting and so what this
22:14
technology essentially does is you have your phone and you scan your pet's eyes
22:19
for example and um it it will detect whether the uh the eye is healthy or not
22:24
uh and'll give you the the the result with about 9 % accuracy which is something that we're we're incredibly
22:30
proud of it took about three years to develop uh this technology very cool okay and to so well we can hear more
22:37
about that during your pitch practice but so two and a half 2.4 million uh us you've already raised you're on your way
22:43
in terms of funding so this is not a from scratch friends and family situation it sounds like you're looking more like at a series a whatever that
22:50
means these days but so your next round you're thinking is probably three or five or eight million or something what
22:55
kind of ballpark are you roughly thinking about yeah roughly we're thinking around five to 10 million um for for series a in the
23:02
US and obviously that's different from you know Korea and the traction that we've heard and I think that's another
23:08
question is um how important traction is currently in the States versus you know
23:13
what we've seen in Korea sure okay so let me um I'll start talking and you can wave your hand if I go in the wrong
23:21
direction so um so let's give an overview for everybody this is great
23:26
because you kind of have the external perspective on the US market so uh obviously Angel Investors invest smaller
23:32
here uh starting at maybe 25,000 or maybe even five or 10 thousand these days right up to maybe 50 or 100
23:38
thousand a group of angels like I belong to Tech Coast Angels which is the largest Angel group in in North America
23:44
we've got about 400 members and we put about $250 million into companies over 500 companies over the last 20 years um
23:52
in that case there's a bunch of us will come together and you might raise between 300 maybe five or 600
23:58
uh but then we might Syndicate to other Angel groups and you might get a million or more especially once you uh
24:03
syndicated it so that's kind of you're probably past that already but that's kind of context for everybody else so
24:09
the next step then is early stage Venture Capital so um the series a level there are thousands of firms these days
24:16
it's it's really hard to find who's who there are so many everybody calls themselves a venture capitalist or an angel investor now so a lot of the
24:23
emphasis I think if I were in your position would be on Research uh who are the real players in this in this uh in
24:29
your space uh looking both terms of uh especially industry sector right who who
24:35
are players in there you've got corporate uh VCS that might be strategic have strategic interests as well um and
24:42
then I would be looking also the thing that people never talk about is which of these funds are actually active because funds raise on a life cycle and they
24:49
might have been really busy three years ago but now all their capital is invested and they're just waiting to see how this fund works out or maybe they're
24:55
busy raising another fund they're not actually investing so they could be good friends for later but are probably not
25:01
in a position to write you a check now and that's something that's almost never discussed but there's a timing element to this that goes far beyond just
25:08
whether it's Christmas or not right this is is a multi-year cycle for investors um it's also important to know and is
25:15
this am I on the right track is this helpful yeah I think having a kind of a general landscape of the of the of the
25:21
VC space is is very helpful and yeah we are definitely trying to look for the right fit with the right investors and
25:28
the people who are interested in Pet Care technology um because that's um ultimately the space that we're going to
25:34
uh you know hopefully transform and uh we want to be the leader in that yeah well it sounds like you could be um so
25:40
the the thing I would do is like I said is research for example one of the things that we built is the startup investors directory.com it's um it's a
25:48
little earlier stage than you but still might be useful because there's all kinds of people there people meaning investors um and you can really drill
25:55
down on things and some of the this it's a unique database because it allows
26:00
people to search for investors who for example you can look at their portfolio but you can also search on things for
26:06
people who like are interested in say in Black Founders or immigrant Founders or veteran Founders or you know any
26:11
qualifications that you and your team have which in this case maybe there's an immigrant angle for example um and that
26:16
because a lot of people want to support that right um because immigrants are such a great benefit to our society um
26:23
so the research I think is really key the the trick is that the research tools are very expensive well ours is I think
26:30
it's 50 bucks or $70 or something it's really it's like a cost basically right
26:35
but pitchbook like $122,000 so I don't know with your funding if that's what you want to be spending it on right and
26:40
you can spend a lot of time on crunch base which is another one and it's hard to find the right people who are also
26:47
current but the trick is to look at the who they've invested in already and then try to work backwards um I would also
26:53
think for you you've said a couple times uh and you're probably on this but just want to point it out uh you're not just
26:58
pets you're medical right so there's a lot of medical stuff and I'm sure it's in your road map that this isn't just
27:04
going to work on dogs it's going to work on me right so so there's a lot of investors who it will open your world a
27:09
lot to look Beyond pets uh especially for example here in Southern California in San Diego in Orange County we have a
27:15
lot of biomed uh and Medtech sort of startup um that I would be looking at so you might look also geographically here
27:23
and in the Boston area uh specifically because there are investors with a lot of experience there and the easiest
27:28
touch uh again maybe not for you you're a little further along but if you want to find angels in this space is to find people who've had success who've already
27:34
exited right they've had a win and now they're ready to put some more money to work and uh those people are are really
27:40
good for 50 or $100,000 checks anyway and in your case you might want to really look also at an Advisory board or
27:46
some kind of folks I don't know what your staff is like your team but have some people who are us-based who have
27:52
the connections that you want to to look smart to investors uh that's a strategy piece that would be probably would be
27:57
very useful for you so they have credibility here like you do in South Korea and and a question on the investor
28:05
um fit piece if the investors have already uh exited out of um a very
28:11
similar uh let's say um startup or somewhere technology um or something
28:17
maybe related is that uh always a better fit or is it better to find someone who
28:23
hasn't invested in the space but who who is more interested in venturing into that um well money's
28:31
money so you if they're interested that's who you want to talk to right dating right you can a lot of girls but
28:37
the one that likes you back is the one you want right um so you know that's kind of up to you I would suggest though
28:44
that uh given what you're doing it's probably technical enough it depends on
28:49
how you want to sell it right do you want to sell yeah I I don't know it's a longer discussion right but both could make
28:55
sense in the right spaces I've had had more luck it's let's put it this way the way to get people to invest and this is
29:01
for everybody with fundraising questions this is one of my big thesis which will be in my my next book actually um people
29:08
invest it's like sales right you buy from those you know like and trust it's the same with investing so you have to
29:13
build a level of trust that's why people start with friends and family because their friends and family they may not
29:19
understand the business or even care but they know and love you and they trust you because they raised you right um You
29:25
need to find a way to shortcut that you know 20 or 50 year relationship with your family with a new investor and the
29:31
best way to do that is to go into people who already understand the domain you're talking about they have expertise and
29:37
experience so they can quickly give you the benefit of the doubt whereas if you're talking to me and I have no idea about this stuff it just sounds cool I
29:43
may get there but it's going to be you got to climb every step right you can skip a couple of steps if somebody like
29:49
hey I've already exited three you know scan Medical Technology scanning companies and I love dogs like okay
29:56
that's a good Prospect right you'll just get there faster um so that's my thesis so could be wrong and everybody hey by
30:03
the way in the chat room go ahead I see people asking questions but go ahead and argue with me right I don't have all the answers I'm just posting here right so
30:09
help Eric out and give him your experience and your ideas that that could be really helpful as well um okay
30:15
well so how's that we probably need to move on to another question but is that helpful that that's super helpful yeah thank you um I guess my only other
30:22
follow-up was uh in that first meeting what is the type of slide or type of
30:28
content that you want to show and present and then obviously the second meeting is going to be slightly more intensive yeah what is the ideals kind
30:35
of set up for that first one I've got one word answer for you there money I don't care about your product
30:42
you may have a lovely backstory and the best technology in the world I'm an investor how are you g to make money and
30:48
and how do you make money I was at a pitch thing just the other day at University of California Irvine some
30:53
fantastic technology but it was a bunch of professors and grad students and they pitch all about the tech and they hardly
31:00
ever get around to the business and unfortunately investors we're as altruistic as we can be I give I give
31:06
the profits from my books to charity I do what I can right but I I don't I don't care what your story is unless it's a business you have to tell me
31:12
about the business so the answer to your question is money show me the money how are you making the money how much and when and when do I get my money back
31:19
multiplied by how much that's the slide I want to see all of that depends on your story of course you can't have one
31:24
with the the other but Founders tend to be product first business second
31:29
investors the other way around business first product second so hopefully that's helpful to you um okay well nice to meet
31:37
you gonna bring on keep you Scott keep moving go sign up for the mailing lists and hope to see you at some future
31:42
events and maybe in person since you're here in California yeah we'll do thank you Scott you're welcome all right so
31:48
hopefully that was helpful uh if you're still here thanks for watching and um I see a bunch of questions in the chat room we're going to talk to some folks
31:55
backstage here let's bring on on Sandy uh for a second actually let me just look at the chat and make sure nothing's
32:01
on fire okay sometimes people are in there like hey we can't hear you or something like that um well there's an
32:08
easy one hold on let me just put this one up um I think that's supposed to show it here it comes yes um uh finding
32:16
Angel Investors in the idea stage the best I'm not trying to hammer you guys but this startup investors directory I
32:22
was talking about I built this to help you okay that's what this is for okay that's what it for um and it's as
32:29
affordable as we can make it like I said I think it's $79 actually there's a code on there Sid launch you can try it for
32:35
free just go look it's a search engine right just go look around um and uh that
32:40
is the best resource that I know the problem with your sentence there verto parking services is in the idea stage
32:47
almost nobody funds ideas anymore I'm sorry to tell you that you're probably going to have to go and raise money from
32:53
friends and family and get started on your own there's just too many ideas in the marketplace uh idea stage is really
32:59
a tough go um I wish it were otherwise but that's just kind of the fact and I
33:05
the reason I do this show is to tell you people things that other people won't tell you and that's kind of the truth okay I see some great questions here
33:11
from uh Joshua Marina Sean and Josh again um okay and uh you all can help
33:19
each other while I'm talking let's um yeah well there you go Cynthia sorry
33:24
Eric this is for you there's a comment in the chat Cynthia says Orange County California has a powerful Opthalmic
33:30
device ecosystem that's right that's exactly that's right here where I live and uh Edwards life sciences and um
33:36
there's a bunch of Opthalmology there's a there's an Opthalmology specific fund I think it's called Vision Vision
33:42
Ventures something like that maybe Cynthia knows uh anyway but yeah Orange County Eric you probably want to look
33:48
here it's not dog it's not pet centered it's human centered but obviously there's overlap there okay let's talk to
33:55
Sandy about her she's got a real early stage question here about funding and covering her expenses while she
34:01
bootstraps her way to success hi Sandy you want to can you just give us the short version again of what your
34:06
question was so um I want to fund raise and I'm
34:15
currently a California S corporation yeah and um I've been told I should form
34:21
a separate company for my app that I'm developing which
34:26
needs to be a Delaware sea Corporation Y and I want to avoid doing that until
34:32
January 2nd because California charges this $800 minimum Franchise Tax but they
34:39
wave it the first year that you're in business so if I become a delc corporation now almost November I'm
34:46
going to have to pay that $800 in March which I'd really like to avoid doing because I could think of better things
34:51
to do with 800 bucks um so I would so
34:57
what i' would like to do is fund raise under my S corporation now and then tell
35:03
everybody and or convert everything into the Delaware sea Corporation when it's formed on January 2nd okay my $64,000
35:11
Question is like can I do this is it legal will I get in trouble with the SEC
35:17
because that's the last thing that I want to do sure yeah that's not a good way to spend money and I know California
35:22
has its own like set of fundraising rules for crowdfunding and stuff like that I'm like
35:27
okay there's a lot here I just want to make sure that I'm doing this right well I I can't give you legal advice so this
35:34
is not legal advice or official Financial advice you really should talk to a tax attorney or sorry transactional
35:39
attorney really or a CPA or somebody that does this all the time my guess and it's all it is is a guess is that yes
35:46
you could do that and the reason is not a legal or regulatory one it's more just a a time management one which is that
35:53
raising money generally takes a couple months so if you um start now it's
35:59
November and we're going to hit the holidays it's probably not going to happen till January anyway so uh if
36:05
that's just to be clear you're talking about January 24 not 25 right correct correct and this would be from friends
36:11
and family so it might not take the couple of months this might be like a week or two that that I a after I
36:18
pitched them that I could get the money that's why I'm asking yeah well that's specific enough I'm sorry I can't give
36:24
you a a straight answer but the it doesn't scare me I mean the reality
36:30
is again this I'll say things other people wouldn't and I may get in trouble so don't nobody sue me about this right
36:35
but you know is the government really going to chase you for you know are they
36:40
even going to notice I mean you know that's not a good strategy like a scale but but like you know six weeks and
36:47
you're probably talking like $50,000 or something right is not A5 million like it's not even going to be worth their
36:53
time to chase you even if they did notice right I mean so I speaking as a businessman not as a tax attorney but
36:59
like I certainly wouldn't spend my time that way um so it doesn't scare me but I
37:04
think um you should talk to somebody for real but um some then and offer
37:10
something like um well do here's the question I guess do you need to take the money in this year like if if you're yes
37:17
you do oh you need it before December 31st yes okay I have I have a developer
37:22
I need to pay I have sales and marketing to do I have yeah other expenses and
37:28
stuff and um I I I like I need the money two months ago so um all right I need to
37:35
get doing this probably could push it off till first quarter so I okay that's a little different um so who are you
37:42
worried about uh if you fully disclose it to the investors I don't think that they should or would have a problem
37:48
although again check with an attorney um because it's not illegal as far as I know uh as a tax issue or a regulatory
37:56
like file in in fees issue yeah the FTB the Franchise Tax Board is they do like that $800 there's no doubt about it
38:03
um yeah I think that falls in the will they know you know but that's not a
38:08
great way to run a business either I think you need I'm sorry I think you need to ask somebody for real I just don't have the specifics on that uh
38:14
unfortunately that might cost you a little bit of money um but I think I would talk to have you talked to the sbdc the Small Business Development
38:21
Corporation yes and I have a consultant there and I've asked them and he kind of was up you know I I think it was like
38:28
you know above his pay grade yeah right specific so um do you have any I know
38:35
with the and I'm a member of the Orange County startup Council um and I see Routan and Tucker has like a
38:43
$10,000 you know they they like postpone or wave the first 10 th $10,000 with the
38:48
fees like would they be a good company to call like a good attorney to call on with this question or is there somebody
38:56
you'd recommend yeah we have several sponsors who are they're good attorneys first sponsor second uh them or uh um
39:04
marter in English uh the stradling law firm sure um if you'd like this is true for everybody listening actually if
39:10
you're looking for a good startup attorney I can't respond to lots of detailed emails or review pitch decks
39:17
and things like that but we can we certainly can help with attorney referrals or accountant referrals we have some really good folks who would
39:23
love to meet you and if you can send uh s if you email me through the startup
39:28
Council website uh is probably the easiest way and send a short description of your company just a sentence or two
39:35
and what you're looking for help with I can forward that to some people and um
39:41
and I you know I can't promise anything but they generally will talk to folks you know just to get acquainted of course it's in hopes that you will then
39:47
become a larger bigger client someday but they start yeah at the base case where you are right now sure because I
39:53
have an IP attorney but I don't have uh somebody who can answer this kind of a
39:58
question my mom my mom was a special kind of IRS tax preparer for 40 years so
40:04
I have like the fear of God put into me about getting in trouble with the IRS and other you know government agencies
40:11
yeah that's right she's not wrong but of course that's her view right so in the real world the IRS doesn't catch
40:17
everybody so I'm not recommending that but I'm not gonna tell her you said that
40:24
um although I I am very compliant just to to to balance that I I do everything
40:30
very very by the book yes I'm very compliant as well um the other thought I
40:36
had though and then we'll need to move on I think is if you already have an IP attorney maybe there's someone else in their firm and you could just lean on
40:42
them because that's not a long question but it it's a person has to have a lot of expertise
40:47
to answer it definitively right so maybe there's somebody there they could just get you on the phone even faster than I could introduce you to someone new and
40:54
just say hey that's an excellent idea yeah gem down the gy down the hallway you know go over the water cooler and
41:00
see if they can connect you so that's what I would try thank you very much Scott all right hope to see you again
41:06
soon right nice to see you Sandy all right Rolling Along here so if you're late uh or just arriving you're here and
41:14
you're listening to Startup office hours I'mScott Fox I run the startup Council which is a global Community Service
41:20
Group designed to help you build uh more companies farther faster raise more
41:26
money meet more clients make more money improve the world and uh we're here today just taking your questions trying
41:32
to help as I do every few weeks and um I'm trying to change the screen here
41:38
hold on come on buddy geez there we go um let's see let me put this one up
41:44
actually I hadn't put that one up yet this is uh this is a page that I put up a lot of people ask me um to come and
41:51
invest myself and I'll be honest I I have too many de I can't invest I can't look at every deck that I Get By Any
41:57
Means because I'm busy trying to help everybody um but if you are interested this is a page I put up that has
42:03
specific recommendations of Angel groups and funds that I'm involved with that particularly help early stage um
42:10
investors uh particularly like if you're a woman for example there's a woman's fund on there that I'm involved with or
42:15
Angel groups like The Tech Coast angels that I mentioned a few minutes ago so that might be a resource that's helpful to some of you if um let's see I had
42:23
this up a little earlier put that up go ahead and come visit me if you'd like and say hi tell me who you are though
42:29
like I said and I'd be happy to connect and if you're watching this later you can certainly post your questions and
42:35
comments if you want to follow up on YouTube we could follow up uh there in the comments that's a good way to to
42:41
follow up um and let's see oh and this one too okay liked and subscribed
42:47
everybody like smash that like button okay let me check the uh chat room here a second and let's
42:54
see um what we're missing um and then
42:59
we'll get back to some on camera questions here let's put that up here oh
43:05
yeah and go over here and join us and we'll help you as best we can okay chat
43:10
so um okay so where was I let's do a couple
43:16
of these real quick Josh says how do investors view raising Founders who raise money but maintain full-time jobs
43:22
is there a preference what about half the team versus all the team uh well Josh you know answer right they want you to be full-time of course they do right
43:29
why wouldn't we um but you know the reality is that's not up to us to dictate and here I'm wearing my investor
43:35
hat right um I want you working 26 hours a day nine days a week right because if
43:41
I put my money in I'm hoping to get a lot more back so of course I want the world but as an investor that's not um
43:48
the only thing that matters in your world and now putting my Founder Hat on um if you got to work another job you
43:54
got to work another job man you got to pay the bills right so uh you want to present that as best you can I wouldn't
44:01
highlight the fact that you're not full-time because it suggests of course distraction which it is but the emphasis
44:08
is on fulltime as soon as these Milestones happen and that sort of thing that's that's there's you know reality
44:15
uh meets Theory right there right of course we want full-time and of course you can't do it so you make the best of
44:21
it Marina says uh about Coast angels I understand that new fund is part of tech
44:28
Coast angels in San Diego so this is a big Angel group that I'm part of if you didn't catch that earlier so can a
44:33
startup speak to multiple offices I.E Tech host Angels OC when we in communication with new fund is TCA
44:38
Regional or can we apply for funding in multiple locations Okay Marina so that's a good question uh let me clear up a few
44:44
things so new fund used to be part of tech host angels and is no longer it's a separate standal in organization now so
44:51
you can easily talk to them separately from TCA because they're not part of TCA anymore they were historically though so you're not wrong it's only happened in
44:57
the last year or so so uh techos Angels is based is headquartered here in Orange
45:02
County and our chapters currently are uh Orange County Los Angeles Inland Empire
45:08
Santa Barbara and Pasadena I think yes padina angels and then also there's a
45:14
specific Medtech group called maida which is part of TCA so there's four or five I've lost track now four or five
45:19
chapters and those are separate from new fund so the second part of your question is can you pitch those separately well
45:25
if you're met thing yes you could pitch ma directly or if you're in Pasadena you could pitch Pasadena Angels specifically
45:32
but really what we do is we intake all the deal flow through Tech host angels.com and depending on where you're
45:37
based geographically or the type of technology or company that you're building or maybe who introduced you
45:43
like you came through me for example as a referral uh our executive director will review that and Slot you toward most
45:50
appropriate chapter so you can pitch multiple chapters but more common is you
45:56
come in the front door uh our executive director Tony Tony will look it over and
46:01
then maybe even ask you a question or two um and then he will send you say to LA or to Pasadena or to MAA or here to
46:07
Orange County and then if that goes well we will Syndicate it internally so say you end up here in Orange County we like
46:14
your company we do due diligence we want to invest we will also share it with our other chapters so that they can come in
46:20
and meet you as well so you'll kind of get the best of both you don't really need to apply separately to each chapter
46:26
okay let me do one more and then we'll head back to our live questions Sean says Hi Sean nice to see you again who
46:32
has a right to see a private company's cap table that's an interesting question uh you know I should put these on the
46:38
screen shouldn't I you guys can all read I don't need to read for you let's see there we go okay so who has the right to
46:44
see the company's cap table is it only I have to read it though share for
46:50
employees okay so a private company so this is a good question I don't think there's a legal thing here Sean as much
46:56
as a um tradition or personal preference
47:01
if it's a private company the owners of the company control who gets to see it you don't have to disclose to anybody as
47:08
far as I know you have to do a certain amount for your taxes and stuff like we were just talking with Sandy but the
47:14
ownership I guess this is more detailed than I know you probably should talk to an attorney I guess but I think
47:20
practically speaking it's up to you to decide and the more stock that somebody has more they're going to feel entitled
47:27
to see what's going on behind the curtain so if you have say an investor
47:32
somebody wants to put in money they're going to want to know who else is on the cap table and by the way cap table is the capitalization table it's the list
47:38
of all the people who people or firms who are investors in the company it's the the list of ownership essentially so
47:45
if you have investors coming in well they're going to want to know who the other investors are and that's a legitimate request right I don't want to
47:50
be putting money into a company or it turns out that your other investors or drug dealers or something right that's not cool so there's a certain amount of
47:57
disclosure expected among peerto peer investors right it gets a little
48:02
different with the uh employees if they own half a percent or some small amount
48:09
of options or especially if it was an employee maybe who has left the company since uh I don't know that there's a law
48:16
specifically and I just don't know maybe somebody in the chat can answer this question I don't think that there's a specific requirement to disclose
48:23
um yeah I just I guess I just know so I'll move on but maybe somebody in the chat can move can help I think but I
48:29
think it's kind of up to you is is my version of that but again I'm just a guy you met on the internet so hopefully
48:35
that's helpful and somebody in the chat room can be more specific for you all right um okay let's get back to our on
48:42
camera folks so we talked to so who's still here um let's see uh Randy
48:48
Nick um save R Nick and Randy want to talk about
48:53
documents okay oh that's good Eric's question we did Sandy okay so let's
48:59
bring on Nick and where's is Nick still
49:05
here come on Nick yes there's Nick okay Nick hey Nick nice to meet nice to meet
49:13
you all right and where are you today I am in Ottawa my company is based out of Delaware okay cool um so a Canadian
49:22
company but a US sorry Canadian person but us company exactly yeah a few a few us Founders and a few Canadian Founders
49:29
okay cool all right so let's talk what why don't you share your question with everybody and Randy you can stand on
49:35
Deck here and listen if you want to chime in as well bring you on as well okay so uh I think it was about early
49:41
stage documentation and deal structures yeah exactly so what we're doing uh here
49:46
at my company is that we're building a fan engagement platform we're five full we are five full-time Founders um so we
49:54
we originally started in the web 3 crypto space made our money and now we using the funds in order to build our
50:01
fan engagement platform for the sports teams and so now obviously that money is
50:07
dwindling down as we build the product so we need to find funds in order to sustain her salaries salaries have have
50:15
already been cut in order to sustain the business and so now well ideally for us
50:20
to continue full-time we need to raise sure and so we are now trying to find
50:26
investors so like for one how to how to find the best investors I know you have that link so I will I will look that up
50:33
um and then so and then what are the best ways to to to do so is it a price
50:40
round safe smaller amount rolling closeth so just your thoughts on that
50:47
sure so it's kind of a wide question right
50:53
um trying to think where to start so you haven't raised any outside money yet no it's all bootstrapped okay great
50:59
congratulations that's great you got five full-time people in your bootstrapping that's that's you made some money good job um so the standard
51:07
and you thinking to raise in the US not in Canada um honestly anywhere it
51:12
doesn't matter okay if if if that's the ideal route right yeah well it matters to us investors that's why I ask and I
51:19
and I really the US market as an investor so my my advice ideally us yeah okay so my advice would be in the US
51:25
context right although US and Canada are closer than most of the other jurisdictions that I know so it's probably the same I just don't know but
51:32
in the if you're raising in the US first of all you have a Delaware SE corporation which is the right thing to do that's what everybody needs these
51:38
days the the market has standardized around one specific form of corporation which is a C corporation based in the
51:44
state of Delaware any other format these days is not cool it's just not well
51:49
that's kind of it's not cool it's possible it's just not the cool one it's not the one that everybody uses so just know that that's changed and you you got
51:55
that already but that's for everybody else okay so then the standard these days from um from the Founder's point of
52:02
view is a safe uh simple agreement for future Equity there are two types of safes one is a pre-money safe and the
52:08
other is a post-money safe the original safe was issued by y combinator I think in 2013 and it's a document simple
52:14
agreement for future Equity it's just a few pages that basically say um you I'll
52:21
give you some money you'll give me a piece of the company uh we're not even sure what the company's worth yet but
52:26
I'm giving you say 50 Grand and we'll figure out what the valuation is later that's why it's for future Equity later
52:33
simple agreement for future Equity when a real investor shows up meaning like a venture capital firm or somebody's going
52:39
to put in a couple million dollars like professionals right so the safe uh that was 2013 but that's been that has
52:46
evolved and that was the pre-money safe investors really don't like that including myself uh the post money safe
52:52
is what you want to use and is the standard now so if you you you have to be my point is you have to be careful if you read about safes how old the article
52:58
is because the pre-money thing is outdated you need to look for a post money safe and we can talk about what that means if anybody wants but it
53:05
basically gives more uh confidence to the investors of how much they're actually getting for their money without
53:11
dilution so safes are generally offered um with some kind of discount because if
53:17
somebody's coming in really early and uh say I invest in you today and you've got
53:23
you know this much going on so maybe the company we're not going to pick a number but if we did pick a number say it was a
53:28
$5 million valuation but we're going to say that it doesn't actually set till
53:34
you can raise real money which means that you probably have more traction which means that you know two years from now the company's worth 10 million well
53:40
then I get I don't have to invest at a 10 million valuation I get to say a 20% discount because I was in early that
53:45
kind of thing uh and there also might be a cap so if it's 5 million uh if there's
53:52
a cap at five million and then the investment comes in at 10 I actually get it at 5 million anyway even though the
53:57
new investors only get it at 10 so I think I got that straight but there's lots of videos about this online but
54:03
that's kind of the standard and I said from the founders point of view and the reason I said that is because it's easy
54:08
for the founders it's fairly cheap there's it's literally a I think a three-page document um everybody needs
54:14
to be careful because a lot of times lawyers will want to get in there and expand upon it and triple your costs so
54:20
they may or may not be right they may or may not have good reasons for doing that depending on your situation but the safe was written to not require almost any
54:27
lawyering so it should be really cheap for you and speaking as a Founder who has blown way too much money on on
54:33
fundraisingdocuments in the past uh that was a great Innovation now I got to turn turn things around from the
54:39
Investor's point of view we don't like safe so much because the it's not clear what the company's Worth or when it's going to be worth something it doesn't
54:45
give us uh rights to uh for example um recall we don't get any interest on the
54:51
money we don't have any rights to force a decision or force a sale if you're not
54:56
doing well or declare bankruptcy um so we prefer convertible notes and convertible note is a similar document
55:03
which I get a piece I give you 50 Grand say and I get a piece to the company um but in the meantime it probably pays
55:10
some interest and it's going to convert at a certain time a certain amount it's just a lot clearer for us the problem is
55:16
and here's the conflict and the reason I'm going into all this am I is this helpful I'm I'm getting pretty deep in the we yeah definitely okay so um I
55:23
should probably just break out this piece and put it on YouTube but um the convertible note structure is really a
55:30
lot more expensive uh and the piece that we like even better than that is an a full Equity offering and those are very
55:36
expensive and when I say expensive I mean it takes a lot of lawyer time to document the whole thing the whole point
55:41
of the safe is it's a few pages you could get it done in an afternoon uh a convertible note is
55:47
significantly more than that and an equity round is even more than that but investors like those more expensive
55:53
versions because they give us a lot more security literally haha security um and
55:58
um we have a better idea what what the deal is both in the short and long term so anyway that was kind of a long answer
56:06
I guess but um that's kind of the landscape in terms of document structure and
56:12
uh I think it is reasonable for an early stage founder to be flexible A lot of
56:18
times you'll run into investors who will insist well let's be frank a lot of
56:23
investors are former CPAs or cfas very numbers oriented people and so if you come in and you don't know exactly every
56:30
number down to the penny what you're asking and how you're going to spend it they're going to think you're incompetent well you may be super
56:36
competent but in something else but to impress those people it's helpful to be more specific so it will be helpful if
56:42
you can come in and say very authoritatively we're raising 2.5 million on a post money safe with a
56:48
seven and a half million cap and a and a 20% discount you know something like that it makes you sound smart the
56:55
problem is that that may not be what they want and some of the investors in the room may say oh crap no way not that
57:00
but if you had said we're flexible then maybe you can have a dialogue so I would just toss that in you want to be authoritative enough to sound like you
57:06
know what you're doing but flexible enough to get the deal done and meet in the middle somewhere that's palatable to both sides okay that was way too long so
57:14
um what do you think Nick what else you got to say yeah I mean that that was awesome it's really good uh really good
57:20
information now my question my follow-up question to that is
57:26
is it better to raise small now or a higher
57:31
safe and a rolling or always a rolling close yeah yeah great question okay so
57:37
well rolling close is not that can be a thing but real investors like in VCS are
57:42
probably not going to do a rolling close that's more like yeah if you've kind of picked a number and you've got whatever
57:48
you know 16 cousins you're trying to get them all to sign but they'll only sign like every three weeks that's when you
57:53
do a rolling clo but but the company valuation isn't really going to move in the meantime um so I wouldn't that is a
58:01
that is a thing but I I wouldn't I would not be talking about that if I were you I would try to do a raise if for no
58:07
other reason that'll make your life a lot easier raising money is a pain in the ass and the longer go the less you
58:12
have time to build a business right and chasing signatures is not a good use of any Founders time right get it done um
58:19
so um sorry what was the other part of that oh how much to raise right so how
58:24
much raise is always a matter of debate you can raise a little at a at a lower valuation or you can raise a lot but you
58:31
want then you want the valuation higher these are all negotiated things my general advice is if you only have been
58:38
bootstrapped to start you probably want to get some the sooner you can get recognized institutional type investors
58:44
on your cap table the more credible you will look to other investors because a lot of it's a fomo herd
58:51
mentality but it's going to be hard to get an Institutional to come in unless you have I'd love to hear more about your business but we don't have time but
58:57
you know if you have great growth and revenue and stuff well let me just ask that do you have any Revenue yet are you guys in Market on the sports side no not
59:05
yet we do have pilot projects but not uh Revenue traction okay so that's going to be hard right because these is everybody
59:11
wants traction meaning Revenue so the more Revenue you can show the easier it will be to get institutional investors
59:17
but the short answer I'm not good at short answers as you can tell but the
59:23
the strategy that i t think about is try to raise a small amount of money because this is your first outside money I'm
59:29
just making up numbers but like raise 200,000 on like a I don't know $2 million valuation something something
59:35
like that just to show you can do it you get some people involved that gets you in the mode um you and then hopefully
59:42
you can use that amount of money to actually demonstrate some traction and you really want to connect that amount to some Milestones so like we're raising
59:49
200 Grand not just to blow it on marketing but because we have this deal that if we had this kind of money we
59:55
could do this much more with these engineers and or this you know that leads like draw the line show a path
1:00:02
yeah to and not just a path towards Improvement but a path towards money that again like I was talking about earlier this is about money right so
1:00:09
what you can do with 200 Grand how do you turn that into 400 Grand or four million and if you can do that then the
1:00:14
next round will be a lot easier okay um just to find to to finalize so you just
1:00:21
so so for us we'd like to raise 250k USD um but you said to give it a valuation
1:00:27
of 2 mil now if it's a safe you don't give it a valuation right that's that's true but that you're exactly right
1:00:33
you're listening good job um but there's still sort of an internal expectation of
1:00:38
what it's worth uh everybody gonna it's an agreement a safe is a for agreement
1:00:43
for future Equity but people still kind of want to know what you're thinking and these days practically speaking usually
1:00:49
there's a cap on it which means that those first round investors will get in at a price evaluation that is no higher
1:00:55
than x so it might say for the valuation cap of two two or three million something okay so the cap would be two
1:01:01
or three mil and then let's say you raise for five but they they get priced at two or three that's right with the
1:01:08
discount that's right yeah yeah that's that's the standard thing so let me bring in Randy here and just see if
1:01:14
Randy hi Randy how are you hey guys thank you excellent I love
1:01:20
listening to everything and you pretty much answered what I was going to ask because um was from a different angle where I was sitting in on um Pitch
1:01:27
competitions and listening to what the investors were saying they were shooting down things across the board you know some would say no no no one one came in
1:01:35
and said No Cap and the investors shot that down the other one's varied on on
1:01:41
the discount rate between 20 and 15 and I thought why what's are the variants
1:01:46
but then your response as far as being flexible in terms is something I remember no one said no one came off
1:01:53
they came in very specific these are my my guidelines my rules and everything and that drove the question as what is
1:02:00
considered um acceptable or in general you know on the market is there such a
1:02:05
thing yes yeah well the flexibility like I said I I do the show because there's some things people don't talk about and
1:02:11
there's this kind of Macho Vibe when people are pitching it's like this is what I want and like you better have
1:02:17
this you know and it's like dude we're all you know if we're gonna if we're gonna do this we're gonna be partners for years can we just have a
1:02:22
conversation it's like think I need about a million bucks what do you think you know that's that's the reality what
1:02:29
it comes down to so uh people peacock a little bit in this pitch competition so I think flexibility is a legitimate
1:02:35
thing and and frankly it demonstrates one of the other big things that we as investors are looking for is coachability like I am listening right
1:02:43
because nobody wants to invest in a guy or a girl who who won't listen right because that's honestly that's what a
1:02:49
lot of Angel Investors get out of this is a feeling of giving back or contributing their expertise
1:02:54
and Founders that won't listen nobody invests in those if they can avoid it right right so just to finalize there
1:03:02
Scott um so at the end when you you say you're ask you say Okay I want 250 ,000
1:03:09
for three mil cap and then you finish off but I'm
1:03:15
flexible yeah how how do you show that you're flexible without showing weakness right like you say it you say it just
1:03:23
like you said it but maybe a little less strongly it's a subtle thing you know um you know or we're but we're open to
1:03:28
discussions yeah you just say it any other way to do it um I guess you could wear a t-shirt right you wear a t-shirt
1:03:35
that says something right I'm flexible but yeah it's it's a delicate
1:03:40
balance right you don't want to be too flexible but you you want to sound like you're listening and that's ay I said a
1:03:46
key personality trait in addition to being a financial uh characteristic that we're looking
1:03:51
for great great uh if if I can follow into my second question unless you want to continue on the safe uh I think we're
1:03:58
good there Nick you pretty good yeah that's awesome yeah thank you very much Scott
1:04:03
hope give me give me a quick thumbs up or smile Nick there go cool I'll get
1:04:09
i'll get a shot that later thanks okay so I'll let Nick go and Randy what's what's uh what's the latest with you you
1:04:14
said something transition yes yes yes I know you know a good theme of our discussion this uh session is you know
1:04:21
business first product second right talk about the business and in this case I have an issue where the product is
1:04:27
driving the business um in the sense that my my main focus in the business is
1:04:33
the alcohol wine uh wine clients but I made this one particular product to help
1:04:38
them in marketing that tool has now taken its own life where we've used it
1:04:43
for um I think I talked about before BMW Motorcycles had an event and we used it
1:04:48
um just this week last weekend uh there is a immersion event um Harry Potter and
1:04:54
so we tweaked it to make the program uh what's called photos and uh what's
1:05:00
called scavenger hunt and Raffles right and and it it made the event more so
1:05:07
than the theme and the decorations and all the props and everything because it became such an interactive thing now
1:05:12
we're in front of a healthc care company um to pitch for they have this big event
1:05:18
on December 1st the problem is they hit us right away with hey you guys are in
1:05:24
alcohol industry do you even know what we do so the challenge for me now and
1:05:29
that's where I'd like to get your opinion is do I lean into yes we are you know doing this alcohol but this has
1:05:35
helped our clients in marketing so it can help you you as well we think or do I spin it off and say this becomes a new
1:05:42
entity the challenge with that is I already have traction I already have clients in my my space I don't want to
1:05:48
create an another business and have and run fear that they're going to be going are you still going going to be taking
1:05:54
care of us you know we we put money into this and um um so this is a strategy
1:06:01
question right right and second an opinion from your vast experience on
1:06:06
something like this because it see it seems to me like the easy thing is create another entity and that way it
1:06:13
doesn't have our alcohol branding and everything else because I had to to pitch for the healthcare I had to remove
1:06:18
all our logos and luckily luckily my name is the company is the Tidus so for
1:06:25
our our opening slide I use a big megaphone right with the little canaries shouting out you know saying we are the
1:06:31
small Tiddly right not a wine glass right but anybody smart does their due diligence which they did looked at my
1:06:38
email address looked at our website and go what's this all right well I have a couple thoughts on that there's no right
1:06:43
answer here so if anybody especially in the chat room has suggestions with for Randy but so first of all
1:06:49
congratulations sounds like some progress that's fantastic and stumbling on a new product is not unheard of at
1:06:55
all right that's that's they call a pivot so it wouldn't be out of the question for you to drop the wine thing and go the other way if here's my big
1:07:03
this is not going to surprise you at all but where's the most money that that's the really you know straightforward
1:07:08
answer and I say that not just well first of all for you for Randy personally yeah but also if you're going
1:07:13
to grow you need the income right to hire people we've talked about this before yeah you can use the revenue to
1:07:20
do more things but the other hat I'm wearing here the lens I'm looking at is is as an investor which is a little
1:07:25
different perhaps may be be helpful as an investor I want to see the money coming in right so that's excellent the
1:07:32
problem is if you do it as two separate companies it really looks like a divided focus and it's very hard for anybody to
1:07:38
build even one business so as an investor if you're doing two things and calling them essentially separate things
1:07:44
right I'm that's going to cut in chance cut in half my chances of investing right because I think every um startup
1:07:52
investment is a lot about the jockey as much as the horse and if the jockey is now trying to ride two horses at once
1:07:58
that a that doesn't work right in the real world anymore then it doesn't startup so um so I would be concerned
1:08:04
about your split focus and and this is also like as your friend just do two things at once right so um I would be
1:08:12
more excited and it's probably all we have time for but I would like would hope for you you know to find some
1:08:19
integrated approach um the verbiage for this what it's sounding like is what they call White labeling right it's like
1:08:25
we have the same service but we white label it or change The Branding
1:08:30
basically that means we for you know we started in the wine industry and then we got into events and now we're over here
1:08:37
but it's the the emphasis to the investor it's all the same backend it's all the same people we're just changing
1:08:43
the graphics essentially um and if you P pitch it that way that looks a lot more like a unified thing from a business
1:08:50
point of view and therefore more attractive to an investor and also more likely to grow because because you just have critical mass right you don't want
1:08:55
to have two separate companies two separate you know recordkeeping and then a person a brand manager here and a
1:09:01
brand manager here an account manager here an account manager here you know like all that stuff like when reality is
1:09:06
they're kind of doing the same stuff anyway yeah so I I would be thinking if you can keep it together that would be
1:09:13
ideal from my selfish point of view as a as a greedy investor right on your side
1:09:19
I don't know but that's maybe a persp that's helpful no no I like that uh that explanation because I can use that
1:09:25
actually for pitching for the for the client too that we're taking this technology that's Geared for uh wine but
1:09:31
it works well with your business so we're going to White Label it to have your branding and your your um for your
1:09:37
Market your industry yeah it's still works and and that way I can still keep it under one entity it just because
1:09:43
there is a big difference the our Core Business charges this this other
1:09:49
application is going to charge this but because of scalability I can get more clients with this as opposed to with the
1:09:55
wine I can only get fewer clients and and the sales cycle is longer too it takes you know three to four two three
1:10:02
four weeks we're closing for this but this the other one that takes me you know less than a week it's a yay or nay
1:10:10
that sounds good and this sounds like the natural stuff for a person in your position you're finding product Market
1:10:16
fit different opportunities come up you need to develop the filter of like is this going to make me money in a
1:10:22
reasonable amount of time or is this a better use of my resources it's that's the CEO's job right it's a constant juggle juggling of the resources so
1:10:29
sounds good though I'm happy to hear about the progress congrats thank you for your help and your opinion have a great day all right nice to see you Ry
1:10:35
all right so uh we need to keep moving here gosh it's been an hour already sorry we get talking here let's talk
1:10:40
about the chats a little bit I want to go to our friend Eric and Berlin who uh is up late into the evening and then
1:10:47
we'll do some pitches so if some of you want to do pitches um let's see I guess
1:10:52
I'm not sure the best way to do this so uh Eric if you still around you want to pitch or
1:10:58
um let's see Nissa and babani I haven't heard from you yet even what you want to do hold on guys let me look in the
1:11:05
backstage chat and see if they've told us why they're here let's
1:11:12
see let's see bani is from Ireland
1:11:18
Malaysia okay okay
1:11:25
okay okay okay they appreciate the time so
1:11:31
forth okay okay so people got that all right okay so the folks that are backstage um let me know if you want to pitch or not and if you're not I'm going
1:11:38
to ask you to step away and go watch on YouTube or on LinkedIn instead of being backstage because we only have room for
1:11:43
10 people backstage so that includes babani nisaf hakeim uh Randy dong um
1:11:50
Eric you stick around because we're going to do your question or and Eric wanted to pitch okay so if the other folks can step out just go over to
1:11:56
YouTube youtube.com scotf foox and you can watch over there um I'm glad you're here but we only have you know there's
1:12:02
only so much room in the room so um okay let's talk to H Eric from Berlin where
1:12:09
did Eric go okay Eric you're still here it looks like there he is hey hey nice
1:12:15
to meet you all right staying up late yeah yeah yeah okay um I don't have a pitch ready
1:12:23
was not ready to to pitch I wasn't looking at the pitch you had said you were curious about post MVP launch
1:12:29
strategy and some testing we can talk about that so um exactly so I study in
1:12:35
Spain and together with two friends of mine we uh created like a payment system
1:12:40
that works uh for groups to split bills online nice um you know so for example when you have a when you go to check out
1:12:47
for an Airbnb there's always one person who has to pay for everyone and then make sure that everyone pays them back
1:12:52
and then we created the software that just lets everyone pay their part directly online very cool and we created
1:12:58
a prototype for it and right now the next step would be to uh basically
1:13:04
implement the the payment system into someone's e-commerce platform and since
1:13:09
we're still students and it's kind of our first time working in this field uh
1:13:14
there's still a lot of things we're un sure about and I wanted to ask you if you have any like ideas any strategies
1:13:20
on how we could approach this and how we could contact or find the right people
1:13:25
uh that could implement or our system so we can like officially test it you know
1:13:30
officially implemented yeah so who are these Partners you you want to find you mean like stripe or Amazon or what kind
1:13:37
of payment well we we we work with stripe but that's for the that's for the payments to work but who we're looking
1:13:44
for is mostly e-commerce platforms so um anything that involves group purchases
1:13:50
so ticket websites bookings um flights uh stuff like that right right that's
1:13:56
funny I'm laughing because it's a great idea um I actually tried to patent something like that 15 years ago um I
1:14:05
did they have Live Nation in Germany it's a big concert PL no okay that's all
1:14:11
right anyway it's the largest concert production company in the United States and I was working there I built live they built their their big live
1:14:17
nation.com website and I wanted to patent that idea because we all the time we had people coming and buying tickets just like you're saying right want to
1:14:23
buy sixtickets to Taylor Swift but I don't want to pay for all my friends I want them to share it right that's it's
1:14:29
a thing right and I we didn't get around to it but it's a great idea and I don't know if it's been done even now so I I
1:14:34
support your initiative um well okay so the trick is and you're talking about a business development effort it sounds
1:14:40
like to me you want to find Partners um who are building storefronts essentially
1:14:46
um that's interesting let's see well Shopify is the big dog right they do a lot of little e-commerce stuff but it
1:14:53
sounds sounds like you have specific verticals you'd be looking at like you said tickets or travel um vacation
1:14:59
Airbnb not you're not talking about restaurants so much right you're talking about bigger things yeah mostly
1:15:04
e-commerce because restaurants are more on S sites yeah right so online transactions so I well I guess I don't
1:15:11
have any specific ideas but I I can brainstorm a little with you and anybody in the chat please go ahead and um you
1:15:17
know give him some advice if you know somebody if your cousin runs a great big uh website or something let know um I
1:15:25
guess one of the things that I found to be really useful in this kind of approach is to find associations so
1:15:30
there's probably like an e-commerce uh Merchants Association or something like that uh where you could go and attend a
1:15:36
conference or maybe some online events and meet a bunch of people because this is going to come down to relationships
1:15:42
especially if you're students and you don't have a bunch of venture capital money behind you already in a fancy business card to hand out they're going
1:15:48
to be well suspicious might be a strong word but they're they're at least going to want to know your for real right so
1:15:53
you're going to need to develop a relationship probably before anybody's going to want to install that um because
1:15:59
what you're talking about is integrating into their payment system which is pretty sensitive stuff right so I think
1:16:04
I would be looking for people uh that you could network with uh like I said associations or events are great even on
1:16:11
LinkedIn and I think I would try to figure out well first of all I'd be concerned about competition there's
1:16:17
probably people doing this by now no yeah but not directly the way we want to do it okay good okay good um well so
1:16:26
figuring out that those differentiation points and then I think I would identify I mean this is kind of a a numbers game
1:16:33
right I think I would set up a spreadsheet and pick your I'm just making up numbers here your three or
1:16:38
four most important verticals tickets uh vacation whatever it is and then think
1:16:45
of uh five or 10 dream clients in each or dream Partners in each of those and
1:16:51
then split it up with your Partners the other students and and everybody contact them and you just got to kind of shake
1:16:57
the tree until something falls down I don't know of a an easy way to get there other than than trying to hustle um I
1:17:05
don't know is that useful not not the uh definitely and also just um to follow up
1:17:11
do you know how willing these platforms would be to operate well to work with us um if we basically only have the
1:17:17
Prototype or just the MVP but we haven't done anything behind that yet so would they even be willing to work with us or
1:17:23
not or would they tell us that we're Too Young Too unprofessional so far and that we need to get some traction first
1:17:30
because that's the problem we need to get traction but to get traction we need to get someone board yeah I well it
1:17:36
depends I think on the level of partner you're talking about if you're going to Shopify or Amazon or you know some big thing yeah you're way too young right
1:17:43
because they need like industrial grade Global bulletproof cyber secure everything right a government grade
1:17:50
stuff um so I think this is a networking thing thing so let's revise I was saying a spreadsheet with uh 20 or 30 targets
1:17:57
so maybe it's not your dream targets of Shopify but it's approach people who are
1:18:03
approachable smaller e-commerce platforms um people that will return your phone call basically right you
1:18:09
you're probably going to have to partner with people your level a little bit who will understand and take a risk on you it sounds like you're at a point let me
1:18:18
turn that around they're going to want to know what's in it for them right so what do they get out of this um that is what I would be thinking
1:18:24
about because you are going to be right in the part of their the most valuable part of their business like I said in the click stream of their checkout
1:18:31
that's really valuable real estate for them and not something anybody wants to mess with so if you can demonstrate some
1:18:37
kind of uptick like people buy more or something that's what they're going to need to be convinced um so I would be
1:18:44
trying to sorry let me digress a little bit what you need is some traction you're
1:18:50
right it's chicken and egg which goes first I don't know so you need to fake fake traction not fake as in make it up
1:18:55
but but uh test traction so I would be looking what you're going to need is numbers and these are going to be very
1:19:01
quantitative people because they're running checkouts right this is very much about conversion funnels and and percentages and margins right so I think
1:19:08
you're going to need to talk to some customers or um run some surveys online or set up a checkout somewhere and just
1:19:15
have 50 people try it so that you can generate some kind of data that looks like traction even though it isn't
1:19:21
really traction but something like we surveyed 100 people and 94% of them
1:19:26
wanted this or you know we set it up in a test environment and ran some ads against it and we spent whatever $500 on
1:19:34
Google ads to this fake website not fake but like a testing website and ab tested
1:19:40
the purchases before and after this and the lift was 30% therefore Mr partner
1:19:46
you should do this because you'll sell 30% more like that kind of thing even though you don't have real Partners you
1:19:51
try to do something because that's what they're going to want to know right if you if you're that person at the company
1:19:56
and they have to go to their boss and say hey boss I want to put this new thing in our checkout like oh who are they well there's some students okay
1:20:03
well what do they got well just a prototype okay you know what what why would we do this right well they have
1:20:11
and they've demonstrated that it increases checkout you know average P purchase volume by 35% Ah that's
1:20:17
interesting right so it's a it's a faking and fake is the wrong word I need to come up with better word like uh but
1:20:24
you develop yeah B baby traction I guess maybe you call it um because it's real
1:20:29
but it's just not fully implemented right prototype traction so that that's what I would be thinking about because
1:20:35
that's what okay investors are thinking partners are thinking the same way as investors what's in it for me okay yeah
1:20:42
that makes sense that makes sense thanks cool wellnice to meet you glad nice to meet you all right back I hope to see
1:20:49
you again go tell all your friends from here trying to help and the start Council we're here trying to help like I
1:20:55
said we have a whole bunch of services and um you can all come and join us over
1:21:00
here yeah we go startup council.org there's a whole bunch of newsletters there uh with free events and there this
1:21:07
investors directory and publicity opportunities for you and all the things that I wish I had had when I was a firsttime Founder so okay so now we're
1:21:14
going to get to the pitches it's already almost 1:30 my goodness okay let me um just quickly check into the chat room
1:21:20
and see um uh what what I missed there and then we're going to do our some pitches and
1:21:27
these are oh let me just uh preface this so the pitches are going to be two minutes or less no slides just talking
1:21:34
um to try to practice essentially right I'm not writing any checks today nobody
1:21:39
is this is practice although you never know who's in the audience here some of my investor friends often watch um but
1:21:46
it's really about establishing your credibility and delivering a message that leads to another meeting that's
1:21:52
really what you're after with the pitch so you want to Intrigue an investor Enough by demonstrating enough credibility and ideally traction that
1:21:59
they want to learn more so we'll do those in two minutes or less and then I'll give feedback and of course you all in the chat room are welcome to give
1:22:05
feedback too let me just check on the chat room here and see what I missed um
1:22:11
let's see okay uh so Eric did you see Athena's message in the chat she's offering to
1:22:17
help you um his name is Eric piie P AI Athena you guys should connect if you
1:22:23
can't find each other uh you can do it through me uh yeah so Athena has a a pet
1:22:28
background Eric actually yes that sounds useful Kirk says how do you present when F and families have Tapped Out for IP
1:22:34
found but significant funds are needed how do you present yeah so you're out of friends and family money uh but you need
1:22:39
more money that's a great question Kirk um you uh well I mean I think you know the answer you hustle and there's no
1:22:47
there's no answer to that right you go out to more events and you present to more people uh you invest more time in
1:22:53
researching finding the right rooms and the to be in and the right people to meet so that you're not just spraying
1:22:58
and praying and you get out there and you know you do the best you can there's no there's no easy answer there I wish
1:23:04
there was I'm sorry that if you're running out of money uh that happens to all of us uh Wade's there's some FTP FTB
1:23:12
advice there Wade thank you that was for um for sy's question um let's
1:23:19
see Amy says what is one challenge you feel most startups face and how can we address it am that's a great question
1:23:25
that's that's a wide open one I think we've covered that in a bunch of different ways today um but happy to have you back if you want to get into
1:23:31
that more specifically next time Arduino from zero do most seed stage investors require a C corporation Would S corporation be acceptable I'd like to
1:23:37
avoid double taxation during what might be a significant bootstrapping phase um Arduino sorry um this is kind I probably
1:23:44
should have said this to Sandy too s corporations are not a thing uh unless you're going to run a It's s is for
1:23:50
single isn't it or solo I mean that's not a fundable company so no investors
1:23:56
will not even look at an S corporation unfortunately so um if you don't think you can make the money to cover the fees
1:24:03
of a C corporation I hate to say but you probably shouldn't be doing this right I mean this is about making a bunch of
1:24:10
money so if you can you know accelerate that um you got to kind of you know you
1:24:16
don't want to mortgage your house and lose everything but you got to kind of go aggressive here there's one way to do this these days and you don't have to do
1:24:22
it right away like we talked about with Sandy I don't think you need to incorporate today but if you're going to do it I would do it the right way if you
1:24:29
can um Lisa says have you heard of any investors investing into safe funds I'm not sure what that means Lisa a safe is
1:24:36
an individual uh document for an individual investment in an individual company usually so I'm sorry I don't
1:24:42
quite understand Scott I have investors says s here friends and family W 200k should I give them a safe agreement is
1:24:48
something I can help uh a safe agreement is made for that yes I would look for the Post money safe s here like you said
1:24:55
um excuse me I yeah I can help but um I cost hundreds of dollars an hour when I do private uh work this is why I do
1:25:02
events so I can give away as much of my time as I can for free I'd be happy to refer you to attorneys if you'd like or
1:25:08
you can uh I think it's on scottf fox.com you can book a call with me for I think it's $400 an hour or something
1:25:14
if you really want me but I think your money would be better spent uh talking to attorneys uh also help putting
1:25:20
together business model how are we going to who have ideas I need help formalizing the model need personal consultation well if you really want
1:25:26
personal consultation then that's what my private coaching calls are for so yes we could talk about that and like I said
1:25:31
scottf fox.com you can find private coaching calls uh in the menu there um
1:25:37
Athena has a nice idea for Eric if you're still with us Eric they in Berlin some big e-commerce platforms except
1:25:43
widgets that's interesting uh Eid is one you could look at okay Osman says what
1:25:49
would you say is the most important part to look at the annual report a competitor in your sector the number one thing investors are going
1:25:54
to look at is growth so I would be looking at growth and U and their margins like how much do they make the
1:26:00
unit economics how much do they make per transaction and where's their growth coming from because uh and where is it
1:26:07
not coming from because those are areas where you want to be or don't want to be depending on whether you want to compete
1:26:13
with them or become a supplier or partner with them um Arduino thanks for
1:26:20
the info trying to have my cake and eat it too fair enough it's good to ask that's right yeah es
1:26:25
Corps are just it's a different animal same with llc's I often get that question uh like like I have an LLC I
1:26:31
have a couple actually but um but that's just to run businesses of my own I'm not going to bring in investors right if you
1:26:36
want to raise Venture Capital type money it has to be a C corporation that's just how it works okay so sorry here's one
1:26:42
last one and then I really will get to the uh uh pitches and you guys can keep posting but we'll do pitches for a
1:26:48
minute is there any preference among investors to start up a service or product based um yandre I'm happy to
1:26:53
help but that's kind of a it's kind of a goofy question right I mean it investors
1:26:59
you should be building a business based on what you have to offer not what investors want if you're just looking to
1:27:05
get paid go get a job like be entrepreneur is hard you don't want to do this um just to find investors like
1:27:11
go work at a bank and you'll make more far more money than you will uh trying to create things tailored toward
1:27:17
investors uh if you have an idea or an expertise that you think will help solve
1:27:22
problems for customers that's where I would start and if it's a service or a product that's up to you the you're
1:27:27
going to find different kinds of investors though right because investors in Services often are than people who
1:27:32
invest in products especially for example if they're Medics or Industrial Products they take a lot of hardware and
1:27:38
capital investment um services are easier because they don't have all the capital requirements but they're probably going to be different investors
1:27:44
so I would really work backwards from who you are and what you can offer the world uh rather than um worrying about
1:27:51
uh what investors are are looking for if that makes sense okay so let's do our pitches now so we got um
1:27:58
let say uh Eric wanted to pitch and Don wanted to pitch if still here yep and
1:28:05
Troy wanted to pitch that's three okay that's probably enough but I also see Jo
1:28:10
let me see how many people we have backstage here we have room for 10 and let's see one two three four oh we
1:28:19
do have room okay so um if you want to come on and Pitch I'm going to put up
1:28:24
this URL so George um or anybody else we can
1:28:30
do a couple of these I'm going to try to cut this off in half an hour though okay it's been it'll be two hours by then um
1:28:35
founder office hours.com uh you can come back there and join us and it'll be a two-minute pitch like I said uh no
1:28:41
slides and just talk for a few minutes and then we'll give you a couple minutes of feedback um let's see let's turn that on
1:28:50
no not that this not that either hang on guys um okay pitch
1:28:57
time okay so let's go okay so on on my screen let me just bring you guys on and just confirm that this is you all want
1:29:04
to pit we' got you three I think at the moment okay so this is just a real quick check
1:29:10
everybody THB yeah you three okay you all on board okay that's cool so let me
1:29:15
uh I guess let's start with the that's wrong one hang on sorry playing with a
1:29:22
no not that either geez sorry there's a lot of controls here all right so let's bring let's
1:29:28
start at the top of my screen is Eric is first and um then we'll do donay and
1:29:34
then Troy and then George or if anybody else wanted to join we can do them as well okay talking fast okay so um so
1:29:42
like I said Eric uh let's do your two up to two minutes two minutes or less if you can and um you can just take it away
1:29:49
talk structure this however you'd like and then we'll try to give you some helpful feedback and everybody who's still in the chat room please go ahead
1:29:55
and uh take notes and offer constructive feedback as well all right so let's hear about your uh your pet scanning startup
1:30:02
Eric okay great thank you Scott um and again super excited to be here my name
1:30:07
is Eric uh pie co-founder of AI for pet um I wanted to ask uh the room uh a
1:30:14
question uh how many people own a pet uh and if I asked you to pull out your phone uh how many pictures would you
1:30:21
have of your pet and what if I told you that with those pictures we can detect what the
1:30:28
abnormalities and what the issues of your pet's health is well that's what our company does we are AI for pet we
1:30:35
are a scanning technology app on your mobile device that helps pet parents uh
1:30:41
like myself I have two Aussies um to identify issues with your pet's eyes
1:30:49
skin uh joints and we're currently working on oral and the way we do that
1:30:54
is over the last three years we've collected uh 2 million plus uh Health
1:30:59
Scan images from veterinarians and Clinics and shelters in South Korea and
1:31:06
through our patented and proprietary algorithm um we have uh created an app
1:31:13
that allows uh now this new um inhome uh Pet Health monitoring uh experience so
1:31:21
great benefit that we found was pet parents um go through a myriad of of
1:31:27
different options to find out their Pet's Health at home whether that's Googling researching like going on
1:31:33
YouTube and looking in forums or calling a vet but having trouble making
1:31:38
appointments with the limited amount of veterinarians currently in our landscape and so we are the players that
1:31:47
function as a inhome pet health uh monitoring um guide and we also connect
1:31:55
our pet parents to veterinarians if the issue calls for emergency services and
1:32:01
we know that this Market has grown tremendously during coid um over 60% of
1:32:06
pet parents were Millennials who have adopted or have um gotten new pets and
1:32:11
we have over 90 million uh pet parent families now in the us alone and we
1:32:17
believe that there is a growing demand that is not being met and we would like to fill those needs uh for pet owners um
1:32:27
regarding monitoring their pets health and currently we have two business models one is a b2c where we do reach
1:32:35
directly out to our pet parents through our app um through a premium model we charge five $4.99 per month um
1:32:44
or we have a B2B um model as well where we partner with pet insurance uh
1:32:50
veterinarian uh clinics and shelters to provide um this scanning Health
1:32:56
technology for potential new pet parents uh pet adopters um and new pet
1:33:02
owners and so we are uh again interested in partnering with new businesses um as
1:33:08
well as investors like yourself Scott so we would be happy to chat further uh thank you great all right well good job
1:33:16
so everybody that was Eric from pet AI so if you have suggestions for him to
1:33:22
improve what he did because he did a fine job but if you have constructive criticism please uh toss that along
1:33:27
because that's why he's here but be be nice be friendly that's what we're doing uh and he can check it out later in the YouTube replay of course um and speaking
1:33:34
of YouTube If you haven't liked and subscribed please do that's the only way that I get paid for this time just trying to build the audience here so we
1:33:40
can help more people okay so um I it was very good you're well spoken um it will
1:33:46
obviously get easier you know and more fluid with time you a little hes hesitation but um practice will make
1:33:52
perfect not not a problem obviously you're a good speaker um I normally hate it when people start with questions
1:33:59
because they'll ask some kind of random question that is obviously self- serving and everybody knows it and but then
1:34:04
usually nobody ever gets the reaction they want because they're so close to
1:34:10
whatever it is they think everybody's that way and then like three hands go up and it just looks lame right wouldn't do
1:34:15
that but in your case it actually works because you're going right into why the photos matter right so I don't think you
1:34:21
need asked the piece about how manyof you own pets because you got to get tighter right so just cut to the chase
1:34:27
right how many you love pets and have pictures on your phone that's good enough because it leads right to it
1:34:33
right um I don't know what two Aussies mean but I guess maybe that's dogs you should probably Australian Australian
1:34:39
mixes yeah I'll probably have to clarify that for example you're so close to it you think everybody thinks like you do
1:34:44
right but so things out we don't know um and my my sort of General critique would
1:34:50
be that was way more about the product than it was about the business it was
1:34:55
like 8515 and that's fine but as investors we wanted more
1:35:02
like 5050 or even 7030 so I would uh hit the number you had a bunch of good
1:35:07
numbers two million images $499 you finally got to business model like 90%
1:35:13
in right of the time so I want to hear about the business model right so get to the point fast um and then um
1:35:22
a good example that was like we believe there's growing demand you said well show me right I want numbers right what
1:35:28
kind of Demand right um and you can't do that now and obviously this is a two minutes is an artificial construct I'm just trying to be helpful investors will
1:35:35
want to hear whatever it is you know there's 300 million people that own pets in the United States you know 47% of
1:35:41
them spend at least $50,000 a year over the lifespan of the dog you know health insurance for a typical dog costs this
1:35:47
we think you know with our service of $499 you know we can Reach This many people over this amount of time you know
1:35:53
numbers you know like draw draw Tell Me a Story by creating an equation of numbers that is convincing that shows
1:36:01
that there's profit here that that's what you're really wanting to do um on the very positive side you got me
1:36:07
intrigued enough I'm like I'm curious like I'm I want to know more about the technology like how does this actually work you know or and you might want to
1:36:13
say a little more just about the South Korea versus us uh transition like you
1:36:19
are a US company or you're not because will you know change us investors point of view um like what jurisdiction are
1:36:26
you in taxwise that's important to us right um anyway I can go on but that was it was very good is anybody saying
1:36:32
anything in the chat room I'm talking let's see somebody else say something and help our friend Eric out here all right we need to move along because it's
1:36:38
getting late but I hope that was helpful and happy to see you again if you want to keep practicing we have people come here all the time and do it again if you
1:36:44
want um there's some some uh there's some critique coming in for me thank you
1:36:50
Andre is somebody who pitches off himself a cool all right well nice to meet you
1:36:56
good luck with the uh with the company sounds sounds like fun and and useful yeah okay gotta go okay I'm talking too
1:37:03
much today all right so next up was gonna be uh don I think and he's gonna tell us um what about his uh it's a
1:37:11
musical thing as I recall from ub's uh meeting U last week right yeah that's
1:37:16
right yes so last week I was uh attending another meeting so I I did not make it
1:37:22
yeah right right okay right so go ahead and give us a shot if you'd
1:37:28
like okay so uh I'm the co-founders uh
1:37:35
so I start right now right yes oh okay so hi greetings we are the co-founders
1:37:40
of the with too vone vintage company and we parently present the Sonic Horizon
1:37:47
which is our solutions to reinvent the sound right so what are our missions our missions to interwin the user adapted
1:37:55
and true contextual scenarios with the latest technological advancement and
1:38:00
ping the Revolutionary soundscape of the timate sound experiences so imagine
1:38:07
there are four we cover four scenarios okay the first one is the
1:38:13
instrument Evolution okay where taking the instrument I and and offline okay
1:38:19
and also Reinventing how we play and experience the music and more
1:38:24
additionally we also uh uh reinvent okay the production line of the future uh
1:38:30
musical instruments the second scenario is the live and Studio magic uh we
1:38:36
capture the true essense of the Sound by passing the microphone limitations and we Perfect all all the instruments from
1:38:44
the strings to the wind the third scenario will be um the global music
1:38:50
classroom with integration to the virtual reality okay by using the
1:38:55
powerful VR our sound tag and we connect with music teachers worldwide it's like
1:39:01
being in the same room okay only better globally and the fourth scenario will be
1:39:07
uh the true sound Revolution okay which is we call the VX rendering so we step
1:39:14
aside okay step aside the Dolby atmus okay so we dive into richer s from the
1:39:22
live shows to the classic archives so our technological advantages
1:39:28
okay is uh using our aien state ofthe art technology where we collected data
1:39:35
to craft the digital preamps and the sound rendering the signals are
1:39:41
conditioned on the pickup okay and the various user contacts I'm sorry Sor I have to stop you so you've talked for a
1:39:47
minute and a half now and you haven't said anything about money right this is a investor pitch you can you hear
1:39:55
me oh yes yes yes so so you're you're wasting my time as an
1:40:03
investor I'm not mad I'm just telling you that pitch will not work because you're talking all about the product and
1:40:09
not about the business so you need to start over and it sounds great okay but
1:40:14
you need to talk about business right so you're very close to this and it fascinates you but I don't know what it
1:40:20
is just want to know if it's going to make money right so you need to turn around and talk about the need for this
1:40:27
in the market like there's a problem with this part of the music industry or
1:40:33
Acoustics or something I and you didn't even really what it is I don't is it a is it Hardware or is it software is it
1:40:39
an online platform app I don't know right so you need to say what it is and
1:40:45
how it makes money all the technical stuff is great but that's more like credibility
1:40:51
but unless I know what you're talking about and where you're going I'm just going to stop listening right because I
1:40:57
don't know okay the business or not I don't know right so that's why you
1:41:03
practice so no I hope that doesn't offend you I'm trying to help um yeah yeah yeah yeah talk about the business
1:41:08
man this is a I'm a businessman talk about the business right and that's what investors want to hear so if you can
1:41:14
make a case that there's a problem that you're solving that makes money then they will want to know all that other
1:41:19
stuff but you have to delay that before you can build the house and furnish all
1:41:24
the rooms that helpful would be like focus more for
1:41:30
example it's like two minute speech so we can just uh at very beginning we just introduce okay very very briefly in and
1:41:37
then we just talk about money and and then later on before finish we can addsome for example our technological like
1:41:44
uh advancement something like that right yes because because if you don't tell me
1:41:49
that it's a business oh and I I I don't I don't care right I mean I care like is
1:41:55
your new friend I like I'm curious but but if you're pitching the person is there to hear about how to make money
1:42:02
not about your business your prodct right it's the other way around like Founders I used to do this too you're so
1:42:08
close to it you're fascinated by this product and you hope it becomes a but my
1:42:13
job as an investor is it's got to be a business and okay before I about right
1:42:20
with with like especially with Venture Capital investors their job is they don't have money themselves right they
1:42:25
have partners that have given them money investors so they're investing so their job is to make money the rest is just uh
1:42:33
extra you know so yeah so you've got you obviously know the stuff but you need to
1:42:39
establish businessman we will yeah we will attend the the Ning a a private
1:42:47
event L we can talk we talk about later yeah thank you thank you cool right I'm
1:42:53
glad you thank you for not being uh taking that the wrong way I am just trying to
1:42:59
help uh and hopefully you're all getting that message today the product is cool but it's it's a you gotta prioritize the
1:43:05
business when you're talking to investors right it's different than a sales call if you're talking to clients it's a different thing right and if
1:43:11
you're talking to your mom that's another thing right or if or a good one actually if you're talking to employees or team members you want to convince
1:43:17
them of the vision and the importance of your solution and your technology ology that's another audience right so it's
1:43:23
it's it's the same um it's the same present but unwrapped from different
1:43:29
angles I guess something like that anyway okay so I think Troy is g to be up next and then we're GNA wrap up here
1:43:36
George I'm sorry we we just do this on camera for people it's um it's a little boring just to watch me talk to people
1:43:42
so this is an on camera show but happy to have you here next time and anybody else actually if you want to come back and Pitch next time we'd be happy to
1:43:49
have you I do this every month um next month is going to be Thanksgiving so I don't know exactly what date we'll do it
1:43:54
and then Christmas but anyway we'll figure it out and I'll be around and and by the way there are uh many uh past
1:44:00
episodes of this show on YouTube uh and years of podcasts as well so if you want more if you're trying to learn the
1:44:07
language of early stage investing please go and listen to those and uh we'll talk your ear off and hopefully help you too
1:44:13
all right so here comes our friend Troy hey Troy hey Scott hey office hours
1:44:19
yeah nice to see you you've been here before right I have yeah actually if if Scott told you today that you're due too
1:44:26
much of a product pitch then join join the club I too bear the whips his whip
1:44:32
on my back no it's good it's good let's let's
1:44:38
see if we cleaned it up okay sure yeah yeah yeah great so hey guys my name is Troy thinkink and I am the CEO and
1:44:45
co-founder of a company called gamut Tech and gamut Tech is a by parents for parents company and we help moms and
1:44:52
dads solve for the everyday problems that are faced raising little ones the9
1:44:57
billion domestic child Goods Market is ripe for the Harvest as parents appetite
1:45:03
for Tech forward Solutions and convenience increasingly grows in the way that we're meeting our children's
1:45:08
needs our Flagship product is the Yuri the Yuri is a patent Hardware tech
1:45:14
device that's smaller than a hockey puck and lives on mommy and daddy's toilet
1:45:20
the Yuri makes a game out of using the potty properly and safely regardless of
1:45:25
age gender or modality the UR will teach you how to use the toilet faster and
1:45:31
more fun than ever before say goodbye to changing dirty diapers and reaching your hand into to discusting Children's
1:45:39
potties chairs to clean up after your kiddo with 27 billion pounds of diapers
1:45:45
put into US landfills every year the fact that every and the fact that every single one of us has to pass through
1:45:52
this right of passage and get over this learning curve the Yuri will fit perfectly into the child good space in
1:45:59
exchange for 10% equity in our company we're looking for 150,000 bucks these
1:46:04
funds will be for the purchase of Bridging the Gap between our existing works like prototypes to the first 50
1:46:11
manufacturable units to go to market that's about 50,000 bucks with the
1:46:16
remaining dollars spent we'll look to spend that on marketing sourcing manufacturers optimizing cost to builds
1:46:23
our product and our brand that was very good way better I
1:46:29
I'm remembering you now that I've heard the pitch yeah that was good job it's
1:46:35
nice it's gratifying to me when somebody listens and they come back that much better that was really good um of course
1:46:40
I I'll have suggestions but um want to prompt everybody in the chat room please if you have suggestions um for Troy and
1:46:47
about his product or his pitch please share them so he can benefit as well as well um so okay so good job Clear to the
1:46:54
so much clearer than last time and you made clear what it does who it's for that it's Hardware it's this big it
1:47:01
gamifies it helps see I retained it right well I've heard it twice I guess but this time I got it right it's like tick tick tick tick tick okay so I know
1:47:08
what you're doing now um the piece that's missing is you didn't talk about
1:47:14
the money enough you talked about what you're raising but I want to hear just a couple sentences is it retail is it
1:47:21
wholesale like who how are you selling and like a suggested price point like
1:47:27
just some numbers so I can get some idea like is this a you know because I don't know you know but I don't know is this a
1:47:33
$3,000 product with a $500 a month subscription that's only sold through Rolls-Royce dealers I I I it might be I
1:47:39
don't know or is it a direct consumer thing that you're going to put on Amazon and it's 99 Cents right I don't know so
1:47:46
that's it's that's easily fixed though I mean you've got the Cadence you've got all the other points but but just tell us enough so we can some idea of like
1:47:53
what the go to market strategy is because that's the big question here we're going to pres presuming it works
1:47:58
and there's a clear Market you have identified and a need um actually you missed now I'm remembering didn't you say last time that um something like in
1:48:05
other countries it takes them they do it like way faster for kids or something yeah yeah yeah you know Scott and it's
1:48:11
like I don't know what to add and what to cut I I I doubled down on dollars and
1:48:17
I know that this is like you said earlier like two minutes isn't a real thing in actual world but I I and also
1:48:27
can I just honestly I don't know Idon't know if we'll be direct to Consumer I don't you know I didn't even know how to
1:48:35
really and I should have asked this as a question not monopolize this time now but I wanted your help in trying to
1:48:41
figure out how we put a proper early stage valuation on a company like
1:48:48
gamitech on the product like the Yuri I I I chose that because we're thinking
1:48:54
crowdfunding and we're thinking 500,000 in ad spend the Savant of that space are
1:49:00
telling me I'm sorry 500,000 in total raise 20% in ad spend so I grabbed a 100
1:49:07
thou but I didn't want to say crowdfunding to potential investors because I thought maybe that
1:49:13
they may not like that I but that might not be true at all a lot of this a lot of this is guesswork yeah know those are
1:49:20
good questions and I and I'm glad you're here this is why I do this because those are legitimate questions and nobody's
1:49:25
going to give you a straight answer so I'll try um it's just hard when it's that specific to you right and and even
1:49:31
an answer that you find online might have be two years ago and and things may have changed right so um so let me
1:49:37
quickly try to address that because I think this would probably help other people too so um you don't have to set evaluation if you use a safe note that's
1:49:43
one of the reasons it's used that way so you would say and I actually I would suggest you rephrase your the way you
1:49:49
said it was just a little it was fine but it was a little off from the way people in Venture say it you should say something more like we're raising X doll
1:49:56
at y valuation rather than we're giving 10% for this like just don't talk that
1:50:02
way you're raising this amount of money at this valuation everybody will immediately do the math in their head right so that's just how you say raising
1:50:09
X at a y evaluation but so if you do that a safe note can be um we're raising whatever the number is $500,000 on a
1:50:16
post money again post money not pre-money post money safe which means that people can put in up to $500,000 in
1:50:23
small or large pieces up to you but the valuation won't actually be set until the next round when you have some sales
1:50:30
some traction and other investors who will do more due diligence maybe have experience in the space or whatever and
1:50:36
they will say you know we think the company's worth three million or seven million or whatever it is and your first round investors will be at that level or
1:50:44
you can put a cap or a discount on that as well so you can read about safe notes but that's what a safe is for for that
1:50:49
question the other question I'm moving quickly here because we're out of time but the other crowdfunding so crowdfunding is a
1:50:55
legitimate way to go especially for something like this I it sounds like crowdfunding I don't have a ton of experience in crowdfunding but it sounds
1:51:01
that way there are differing points of view on that from professional investors point of view which is one if it's
1:51:06
crowdfunding um if there's already a crowdfunding round done it was probably done with a bunch of customers not
1:51:13
actual investors so the valuation is probably inflated because those people are buying because they know you or they
1:51:18
like the product they don't really know if it's worth 6 million valuation or 6.5 valuation which is a difference to me as
1:51:25
an investor right so crowdfunding round is a legitimate way to raise money but it's it's not the best signal uh but
1:51:31
it's increasing in popularity and I have other people especially if you talk to the crowdfunding people they'll tell you oh we have VCS on our platform looking
1:51:37
for deals all the time right so there's no clear answer there but it sounds like a viable place for where you are given
1:51:44
the consumer appeal of your product the trick as you probably know and it's a whole another discussion is crowdfunding is not so much a way to raise money
1:51:51
unless you have a lot of money to market the raise right so it's it's
1:51:57
it's if you're going to try to raise 500 I would have at least 50 or 100 ready to go to help gra Drive attention to the
1:52:04
raise it's what do you what do you think Scott about grabbing hold like so our our numbers were were one 150 for this
1:52:12
this pitch so like let's just use that so what do you think about going to angels to grab the 100 for the ad spend
1:52:19
to build the traction to then to crowdfund yes that that's a that I think
1:52:24
is the way to do it if you can that's what I would and here's why first of all angels will be easier to close it
1:52:30
wouldn't take as long you don't have to spend a ton of money marketing ideally second if they come in we're
1:52:36
just making numbers up again right if say the initial valuation is three million then if you go to a crowdfunding round and the the valuation gets kind of
1:52:45
elevated because people aren't real investors like I was talking about your initial investors won't be pissed off
1:52:50
right because they're like oh I invested at three now it's at six they're happy whereas if you do it the other way around and you start at four or five
1:52:56
because the crowdfunding audience does know the difference Angel Investors aren't going to want to come in like that was five well I think it's probably worth four they're gonna undercut you
1:53:04
right so it's it's uh yeah order of operations is important here but again I
1:53:09
just making that up I would get multiple opinions on that but that's uh that's how I would see it and hopefully that's
1:53:14
helpful so I'm sorry we probably need to move on here but nice to see you a real Improvement in the pitch I I'll be back
1:53:19
man I'm not I'm not done with you yet all right all right well please like and share and all that stuff
1:53:26
online all right thank you Troy that was Mr Troy Okay cool so we're look at this
1:53:32
almost two hours of uh centilating advice nonstop from Southern California
1:53:38
uh it's my favorite way to spend lunch I have to admit although I'm getting hungry so let's just run through a couple more things before we wrap up
1:53:45
we'll be having our next masterminds uh meeting is in person here in Orange County so if you are here be happy to
1:53:50
see you that'll be in mid November if you're not on the startup uh Council mailing list you really need to head
1:53:55
over here there's a whole bunch of different uh services and newsletters and things that you can uh subscribe to
1:54:02
and they really are there uh to to help you um let me put up this logo again
1:54:09
this is all stuff that I've built me and my team to try to help early stage Founders like I used to be right so go
1:54:15
to these any one of them you can sign up on for the newsletters on the other ones but I'm telling you they they they're
1:54:21
not all free but they're all less than $100 just trying to cover the costs and the time that we've put in um I lose
1:54:28
money doing this I'm just trying to help swear to God so if any of that looks useful to you I hope you'll sign up and
1:54:34
um let's see what else the uh the end of the show is nigh but let's just talk
1:54:40
quickly about our um where is that our sponsors let's see so we've got uh we
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talked about that these are the guys startup in uh you can't see that that's not very clever let's hold on turn off
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the chat cake you can't see that very well either anyway cake equity.com is a
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is a platform for um managing capitalization tables and stock options and it's really super helpful if you're
1:55:05
at that point where you're starting to issue stock options to your employees and they have a lot of associated legal services and it's all templated and it
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can save you a lot of money and time they're good friends of mine I'm an investor and I think you should go use
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cake Equity if you are um looking for that kind of help because they are good at that stuff trying to put up a
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discount code too we have a discount code there it is
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okay there okay oc20 if you go over to cake equity.com
1:55:34
and I think that's kind of it um yeah I think that's it so let's uh future
1:55:41
events yes go over to YouTube please like And subscribe invite your friends get on the mailing list so we can keep
1:55:47
in touch please say hello on LinkedIn be happy to connect with you and uh we have a LinkedIn group over there that you can
1:55:53
join I'll uh respond to people that connect with me with URL for that and I hope you have a great week a great month
1:55:59
and a great fundraising uh round for your startup and thanks for being here sharing your Visions with me and with
1:56:06
the world I'm inspired by you and I'm looking forward to seeing how you make the world a better place because that's
1:56:12
what we're doing here making the world a better place um if we don't do it as Founders um you know I I got to tell you
1:56:20
I don't know who is going to do it so it's up to us thank you for being here hope to see you again next time uh
1:56:25
please like And subscribe and tell your friends lunchtime see you next time