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Startup Fundraising Office Hours for Entrepreneurs [Replay]

MasterMinds Startup Fundraising Video Free 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.  Masterminds Startup Fundraising Office Hours with Scott Fox May 2021

Startup Founder Discussion Questions

This month Startup Council CEO Scott Fox took questions from startup founders live on camera and via chat, including:

  • Ken – how founders can support themselves while developing their first products (aka how much can founders pay themselves from investor money)
  • Nzola – crowdfunding strategies for raising money for a B2B product, why investors rarely say no, how to find the right investors that fit your company
  • Rob – what is a cap table, what are the best tools (software) for tracking a startup’s equity ownership
  • Patty – how to encourage angel investors and venture capitalists to “lead” a deal, what are appropriate company valuations for an early stage venture, why the relationships and networks angel investors offer may be more valuable than their money
  • Toyah-Maria – how far to reach geographically and across markets for a new startup

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

And see a complete TRANSCRIPT BELOW.

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Questions and practice investor pitches are hosted LIVE by Scott Fox, CEO of the Startup Council/Angel Investor/Serial Founder/Author/Startup Expert.

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

 

MasterMinds Startup Fundraising Office Hours [unedited] TRANSCRIPT from May 25, 2021:

00:00
is scott fox i'm here for mastermind
00:02
startup office hours today we're going
00:04
to talk about startup fundraising
00:06
and we're happy to see you and join you
00:08
have you join us from all over the world
00:10
we're live on youtube live streaming on
00:12
linkedin live streaming on a couple
00:13
different facebook pages
00:15
and on blog talk radio as well so if i
00:17
can help you with your startup
00:18
fundraising questions
00:19
well that's why we're here i've been
00:21
doing this for a long time i'm a serial
00:22
internet entrepreneur
00:24
i've been busy building companies
00:26
advising companies investing in
00:28
companies
00:29
ever since the first.com boom and
00:31
basically i spend most of my time these
00:33
days investing in companies and advising
00:34
early stage entrepreneurs trying to help
00:36
you
00:37
well figure out how to get to the next
00:39
level none of this
00:40
is as easy as the media pretends and uh
00:43
there's a constant stream of uh
00:45
misinformation
00:47
on the internet uh as in all topics i
00:50
guess really
00:50
but especially around how easy it is to
00:52
raise money it's not easy it's never
00:54
easy it's a challenge
00:55
and it can be made easier with some
00:59
helpful mentorship
01:00
guidance and talking to people who have
01:03
done it before
01:04
or who are even doing it right now and
01:06
that's what these
01:07
office hours are about as well as the
01:09
monthly mastermind startup accelerator
01:11
workshops that i run
01:12
these happen once a month
01:16
and we do those in the evening specific
01:17
time and those are a more interactive
01:19
group situation
01:21
so if you're interested in those please
01:22
visit mastermindsworkshops.com
01:25
and in the meantime today we're really
01:27
doing q a
01:28
so this is about um a simple uh show
01:31
hardly even a show it's me turning on
01:32
the camera here in my office in southern
01:34
california
01:35
and giving the benefit of my expertise
01:37
to a whole bunch of you who wrote in
01:38
with questions
01:39
and we have a bunch of questions today
01:41
enough that we're not going to get to
01:42
all of them for sure
01:44
but we'd like to have you here
01:46
participating glad that you can join us
01:48
and if you'd like to we have a live chat
01:51
going as well they're on several
01:53
different platforms
01:54
so if you are out there um on youtube
01:57
or like i said linkedin or facebook
02:00
some of those places that chat will show
02:02
up live here on the video as well i'll
02:04
try to respond to those as well
02:05
and in the meantime we're going to have
02:07
a bunch of our different friends
02:09
show up here and um ask their questions
02:12
and we're going to talk through them
02:13
together
02:15
a quick disclaimer i do have a law
02:17
degree from stanford law school as well
02:19
as a
02:20
bunch of financial certifications but
02:21
this is not legal or financial advice
02:23
that you should
02:24
rely on you should consult your own
02:26
expert advice
02:27
advisory consultants and team
02:30
because they will know more than i do
02:32
and i can't get into the specifics of
02:34
any specific situation
02:37
the last thing i just want to mention is
02:39
why i do this
02:40
why i do this is because i believe in
02:44
you and i haven't even met you right
02:45
this is virtual
02:47
there's hundreds of people listening to
02:48
this all over the world
02:50
but entrepreneurs are the people that
02:52
make positive change in the world
02:53
and i'm convinced that uh together we
02:56
can actually make some positive change
02:58
so i do this as a volunteer service to
03:01
try to get more people
03:02
on the road to entrepreneurship it
03:04
doesn't have to be as hard as it is
03:07
if you know the right people it makes a
03:08
huge difference and when i started out
03:11
i didn't know anybody and i came from a
03:13
modest upbringing in the midwest and
03:16
long story short i i i started from the
03:19
ground up
03:20
uh but with some obvious advantages
03:22
right i'm male
03:23
i was born at the right time in the
03:24
right place i'm white i
03:26
speak fluent english at least i pretend
03:28
to speak fluent english
03:30
and i got into the inner circles of
03:33
places by going to places like stanford
03:35
for my education
03:36
and i worked my butt off and i'm not
03:38
ashamed of any of that i paid my way
03:39
through schools and
03:40
so forth but it's not even for me it
03:43
wasn't easy
03:44
so i'm trying to do this to help others
03:46
of you uh who may be on this road
03:48
somewhere on this road
03:49
um as well to get onto the onto the
03:52
freeway
03:53
a little faster that's why i wrote all
03:55
these books behind me here sorry over
03:57
here
03:58
those three in the middle are in english
04:00
those are my books the rest are all
04:02
foreign translations so many of you here
04:03
might be
04:04
tuning in from other countries uh thanks
04:06
for being here happy to help if i can
04:08
uh but just the bottom line is my
04:10
mission is to help you if i can
04:12
and uh if that is useful to you let's uh
04:14
let's get on with the questions
04:16
okay so um let's check in all my notes
04:19
here make sure i don't miss anything
04:20
okay so we've got a bunch of people in
04:21
the waiting room here and we're gonna
04:23
try to
04:24
what do we got here let's see i see uh
04:26
christy and ken and rob
04:28
and uh nozzola and patty and
04:31
okay well there was supposed to be a guy
04:33
named jay here and she
04:34
didn't show up yet so we're gonna move
04:36
on to somebody else um
04:38
let's see who would be a good next
04:40
question hopefully jay will show up
04:41
later
04:42
um by the way really does help me if you
04:45
rsvp for these things please show up
04:47
uh it's really useful okay so ken ken
04:49
has been on
04:50
camera with me before so we're gonna
04:51
bring ken in here and let's see ken i'm
04:54
gonna try to make this work
04:56
let's see how about that button let's
04:59
see and then it can if you want to
05:00
unmute
05:01
i know i've done that okay let's try
05:04
that one
05:05
it's fancy yeah i can hear you
05:09
a little slow today come on let's see
05:12
well there you go
05:13
and there's ken fresh from san diego hi
05:16
ken nice to see you again
05:17
hi nice to see you scott great so let's
05:20
talk about your question you were
05:22
um well it's about angel investors and
05:24
how to use their money i guess right
05:26
yeah what's your question
05:29
well um when when raising money from
05:32
angel investors
05:34
will they typically provide funds to pay
05:37
software
05:38
developers who work on building a
05:40
production ready
05:41
initial product version and if so what
05:44
if
05:45
one or more of the co-founders also work
05:47
as developer
05:49
employee cto or technical lead what this
05:52
question is really asking is do founders
05:55
need to have runway funds to pay for
05:58
their own basic needs
06:00
or can they have a job in their own
06:02
company doing
06:03
actual creator work right right okay so
06:06
that's a good question and one i
06:08
struggled with personally when i was
06:09
first time i was a founder
06:11
um so i picked your question because i
06:13
think it applies to a lot of people so
06:15
thanks for sharing it
06:16
um the answer has changed over the years
06:19
and that's why another reason is a good
06:20
question right because old advice is
06:22
different than current advice
06:26
i think i would say this traditionally
06:29
you were supposed to do anything you
06:30
could
06:31
to bootstrap the company right and you
06:33
weren't allowed to pay yourself anything
06:35
luckily that has changed so that's the
06:37
short answer to your question you can
06:38
raise money to do anything that's
06:40
reasonable
06:40
it depends mostly on who the investors
06:42
are and what you sell to them right
06:44
um in terms of selling the investment i
06:46
mean the business um
06:48
so if you uh uh sorry we've got some
06:50
people coming into the chat room there
06:51
okay so folks if you're on youtube looks
06:53
like sandy's over on youtube talia as
06:55
well um those should show up in the
06:57
stream here in a minute and if you guys
06:58
want to
06:59
talk to each other that's fine or post
07:00
some questions or follow-ups here to
07:02
ken's question we'll do those as well
07:04
okay so so depend it all depends it's
07:06
the art of the deal right
07:07
so what are you offering and what are
07:09
you giving the um
07:13
standards have changed in the favor of
07:14
founders it used to be that you were
07:16
supposed to demonstrate
07:18
anything you could that you were
07:19
desperate for capital right and you
07:20
would bankrupt yourself
07:22
um but but investors are much more
07:24
reasonable than that these days there's
07:26
a lot of deals in the market and there's
07:27
a lot more capital too looking at early
07:29
stage ventures so these days i think
07:30
it's perfectly reasonable
07:32
to pay yourself something the question
07:34
is how much
07:35
right and that's where there's often
07:37
friction between
07:38
the investors and the staff because or
07:41
the founders
07:42
because sometimes people have a certain
07:43
level of accomplishment or lifestyle
07:45
that they want to maintain
07:46
and they're not ready to cut that in
07:48
half so let me get some real numbers
07:51
um i have seen as recently as last week
07:54
i was on a call
07:54
where this came up i'm a member of tech
07:56
coast angels which is a
07:58
uh one of the largest angel investing
08:00
groups in the united states
08:01
and we literally in a pitch session
08:03
questions came up to a founder well what
08:04
do you
08:05
guys you founders on the team and it was
08:07
all guys uh what are you paying
08:09
yourselves
08:09
and the market rate i would say roughly
08:12
is something like
08:13
if you could pay yourself up to 10 000 a
08:15
month or even 15
08:17
000 a month so a salary of like 120 to
08:20
150
08:21
probably going to be okay if you get up
08:24
close to 200 or more than that
08:26
and this happened because the two
08:27
founders were paying themselves each
08:29
like i think 11 or 12 000 a month
08:31
and then they had hired someone else in
08:33
from the outside and they were paying
08:35
him like 20 000 a month
08:36
so that was exactly that tipping point i
08:38
was talking about somewhere around
08:40
180 200 thousand dollars a year the
08:43
investors get
08:44
leery right you're you're obviously
08:45
doing more than just covering basic
08:46
expenses you're living off our money
08:48
right while you're
08:50
and that's where they get uncomfortable
08:51
so um
08:53
so that's what i would look at now all
08:55
that of course is in the context of how
08:56
much money you're raising right if
08:58
you're raising a hundred thousand
08:59
dollars
08:59
you can't say i'm going to pay myself
09:01
150 000 right because then
09:02
for the company right so you're a smart
09:04
guy you figure that out but that
09:06
that's why there's no easy answer to
09:08
this but the simple version oh
09:10
sorry let me get another example during
09:12
covid a lot of companies
09:14
cut back quite understandably right that
09:16
was the first question in every due
09:17
diligence meeting what is your plan for
09:19
kovit like a year ago right now
09:21
it was crazy every company was cutting
09:23
chopping everything
09:24
and i know of a number of companies
09:26
where the founders may have been
09:28
making say six 10 12 000 a month
09:31
uh from essentially from investor funds
09:34
um but they cut that in half
09:36
and so they and they laid off people too
09:38
right so they often cut their staff in
09:39
half and cut themselves down to
09:41
6 000 or even 3 000 a month like really
09:43
bare bones because they weren't sure
09:45
they were going to survive at all
09:46
and that's the kind of aligned
09:49
incentives that investors like to see
09:51
they like to see that the
09:52
the founding team is in the game um
09:56
but if if if the investors get hurt they
09:59
wonder that the founders get hurt too i
10:00
guess is this right right okay
10:02
is that helpful very helpful very
10:05
helpful
10:06
great yes all right that makes sense
10:08
good all right well that's
10:09
that that's the key i would say to a lot
10:11
of folks here
10:12
um when you're wondering what investors
10:14
are thinking they are generally
10:16
thinking like you would if you were on
10:18
the other side of the table right
10:19
they're trying to find a deal that makes
10:20
sense
10:21
they if they're going to invest in you
10:22
they want you to succeed
10:24
they just don't want to be cheated right
10:26
so um if you if you kind of wear your
10:29
your com it's more than common sense
10:31
there's a fair amount of business
10:32
expertise here too but if you combine
10:34
the business expertise and some common
10:35
sense
10:36
in some simple fairness um then i think
10:39
you'll get pretty close
10:40
and it's hard for anybody um to uh
10:43
argue if you know if they're being
10:44
treated fairly and they want to complain
10:46
about that well
10:47
sorry we're running a business here you
10:48
know it's not personal right the
10:49
godfather it's not personal business
10:52
so cool all right well that's helpful
10:55
so thank you very much yeah nice to see
10:57
you again and we'll hopefully see at the
10:58
next
10:59
masterminds workshop too you will you
11:00
will awesome okay
11:02
so we've got a couple more folks here
11:04
we're going to tune out here from
11:06
mr ken and let's see who else we got
11:08
here
11:09
um let's see thank you ken
11:12
and it looks like we're going in the
11:14
chat here
11:15
let me just check in the chat here see
11:17
if there's anything urgent
11:18
um okay uh
11:22
let's see tell you okay
11:26
okay those are good okay guys we'll get
11:28
to those if we can
11:29
uh the format here is that these
11:31
questions come in in advance
11:33
and um i that's the way i can print them
11:34
out and think about them
11:36
um and um i will and we have a lot of
11:38
them today so i'll do my best
11:40
uh and if you're gonna do that then you
11:41
need to come on camera like uh
11:43
like ken just did uh so that this isn't
11:45
just a boring talking head show okay
11:47
so if you want to um you know turn on
11:50
your camera and submit a question in
11:51
advance i'm happy to help you
11:52
that's literally why i do this okay so
11:56
let's get on to our next one here um
11:59
okay next question so that was ken and
12:01
that was a good one i hope that was
12:02
helpful to you guys
12:04
uh okay and zola okay good i just saw
12:06
you turn on your camera there too
12:07
perfect timing nice
12:08
there we go there's allah hey hey doc
12:12
how are you good nice to see you good to
12:14
see you again
12:15
um all right so why don't you tell folks
12:17
what you're asking about today
12:19
uh yes so i'm trying to fundraise
12:23
through
12:23
crowdfunding i my
12:26
startup it's a bi-tech company i'm
12:28
trying to
12:30
further or advance my
12:33
pancreatic cancer therapies into the
12:36
market
12:37
and i've been trying to you know i've
12:39
tried the sbirs i've tried
12:41
other types of funding i try to secure
12:43
angel
12:44
investors or vcs but i keep
12:47
being told that i'm too early so i'm in
12:50
the seed funding stage and since i've
12:52
been having
12:54
challenges as a black engineer and
12:57
scientist
12:58
in the biotech space um to fight find
13:01
financial support through those means
13:03
i decided to try to get help from the
13:06
community
13:07
so through crowdfunding so what i want
13:09
to know is i haven't done it before
13:12
so how do i set up a marketing strategy
13:15
campaign
13:17
who do i talk to how do i create a
13:19
storyline that is convincing
13:21
that explains my technology but at the
13:24
same time
13:25
convinces people to support the efforts
13:28
to try to get
13:29
the this pancreatic cancer therapy into
13:32
the clinic
13:33
um i don't know how how to start yeah
13:36
so there's a whole bunch of issues in
13:38
there and um thanks for sharing that
13:40
with us
13:41
um and you have an incredible background
13:44
that's i'm always happy to see you with
13:45
your medical doctor and an engineer and
13:49
she's got
13:49
i don't understand what she's doing but
13:52
that was cool
13:52
um and i actually know i guess that's
13:54
the challenge right it sounds cool but a
13:56
lot of people don't understand it so
13:58
um okay so there's a lot to unpack there
14:01
but um
14:02
i think that um the the first strike i
14:05
would i would take at this
14:07
would be really to to dig down and
14:09
question some of your assumptions
14:11
um and so i have a couple questions for
14:12
you one is
14:14
well let's just start with this the
14:17
investors you've been talking to are
14:19
obviously not the right investors
14:21
right so and as you know with these with
14:24
in this broadcast format i'm trying to
14:25
give advice that applies to as many
14:26
people as possible so if this doesn't
14:28
hit you particularly i'm speaking to
14:30
everybody that's watching all right
14:31
but a lot of times when people say i
14:33
can't find investors it means that they
14:35
haven't researched
14:37
enough to find the right investors right
14:39
it's just like you say you know
14:41
i i'm struggling for a metaphor but you
14:43
know i can't find a
14:44
a car well or i can't find this kind of
14:47
car well you're looking at all the cars
14:48
right you need to drill down a little
14:50
more so again i don't know
14:52
just take this as food for thought i
14:53
just want to get it out on the table
14:54
because
14:55
you know if people go out and they're
14:56
looking for investors you know an easy
14:58
example in your case
14:59
you've got a biotech sort of product but
15:01
if you talk to software investors
15:03
of course they're going to say you know
15:05
no and and the trick here
15:07
here's the real insider secret this has
15:09
got to go in my next book because it
15:10
comes up all the time
15:12
investors never really say no and it's
15:15
so
15:15
frustrating they'll say something else
15:18
they'll say like you're too early
15:20
or come back when you have this or
15:24
why don't you have a partner or some you
15:26
know something that is they just never
15:28
say no because they're
15:29
it's their job to be greedy right and
15:31
they they don't want to miss out if it
15:32
turns out that they were right
15:34
they were wrong on saying no that you
15:36
know then you don't like them anymore
15:37
and they missed investing in facebook or
15:38
uber or some big company right
15:40
so it's really hard to get a straight no
15:42
out of somebody but actually a no
15:44
is the biggest blessing an investor can
15:46
give you because they may be wrong
15:48
but um it uh you know
15:51
it's not their job to be friendly it's
15:53
their job to find the right deals right
15:55
and and it's so
15:56
it's this hidden agenda that they always
15:58
have of like keeping you on the hook
16:00
without being clear
16:01
so okay so first of all um i would
16:04
broaden your
16:05
whoever you're looking at again i don't
16:06
know if this applies to you hello but
16:08
but go back look at the list you made
16:11
and try
16:12
a little harder you know i don't know
16:13
how much time you spent but spend
16:14
another
16:15
10 or 20 and drill down because you have
16:18
several really cool things going for you
16:20
right you the biotech market is huge and
16:22
doing really well
16:23
so that's a growing area you always want
16:25
to be in a growing area right
16:27
um the other is that you're female
16:29
you're a minority
16:30
i mean you there are funds that just do
16:32
this kind of stuff
16:34
and the combination of those three as
16:35
you know is really rare
16:37
so i gosh i you know i so i haven't seen
16:40
your business plan and i don't i don't
16:41
even understand the tech i'm not even
16:43
the right guy to look at your business
16:44
plan because i'm not qualified
16:46
um but but i would look harder
16:49
um before you go the crowdfunding route
16:51
um and here's a great suggestion that
16:52
came in a private chat uh patty why
16:54
don't you put that in the public chat if
16:56
you can i'm not sure where you're
16:57
logging in from but she said
16:58
your speaker should look into the
17:00
fearless fund so that's
17:02
that's the one i didn't know about but
17:03
thank you for that anybody else
17:06
yeah and actually there's a great use
17:07
for the chat anybody that has
17:09
suggestions for our speakers or
17:11
commentary
17:12
uh please put it in the chat or um you
17:14
know like you have an article
17:16
that might be helpful um i'm gonna put
17:18
that in my notes
17:20
yeah okay okay so let's assume you look
17:23
and you find um i don't know 15 more
17:26
investors and you pitch those
17:27
folks and still not a good fit okay so
17:31
here's the the problem one of the
17:33
assumptions you're making is that
17:34
investors are there to invest
17:36
it seems like they are they call
17:37
themselves investors but investors
17:39
really only invest based on
17:40
relationships
17:41
so if you find the ones that are close
17:46
don't just ask for a check there's a
17:47
saying in venture capital you've
17:48
probably heard this but
17:50
uh ask for money get advice for advice
17:53
get money
17:54
right so what you need to do is build
17:56
relationships with these people so even
17:58
if everybody says no
17:59
take the 10 or 15 that are the best
18:02
possibilities as far as you can tell
18:04
even if they say no
18:05
as long as it's not a hard note right
18:07
because anybody that's in your space is
18:08
not going to give you a hard no
18:10
unless they think you're crazy or
18:11
something they're clearly not crazy
18:12
right so
18:13
um find those people and just keep in
18:16
touch with them anyway
18:17
send them a monthly quarterly update on
18:19
what you're doing and build the
18:21
relationship over time
18:22
that long-term building of trust is the
18:24
way to get
18:25
investment done um now all that is not
18:29
about your question you asked about how
18:30
to build a crowdfunding campaign and the
18:32
reason i went
18:32
this way was because crowdfunding is
18:35
generally
18:36
for b2c type products business to
18:38
consumer
18:39
you know like i have a whole new
18:40
bluetooth speaker or
18:42
um one of the first things i ever
18:44
invested in crowdfunding i'm from
18:46
detroit
18:46
and detroit as many of you may know is
18:48
uh the scene of the movie robocop
18:50
which is yeah i remember robocop yeah
18:52
okay right so
18:54
when crowdfunding was new my first ever
18:55
crowdfunding investment was somebody was
18:57
going to put up a big bronze statue
18:59
of robocop in one of the parks in
19:00
detroit
19:02
right it's that kind of stuff like like
19:04
you know that's it's
19:05
fun or fun funky or or or a consumer
19:08
product
19:09
to do a b2b fundraise on crowdfunding i
19:12
i have never tried it but i think it
19:14
would be really hard
19:16
um because you're going to have to make
19:17
claims that i think would get you into
19:19
dangerous territory as a medical
19:21
professional right because the only way
19:23
you're going to capture people's
19:24
attention is basically to kind of say
19:26
i'm going to cure cancer
19:27
and obviously you can't say that right
19:30
yes so i
19:31
i'm just a little skeptical that
19:33
crowdfunding is going to work for you
19:34
without pushing you into a place that
19:36
would be really dangerous for you
19:38
from a liability point of view um
19:42
so all that it doesn't answer your
19:43
question i and i apologize but does that
19:45
give you some food for thought
19:47
yeah it does because now i can you know
19:50
i'll
19:50
i'll go back and look at you know the
19:53
investor
19:54
option but also try to see
19:57
what other companies may be in my space
19:59
that are not b2c
20:01
have done in terms of fundraising and
20:03
look at you know liability and make sure
20:06
that
20:06
i don't cross you know any uh um space
20:09
that it's
20:10
you know it's uh counterproductive yeah
20:13
yeah and you said something really smart
20:15
there which i would reiterate to
20:16
everybody
20:16
pull this out from what azola said
20:19
looking at other companies in the space
20:21
that's the best way to get funded is to
20:23
figure out
20:24
like people always want to go right to
20:26
the investor and that makes sense right
20:27
why wouldn't you
20:28
but the other way is to look at
20:30
companies like yours or like yours say
20:32
two or five years ago
20:33
before they got big and successful and
20:35
figure out who invested in them
20:37
right if that company if you can find
20:39
company a and company a is kind of like
20:41
yours but five years farther along
20:43
because they raised you know an a round
20:45
of five million and a b round of 50
20:47
million and now they're worth 500
20:48
million
20:49
well that means they have a whole list
20:50
of people who invested in them
20:52
if you can do some due diligence and
20:54
figure out who those investors were
20:56
those investors are very good targets
20:58
for you because they've already made
20:59
such money
21:00
so it's good money on something very
21:01
similar to you yeah that is the way
21:03
honestly i would go about fundraising
21:05
these days
21:05
uh people kind of want to do like the
21:07
old uh phone book approach you're like
21:09
oh here's a list of investors i'm gonna
21:11
email all of them right well that that's
21:13
of course that's not gonna work
21:15
um it would be better to work backwards
21:17
from your goal
21:18
investors like this they're proven to
21:20
like companies like mine
21:21
and they've done well and then even
21:23
better here's
21:24
the killer pro tip is that if you can
21:27
find those companies
21:28
contact their founders and say hey i
21:31
have a company like you
21:33
like yours um you know if and if they do
21:35
you probably have something in common
21:37
also right you say hey we both went to
21:38
this school or we both
21:39
majored in this or you know build a
21:41
relationship with them because then if
21:43
they introduce you to their backers
21:45
that's how you really get attention
21:46
right because it's one thing to cold
21:48
call a firm and say
21:49
hey you invested in uber i've got the
21:51
new uber well you know how many of those
21:53
calls they get
21:54
it's another to know travis canuck
21:56
kalanick or whatever his name is the
21:58
founder of uber
21:59
and have him call the investor say hey
22:01
and zola's building something like what
22:02
i've got you should look at you know
22:04
they're going to
22:04
take the call right or respond that's
22:07
that's really the way to do it
22:09
okay all right all right thank you so
22:11
much
22:12
you too all right so that was
22:15
my friend and zola dr zola and um
22:20
let's see what do we go uh um
22:23
how do you turn on your camera okay guys
22:25
this is i will turn on the cameras if
22:26
you're here but let's see
22:28
um cameras are only for people who
22:30
already sent in their questions and and
22:32
we've already printed
22:33
printed those out so i don't think uh
22:35
sandy or
22:36
toya that you guys i have those from you
22:39
um
22:40
sam p said interested in talking to her
22:42
okay well sam
22:43
um i don't know who you are but if you
22:45
have something that could help in zola
22:47
i guess you could uh contact me
22:49
scottfox.com or
22:51
through mastermindsworkshops.com or
22:54
through linkedin actually all of you
22:55
let's uh
22:56
if you want to we can connect on
22:57
linkedin i'm happy to help if i can
22:59
um i don't like linkedin messaging
23:02
i get too many of them but if you can
23:04
contact me via email that's the way i
23:05
work
23:06
and i'd be happy to help you if we can
23:09
okay so
23:09
who else we got here um
23:12
let's see i was looking at so that was
23:15
in zola
23:17
good stuff i hope that was helpful to
23:19
several of you
23:21
um okay
23:25
so chrissy okay so chrissy we can
23:28
talk about your thing but you said you
23:30
don't want to turn your camera on i'm
23:31
sorry this is a video show
23:32
so if you change your mind let me know
23:35
we can bring you on
23:36
but let's talk to rob let's see rob is
23:40
your camera working i can see you here
23:42
there he is okay so this is our friend
23:45
rob
23:46
let me just get this going here for a
23:48
second there we go there's rob hey rob
23:51
hey scott good to see you how are you
23:52
i'm good thank you
23:54
great all right so let's uh rob's a
23:56
attendee at our masterminds workshops as
23:58
well a lot of these folks are alumni so
24:00
just this is the only commercial i do
24:02
this is a non this is a safe no cell
24:04
space but
24:05
if you enjoy these workshops or if you'd
24:07
like help like this
24:08
this group of people you want to talk to
24:10
all of us at once instead of me doing
24:11
all the talking
24:12
it's a great group and we do it every
24:13
month the workshops are great
24:15
they're great great well thanks for that
24:17
rob okay so why don't you uh let's talk
24:19
about your question if you've got it
24:20
yeah as a as an early stage uh startup
24:23
and anticipating
24:24
uh venture funding you have to think
24:27
down the road and
24:28
one thing i don't want to do is dilute
24:30
myself
24:31
and to really be prepared to
24:35
properly negotiate investing
24:38
and in order to do that in planning
24:42
we need to have a cap table to
24:44
understand
24:45
option shares uh shares for the founders
24:48
and so forth and then
24:50
what the equity is going to be for the
24:52
investors so i've seen a lot of
24:54
um you know self-made templates and
24:57
spreadsheets
24:58
uh that are available also there's some
25:00
free
25:01
uh apps like cap table io and then
25:05
there's
25:05
expensive equity management software
25:08
what is your suggestion
25:09
for an early stage startup what they
25:11
should use to properly prepare because
25:14
you know the investor is going to want
25:15
to know what the plans are
25:17
absolutely and it's a great question and
25:19
this is
25:20
if i had to pick something this is
25:22
probably the number one problem that
25:25
companies have when they get into due
25:26
diligence with investors
25:28
they haven't really tracked the
25:29
ownership of the company
25:31
especially if they've been around for
25:32
more than a year or so and they have
25:34
several different investors and they may
25:36
have had founders
25:37
come and go or staff come and go or
25:39
maybe some consultants who are given
25:41
some equity
25:42
you can see pretty quickly how
25:43
complicated that gets and this is the
25:45
basis of
25:46
rob's question and and actually you know
25:48
what uh christie i see your question
25:50
also was
25:50
what is the cap sheet used for so that's
25:52
cap table uh so let me back up and this
25:54
is christy's question
25:55
uh capitalization table is what rob
25:57
talking about so capitalization means
25:59
the funding of the company and the table
26:01
just means spreadsheet so
26:03
um a capitalization table is what i was
26:05
just referring to it's what tracks
26:07
who owns the company because a company
26:09
as we all know is kind of a fiction
26:11
right it's an idea really that uh has a
26:13
bunch of
26:14
uh people and relationships and and
26:16
maybe a building or some
26:17
equipment or you know object or two but
26:20
it's really an idea so
26:22
tracking that is hard and over time the
26:25
equity from the company is split up
26:26
between all the different constituencies
26:28
that i just mentioned there's
26:29
there's obviously the founders investors
26:31
employees consultants
26:33
all those people come and go over time
26:36
they generally have a vesting schedule
26:37
meaning that
26:38
you don't just own the stock outright
26:40
you earn it on a monthly basis over time
26:42
usually like four years
26:44
so in the early days of a company you
26:46
can easily have
26:47
uh you know say you know just a simple
26:49
case two founders uh
26:50
say maybe three part-time people who
26:53
work for them that's five
26:54
maybe you brought in a contracting
26:56
company you know outsource
26:57
something so that's a an outsource
26:59
that's six um
27:00
and then you have maybe uh three of your
27:02
uncles invest some money
27:04
uh that's nine um and then you know
27:06
that's in the first year
27:07
then the second year he had three more
27:09
investors that's 12 and then
27:11
that's all in the first or second year
27:13
three four years out
27:14
as i said people get sick people get
27:16
married people move people take new jobs
27:19
you know whatever people come and go it
27:21
creates a complete mess
27:22
um so that's all the intro so now we're
27:25
gonna get to rob's question
27:26
what do we what do i recommend so so how
27:28
do you keep track of that stuff
27:29
so rob you already know the primary uh
27:32
the alternatives here
27:33
and i'm so glad you're asking about this
27:34
because it's such a recurring
27:36
problem for entrepreneurs so the first
27:38
is just tracking on a spreadsheet
27:40
uh and this is state of the art and was
27:42
for 25 years probably
27:44
since spreadsheets were invented and you
27:46
just try to track everybody
27:48
and and the problem sorry i've given a
27:50
couple times on the uh
27:51
i've explained the time problem but
27:53
there's also the the
27:55
the dilution problem that's hard to say
27:57
revolution problem
27:58
so the founders originally owned all the
28:00
stock but as additional capital
28:02
comes in more stock is issued so they
28:04
add a hundred percent
28:06
say there's two founders 50 each which i
28:08
would not recommend but just to keep the
28:09
math simple
28:10
uh and then you know uh they sell say
28:13
a million dollars worth of stock at say
28:15
a 5 million evaluation
28:17
that's 20 of the company roughly so that
28:19
dilutes the original founders down and
28:21
you just keep issuing stock with every
28:23
new person who's involved so the few
28:26
shares for the employees a few more
28:28
shares
28:28
for the contracting company more shares
28:31
at a different price for future
28:33
investors
28:34
and there they use preferred stock
28:35
instead of common stock
28:37
different voting rights different
28:38
liquidation preferences it just it gets
28:41
it gets geometric really quickly so
28:43
spreadsheets
28:44
can do it they're way better than on
28:46
paper but they've been outgrown
28:47
outclassed by services
28:49
like two that rob mentioned one there's
28:50
one called carta c-a-r-t-a
28:53
carta.com and they're doing a really
28:55
good job of this i'd say they're
28:57
probably the leader in the space
28:59
um uh it's like most things it's a
29:02
monthly there's like a i think there's a
29:04
free level uh but then there's
29:06
a monthly charge of course it's a sas
29:08
software as a service business
29:10
and they'll try to upsell you the more
29:11
complex that your company gets
29:13
but honestly totally worth it at least
29:15
from the investor's point of view
29:17
the other one you mentioned is the uh
29:19
what's the one i i was going to say
29:21
what was it cap table that i o yeah dot
29:24
io
29:25
so that's another one and they were more
29:26
free but they just got bought
29:28
um by somebody else so if you go to
29:30
captable.io there's another company that
29:32
owns them now
29:33
and i'm not it's not clear what their
29:35
plan is you know are they
29:36
gonna try to monetize it more or what
29:38
but either way that those are the two
29:40
that i know of so you're you're on the
29:41
right road
29:42
um the other one i have for you is uh
29:45
and i just became aware of this last
29:47
week is called
29:48
cap base capbase.com
29:52
uh at least i think it's dot com might
29:53
be dot co or io or one of those
29:55
ones but anyway cap bait and cap base
29:57
looks very cool
29:59
um their pitch and i say this early
30:02
because they're
30:03
they pitched me i might invest in the
30:04
company um
30:06
they are trying to stitch together all
30:08
the other pieces so their claim is that
30:10
even as good as karta is
30:11
as far as i know card is the leader in
30:12
this space that even karta
30:14
only does part of the equation and they
30:17
have successfully
30:18
solved the rest of the the other pieces
30:20
so
30:21
i haven't used it but i'm intrigued
30:24
myself
30:24
so cap face is another one i would look
30:26
at and they're early
30:28
they're very early stage and you could
30:31
do uh
30:32
you could do worse than looking over
30:33
there so there's
30:35
three for at least one new one and
30:37
actually my friend phillips in the
30:38
channel hey phil
30:39
um makes a good stuff uh he said good
30:42
stuff
30:42
um thank you uh but his comment is many
30:44
legal firms will provide term sheet
30:46
management to their clients for free and
30:48
that's a great point a good law firm
30:50
will do this these days they're probably
30:53
outsourcing it to card
30:54
or somebody like these others anyway
30:56
right but if you're paying a law firm a
30:59
good
30:59
chunk of money uh that might just get
31:01
rolled into their service so that's not
31:02
a bad way to go at all
31:04
those are all um suggestions that might
31:07
be useful for you
31:07
at least i hope so yeah thank you
31:11
very helpful really appreciate it at
31:13
least on the right road
31:14
yeah yeah no that's right you did the
31:16
research you you got most of them and
31:18
this cap base is very intriguing to me
31:19
they look they're trying to take the
31:21
apis from all the different pieces so
31:24
that you kind of sign the documents once
31:26
like with docusign or all the other
31:28
tools that
31:29
as you know they're tools for each of
31:30
these pieces and they're trying to be
31:32
the one
31:33
that takes apis from all of them and you
31:34
do it once and then it really looks the
31:36
software does the rest
31:37
so if they can do that that would be
31:38
really valuable to all of us in this
31:40
ecosystem
31:40
sure would yeah okay cool thank you
31:44
appreciate it you bet my pleasure all
31:47
right so
31:48
that was our friend rob and who else do
31:51
we have here looks like uh
31:53
so then uh what time is it we're
31:56
cruising right through these this is
31:57
great so maybe we will get to some of
31:58
the ones in the
31:59
in the chat room um sorry let me review
32:02
the chat here
32:03
it looks like oh patty you've got your
32:04
camera on i didn't print
32:06
your question but uh just wave at me or
32:10
put something in the chat if you remind
32:11
me what your question was and if you'd
32:13
like to come on camera we can do yours
32:14
as well
32:15
let me just look through the chat here
32:16
guys let's see if i miss anything um
32:19
okay so
32:23
all right looks like i can't see them
32:25
all because
32:27
it's kind of real time sort of thing um
32:30
okay sandy looks like you're happy to
32:32
help and zola so i can put the two of
32:34
you together that would be pretty easy
32:36
if anybody wants
32:37
um okay hello philip hello brandon hello
32:40
sandy hi sam
32:42
toya a bunch of you there and nice to
32:44
see you all
32:46
um okay okay yes patty right i remember
32:48
that question all right let's bring
32:49
patty on camera and if others of you
32:51
have questions
32:52
go ahead and put them in the chat room
32:54
you'll probably need to reiterate them
32:55
because the uh
32:56
the uh chat's like sliding off my screen
32:59
right so i can't i can't uh
33:01
dig into it very closely without turning
33:03
off the camera
33:04
so uh all right so now we're going to
33:06
talk to patty
33:08
let's see here we go
33:12
and here's patty hello patty hi
33:15
i can't hear you yes nice to meet you
33:18
rubble's with the audio in the
33:19
video so it's nice to be here super
33:22
useful
33:22
i appreciate all the info
33:26
so um i am the co-founder and ceo of
33:29
a startup uh it's b2b as well for
33:31
pharmacies
33:32
and solving for drug procurement uh
33:35
we've been having conversations with
33:36
funds they're engaged
33:38
diligence now how do you move them to
33:40
cloak
33:43
get the check how do you get the check i
33:46
remember my first startup
33:48
i had lots of those conversations and my
33:50
phrase uh
33:53
it's a seven word phrase and i said this
33:54
so many times my whole team got really
33:56
tired of hearing it
33:57
every meeting we had went great you know
33:58
because vcs will never say no were you
34:00
here earlier when i was talking about
34:01
that they never say no so you're
34:02
suffering through that right
34:04
yeah so my phrase was don't mean
34:07
until the check clears
34:09
[Laughter]
34:11
that down yeah right that's like i'm
34:14
gonna make t-shirts with that right
34:16
lots of talk lots and lots of talk so
34:18
okay so we've already covered the point
34:19
that it's a great question um
34:21
and everybody there's no easy answer
34:22
right you're obviously pretty sharp if
34:24
you've
34:25
already started this startup and gotten
34:26
that far but some tips um
34:29
when i was a corporate guy my expertise
34:31
was business development so closing
34:33
deals is something that
34:34
i have some background in um so
34:37
let's see let's think about this for a
34:39
second so
34:40
b2b pharmacy closing deals
34:43
so what stage are you at did you say
34:45
that i'm sorry if i missed it i'm
34:47
raising a million in precede a million
34:50
precede okay so have you is there any
34:51
money in the company already
34:53
yes okay yours or other people or got
34:56
some angels
34:57
some other people in ours we
34:58
bootstrapped for as
35:00
much as humanly possible and then um
35:03
some capital from um from some angels
35:07
we do have some commitments to our round
35:09
um
35:10
and now we just need to move everyone to
35:12
a close so we can
35:14
because it doesn't mean let's check
35:17
clears yeah
35:19
these days it's not a check it's a wire
35:20
but yeah same idea right
35:23
um okay so um so you have a bunch
35:26
interested so what you really need it
35:27
sounds like is a lead somebody to step
35:29
into the jump into the pool first is
35:30
that
35:31
yes and we do have a commitment but they
35:34
need friends
35:35
and they need validation right exactly
35:37
okay yeah i've been there that sucks
35:40
okay all right so um so do you have any
35:43
revenue yet
35:45
just started uh we we just posted our
35:48
first transaction two weeks ago
35:49
okay great and is that a a lar you don't
35:52
need this is public right so you don't
35:54
need to be too confidential about it but
35:55
are we talking is that like a five
35:56
dollar transaction or a five million
35:58
dollar transaction
35:59
no uh between five and five million
36:03
no oh it's a small amount okay so it
36:06
doesn't it doesn't prove the whole model
36:08
it's just kind of like the first time
36:09
someone's bit
36:10
okay okay sorry i'm just trying to get
36:12
the data points here to figure out how
36:13
to position yourself
36:15
okay and are the investors local or
36:17
geographically based or is this a wider
36:19
field
36:20
they're a wider field okay as is
36:22
everything these days right yeah
36:24
um okay but why the united states
36:27
yeah okay okay so the first question i'd
36:30
have
36:31
oh how about valuation five nine
36:34
okay five million okay so the first
36:37
point it's not a question i've asked a
36:38
bunch of questions the first point i
36:39
would make is
36:40
that sounds like a lot of money um for a
36:42
company that
36:43
has only just touched revenue um are you
36:46
talking of
36:47
vcs are you talking to angels vcs
36:51
okay well these days vcs have that kind
36:53
of money have you done enough research
36:55
to validate so
36:56
okay what i'm doing here is you can see
36:57
already i'm questioning your assumptions
36:59
right
37:00
because um a lot of times the the
37:02
problem isn't that
37:05
there is an interest it's that you're
37:06
asking the wrong question or talking to
37:08
the wrong people or some combination of
37:09
both
37:10
right so have have are these people that
37:13
you're talking to the vcs
37:15
do they do million dollar checks at five
37:17
million dollar evaluations yes
37:18
that's kind of there so you've qualified
37:20
that part okay good um
37:22
okay and this is this software or is
37:25
this a kind of a fulfillment
37:26
you said pharmacy like what part of
37:28
pharmacy it's software solution
37:30
it is software so some sort of um
37:34
cloud-based uh pharmacy management
37:37
desktop or something like that it's a
37:39
sas platform yeah okay okay
37:42
okay um okay
37:45
okay so the first thing and how much
37:47
money did you raise from angels you were
37:48
a little vague about that
37:50
uh we raised
37:54
under six figures okay
37:57
okay and how long have you been at this
38:00
for a year okay so not two okay okay
38:03
sorry it's a lot of data points i'm
38:04
trying to give you the best answer
38:08
being so thorough no you're welcome um
38:10
um okay
38:11
so what i would say is that's a million
38:14
dollars at 5 million
38:15
pre sounds like too much um just frankly
38:19
um if you don't have more validation
38:21
from the angels are any of the inven
38:23
any of the angels experienced either in
38:25
the pharmaceutical pharmacy area or the
38:28
software area are these more like
38:29
friends and family
38:31
some are and some are just friends and
38:33
family okay
38:35
so if that's the case i'm just doing the
38:36
math you said angel investors did less
38:38
than 100
38:38
000 and some of them are qualified and
38:40
some are not so maybe you got 25 or 50
38:43
grand from somebody who might impress an
38:45
investor
38:46
that doesn't sound like enough to me
38:48
with one transaction to raise a million
38:50
dollars
38:51
quite honestly these days there's lots
38:53
of money in the market and i'd be happy
38:55
to be wrong
38:56
but i think you probably have an easier
38:58
time of it if you looked for an angel
39:00
round
39:01
of say 250 or 500
39:04
from people especially if you could find
39:06
people that had some
39:08
board level expertise you know that were
39:10
pharmacists or
39:11
or sas founders or ideally both
39:15
so that you would could then go to the
39:17
vcs and say look we've got these
39:19
people who really know this stuff and
39:22
they're in already
39:24
um have you considered that or is that
39:28
helpful feedback yeah yeah that's that's
39:30
an avenue that we
39:32
are exploring just to to get capital
39:34
infusion
39:35
yeah that's what i mean
39:38
i'm biased admittedly because i am an
39:40
angel rather than a vc
39:42
um vcs these days tend to move pretty
39:45
quickly if they're not
39:46
jumping in then they're probably not
39:47
jumping in they're waiting right
39:49
so um angels are the ones you're right
39:52
at that point you know
39:53
a couple hundred grand in a company
39:55
that's just come to market
39:57
it's less than a year old that is in a
40:00
good space like sas and medical
40:03
healthcare stuff i mean you've got all
40:05
the hallmarks that angels would probably
40:07
be invested
40:08
it would be an interested in investing
40:10
in where are you based geographically
40:12
orange county oh you're here okay okay
40:16
all right well that's easy then now you
40:17
should come talk to tech coast angels i
40:18
mean i can't promise anything but
40:20
um that's the kind of stuff that we do
40:22
um and
40:24
you know every round struggles for a
40:26
lead so i didn't really answer your
40:27
question i did the same thing that i did
40:28
to the zola which i know is infuriating
40:30
but
40:30
you know i'm redirecting you um you know
40:33
if they're not jumping in
40:34
i don't have any magic cure for you
40:36
right except to find an investor who
40:39
validates the thing right if you could
40:40
find the former ceo of
40:42
xyz company that fits in your space and
40:45
says this lady or this guy wrote us a
40:47
250 000
40:48
check the vcs are going to go wow right
40:50
but the odds of that happening are
40:52
pretty small i presume you've shaken as
40:53
many of those trees as you can
40:55
particularly if you're here in orange
40:56
county there's a lot of med tech and
40:59
healthcare and biotech and people that
41:01
would
41:01
have real informed opinions about
41:04
pharmacy stuff
41:05
in fact i can even i just thought of a
41:07
guy i know who runs an angel group of
41:09
pharmacists
41:10
uh that i could introduce you to um so
41:13
there
41:13
[Laughter]
41:15
um and he's here i haven't talked to him
41:17
in a year probably because of covid but
41:19
um
41:20
anyway we could we could connect on that
41:21
offline um
41:23
but for any of you who are thinking i
41:25
think you're a little bit
41:26
my two cents right get worth what you
41:28
paid for it which is nothing
41:30
you're you're falling into the media
41:32
trap thinking that everybody can raise a
41:33
million
41:34
dollars these days and it's just not
41:35
that easy i mean if you can awesome and
41:37
i don't know how long you've been at
41:38
this
41:38
but if it's been more than i don't know
41:40
five or six months
41:42
you should be spending your time
41:43
building your product and
41:45
generating more revenues because that
41:47
will get the people off the edge of
41:48
in into the pool right rather than it's
41:51
really easy as a ceo to spend your time
41:53
and
41:53
frankly your enthusiasm trying to raise
41:56
money when you're really not ready yet
41:59
and the thing that will convince
42:01
everybody is if you have revenue graphs
42:03
that go straight up right
42:04
that that's way more convincing than all
42:06
the meetings you can take where people
42:08
kind of say you're not ready yet or you
42:09
know we'll keep in touch and blah blah
42:10
blah you know which is not really a no
42:12
but kind is a no
42:13
um so i would i would think about those
42:16
things i would refocus either on the um
42:19
on the revenue generation um finding a
42:22
specific
42:23
board member who might be an investor uh
42:26
and thinking about restructuring your
42:28
ask towards an angel round because a
42:30
million dollar
42:31
round it's it's it's it's a weird place
42:34
it's too big for angels and too small
42:35
for most vcs
42:37
you'd probably be better off raising
42:39
like you know 300
42:41
and hopefully it gets oversubscribed and
42:42
you raise 400 right
42:44
and then you can have a great story we
42:45
were oversubscribed on our first round
42:47
and the real point of that also is all
42:49
the relationships you make
42:51
it sounds like a pain to raise angel
42:52
money this is for everybody if you're if
42:54
those of all of you still listening one
42:56
of the points of angel investors just
42:58
like law firms right
43:00
they may be a lot of work or in the case
43:03
of angels because i've talked a lot of
43:04
people or a law firm they're expensive
43:06
but these people they do this all the
43:07
time so one good angel investor or one
43:10
good lawyer
43:11
they know dozens and dozens of people we
43:13
do this all the time right
43:15
so building those relationships is a
43:17
much better
43:18
use of your time than trying to rifle
43:20
shot with one vc at a time
43:22
who is just gonna you're gonna be in a
43:24
pile of business plans and they're just
43:26
like the average time of vc looks at a
43:28
deck these days i think is down to three
43:29
and a half minutes
43:30
right that's your life in three and a
43:31
half minutes that's not fair to you
43:33
right you need to invest more time in
43:35
building relationships and angel groups
43:36
are a great way to do that
43:37
because the way angel groups work is
43:41
we have a screening committee that looks
43:43
at the deck
43:44
and interviews you and then you come and
43:46
present to a larger group and these
43:47
larger groups are
43:48
generally 20 30 sometimes 50 or 60
43:50
accredited investors
43:52
and in a room of 60 people there's
43:54
probably going to be somebody that's at
43:55
least half interested or knows somebody
43:57
and odds are there's 10 of them
43:58
right so that process alone even if it
44:00
doesn't directly lead to a check
44:02
can triple your your outreach ability
44:05
and really
44:06
benefit you a lot and maybe lead to the
44:08
vc money anyway
44:10
right so okay how's that
44:13
thank you all right well great well nice
44:15
to meet you um yeah reach out and
44:17
see if we can connect here in orange
44:19
county and see if we can hook you up
44:21
great nice to meet you patty thanks for
44:23
joining us
44:24
so that is patty and uh
44:27
okay so we're nearing the end of this
44:29
show here i'm
44:30
let's see if anybody else is in the chat
44:32
room if you have a question you want to
44:34
put in the chat room
44:35
go ahead um by the way if
44:39
you're enjoying this show i would love
44:40
your help promoting it
44:42
this is a you know it's free i do it
44:44
because i want to help you
44:46
and i don't spend any time really
44:48
marketing it we sent out a couple emails
44:50
so if you have a chance
44:51
and you want to share it online or if
44:53
you're listening to the podcast version
44:54
and you could post a review on itunes
44:56
or when you see us post a replay on
44:59
linkedin or something if you could like
45:01
it or post a comment
45:02
and all that kind of stuff really helps
45:04
and it allows us to help
45:05
more people i do this because i'm trying
45:08
to help more people
45:09
uh participate in the information
45:10
economy and and and succeed at it
45:14
and i could use your help that's all
45:16
there is to it so if you have a minute
45:18
like and thumbs up and share that would
45:20
be really super much appreciated
45:22
and we also did these workshops this
45:26
banner behind me
45:26
there's the url the next this is monthly
45:28
the masterminds workshop this is a group
45:30
of people like you just met we all get
45:32
together and talk
45:32
i moderate uh great networking we often
45:35
have investors with us as well
45:37
in addition to myself and some sponsors
45:40
who are very interesting it's a great
45:41
place to be and we do these online so
45:43
they're people from all over the world
45:44
so if you want to meet people you know
45:46
other entrepreneurs
45:47
from sydney or paris or philly you know
45:49
come and join us be happy to have you
45:52
all right let me check back to the chat
45:54
and see what we got here
45:58
toya wants to talk about market size and
46:01
market share that covers multiple
46:03
areas okay uh i'm
46:07
i guess we can talk about that to you
46:08
that's not really a question though as
46:10
well as find out where you could help
46:11
with business plan help
46:12
well that's a little easier one let's
46:15
see
46:16
so let me talk about business plan help
46:18
here for a second
46:19
and if you want to elaborate on market
46:22
size and market share that covers
46:24
multiple areas if you want to be more
46:26
specific about that i
46:27
i will try to give you an answer there
46:29
um
46:31
uh so just be more specific there okay
46:33
so where to get help with business plans
46:35
so business plans are um well let's
46:37
start with the headline is business
46:39
plans are outdated nobody writes
46:40
business plans anymore
46:42
it's kind of crazy but the world moves
46:44
faster when i was a first-time
46:46
entrepreneur
46:47
my major job was i thought was writing a
46:50
business plan over and over and over
46:52
again
46:53
and in fact i think i still have that
46:55
hold on look at this
46:56
uh yes this is what a business plan
46:59
looked like in the 90s
47:01
it looked like this this is look at all
47:04
these
47:04
graphs and calculations and
47:08
plans and diagrams and all kinds of
47:10
stuff
47:11
and this is uh how many pages i can't
47:14
even tell something like 50 pages
47:16
and i spent years rewriting this because
47:18
i thought a business plan was the key
47:20
and it turns out the business plan
47:21
doesn't matter at all what matters
47:23
is the business model and even more so
47:25
that you make some damn money
47:27
right so money is what investors are
47:29
interested in they're not interested in
47:30
your idea they're not interested in
47:32
the good you can do for the world
47:34
unfortunately their job is to make money
47:37
they have a fiduciary obligation to make
47:39
money for the people that invested in
47:41
them
47:41
most investors venture capital firms
47:43
they're not investing their own money
47:45
they're investing money that other
47:47
people gave them and those other people
47:48
tend to be
47:49
insurance companies foundations
47:52
endowments
47:53
private pension funds so they are
47:56
dedicated to making money so
47:57
your business plan doesn't matter unless
48:00
it shows that you're going to make money
48:02
and even more so these days
48:04
people don't use all that writing and
48:05
text at all they use an investor deck
48:08
which is a 5 to 15 page
48:11
pages of slides that simply and clearly
48:14
point out the problem you're solving the
48:16
solution you offer and who's going to
48:17
pay for it
48:18
right that's what people want to know
48:20
about
48:21
the rest unfortunately as good-hearted
48:24
and altruistic as you may be
48:25
doesn't really matter unfortunately and
48:28
believe me i'm as charitable-minded as
48:30
anybody you'll meet i think
48:32
but that's not the game the game is
48:34
business so um
48:35
so okay that's my enough of my speech
48:37
there um so where do you get help with
48:38
that
48:39
well first of all uh toyota reorient
48:41
your question uh don't look for a
48:43
business plan look for
48:44
uh an investor pitch deck investor pitch
48:47
decks
48:48
are very very different format uh you
48:50
can google that there's a million
48:51
templates online
48:52
uh it's like i said it's generally five
48:54
to 15 pages that
48:55
outline who you are what you're doing
48:57
why it matters and how it's going to
48:59
make money
49:00
if you put those things together um
49:02
that's what investors want to see
49:04
because it's
49:04
just frankly it's much easier for them
49:06
to flip through you may later need an
49:08
investor
49:09
a business plan to you know elaborate on
49:11
the points
49:12
but that's not the first strike anymore
49:14
these days and many many deals get done
49:16
just based on
49:17
an investor deck and some accompanying
49:19
financials
49:20
and then a lot of conversations and due
49:22
diligence right so i would
49:24
start with that uh literally google is
49:26
your friend there are
49:27
thousands of articles about this if you
49:30
want
49:30
a specific place to look actually this
49:33
is a pretty good resource
49:34
here in orange county california i run
49:36
something called the oc startup council
49:38
so if you go to oc
49:39
startupcouncil.org ocstartupcounsel.org
49:44
it's a there's a blog there and there's
49:46
a section of the blog when the
49:47
categories is resources
49:49
and you click on that tag and you'll get
49:51
all kinds of articles that we have
49:53
linked to from all across the web and
49:55
many of them are about investor pitch
49:56
decks that's a place to go
49:58
other than that there are usually i
50:00
don't know where you live
50:01
but depending on what city you might be
50:04
in there are organizations like the
50:06
small business development corporation
50:08
the small business administration score
50:11
which is the service corps of retired
50:12
executives
50:14
maybe your local chamber of commerce
50:15
your local university these days most of
50:17
them have an incubator or some sort of
50:19
entrepreneurship program
50:21
or even more simply go to meetup
50:23
meetup.com has meetups of
50:25
all kinds of people including me and the
50:27
groups that i run like the masterminds
50:29
workshops
50:30
and lots of people that you could meet
50:32
who could help you with this and
50:34
that there's lots of information on that
50:36
okay so
50:39
let's see here looking back at the chat
50:40
questions
50:42
uh if your business covers multiple
50:45
areas do you just talk about the main
50:47
area it covers in the market
50:49
uh okay so if your business covers
50:52
multiple
50:52
areas do you mean geographical areas or
50:56
do you mean
50:57
business line areas that's not clear to
50:59
me sorry you're still not being specific
51:01
enough to
51:02
for me to really answer very well but i
51:04
guess the answer
51:05
either way is that you include whatever
51:09
makes sense
51:10
this goes kind of back to what i said
51:11
with with ken earlier
51:14
investors are it's easy when you don't
51:16
have any money
51:17
to think that investors are a different
51:19
kind of human
51:20
and i used to feel this way right
51:22
because i didn't have any money and and
51:24
you know you think that they're you're
51:26
not sure what they're looking for right
51:28
and you want to do it right
51:29
um but the fact is they're just people
51:31
right so they want to see what makes
51:33
sense
51:33
so if your business if it makes sense
51:36
for your business
51:37
let's talk about geography for a second
51:38
so say you're based in baltimore
51:41
maryland in the united states and you uh
51:44
you think your business can also reach
51:45
down to dc
51:47
then include that in your plan and your
51:49
projections right assuming it's cost
51:51
effective for you to expand that way
51:53
you know don't make stuff up say we're
51:54
going to be in baltimore and then we're
51:55
going to go national
51:57
you know and take every city in the
51:59
country and be a billion dollar company
52:01
when we only raise 2 million right
52:03
that's not going to happen generally
52:04
right that's magic
52:06
and this is not a magic show so
52:09
you just got to be realistic and it's
52:11
the same if you weren't talking
52:12
geography if you were talking about
52:15
about business line areas like say you
52:17
do software um
52:18
like patty there she's in the pharmacy
52:20
space but they want to go adjacent and
52:23
get into
52:23
say i don't know the dental space for
52:25
dentists right
52:27
so you know if you want to do both of
52:29
those well if it makes sense and you can
52:31
explain
52:32
why it makes sense then sure but
52:34
otherwise
52:35
in both cases generally investors would
52:37
like to see you do what they call land
52:39
and expand
52:40
which is you find an area and you get
52:43
really good at it
52:45
and you make some money from that area
52:47
and prove your model first
52:49
improve the model by revenue actual
52:52
sales
52:53
from the core area and then you use the
52:56
learnings and the revenue from that to
52:58
grow
52:59
either geographically over to baltimore
53:01
right or into a horizontal or into
53:03
another vertical market like from
53:04
pharmacy into dental right unless you
53:07
have some competitive advantage right
53:09
like i don't know you were you the
53:11
founder were 25 years
53:14
in uh you spent 10 years in pharmacy and
53:17
then 10 years in dental and now you
53:18
started this company and you know them
53:19
both really well
53:20
and for whatever reason your product
53:22
serves them both then fine right
53:24
but if they're separate i guess the
53:25
bottom line is it depends on where your
53:27
resources are going to go because that's
53:28
what investors are looking at
53:30
you have a limited amount of resources
53:32
which includes the money that
53:33
that we gave you right so what are you
53:35
going to do with those we don't want to
53:36
see you spreading it too thin
53:38
and we want you to use it to make some
53:40
money most investments these days
53:42
is a is really to help people
53:46
make a business accelerate uh they talk
53:49
about throwing gasoline on the flames to
53:51
make the flames higher
53:52
but you have to start the fire yourself
53:55
right the days when people
53:56
invested just in ideas are kind of
53:58
passed
54:00
the investment is really tends to be
54:03
after a company has what the they call
54:05
traction which means you have some sales
54:07
you have some customers you have some
54:08
people
54:09
paying and it shows okay this business
54:11
model works
54:12
and if we gave her an extra million
54:14
bucks oh look that's interesting because
54:16
then
54:17
this year they made fifty thousand
54:18
dollars but if we gave them a million
54:19
dollars they could make five hundred
54:21
thousand dollars
54:21
okay that's the kind of equation that
54:23
investors are looking for
54:25
and however makes sense for your
54:26
business to tell that story
54:28
is up to you and that's the challenge
54:31
and the opportunity
54:32
for you as a founder okay so i hope
54:35
that's helpful
54:36
this is uh it's a lot of questions there
54:40
the uh let me see what else we got to
54:42
say here i think we're about out of time
54:45
it's been an excellent hour if you'd
54:47
like to hear more about this kind of
54:48
stuff
54:49
please head over to masterminds
54:51
mastermindsworkshops.com
54:52
get on the mailing list we do these like
54:55
i've said three times now we do these
54:56
workshops regularly
54:57
i'm here to try to help i don't do a lot
55:00
of one-on-one
55:01
stuff because i just get so much inbound
55:02
as you might imagine but if you go to
55:04
scottfox.com there is a page
55:06
work with scott and there's a bunch of
55:07
ways to do that if you want
55:10
and same thing with investment decks i
55:12
don't look at them directly but i invest
55:14
through i'm part
55:15
a partner in several different adventure
55:18
funds
55:19
and um like tech host angels and other
55:21
folks so
55:22
i would route you over to them if you
55:24
want me to look at it personally i'm
55:25
sorry i just don't have enough time to
55:26
do it
55:27
individually but that's why i do this so
55:29
i can reach a lot of you and hopefully
55:30
help a lot of you at the same time like
55:31
with my books
55:33
so okay so i hope that was helpful to
55:35
you um
55:36
no sales pitches just uh a small request
55:39
that if you enjoyed this please follow
55:41
on youtube please subscribe on itunes or
55:44
wherever you're looking over on linkedin
55:46
if you could press follow that would be
55:48
great
55:48
help us get the message out that there
55:50
is room in the pool for everybody
55:51
including you as a successful startup
55:53
founder there is a lot of money being
55:55
made it's crazy
55:57
and i'd like to help more view a more
55:59
diverse population get access to
56:01
that capital so that we can all make the
56:02
world a better place
56:04
so there you go that's my story and i'm
56:06
sticking with it thank you for being
56:07
with me today
56:08
i'm scott fox this has been another
56:10
episode of masterminds
56:12
startup fundraising office hours and i
56:14
hope that you have a great day and all
56:16
the best with you
56:17
and your startup ideas see you again
56:19
next time i hope
56:20
by the way yeah these are every month so
56:22
uh sorry that was the last thing next
56:24
tuesday
56:25
it's the second tuesday or no the fourth
56:27
tuesday fourth tuesday
56:28
of the month and we'll be back later
56:30
next month thank you everybody bye

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