 Exciting times love being here. This is like my favorite time of the year. I Love the cold. I'm from Latin America. People think I like the warm, but I don't actually like the cold and Got invited to go to swimming in the Baltic Tomorrow, so I'm really looking forward to that I'm also that I have the privilege of being Tom's colleague. So if you were here raise your hand if you're here for Tom's talk Great, it's a very tough act to follow. I really love him and his contents amazing I'm the prequel think about the Star Wars movies. He made three four and five. I'm one two and three Hopefully, I'll be better than George Lucas's rendition so One of the things that I want to get a sense from the audience is how many of you are actively fundraising so just a show of hands Excellent, so the most of you which is good How many of you are raising your first round? Okay, so I would say this this talk is probably targeted to you guys if you're raising a series D This is probably not for you. So feel free to go and mingle somewhere else The reason why I was asked to give this talk I think a little bit is partially on the tail end of the book which I wrote About four years ago, and then I republished this year with updated view and the reason why I updated is for many reasons One of the things that you'll notice is that on the X on the term sheet It says X as opposed to a number when I originally published the book I put a number which was typical for seed but what we're seeing now is how fast those rounds are growing people's expectations of Round sizes at the pre seed and seed stages have like doubled in just one year So a lot is changing and what I want to do in this chat is give you a sense for What to what to like reflect on in the lead up to your first round? So that's what we do now a little bit about my story As the as the introducing team said I was an engineer. I worked in tech I worked at New York Stock Exchange and I moved into The world of venture because I loved it. I love tech. I love meeting founders. I love what people are building and Over my career. I've I've been part of the journey of 400 companies I have a pretty good sample size and I really specialized in that first year that first year of your journey That's what Tom and I and the rest of the seed camp team has been seeing for over 13 years And I wrote the book because I saw how hard it is You know the the process of fundraising is probably one of the most frustrating Experiences and I know this personally because I've had to raise for seed camp seed camps a startup like you guys our first fund Was 2.5 our second one was five our third one is 20 and yes We have some winners in the in the family of seed camp, but it didn't come easy I mean we've had people turn us down for investment. We've had term sheets pulled from us We've had every single story. I won't say them on stage But if you grab me later, maybe I'm willing to share some stories But I trust me when I tell you I can feel and understand but I will say that fundraising has also been one of the most inspiring Insightful and serendipitous Events in my life. I've learned from so many people during fundraising I've gotten I remember one chat that I was having with my colleague Reshma Where we were fundraising and we got asked a question by an investor and neither of us knew with the answer And it's it's really great when you go fundraising you have your co-founder there because it's easier to to sort of You know trade off of each other. We were like, do you know the answer? No, I don't do you know the answer? No, and so like later we looked it up. We're like shit next time. Let's not get caught on this So we came up with an answer and we'll talk a little bit about that How many of you are here for 10 persons talk raise your hand? Okay, a few of you there will be some overlap. Don't worry, but we'll hopefully cover some new stuff so the first thing is Do I need to raise Now why would I put this when all of you just raised your hands I don't need to raise is because I'm seeing more and more companies that can sell fund Especially if you're issuing some sort of crypto token or you're doing anything Bitcoin you can probably generate enough capital You don't need to go through a venture Program of any sort and I mean venture programming include funds and everything Also, sometimes you need to think about what it is that You you get into with the relationship with an investor You might not realize that when you're taking money from investor like it's got implications and those implications are both positive But also they do put you in a certain track. I mean just to give you an idea of what I mean by shareholder alignment Can I realistically return at least ten times their money? Like if you're building something and you honestly think your company is probably worth fifty to a hundred million Maybe two hundred million you can get rich But can an investor get rich to and unfortunately that's the nature of the venture business And I know it sounds like a basic question But you'd be surprised a lot of people are in the business of building businesses that are casual positive and can do very well But they don't haven't fully thought through is this a venture-backable business and if it isn't don't worry about it You can make enough money on your own now the second thing and I should probably put it another reverse order But personal alignment You really need to invest in researching who you are as a person Because so much of who you are as a person will be transformed when you're building a company and I can tell you this from first-first hand experience I remember some of the worst mistakes I made maybe seven years ago as a leader within the seed camp team Helping manage our team members and making all sorts of HR mistakes like things that you learn and so first of all First question you ask yourself is do you see yourself as a leader? Do you want to be investing in yourself? Because that's what you need to be willing to do if you're not willing to invest in yourself and what I mean by that is like Actively thinking about how can that be a better human being for those around me that I have the responsibility of leading? Because you need to not only fundraise for their company But you need to hire their best people inspire them keep them motivated deal with their problems and own their problems It's your problems to take care of it's not anybody else's and so if you're driven by other Externalities like your ego or what you want to achieve any ain't the thing to do this is not there There's other ways to make money. This isn't the way to do it So think about what is the ambition for your business? Is it externally led or is it internal? Those are really key things so that you know and then the last point is what is your ideal outcome? I think early early days maybe about 10 years ago in the venture world I would hear investors say how European founders aren't ambitious enough that's bullshit. We all know that's bullshit But the reason I think they were saying that was because they had a couple of anecdotes about how founders sold too early I Don't care whether you sell early or late doesn't really matter But I think what really matters is that you fully understand what it is that success means to you I remember when I was in my in school back in the day One of our professors told an entire group of people said hey guys write down everything you want Just write it down is it write a list and so everybody's writing down, you know plastic surgery yacht, whatever, you know, you write it down Pretty much everyone said Something around 100,000 to 200,000 dollars covered all their wishes, you know, maybe a bigger house Okay, fine add a million a million a hundred a million 200 You quickly realize that in order for you to achieve the material or other things that you think you want Doesn't take a billion dollar company, but I'll tell you what comes to the billion dollar company responsibilities Shareholder meetings investors expectations if you go out public you've got public Issues and you have a team of at least 300 people all that need your attention your inspiration your management So those are all things that you need to consider This is the journey and the responsibility that I'm embarking on as a leader of a venture-back company so the next point is The fundraising mindset now the reason why I say all these things is because if you believe all those things that are saying earlier The way that you will present yourself to a venture investor will be fundamentally different my job is to invest in people I Can tell you right now I can tell so can Tom so can Ted other investor who spent a lot of time You guys too you can tell when somebody's driven for the right reasons and that inspires because you know what your job is as CEOs Hiring other people raising money So if you can't do that if you can't convince me of that, how can I believe that you can convince others? That's the tricky thing So about fundraising The whole process is a series of iterations I can give you a whole bunch of magic formulas doesn't matter if I sat here and I told you exactly how I raised for seed camp Wouldn't be applicable to you I think one of the biggest mistakes you can do is compare yourself to somebody else on TechCrunch Oh, you know we've invested in some great stories, and I'm sure those founders you've read their interviews on TechCrunch or medium Or sifted or any of the great publications out there what you realize is you're not like them Like when we fundraised for seed camp We struggled raising we had our first fund. It was 2.5 million our second fund was Twice as big 5 million It was hard people said this day will never work. Why do you have so many companies? Why are you too big, you know too small too many fees always some issue with how we were raising and If we looked at some of our other friends who were raising funds We're like fuck man. Why are we not man? Why is it so hard for us, right? Don't compare yourself to others. That's the first thing and the second thing is Don't think any rejection as failure think of it as an evolution because with evolution you will end up with achievement Some of the best stories are about continuously evolving to the point where you get to where you want to get to one of my favorite stories and I talk about it in the book is one of our founders who I'm not gonna say his name because I Don't know that he wants me to share it, but you can read it in the book is He went to a meeting which was his 80th meeting or 76 high enough He had been rejected by everyone. He had about five euros left in his bank account Flies to this guy's office in Germany shows up to the office is in the lobby and then all of a sudden the the EA says sorry Forgot your The meeting ah wasn't in the schedule. Whoops. He's like fuck me. Yeah, I've come all this way this guy Anyway, the investor says look really sorry about that. I'm going to the airport getting the car Let's go gets in the car goes pitches him gets his anchor investor the rest is history You just never know you never know another one of our founders sitting in the tube in London Starts talking to a stranger next door boom ends up being an investor You just never know and that's happened to us like I've had amazing conversations with people people who have ended up being our investors And the thing is that you need to be open-minded about this You need to be thinking every single interaction I'm gonna have here outside with me in the party Every single interaction is a possible lead to the next person who's gonna invest and as long as you embrace that You'll always have authentic Engagements with people which can lead to possible fundraising and element because at the end of the day. This is a relationship business. That's all this is So you will find the right person at the right time You cannot control events that get you there. You can only control your reaction and be resilient with any feedback you get So now let's go into the bit. That's maybe a little bit of overlap with Ted's talk Storytelling So much of what you need to do in Fundraising is just get what you're doing correct. It's that simple, but it's also that hard for example raising as a seed fund One of the things that came up often was how do you compare this other fund or how do you compare this other fund or? I've already invested in this seed fund in Europe I don't need to invest in you because I already have exposure to the seed market I'm giving you personal anecdotes for what it feels like for us to fundraise even though I appreciate many of you aren't raising funds, but it's it feels very similar and What what we realize very quickly is when we're presenting anything you have to be able to present things how they're different From anything out there There's a really good book called positioning and it's written by an author called Jack Trout And what he talks about is how do you get people to think about you? Different in their minds. We're not talking about like an XY axis. It's an emotional engagement How do people emotionally connect with what you're doing in a way that they've carved out a niche in their heads for you? So that's the first thing and storytelling is just how do you package that and get it out the door? But positioning is how do you make sure that when they receive it? They know how to compare it relative to something else? The rest of the points are pretty obvious You need to set the right milestones. What do you want to achieve with it? How much money do you want to raise and do you have a plan on how to spend it? Which is the financial plan and all that stuff, right now on how much you want to raise? One of the things that you probably are seeing today is the increase in valuations. I'll give you a very very fast mathematical tip The equation is very simple. How much money are you raising? Divided by the dilution equals the post money valuation, right pretty simple math So I'm just going to help you prioritize your negotiations here the dilution is Something that the industry of venture has kind of stabilized around nobody wants to own 50% of your company Nobody wants to own 0% of your company. So focus on how much money you want to raise and To some extent you will find that most investors are going to offer you something between 10% to 20% dilution, which will give you a range for valuation The point of this isn't to give you a lesson on valuation the point of this is you control your valuation with how much you raise That's the biggest variable because it's simple equation three variables pick one The other one is kind of market-driven. You have the outcome for the third Simple enough, right now the reason is The reason why it's a little bit more complicated is because you can't just pick a random number You can't say I want to raise 10 million although you're hearing about it more and more But the point is you get to choose your valuation to some extent by how much you're raising and try to calibrate For what you've seen others do in your sector in your space What is the right first round to raise on average? Pre-seed to seed somewhere between let's say 500 on the smaller end to about 3 million on the upper higher end But not the highest right there's always going to be outliers But anyway, those are just rough numbers for you to think about The next part is pretty simple the materials. I mean, I know this is basic super basic, but When you're an investor and you're receiving tons of emails Try to optimize. This is a hack right try to optimize for how do I get their attention without overwhelming? This is super simple first of all optimize everything you send for mobile consumption Secondly don't send an email. It's this long try to think about your email as something I can be viewed without scrolling And have everything be so that people can automatically Engage with it without having to over like don't log in do that extra now I've seen a lot more founders do doc send. It's pretty cool for a couple of reasons you can see Who saw your presentation? How long they saw it for who they shared it with and that's all great And I don't discourage that but what I'm saying is find a balance between having a high barrier for consumption and or being like super like track everything But both work The last points on the on the materials is make sure you have a cap table That's readable and understandable and try to when you talk to investors try to front load any issues You have with your cap table because one of the biggest problems everybody has is if you've had some Historical thing that happened to you. That isn't great. You know what front load that actually for anything If you have anything that's gone wrong in your company Front load that at the right time, right? You know it's like when you go and you meet somebody new a romantic partner You don't just immediately go into all the bad things about your life, right? You first find some charisma some charm some connection and then you kind of you know You have to tell a story. Did your co-founder leave? Well, you know, just share that at the appropriate time Don't wait for that to come up at the very last minute to jeopardize your your round if you have Founders that have left or investors that are you know not actively involved. Yeah, maybe you find the right time The point is all these things add up to your fundraising materials and you want to get those done, right? The next bit is the human element This is the bit that I think Ted spoke about quite a bit and I'm not going to go into too much detail But the human element is Reaching out to the right investors How many of you have cold called an investor? Okay, how many of you cold called an investor? I'm not going to look just raise your hands I won't look without actually checking to see if their stage and their sector of interest was in alignment with you okay The reality is It's a it's an easy sin to commit you do a mail merge off you go It's so easy, but you know what is so deadly because You build yourself an unfortunate reputation of spraying and praying and investors talk and they'll be like oh This doesn't look right why would he send and I get so in our fund our funds name is seed camp I mean it's written there and I get an occasional email says we're raising a series B. I'm like dude come on It's written on the thing. Why would you send me a series B? Don't do that That's an example of totally completely not identifying the right investor So make sure you identify the right investor Get an intro. I think Ted spoke about this get an intro get the right references It's gonna do wonders for your introduction even from another friend. Look everyone here is probably sitting next to somebody else that Is connected to the right people they need to connect to make friends and go through those friends If you don't have any friends grab a beer and make a friend. Okay. It's that simple so In terms of choosing the investor it's about relationships. It is so much about relationships. This business is a relationship business You want to find somebody that you can work with for a decade at least because that's how long it takes You know, we invested in transfer wise in 2010 I think and I'm friends with Tavit Actually, I go to him for a personal advice and he might be around here somewhere right now But you know, he's a great friend and I've and and I cherish that and you know I hope he cherishes that too and the same for Johnny from Hopin same thing You know like you want that kind of relationship because at the end of the day you're gonna build that now Doug Leone from Sequoia Says I don't want to be your friend, but we might become friends during our work time working together And that's fair too fair too So either be be some be with somebody that you think you can be friends with or be with somebody you respect So that you could potentially become friends with but if they're an asshole or dick just because they're giving you money I wouldn't take it and there's people that I wouldn't want to work with So about managing your pipeline I don't want to go into too much detail because it was covered a couple of the previous presentations I wrote a blog post about this and I am gonna be that guy who says check out my blog. I wrote it The cool thing is I promise you'll get out of value out of it because there is a excel sheet You can download and literally all you have to do is fill it in But basically the summary of the blog post is think of Fundraising as a pipeline like your sales pipeline and as I was talking about it's an iterative process So you just fill out the names who are you to who you spoke with when you did when you spoke to them last What's the next thing you need to do and then over time that will materialize into Hopefully an investment. This is a summary of what we've just been good through. It's a it's a circular as you can see circular process You identify the right investors You move into your first draft of materials you take those interesting meetings you analyze those you fine-tune those materials and Then you go back to identifying new investors and you can do one or two or three of these and then you'll tweak it So when we fundraise and by the way if you want to look at seed camps pitch deck because fair enough you guys share it with us So we share it with you if you go to slide share and Google seed camp pitch deck You'll see our previous fun in the fun before that. We went through multiple iterations. We'd go pitch make a mistake fix it Oh shit. We didn't have this person fix that. Oh, oh, we should describe this or the numbers went right fix that Grammatical mistake we all make those fix that and so you know you want to do that You don't want to do that forever, but you want to like maybe two or three meetings You'll figure out what the issues are and you start fine-tuning another thing That's really helpful and it's it's it's here an analysis from the first meeting is if you can go in with your co-founder or With somebody from your team and you present One of you kind of mentally keep track of the eyes of the investor and see where your story Isn't quite connecting you can kind of tell from people when they're disconnecting and you can be like This isn't quite working like for example this gentleman here getting up I'm like shit. I don't know what I said, but I lost them, you know So it's the same kind of thing, you know, you're just kind of like ah, man, what could I have said? Series B he left um So think about this is circular process and Lastly closing the deal There's only two things that really drive this FOMO and metrics Really only two things you're either generating FOMO because you're doing something Or you have the metrics to show and I have seen both versions of this One one of our investments is Revolute and I love Nikolai the founder of Revolute He's a great guy, and I know that you know that you might have opinions about him or not But one of the things I really admire about him is that he's been shipping product very fast He's always been super super fast about how they ship product And one interesting things was that early days when he would present to investors He's just you know, if you've ever seen him speak. He's not like, you know He doesn't like that, but what he does he backs up everything he says and I just remember early days He would just talk about his numbers and it was just like wow like how they're growing how they're doing And if you have that kind of story tell it, it's amazing You know like it delivers now sometimes especially at the early stages. You don't have that fine Which then leaves us to FOMO. Okay, so what generates FOMO the right storytelling the right team all those elements that we were talking about earlier That's what generates FOMO. So how else can you generate FOMO? Well, you heard Tom talking about when you have competitive term sheets that that helps that involves having one or two more Investors another thing that generates FOMO is being at the right place at the right time And this is part of being a founder is like, okay, what part of my business is relevant for this investor right now Why am I the right business right now? Why am I the right team right now and how can I tell that story in a compelling way where people are like? Shit if I'm not part of this I will miss out Now if you can have both those things that's amazing and that's how stuff gets done So with that guys, thank you so much. It's absolute pleasure being here. I'll be around if you guys want to chat But thanks again