Inside a GoldCapital Engagement: What Clients Actually Get

0:00 The Funding Table: GoldCapital Consulting podcast

[Cold open - highlights from the episode.]

Max: What's going on everyone, and welcome back to The Funding Table, episode number five. Can't believe it's number five already. For those of you that are new here, this is the show devoted to all things startups, venture capital, and raising money, with the hope that you avoid some of the costliest mistakes we made on our own journeys. A quick highlight of what's to come in this episode. First, we'll be talking about the Federal Reserve hiking rates for the first time in a few years and what that means for you if you're raising money. Then we're going deep into our own engagements with clients: what does it look like to work with GoldCapital? What does it look like to work with FTFC, and everything in between? And finally, we'll end our episode as we always do, with Cam going over some of the more common questions he's been getting asked by folks considering working with us this week.

1:47 Max Goldberg, Mike Spidaliere, Sam Poon, Cam Owen

Max: It wouldn't be a Funding Table episode if we didn't start by going around the table and doing some quick bios and introductions, so you know exactly who you're hearing from. As always, I'll go first as the host of your podcast. My name is Max Goldberg. I'm a two-time exited startup founder, Techstars alum, and former investment banker - definitely a former investment banker. Currently the founder and managing partner of GoldCapital Consulting, where we help startups raise capital. Mike, number two - welcome back to the funding table. Looking good.

Mike: Much appreciated - I'm going Max style with the white tee today. Mike Spidaliere, multi-time founder. I started First Time Founder Capital about three years ago. We work with early-stage founders to help them get to the point where they're both investable and investor ready.

Max: Awesome. Mike, welcome back as always. Moving on to Sam Poon, our resident VC. Sam, loving the setup, man - it's looking great.

Sam: Thanks, man. I was playing around with the setup a little bit, because people were like, "What's that behind you?" And I was like, you know what? Enough of the questions - let's get right into the juicy bits. Like Max mentioned, I'm Sam Poon. I sat on the venture capital side for many years - from sourcing companies, taking them through diligence, all the way to the investment committee where we talk it through before we actually write a check. And this was with general partners that have collectively over 40-plus years of experience, having been the earliest and biggest investors in your Facebooks, Uber, Venmo, Beyond Meat, and one that came out of NASA as well. Couldn't be happier to be here, guys.

Max: Amazing. Sam, welcome back. And last but not least, my partner and COO of GoldCapital Consulting, Cam Owen. Welcome back to the funding table.

Cam: Thank you for having me back. Everybody looks very happy today - look at you guys go. This is great. I'm Cam Owen, a one-time exited startup founder - bootstrapped that business myself. And I'm the one that gets to talk with all the founders on the front lines every day, and I bring their burning questions to the funding table so we can cover them.

Max: Amazing, Cam, and we appreciate you doing that. Now, for everyone viewing and returning - if you've liked the podcast so far, we'd really appreciate you dropping a quick thumbs up and commenting below. As you'll hear towards the end of this episode, next one we're going to be answering all of your questions, straight Q&A style. I'll be doing a post on Instagram, we'll be fielding some questions over email, and of course, below in the comments: if there's absolutely any question you have for us - individually, as a team, about venture capital, startups, whatever it might be - please drop a comment below, because we're going to respond and get to every one of your questions in the next episode. But with that, let's get into episode five, gentlemen.

4:23 Can one investor take my whole round?

Max: I want to go around, quick one line each. I want to hear about something that a client said to you this week - not a lead, an active client. We'll keep things civil, keep things anonymous. Something that really stuck with you. This could be a really good thing that gave you new energy, or even something that did quite the opposite - and that occasionally happens, as much as we don't like it. Start with you, Mike.

Mike: I didn't know that one investor would take an entire round.

Max: Tell us more about that.

Mike: You think about rounds coming together, especially multi-million dollar rounds, with a handful of different investors. Every once in a while you have a conversation with an investor and it's just the perfect fit - it's right down the fairway for them and they get stoked. They love that first or second conversation, and they propose taking the entire round. Certainly not an everyday situation, so don't expect that, founders. But pretty wild.

Max: About how big, just so we're clear? Are we talking a small round, maybe 250 to 500K, or could this get bigger?

Mike: Seven mil.

Max: Seven mil! Okay - so it can go even as high as that. People can just take it in one shot.

Mike: It depends on the investor, certainly, and what they're working with - where they're at in the fund cycle. But more on that to come.

Max: I'll cheat on this segment for a second too. This is not what a client said to me, but Mike said in our company Slack this week that he met with a new investor for the network whose minimum check size was between 100 and 200 million dollars. I've candidly been sharing that with some clients this week, and they're like, "Oh my god, I came in looking for like 300K." There just really are levels to this. It's unbelievable - it sometimes even surprises us. Founders: if you're raising 300K, or even 3 million, or even 30 million, you can have a nice hello conversation with an investor like that, but don't expect them to come in and take the entire round for 3 million. That's not how that works.

Cam: A bit of an anomaly is what's happened here - but it can happen, is what you're saying. Alright, this one really caught me off guard. One thing that a client said to me this week that I wanted to bring to the funding table is: we're not in Kansas anymore. And just to give some context - that's a little homage to The Wizard of Oz. They've raised a round of about 250,000, and that's a friends and family round - props to the friends and family filling that out. But they've started to really realize the difference between what that took and what an institutional round takes, now that they're raising a larger round and moving on to that pre-seed level. They've started to understand how much more effort it takes, how many more documents, and how the story really has to shift - because it's not somebody warm right next to you, having Thanksgiving dinner with you this year. I thought it was funny when they said it.

Max: When you say Ruby - for the record, do you mean Dorothy?

Cam: The hell? Sorry. She has the ruby slippers. Am I right?

Max: I'm pretty sure that's Dorothy.

Cam: Did she wear the ruby slippers? Is that what I was thinking then? I'm only a half dumbass.

Max: That might be a Mandela effect, because I imagine them as diamond shiny, not red.

Cam: They were red.

Max: On the yellow brick road to venture capital, to Sand Hill Road - I guess that makes a lot of sense. Moving on to you, Sam. You worked for a Sand Hill Road firm. What stuck with you?

Sam: What did I hear this week that stuck out to me? It would be: "I'm building this no matter what. It's do or die out here. I'm thinking billions, not millions." It's like the Latin phrase - I learned the classics in high school, and I love to bring this up; it's one of my favorite quotes - from when Julius Caesar crossed the Rubicon in 49 BC: alea iacta est. The die has been cast. So you've got to be in it for the long haul, man. The die has been cast, baby.

Max: Hell of a start to an episode here, fellas - and people will think that's scripted. Can you say it one more time for us in the Caesar voice?

Sam: The Senate was like, "You can't cross with your army" - but once he crossed that bridge, man, he declared war. I learned the classics, like I said: alea iacta est. The die has been cast.

Max: That's awesome. And if you do that on a pitch to a VC, that's a guaranteed way to a check.

Sam: Disclaimer - that was not official advice. That's just an opinion.

Max: I'll ask myself. Two things stuck with me. One - and this client might actually be tuning in - he's been sending us killer investor updates, traction updates, almost every single day by email, which is fantastic. Maybe even a little too much - if you're listening to this, you could probably space it out to every other week. But killer updates. And at the bottom, he writes: "Add a billion dollars to that valuation, Mike. Add a billion dollars to that eventual exit, Mike." He keeps writing that every single time. And that's the spirit that makes this really fun. You've got to believe. I wouldn't call him delusional, but there is a healthy amount of delusion you need as a founder to be successful, because no one's going to believe if you don't. The second thing: a client I'm really enjoying working with, who just recently started - he's from Australia. We were talking a little bit about our past successes and clients we've worked with, and somehow we got into the fact that a lot of clients, especially younger ones we've worked with in the past, don't necessarily want people to know - or to broadcast - that they had help with their round. Not everyone's gung-ho about announcing they had advisors, especially at this stage, and people change throughout this process. He was shocked - he's a dad, he has kids, he's married - and he said, "I would just never be like that." And when I told him that it's hard to get references on the phone because people don't want to advertise the fact that they didn't do it all themselves - there's nothing wrong with seeking out help - that stuck in my head. It doesn't seem intuitive to most people, but it's just the nature of founders: they develop egos. We all do. We all have egos. It's understandable, but it's always interesting to have those conversations with clients.

Cam: I think you also always have the blinders on - let's focus forward rather than trying to look back at the past. Who cares how you got here? You got here. Let's keep going forward. I think that's such a big thing with being a founder.

12:23 How do rate hikes affect my startup raise?

Max: Moving on here - big headline, major economic news. Also shocking that a bunch of our clients had not seen this headline. I guess it's our job to communicate the news, but it's also slightly alarming if you're a founder in the business community not keeping up with, say, the price of oil - or, in this case, the Federal Reserve of the United States raising interest rates for the first time in quite a while. Mike, you're on the front lines with investors, and this industry is certainly sensitive to things like this. Tell us more. What happened? Explain it to me like I know nothing about really anything, for that matter.

Mike: There are a lot of ways I could explain it to a five-year-old like yourself. Effectively, what they did raising interest rates - think about it like this. You have a bond or a high-yield savings account, and the interest rate just increased, and the US government is backing that. So what the Fed just did was make safe pay better, and they made risky have to work harder for that money. It trickles down all the way from the LPs - the investors in funds. If they have an opportunity to make 5% safely, versus buying a lottery ticket by investing in a fund that invests in other lottery tickets, you're going to have a little bit of that tightening, that white-knuckling of the top-line cash. So funds are going to have a trickier time raising their next fund, or if they're currently raising. And investors are going to feel it themselves - they're going to be a little sharper, a little more selective about what type of investments they want to make, because it's safer to put money in other places. What this means for founders: not a huge change in how you pitch the company. It's important, certainly, but it shouldn't change how you're going after the capital - you still need that capital. Just be aware that you're fighting an even larger uphill battle than before. Max, you and I went through this back in the day when you were raising for HotDrop - interest rates were in a unique position there, and we still succeeded. So at the end of the day, this doesn't mean venture capital is shutting down. The Fed is talking about hiking rates even more by the end of the year, but investors are still going to invest. They still have the LP agreements that require them to invest a certain amount per year. It's just going to get a little bit trickier.

15:24 Should I raise now or wait until 2027?

Max: One point you made there is that they're most likely planning to raise those rates again. What does that start to do for a founder who - yes, I probably need the money, but I'm honestly trying to figure out the timing? Should I be putting full-force effort into it? Should I hold off?

Mike: Are you talking about a founder that's currently raising already, or someone contemplating kicking off a process?

Max: Good question. Let's play pretend that we're a founder who has contemplated raising. I'd like it done, but I haven't fully started to go out to market just yet.

Mike: Now's the time. If you're a founder that's thinking about raising, hearing that interest rates might hike up even more by the end of the year - that's going to put a bit of a bleaker picture on funds raising in 2027. So go out now. This ties back to when we talked, a couple of episodes ago, about that $150 million raise and peak ZIRP and Airtable, et cetera. Zero interest rates also caused a hysteria: massive valuations, investors throwing cash left and right. And now look at what's happening - these companies are getting bought up by PE firms for pennies on the dollar, because they raised at ridiculous valuations. It's not the end of the world, but I would be prepared to face that scrutiny with investors.

Max: I'd like to speak to this for one second - sorry, Sam - because Mike brought it up and I think it's important. When I was a client of Mike's - this was the end of 2022 going into 2023 - interest rates were far higher than they are now. That was the peak of the hike campaign. Every Fed meeting they were raising rates: first a quarter of a point, then half a point, and there were at least two, maybe three, half-point hikes. And so we speak in specifics, since I have it here: this week the Federal Reserve upped rates by a quarter of a percentage point - 25 basis points - so the rate is now anywhere from 3.75% to 4%. And 12 of the 18 Fed officials basically said they expect at least one more rate hike before the end of the year. Let's just be clear: this is not the stagflationary time we had only a few years ago. Inflation is not at the Fed's 2% target - I think it's running at around 2.4 - but it's been stubborn, and it has been coming back down toward the Fed's long-term target. And I think this is a very good move for us, as business owners, but also as members of a global economy. Inflation is not good for anyone. It's good for asset prices, but most people here are starting businesses at the very beginning - they're not in a position to really take advantage of inflated asset prices right now. It means your personal runway is longer, assuming it actually achieves the goal of reducing inflation. But when we were out raising - let's not sugarcoat it - it was really bad. Funds were not writing checks. It was like everyone was a zombie fund. They were all taking meetings, and you would see almost no announcements or new investments getting made. There was also a mass consolidation in venture capital that was starting and accelerating - and still continuing - and now Bending Spoons, as we've talked about in other episodes, this PE-style buyer, is coming in and winning and buying up all those companies that raised prior to that massive correction. So from my own perspective: you would be a fool to not go into market raising now, especially with interest rates rising. You can't run your business solely through the lens of what a body or regulator - in this case, the Fed - is going to do. People do this all the time, which is why they don't buy houses. One of the most common realtor objections is, "Well, what about the interest rates?" The only thing we know for certain is that prices go up over time - home values just go up. So if you're only making decisions based on the rates, that's probably weak. But if you know the times could get worse ahead: you're going into a holiday season where raising doesn't really happen past Thanksgiving, past around late November. Things slow down. The volume's high, but those deals were already coming in at the start of Q4. Now you're not raising until 2027. If you're not starting to go out to raise this month or next month, you're very likely either gambling, or you're last-minute and going out in January with potentially another rate hike behind it. We only know what happens now. I don't think, as a founder, you should gamble your company's runway. So if you think you may need to raise, the answer is not "I may raise" - it's "I need to raise now." Let this just push you over the edge. This is not one foot in, one foot out. I feel very passionately about this, because I know how hard it is to raise in those times. Is it going to be that bad? Hell no. Are we trying to fearmonger here? Hell no. But it could get worse. We have no idea.

Mike: We don't know if the pendulum is going to swing that heavily to the other side, the way it did between peak ZIRP and when you started to raise, Max. We simply don't have the answer to that. You don't want to put your entire business at risk on the potential of that happening in mid-2027. Oil's at an all-time high, and all we need is a terrible Anthropic IPO and we go into a down cycle - and you won't be able to raise money. So take advantage of the frothy times, folks.

Cam: This is real strategy being called out. I don't think a lot of people think about this - again, back to the blinders. People are so focused on their business, and rightfully so. But if you don't step away and start to take a look at what's happening outside, you'll just miss the moment that you could have had. And it's more of an alarm to say: hey, it's not a guarantee that six months from now you're going to be out of luck - but we don't want you to be. Nobody wants you to be. This is a warning, so we can sleep at night saying: hey, we made mention of this.

Sam: I agree with everything you just said. But really, for the founders - it's when Mike mentioned ZIRP. During times when capital gets a little more expensive, you have to remember that cheap money funds your competitors as well. But when it gets expensive, the tourists leave. The copycats don't get funded. So if you survive that cycle, you're competing against fewer people, and they have less discipline.

Max: I love that line about the competitors. It made me think of David Roux. The Techstars accelerator I was in was at the Roux Institute in Portland, Maine. David Roux was one of the founders of Silver Lake - they have a great record, let's just say that - and I think he made a hundred-million-dollar donation to build out this facility. The guy has done pretty well. I'd love to have $100 million liquid under my couch to throw around for fun. But he mentioned to us - we had one touchpoint with him through the entire accelerator, where he came in and gave a speech - and he basically said that the great investments they've made, and what they recommend to all founders, were made in recessionary times. Which is what you're saying. Google, Facebook, Uber - almost all of these companies actually got built in really bad economic times. And I think that's very consistent with what you just said. It's not just that the competition and the fakers fizzle out - it's also a time when really good talent, if there are layoffs, might aggregate, or might have the willingness to work for less money on something that maybe one day works out to be very valuable. I'm sure there are a lot of reasons, but that's really consistent with what I've heard as well.

Sam: For sure. Problems get hyped and heightened in bad times like that. If you're dealing with a problem, you're going to see a solution much more positively than when everything is shiny and fun and you have a bunch of money to blow. So it makes complete sense.

Max: Mike, is there any reason the interest rate hikes would be good for founders?

Mike: It's good for their runway, like you said. It's good for them personally, regardless of where they are. Start tossing money into Ally - not a partner of ours - start getting some high-yield savings accounts, and put that money to work.

Max: It's exactly what I was going to say. Go get a money market. You might be making more money from the yield on the money market than you are in your startup - go take advantage of that. And I think if you have active investors on your cap table, if you send out a good update letting them know that you've allocated the capital to a money market with the right FDIC coverage - there are ways to ladder coverage through different institutions - that's something that builds a lot of trust in your credibility as an operator. "Wow - before I even had to think about that, this founder in my portfolio did this, and no one else did." Those are the reasons investors want to re-up at the next round: you gave them proof points that you know what the hell you're doing - or, as they'd put it, that you're a responsible steward of capital. Just don't raise a million and then put 950,000 in one of those accounts and allocate 50,000 to growth of the company. That's all I'll say there.

26:28 What are my odds of raising venture capital?

Max: Let's move on here. A consistent theme over the past few episodes is this idea that it's been a record year by pretty much every stat except one in venture capital: more money raised at the fund level, more capital deployed. But the market, to some, once they really get in and start raising, seemingly feels impossible. I feel like most founders that come to us think that the round's just going to get done - a surefire thing, put me on a couple of good investor conversations - because the headlines and all the AI frothiness suggest that now is the best time to raise capital. And while I'd agree in some regards, there's obviously an incredibly low chance that you end up successfully raising capital. Even the best odds - it's like 2% of companies that raise venture capital, and raising cold, it's way under 1%. So let's just be generous and say there's a sub-1% chance. Sam: why do the folks that are listening, that don't have help, that don't have a warm network - why are they unfortunately destined to fail? Why is the round not going to get done?

Sam: That's a great question. Why do founders that are raising face such abysmal odds? The truth is that most founders that are raising cold typically don't have a network, and they can't get in front of those doors. It's sort of a closed-door, secretive industry. And it's not because the companies are bad - it's that the attention gets allocated before anyone even opens your deck. So you really have to have those relationships. It's a bit unfair, but that's just how the industry is. I call it the business of people. And if you're in founder mode, as Cam and Mike love to say, you're not in those rooms to begin with. And this is a full-time job on top of your current full-time job, where you have to wear so many different hats.

Max: But they're not in those back rooms doing anything sinister, right? There's a fallacy here, and it's unfortunate that we have to put a pin in your balloon for a second. Mike: founders - why do they have a sub-1% chance to raise money if they don't have help?

Mike: Like we talked about in the last episode: investors constantly have other investors, founders that they previously invested in, warm connections that they're friends with in their network, sending them deals that are aligned with what they're investing in. And then they also have an inbox filled with cold emails that takes a while to get through - if they even go through it. So you're dealing with their lack of attention. If you're not getting a direct introduction, it's a 1% chance that your email is even going to be opened.

Sam: Time is the constraint, Mike - for the founders and for the investors. And there's also the filtering, like you mentioned. If I've worked with this investor and I know how they think, or I've worked with this founder and I see that they can execute, go out there, convince, and build momentum - who am I going to divert my limited time to, between calls or during my day? That's just the easiest way for an investor to de-risk what they think is an investment that will actually scale meaningfully.

Cam: Sam, I have a question about that. On a typical day, back when you were a VC, how many first calls were you on?

Sam: The most startups I would meet in a week would be anywhere from 30 to 40.

Cam: That's a lot. Holy cow.

Sam: These were 30-minute calls, back to back to back. And I like to say: yeah, you've got to love changing the world - but really, you've got to have the stamina too. At the end of the week, it's not "hey, which were the top five startups?" It's "did any of these stick out to you?" So you really have to stick out meaningfully - and if someone's vouching for you, that goes a long way.

Mike: And the reason I asked is because there seems to be this mentality from some founders that you're just sitting there as a VC, constantly clicking refresh on your Gmail to see what emails are coming through. You have a job. You're talking to founders, you have portfolio management, you have investment committee meetings, you have meetings with the GPs, meetings with other partners to talk about companies they're talking to. It's a busy job. Investors aren't just sitting around waiting to see what cold emails come in during the day.

Max: Not just that - and correct me if I'm wrong - VCs generally, even junior folks trying to make a name for themselves, have much better work-life balance than a lot of other financial services career paths. Is that fair to say?

Sam: It's not like banking and private equity. There's no way. But it's going to sound corny as hell: you've got to love what you do. If you love meeting with people and doing the research - and there's another stress layer: you're fundraising, you're on the road, you're setting up portfolio company calls, you're speaking with other investors on quarterly or biweekly calls, you're doing market research. You're really learning the entire time. Even during meetings with startups, when they're pitching, I'm already doing a lot of market calculations - okay, this is the demographic, this is how much they charge - I'm doing all that math. And after I get off the call, I'm doing even further research. You've got to love it, man. You've got to be creative.

Cam: Speaking of that research - to go back to the earlier topic - when money gets more expensive, does anything change in that research, and in how you as a VC get to a yes, versus just sticking at a no and saying this is too difficult? What changes when times get tougher, like now?

Sam: Cam, I can talk about venture all day, man.

Max: Clip that.

Sam: Every venture fund's process is different. When they go to the investment committee, you're looking across the timeline: the past, the current moment, and forward-looking. Any investor worth their salt is looking at where they think their returns are going to be, and evaluating companies not just on net income, and not even just on multiples - though a startup has to be profitable in the future - but on that top-line number. And a lot of the time, even when markets are booming and on fire, you have to have a bear and a base case: based on their business model and their growth, if they're a market leader, this is the multiple we assign them - and on those returns, we're more conservative. And I would say that doesn't really change whether times are good or bad, if you're a good investor. A good investor should see the ebbs and flows of a market - it's gone up, it's gone down, they see what works and what doesn't. But the way you evaluate a company, you should be prepared for the downside at all times.

34:57 What if a VC already invested in my competitor?

Mike: I have another heater question that I think a lot of founders don't think about: competitive investments. Let's say, for ease of conversation, you're a gaming company. You go out and pitch gaming-focused investors, and they have invested in a direct competitor. What does that look like? Is that a barrier founders should be aware of? Should they be doing research on the portfolio? Should they know who's invested in their main competitors?

Sam: One hundred percent. If you're a gaming company talking with a gaming investor, sure, they might work on or invest in things tangentially related - but you'll see even the biggest venture funds say, "Well, we actually invested in this company." The conflict of interest is there, because you're a fiduciary. As a VC, you want the company to win - not legal advice, by the way - and if it does well for the founder and founders, you're going to be behind them. So founders shouldn't just pitch because "this fits my thesis." Really drill in and look a little deeper. That's something I'm definitely going to stress: look deeper.

Max: That's such a good point, and I'm happy you brought it up, Mike - we haven't talked about competitive investments at all. It's a very common reason why even folks that we work with get rejected, and there's nothing we can do: they already wrote a check. And this is where I call out the hypocrisy - though to VCs' credit, people hate VCs no matter what they do. If they say no because they have a competitive investment, people say they're spineless. And then YC has, like, 17 of the same company - and that might be too much. That's arguably egregious in the other direction: very Darwinist, whoever wins wins. So if VCs honor those conflicts, people are not very happy and they'll be the first to talk - and when they don't honor them, they're equally as pissed. It always stings on our end too. When Mike sends out updates about progress - some amazing news, and then of course the not-so-good news - I always hate when I hear: "This was actually right up our wheelhouse, but we already wrote a check." Did we lose because we weren't there first? We don't know. That could have been a bet from four years ago. They're usually not going to go into too much detail. And here's what's unique: if you're here, listening at this point in the pod, 30-some minutes in - you're the real deal. The fake founders tuned out in two minutes. I see the average watch time on these things - it's about seven minutes. You should be able to watch a full one-hour session when you're getting all this free game. We charge thousands and thousands of dollars for conversations like this. So if you're here, believe me, you have way less competition than you think - there might be two or three other people worth worrying about. So if you're here: how the hell do you know if there are competitive investments? You talk about it like it's some thing you can just Google, or ask an AI that will give you an answer that's sure as hell incorrect - because it's not always public. It's not always on Crunchbase or PitchBook. Those are places I'd look to see if there are funding announcements - you can look there. But a lot of things go undisclosed, because there's hardly any incentive to disclose things in this industry.

38:35 How does GoldCapital Consulting help founders?

Max: That transitions well. I want to go back to you, Sam - and Mike, fill in the gaps. Can you explain, and we don't need to go process-level just yet: what actually changes when founders work with us? Why do they completely defy those terrible sub-1% odds? Why are they playing a completely different game? Why are they on the fast track - the easy pass at Disney, not waiting in the same lines? I gave a little bit of a gimme on the intel side of things and the unfair information you have access to. But go ahead, Sam: why do we defy those odds, and what does that actually look like?

Sam: It's a process. Most founders treat the raise as just a singular moment, and then they improvise it while they're running a company. What changes is that this is a run process, and there's a real list of things you have to do. We get you to a story that a stranger can repeat. A data room that's ready before diligence, instead of during it - Max, you have horror stories about that as well. That beats the odds, and it removes the reasons you would lose that investment, or that conversation with that investor, that had nothing to do with your company. You might have the best idea, and you might be the right person to do it - and the clients we work with, we genuinely believe that - but it's a full-time job on top of all those things.

Max: Of course. Mike, did you want to chime in?

Mike: Look - it's a two-plus-year timeline between rounds now, at least seed to Series A. The average time between those two rounds - investors are looking for more.

Max: So what are people doing, or not doing, in that window between seed and Series A? Do you wake up one day and say "I'm raising a round tomorrow," and then you start the round? How does that actually work - what should you be doing, and what do we do?

Mike: Like Sam mentioned, there's an entire checklist of things you need to get done beforehand. This is not "I woke up today and realized I could use $3 million - why don't I just go get that done today?" You need to have the data room. You need to have the story. You need to have the deck. You need to understand who that ideal investor profile is. You need to do research on those investors. You need to understand which investors are actually looking to allocate - which ones are currently allocating right now into your space, et cetera. There's a lot of prep work that goes into it. And that was one of the reasons, going back to starting FTFC - I'm going to call out another podcaster here; we're not quite at his level yet - but I remember I was on a run listening to Harry Stebbings' 20VC, about three and a half years ago, and I heard him say, paraphrasing: if you're a founder that's looking to fundraise, you effectively have to hand over your company to your number two, because fundraising is a 40-hour-a-week minimum job. And I just thought that was ludicrous. Why not create something that allows a founder to come in for a specific number of hours per week, work on these things - very targeted, very specific - get them accomplished, and then go back to running the company and building traction during the raise? Because that is exactly what investors are looking for. If you reach out to an investor today and say, "Hey, here's my company," and then you reach out a week from now and either say, "Hey, I'm just circling back," or you say, "Hey, look at what we've done in the last week - look at these traction points, look at this new revenue, look at these new partnerships" - that second one is going to win ten times out of ten. And Sam can corroborate that.

Sam: I sure can. And that's something Cam hears about and actually mentions to prospective clients. It's so important. Investors want to see more proof: revenue that actually stays, instead of revenue that arrives. Retention that shows the product will scale beyond the founder eventually. Sales channels and acquisition channels that actually close without the founder. And really, some sign that the market is as big as you say it is - which is something you only learn by selling into it for a while. So you have to have that intentionality. And it is a full-time job, like Mike said. You have to really cover your bases, and that's not easy to do while running a startup.

Max: And that's part of the flawed logic, too. Sticky revenue and significant growth - these are things that are going to help make a raise easier, and almost compensate, not completely, for a lack of process excellence. You could have a worse process, but if your company has incredible fundamentals, things will be a lot easier for you. Then, on the flip side, the flawed logic: most of the people we speak with who are most skeptical of working with a firm - "am I ready to do it?" - are the ones with the weakest traction. No revenue, very few users. You are the one that's questioning it, and you're the one that needs the help. Figure out how you're going to come up with the money - go into debt if you have to; not financial advice, but do what you have to do and figure it out. You are the person that needs it. The rich founder that's already connected, that has millions and millions? He doesn't need the help. He could use us for leverage - he could get that time back, he could pay for speed. That's why I think people pay us so much money on these engagements: they're paying to get execution speed and leverage. But if you're in a position where you don't have a lot of resources - look, it's always worth having a conversation with our team. We don't ever want someone to do something that would put them personally in a bad situation. But you're a business person. You're going to have to take risks and make a calculated bet. And if you are in the worst position with your business, that means you need this - these people, us - more than anyone else that's watching, because you're in the worst inherent position and the most in need of help. "But Max, I'm working so hard on my startup right now - I just don't know if I'd even have time." You're 300 pounds overweight and you're wondering why you need a trainer. The guy that's one pack away from the six-pack? He doesn't need the trainer - he just needs a little cut and a little more discipline. You need the trainer.

45:22 What happens after I sign with GoldCapital?

Max: Cam, you talk to leads every day. I know for a fact - because we were talking about this before hitting the record button today - that one of the most common questions you've been getting lately, and it's been true forever, is: what the hell do I get? I pay you the retainer - then what happens? What's in it for me? What happens between now and the round close? Give me the exact itemized list.

Cam: Sure thing. Our process as a whole runs in twofold. Mike handles a lot of the investor side of things. Really, the only ways you can help a fundraise are preparation and investors. That's it. You can break it down a billion ways from there if you want to - you're just getting too into the weeds. At the end of the day, it's preparation and investors. So while Mike handles the investor side - who's going to be the target, what is this a good fit for, what does the round size look like, and who in the network is going to be a good fit for that - what do we work on? Well, we don't just sit on our hands and do nothing and sing kumbaya. We get to work right away. The first week is going to be very education focused. Everybody talks about accelerators - what do they do? They educate you. They work with you on your deck. They work with you on your story. They talk with you about what your business needs to look like. That is how the first week of this engagement runs. The first week, week and a half, is going to be four education calls. We go over a lot of high-level information and get into the weeds about how investors think. We give away maybe 5% of that on this podcast - you guys can correct me if I'm wrong; maybe a little bit more. We try to give as much value as we can, but we charge what we charge because it's damn good information. So that's the first week and a half: you're going to come out of that feeling a lot better about how to pitch investors and how they think about your business.

Max: And we all paid for that education ourselves. I diluted 7% of my company to Techstars. They wrote a check - but that's a lot of the company, and that doesn't go away. To get the same education: six weeks, down to four hours. Sam, you've probably had some nights where you were crying with the amount of work you had in venture - and Mike and I are the same. We already paid for this.

Cam: Exactly. And trust me, that's part of why the upfront engagement is there - because this is something you get from day one. It's not something that just grows on a tree. You're getting it from square one. So: first week, week and a half, education based - very important to knock that out. Then we move on to a pitch with none other than - who might that be? That's that resident VC right there. The big, important piece of that call is it's going to be the first time seeing you pitch. Because at the end of the day, you can look at a deck, and it isn't going to matter. The story - the story is what's important, and I think we all agree on that here. It's how you say it. Looking at a deck in broad strokes isn't going to matter, because it's more about how you say it. Something may look stupid on paper, and then when you're actually giving the pitch, it makes way more sense. There's no need to just sit there and send it through AI, or even send it to us to look at in isolation - it just doesn't matter until you actually get in front of an investor and you talk it through. That's what's important, and that's what that second week is really designed to be. Third week and on, we start to really get into that deck and story. And I'll give a little bit of props to the team here, and specifically Max: I don't think there's a single person that can hear one person pitch a company and then re-say the pitch right afterwards. We've had founders tell us this ever since we started this company. My god - Max can hear you pitch your business one time and will be able to repeat it, frankly, I hate to say it, better than most people pitch their own businesses, right after you get done saying it. It's a fantastic trait. And that's what that week is all about: dedicated to building out the story more than anything. The deck is there, of course - it's the narrative and how you position it. But this isn't just broad strokes. This is all honed in on who else - Mike - and what Mike has been doing in the background. Speaking about the investor side of things: you're not just creating a blanket pitch. That is the dumbest thing you could do. It's going to waste hours of your life. So in that third week, we really hone in on who you're actually going to be speaking with, and dedicate that pitch, that narrative, the positioning, to those people. How can you build it for the people you're going to be speaking with? That's the important piece there.

Max: There are clearly two lanes here, if you couldn't tell already. That's the GoldCapital lane - from kickoff, everything Cam mentioned starts to go. But what's also happening, Mike? Because you're not starting from behind - you're kicking off too. First call, kickoff: what's going on right afterwards in your swim lane?

Mike: Well, I prefer to say that GoldCap is the Fiat and FTFC is the Ferrari. All jokes aside: I'm working diligently with the founder, alongside Sam, on the data room. Super fun - got to be the funnest part of any startup. We want to ensure the data room is completely done before we put the deal in front of investors. As I always tell founders: as soon as you have a good conversation with an investor and they ask to jump into diligence, if you make them wait for the data room - they're seeing new pitches every 30 minutes. As Sam mentioned, they're going to get excited about one that already has its data room done. We don't want the founder in a position where the investor starts to lose the luster, the interest, because the data room wasn't done. So we're working on the data room directly with the founder, and I'm in the background doing a bunch of research and digging - not only in the network, but also outside of the network - to understand: okay, this is a perfect investor profile fit. It's this perfect storm: we're going to bring them into the network so we can increase shots on goal with ideal investors.

Max: So we've got the education, we've got prep, deck, narrative work, we have the talks - and data rooms, let's be honest, are the most bureaucratic, boring thing in the world. Sam and Mike do it with a smile. There's a lot of banter on those calls - locker room talk, they'd call it. If you don't like locker room talk, definitely don't engage our team; we don't really filter ourselves. But we've got a lot going on - and then we have this critical moment, which, interestingly enough, has ended up being called leaving the nest. Our little birds - our little clients - fly away, and we hope they don't fall like some birds do. We want them to take flight like a real bird, with life. So when they've left the nest - Mike, everyone knows when our little birds leave the nest - what starts happening, and what does it look like from that point?

Mike: One hundred percent. So what we do is begin building the investor outreach template. This is absolutely critical - it's the first thing investors are going to read about your company. I worked with the earliest investors in the network to understand exactly how they like to see deals put in front of them. Sam, you got a lot of those great investor outreach templates in your inbox back in the day. We build that out - very specific to your company, very specific to how investors want to see deals, very specific to that industry set. And then once that is built, the deck is solid - we give a thumbs up to that - the data room is solid - thumbs up to that - we begin what we call the shipping process. And this is where I come in and shine. This is where I live. Shipping, as we call it internally, is when the deal starts to go out to investors.

53:38 Why not intro me to investors on day one?

Max: You start to take flight. Sam: why do we not make introductions on day one of the engagements? Folks come in, they speak with Cam, and they say, "I'm already perfect - I just need the intros, man." Why do we not make investor introductions on day one? Why would that be a bad idea?

Sam: Introductions don't happen on day one because you only get one first impression with a fund. You have to get your narrative right - you get one really critical step to make a really good first impression. And after that first conversation, they might have to go to diligence, to their investment committee. A follow-up with real news, once you have your narrative and story down pat, is worth way more than an intro. That is the most critical juncture. And - let me backtrack - venture folks are creatures of habit, people of habit. They want to see that sequencing. When you're pitching to them: if I'm on slide five during this pitch and I'm still wondering about something from slide two or three, I'm not really going to pay attention - and they're more than likely not going to want to speak with you. So I wouldn't encourage it. I just don't recommend it at all.

Cam: You're saying jumping the gun on day one - you just don't know. And I think there's even more to it. I'd love to hear a little bit more about Mike's cohorting process - I think that's a really important thing to hit on here, and an easy layup for Mike. Mike: I'm a lead now, we're in the shipping phase, I'm hoping to now talk with investors. How does that work from your end?

Mike: Let me give you the little cohorting spiel. Once we get to shipping, we cohort it out. The first cohort is going to be anywhere from 5 to 15 investors. These are all winnable opportunities - all investors investing in that founder's space, all currently allocating capital. But we use this as a control, if you will. We want to understand what the common questions are, what the common pushback is. If there's specific feedback we keep seeing over and over and over again, that means we should make some adjustments to the deck, or the investor outreach template, or the narrative. We want to ensure, before we go wide to all of the investors that are a good fit that we need to fill the round, that everything is really buttoned up.

Max: Once you've done the first 10 pitches or so, you're going to know 90% of the most commonly asked questions you're going to get in the round anyway. It turns out there are not that many original tough questions. I think that speaks to the brilliance of the FTFC process. And look - there are the scam artists we talked about in the last episode, so go watch that one on red flags. There are people that try to rip off and replicate what we have going on here every single day. They're always trying to take our lunch, but they're not going to - and they generally fizzle out, because at the end of the day, you have to love what you do. Mike and I have routine pep talks. There are days that I'm down and days that he's down, because we take the rejections personally, people. We're not trying to just take your money and run here - we're aligned with your prospects and outcomes. But it's hard. Even though it's not our company, we take those hits personally.

Mike: It's hard. You're a human being. When they say "I have a competitive investment" - or when a founder bombs a pitch on an opportunity that FTFC created for them - that hurts. We're not going to let it ruin our days beyond that point, but that stings. We are people that are actually really in it. These are all real relationships. So you always have a real fighting chance - it doesn't matter who you are. If you're working with us, you have a fighting chance. You've defied those odds just by engaging the firms. But it's tough.

58:15 Is my pitch deck actually good enough?

Max: The shipping process is very important, and I think you gave a pretty good amount of color on it. But the point I'd like to wrap this piece on is: your materials probably suck. And it would be so easy - we would have made a bunch more money as well - if we just didn't say that. I can speak to it, because I was probably the reason for a lot of the engagements we could have done but didn't: they love Cam - Cam's so kind - and then I come onto a call because they want to speak with me, and they're like, "That guy - he's so fiery, he's a jerk," and they don't want to work with us. Because I'm the only one around you - family and friends included - that's willing to tell you the truth. I don't want to have an engagement based off of a lie. We've lost so many deals - we could have more cars and all these great things if we just shut our mouths sometimes. But we want to tell you the truth. If your instinct is "I just need intros - I've done 25 iterations of my deck," I'm going to be really honest with you: in 9.9 out of 10 of those cases that we've seen, it's garbage. The materials - your deck - suck. It's AI-generated, em-dash-filled crap. And even if it's not, it's not in the order that VCs would expect. You have 55 slides. It looks literally like an investment banking CIM. It's not right. So I would just encourage most folks: if you're linked to this video, it's because we know, based on just probability, that your materials haven't been circulated to investors - by Mike and the FTFC guys, to see if they'll land - before you go do the audition. We're not interested in producing five seasons of a TV show before we run the trial episode to see if it's worth it. We have the advantage of quickly showing this to trusted people, and we have our own instinct to say: is this good? And when they say it sucks, and we tell you it sucks, and the answer is "No it doesn't - I just need intros"? Then your business has a death date. You just don't realize it yet. It's sad, but it is true. Get out of denial. Be delusional and focused on winning, for sure - but don't be in denial that your materials are good when you have no reason to believe it and zero experience. Let's leave it there - but that's really important. Get out of your own head.

Cam: One hundred percent. I couldn't agree more with that. You're not as good as you think. Stop saying that you're 90% of the way done and this is going to be an easy race.

Max: "So why don't you guys just do it for free?" Why don't you just work? There are four of us here, and we disagree on deck stuff sometimes - copy that should be written. There are four people that have done this, in different lanes, with opinions. You're just one, and you have a room of nobodies - they've never done anything, and you don't know anyone. You're not as good as you think you are. Good resetting is good for people. I've had people do this for me, and it very much helped my career. You're always proving yourself, and you have to get good. If you've raised 50, 100 rounds, and you've done the nine-plus figures in mandate volume that we've done - then we trust your gut. But you haven't done a quarter of a billion dollars of mandate volume. We have. That's the first time I'm airing that stat, too.

1:03:56 What is a zombie fund in venture capital?

Max: Moving on, because we're about at time here - we're running a little long. I was going to ask for another hot take, but we'll bag that for now. Last segment: if you had to change anything about raising money for founders - if you could change the industry, the best practices, something that would make our lives easier, our founders' lives easier - what would you change? Sam, you're the closest to the industry.

Sam: What would I change about the industry? I would say the discovery piece. I mentioned that for founders and VCs and investors, time is the constraint. There's always an investor out there for everyone, but discovering them and getting that door open is difficult. I wish there was a way that was like: okay, this is my story as a founder, my industry, and where I want to go with it. Probably not feasible - but that's one thing I would change if it was possible.

Cam: Mine would be a lot along those lines - not to steal Sam's. It would be more so: I wish there could be more of a one-size-fits-all way to know that you're sending to the right investors, and that all of your materials are correct. I don't think it's ever going to be that way. But if I had to pick what would make things easier, it would be to know that I've done everything right - and that would mean a cookie-cutter, one-size-fits-all. At the end of the day, that's impossible.

Mike: This is a loaded question - there's a decent number of ways I could go with this. But going back to one of your earlier points in the episode, I think the ideal, critical change would be the disclosures. Coming out and saying which investments you've made - making it very clear what your current portfolio looks like - so that people can understand competitive investments. It also puts the founder in a position where they can understand whether or not the fund is a zombie fund. I think a lot of founders waste a lot of time talking to investors that are between funds, or maybe not even raising another fund, but who just want to have the conversation because you're building something interesting. It's a waste of your time. I think having the disclosures there would be the change.

Max: For ten seconds - what is a zombie fund? I think a lot of people won't have the fullest clue what that means. And quickly: what can it do to a founder? Because I think it leads them astray - they hear something in one of those conversations and start to build or change things based on information that was never going to work out.

Mike: Super quick: a zombie fund is a fund that is not actually allocating capital. They're not writing checks. That can be because they're done with fund one and they're going to go out and raise fund two but haven't started yet, or they haven't hit their first capital call for fund two. There are a multitude of reasons that could force a fund to be a zombie fund.

Max: But why would they take meetings during that time? Well - if you want to learn more about that, we literally have an episode on this channel that Mike and I did about a year ago, where I needed a haircut desperately and Mike looks very sexy. Go watch that - we discussed at length what a zombie fund is, in detail. We'll leave that as a tease, and help the algorithm. Although I'm a little worried about what you just did, Mike - you probably just created an uprising of blockchain fanatics who are like, "Now that's a startup idea" - the instinct to put fund portfolios on the blockchain so it's all disclosed. This is what they want to do for everything. Now it's 2021, everything's on the blockchain, your burger was on the blockchain. That's a terrible idea, because VCs are never going to do it. You can have ideas that sound good, but if they're never going to be adopted - don't waste your time. My thing is a weirder answer: it's the fact that founders only have one bet, and VCs get a portfolio. Back in Techstars, I had a startup idea I ran through a bunch of friends - and there are companies that have done this; they've done it in YC, in some cohorts, where early YC companies would trade 1% of equity with a bunch of each other. So even if your company failed - which is the likely probability - hopefully someone hits, and you come away with something. It's kind of a weird, unorthodox idea, and there are a lot of issues and diligence considerations. But I was thinking about how you could do that at scale, with a real marketplace. I think that's still a startup idea. You can work your ass off for so long, and it doesn't work - but you probably have friends who might build something. If we could structure founders' financial prospects so they had more of a portfolio, or a product where you could hedge your downside a little, I think that would be really good - people could make better choices without having to make very short-term sacrifices. I wish founders had portfolios as well, somehow. That would be really cool.

1:07:10 Next on The Funding Table: founder Q&A

Max: That's it for today's episode. Next week on The Funding Table, as I hinted at the beginning, we're going to be answering all of your burning questions. For the first time, we're not coming with a clear-cut agenda or topic list - we will be answering all the things you want to know from us, from the team, from our experiences. Whether that's engagement-level items, how it works, how to get started, what folks have gotten done with us, some of our favorite stories, or really anything about building a startup. We're going to do a full hour of just straight, unedited Q&A, raw reactions - and I'm not going to give the team here any advance notice on the questions that are going to get asked. I crossed my heart on that one, so you'll get the raw reactions. Any viewers here on YouTube: this would be the time. Throw something in the comments. My Instagram is linked in the description, and you can send me a DM with a question. I'm also going to be putting up a story post there, so you probably should follow so you get that story. And we'll keep it anonymous if you'd like - just mention that you want to stay anonymous, and we're happy to do that with your question. Also coming up, which I think we're all really excited about: in a few weeks, we're going to have our first guest appearances on The Funding Table. Logistically, I don't know how we fit a fifth square in here - it's going to make this very non-symmetrical in the grid - but we're going to figure it out. Past clients, current clients, folks that are early on in the process, folks that have gone out to raise a bunch of money and are re-raising - with us, without us - startup attorneys, tax folks, active VCs that can give their perspective on a whole host of items. A ton of value is coming to those of you that are subscribing, and I encourage you to do so now, because you're not going to want to miss these conversations. You just won't get them anywhere else. So that's the story for today, gentlemen. Really appreciate you being here as always - and damn, Sam, looking good.

Mike: This is my favorite one so far to record, actually. Really smooth, a lot of fun. And I'm excited to get my new office - I'm moving soon; that's why the change in scenery here. Excited to get the new office looking as snazzy as Max over there.

Max: Thank you - I cannot wait to see your new setup, Mike. You deserved it, man. What's the first token you put on a bookshelf - the most important, cliche, sentimental thing? Is it a copy of Zero to One?

Mike: Zero to One is going to be on there, certainly. But my last co-founder, from my last company, 3D-printed a Land Rover Defender for me - huge fan of the old 1990s versions - after we closed up shop on the last company. That definitely means quite a bit.

Max: That's awesome. I love those Defenders. Anyways, gentlemen - back to the grind. We'll see you next week.

Cam: I love it, boys.

Max: Awesome. Thanks, gentlemen. Speak next week.