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Oct. 21, 2020

Oversubscribing a round in COVID world - how did that happen? By Audra Gold.

Oversubscribing a round in COVID world - how did that happen? By Audra Gold.

Audra Gold Co-founder and CEO at Vurbl Media in this episode explains how she managed to close the round after the covid hit. We've also discussed the major tactics she used while raising money and how her approach to investors changed after covid. We also talked about the moment that Vurble started getting more attention from VCs and the round got oversubscribed.

Audra's LinedIn: https://www.linkedin.com/in/audragold/

Vurble: https://vurbl.com/

Fill out this form to get connected to investors and mentors: https://form.typeform.com/to/vT8gVQDG


And today's a guest speaker, we have other gold Co, founder and CEO at verbal that very recently closed their preceed ground. And today we'll talk about how that precinct round got closed in the coven world. 

So, let's kick off by you giving us some background on yourself. And verbal. 

Sure, so thanks for having me, like you said, an honor gold, and we founded verbal just earlier this year, right before the pandemic hit, and we got corporate teams. So. 

Some interesting stories out of that, 

but my general background has been in building digital products over the last 20 years in a product management capacity of and had a product is several startups and really heavily exposed in the video world ad tech world and digital media 

slash publishing world, so. 

We kind of brought together some old team members that I've worked with over the years, and all of our skills and streaming products and we. 

We founded verbal and we actually incorporated in February and raised our 1st money in March. 

Nice. That's fast. So he raise your 1st money. 

March, when he started, I forgot is it was it me right? 

And well, in L. A. we were we close down the offices, March 16th, which was basically our 1st, day of work and then the next week was a mandatory that by the city. So nice. Yeah. Yeah. 

It was interesting. 

So, now let's talk about that closing the round you've raised 1.3M dollars and most of it was closed. Uh. 

To your decode it. So how did that work? How did you go? Yeah, so, like I said, we closed our lead investor, right? As we were getting, you know, right. As the whole pandemic was kind of coming to light. 

But that wasn't nearly enough money for us to do what we needed to do with this 1st, batch of money, which is to build the product, launch the product and get a little bit of growth metrics. 

You know, on the board, so we could raise our next round. So we.
Again, Pre, pandemic, closing our lead investor went quite smoothly. I was. 

Had several other people lined up that were interested in participating in the round once we've closed our lead. So that kind of all fell apart after we got quarantine. 

I think most of the investors I was talking to kind of wanting to a temporary locked down, just like a wait and see time where a lot of people just decided to stop investing for a couple of months. 

While they waited to see the effects on the environment, the economy with, with the pandemic and many of the angels I was talking to were having their own financial crises, or weren't very worried about their personal finances. 
So they all kind of went away. So, what we had to do, because we were only about halfway there with the money we needed with our lead investor. 

We drastically slowed our burn rate so we slowed our just the, our hiring down. We decided to build a product much slower than we had planned. So originally we wanted to go live. 

And basically, June, July, but we needed a bigger team to do that, but we just wanted to make sure we could get as far as possible with that. 1st. 

Part around, or, like I said, our lead investors investment and I had to continue to raise money throughout and I knew it was going to take a lot longer than it would have. 

I have a pandemic in quarantine, so I just started pitching like crazy. I, you know, like I said, a lot of the people I had lined up as follow on investors were just not decided not to invest for a while or or completely went away. 

They basically stop returning emails, so, that kind of thing. So it was pretty scary, but we just kept pushing forward, making meetings with as many firms as we could get meetings with. And I must have pitched. 

Well, over a 100 investors, so both firms and individuals and.
Got really good at it. By the end. I feel like I've practiced a lot and.
As we started to see the light coming out of July, August.
We, I just saw a complete shift in the market in terms of the investor market. So we had. 

I've been introduced to, you know, a few people throughout over the summer, and I was pitching, pitching pitching and they were mostly passing. And then this batch of people that I was connected with. 

In August and early September, just.
We're all so much more receptive, so much more excited about the platform by that time. 

I had a demo built, so I could actually show people what it looked like and it was just a completely different perception and we ended up closing a lot of money in a very short amount of time to close around, but it's just a very strange right? 

The book into around, it took a lot longer to raise and we've had a. 

That's your money in the beginning and then all the rest of it came in at the. 

Very, and, you know, right, right. As we really needed it so pretty high drama, but it all worked out in the end. So right. Yes. 3rd world is all about super high drama and yeah. So I hope you enjoyed that journey. 

A lot of sleepless nights all that. Yeah Yeah I can imagine that. So, let's talk about this. 

1st, part of that you've been dynamic where no, 1 had any idea what was going on pretty much everyone stopped invest and even those who claim that business as usual. 

1st, move of many founders was to decrease their validations and and slow down their fundraising process. Well, did you do the same thing? 
Did you decrease or did you keep it the same and would you think should founders who are unable to 
raise now decrease their variations? Should they keep it? Pre cobit? 
I mean, it's that's such a hard question to answer. Did we decrease our evaluation? No, we did not. And. 

And 1 of the reasons, why was because I felt we were at a very fair valuation, even before the pandemic as a 1st, time founder, we had already kind of priced in, you know. 

Some, let's call it disadvantages that might be perceived of our team. 

And quite frankly, we raised that 1st batch on just a deck and an idea, and a very solid team. By the time I, I got to the end of my of my fundraising period. We had a substantial amount of technology built. 

So, I feel like we, we built a lot of value just throughout the fundraising period and I. 

Certainly, you know, I feel like the people investing at the end probably had a much better deal and a little lower risk profile than our lead investor did in the beginning. 

So so that was our thinking, you know, I think a lot of other companies came out very aggressively. There were some really high preceed valuations going around and in January, February, because. 

You know, we were kind of hitting a major investment investor bubble and a lot of money flying around and very, you know, you are seeing 12 and 15. 

You know, Pre, money, preceed valuations in some cases and, and. 

I think those kinds of things deals might need to be adjusted just because we're not in the kind of market we were. 

6, 6, 7 months ago, how however many months ago now, 9 months ago. So, um. 

So, yeah, I think and in some cases, I would definitely recommend readjusting. 

Right, if your company is. 

1215M dollars of, uh, evaluation and preceed probably probably should reevaluate especially if you don't have any traction. Um, but let's talk about your address. 

Fundraising process in terms of me investors post call it. I mean, not postcard. 

But Kobe world, so, after the coby's 30, how many investors did you talked to and they didn't invest in you just because they couldn't meet you in person, you know, was that an actual issue? Or most investors got over it now? In a few months. 

You know, 

I do wonder how much that affected the process I will say I was really nervous about having to do everything on conference call only because I feel, 

especially in my case, 

I have a lot of energy and passion about the product itself and that's very hard to to get across and a video kind of situation instead of being in a room with someone. 

So, I was nervous that people wouldn't really understand the extraordinary amount of passion and extraordinary amount of kind of expertise that we have in the space that we're in. So. 
So, I feel like, you know, I kind of adjusted my pitches over time. I was probably really bad at zoom pitches early on. I wish I had them recorded. I, I kind of wish I didn't. Maybe maybe I don't, but. 

But I got much better at kind of playing to the advantages of zoom allows, which is to really keep focus on the slides that you want in your deck. And I could do demos really with a very captive audience. And. 

You know, I think I kind of. 

It became easier and I think investors got more comfortable with it over time. I also. 

Mostly ended up with with, uh. 

Investors that are in my network and so they know someone that can vouch for me very, you know, or several people that can vouch for me. 

And I think that was probably the most important thing for for this. 

Type of fundraising environment, because people don't get to shake your hand. They don't get a feel for. Is this. 

You know, is this a good or a bad person like, with the energy of the room? You know, because you can read people a little bit better in person. And so I think that my network and having. 

I've kind of 1 degree of separation from pretty much. Everyone I spoke to was a really important aspect of the pitch process. 

Right, right, right. And let's talk about meeting new people. So, before it was, I mean, somewhat easy just go to the events. You get introductions, you meet those people for coffee. You go to their offices, etc, etc and now cobit world. 

How did you meet new investors? How you bringing new leads to your fundraising pipeline? 

Yeah, I have to say that was probably the 2nd, scariest thing for me when quarantine hit was all of the networking events that I typically go to and invited to. 

I were just gone and those have been so important for me throughout my career and I knew they were going to be even more important for investor relations and getting to know the investor community. Like I said, this was the 1st time. 

I was out raising money like this, this scale. So that that was something I knew we needed to correct for really quickly. And so what I ended up doing is joining some networking Summit, some founders group, some networking groups I got. 

Into a couple slacks so I'm on the slackers LA, which has a bunch of founders and and as such sharing information and. 

Talking about what they're working on and talking about who they're who they need to hire someone that they have. So that's been great for meeting people. I'm on the work from home dot L. a slack which has all of the La tech community leadership. 

People pretty much a lot of founders, a lot of exacts. 

A lot of senior level people that interact there in our market specifically. And a lot of investors actually are there too. And then again, the founder's network I joined, and I try to attend just zoom. 
Conferences when I can just to. 
Be exposed to new people. It's really slow. Yeah. Obviously the only way that I'm getting exposed to new people through. 

Do these video experiences, so. 

Right, right, right. That's actually a great choice. I think Slack is great. You know, more and more slack meetings are emerging and you just have to find the 1 that's active in that section. 

We're bringing value, not just people you joining for a copy pasting the same message over all the chat rooms and leaving forever. Like, that's the worst part. 

But anyways, so, from those channels that you've mentioned by the way, sorry for this for the truck here for all those channels that you mentioned, which ones you think work best for you. 

So, which 1 do you see bringing you most highest quality people to talk to or highest quality connections? Basically. 

The 2 best ones for me have been the, the work from home and the slackers slack groups. 

I think I feel really comfortable going in there asking quick questions. I get immediate responses whether it's a recommendation for a tool or recommendation about. 

For maybe a development firm, we actually hired our mobile web team. 

Through a recommendation on slackers, so, you know, we have some material advantages. We've gotten out of out of that community. 

It's also great for finding additional resources and even, you know, local resources not that that's very relevant anymore. But, but a lot of people looking for jobs on there and things like that. So, those 2 have definitely been strongest. I think the ones that. 

That are more, you know, paid membership, they feel a little more and people aren't as networked there in terms of knowing each other as well. I think. 

In the law community in tech, we all. 

We all pretty much have heard of each other, or we know someone who knows that. And, you know, because the market's pretty small in LA, but so, and my national founders groups and things like that, I. 

I don't know, it's not as comfortable or I guess it doesn't feel as community like, to me. So. 

100%, I totally agree with you here. I think whatever new founder is starting to network. Definitely start with your own community. Even if you leave in, you know, tiny town, which you. 

100000 people in it definitely. Start there and then expand if you feel comfortable. So let's move on to the thing that I really want to discuss this whole time, but I forgot to touch on to it. 

So, on our Pre, you mentioned that you've actually after the cobit, you've actually increase the round that you were trying to raise from. 

Ah, I don't remember how much, but 2 1.3M dollars. 

Why do you decide to increase the round? Because that's that's just well, contrary intuitive move basically. All right our our. 
There's a few reasons, I mean, even though we can kind of see the line at the end of the tolerate now with the economy and I say, kind of because there's still a lot of unknowns. 

We just don't know what the end of the year and what the early part of next year looks like. Really we can make some guesses but, and it's looking brighter than we thought of course, if you asked me 6 months ago, I would have been like yeah. 

The world the sky is falling, but I've sent to be covered from that negative outlook. 

But we had I honestly, once we got the platform kind of constructed so we have most of the platform built right now, and we have a closed beta and so I can take investors inside of the product and show them the scale. What we're doing is such an easier way. 

It's 1 thing to show people on deck and talk about millions of files and show them some screenshots. But it's another thing to show them exactly how everything's connected on the platform and how you estimate how the U. S. 

feels and how content moves around how people move around and. 

Once I was able to to give demos, I got just a lot more excitement and so while we did end up taking a lot more money in to get our burn, you know, have a much longer, burn rate, much longer, run rate. 

I should say. 

We also we're just really excited to be working with some investors that. 

Even though we had enough money to get us to where we wanted to get. 

Wanted to work with these particular investors so much that we just decided to take their money anyway so that they were kind of folded in and on the team. 

So that's why, you know, 1, we had. 

But there was a lot of excitement, so there was more money to take too. We got a longer run rate in 3 the. 

It was strategically smart for us to take money from some certain people that from and around that, you know. 

We typically wouldn't have if they weren't who they were or so. So those are the 3 core reasons and. 

And we actually ended up, we turned away and we ended up turning away quite a bit of money at the end as nice. So that's really cool. 

And Congrats on that, you know, that's that's always awesome to see that train point where you stop between investors and investors start going your way pitching kind of their firms to you saying that you need their money. So nice changes. 

I'll tell you that. Like I said from the depth of the recession to yeah. Coming out on the other end and. 

Yeah, that's that's great. That's great. So, yeah, another thing that kind of surprised me is, you know, 1.3M, presale round, that's. 
That's a little bit standard, but not really during cobit world. So how do you manage to convince 
people to invest because you've started raising when you didn't really have an MVP yet? Not no traction because no MVP. 

How did you what was your major selling point? They're basically to the early stage investors to do those 1st checks. I mean, honestly the 1st, 2 investors much for, like I said. 

The depth of the of the quarantine, and when everyone was really scared. 

Those both those investors honestly just invested in me. Uh, they, they both knew me and they knew my work. 

And they had seen me, they look at my portfolio of things I've built throughout the years, and the kinds of audiences that we've been able to grow around products and built. So. 

So, those 1st checks were literally just about me and their belief in me, and the latter checks were more about oh, my God. I see those. I see how this works. I'd get the market. I see what you guys are doing. 

I understand the space you're, you're plugging into I understand the holes. You're, you're filling and that was. 

Much more of the opportunity for the platform itself and with the latter set of investors. So. That was also an interesting arc to play with because. 

I was just selling myself in the beginning. I was like, look trust me. I can do this a relevant. It's like, look at what I've done before look at the team we have together. So it was all about. 

You know, trust me kind of thing, and then I could actually show people and they're like, oh, yeah, this is totally necessary. I get it. So great. Great. 

So, let's talk a little bit more about that shift from you selling yourself to and your company to the investors to the later stage where investors were going your way. 

So, when did that happen again that was when you've built and then something else happened, right? 

Once I had, I got a whole new batch of introductions, as I think it was in August, starting in August from 1 of my early investors. 

Collagen and she started sending me people because I was telling her, I was having a hard time closing that last bit of money and she must have introduced me to. 

I don't know 50 people from her network. Nice. I know it was amazing. And so I just started cranking on meetings for like, 2 weeks. 

And that was that was August and September. 

So that was very recent. Actually, we closed the money really put the rest of the money really quickly after that. 

And I could show, like I said, I could show them the platform. I could say this is what it is, this is how it works and these are the kinds of things you can do with it. So. 

It was just a lot easier to sell. Right right. So, now, looking back at that process of fundraising, where, in the beginning with no, 1 was really painful and hard and layer on where you had to reject some investors. 
Uh, do you think it would be a good idea to start raising a little bit later when you already had an MVP and some traction or do you think you did everything? Right? 

It would sure if I had the financial means to have raise later, I think I could have done it on a much higher valuation. But. 

The truth is, is we're building something. That's very important. It's, it's a. 

It's a big piece of technology it's got big data in it. You know, we've got millions and millions of audio files. 

Hold from from all sorts of places. So it required very skilled engineering talent to to get to build our MVP. 

Typically, I don't recommend people build such and I'll call it an extraordinary MVP but but because of what we're doing, we can't go out small. It just won't work. We have to go out bigger or it's, it's not going to land. 

So, yeah, and the reason I was willing to.
To go this far with build such a, such a powerful was because again, I.
I know the problem so well, that we're solving and I build these kinds of tools before. So I. You know, from it from a risk perspective, in my opinion building. 

Building a platform we set out to build, we knew it was going to we knew it would work right? We, there wasn't a lot of unknowns about all this technology work and this technology, but they needed to pay a lot of engineers to do it. 

So, I wouldn't, I wouldn't have been able to do a proper is a thing with, with a kind of a bootstrap budget. 

Right that does make a lot of sense. And now let's touch on to was actually speak about your advice to those. 

Founders for trying to raise money right now, like, at this exact moment, or are about to start fundraising, what would you recommend them? 

Yeah, I say, build as much as you possibly can before taking a dive, like, you know, if you, if you can afford to throw some cash in yourself and hire some offshore developers and you have a very clear understanding of what you're building. 

I say, go for it. 

If you're not very technical, and you really are going to rely on high level engineering talent that you have to pay. If you say your Co founder, you don't have a technical Co founder whatnot. 

I would say you're gonna have a very hard time getting anywhere until you can hire those people and you're going to need money to hire those people. So. 

It really depends on the space. You're in what you're building and what your founding team looks like. 

Right I think I'll add to that part that you should try to generate as much revenue as possible with no budget. 
Because usually, usually there is a way to do, like, tiny MVP or some kind of test because even 100 
dollars from a customer is better than 0T. So, yeah, that's true. If you're doing. Yeah. Simple SAS service like that. Yeah. 

It might be right.
Try running super small tasks, you know, dragging. 

Dollars from people, but still my so on this point, we're moving on to the last question of today's episode, which is a call to action. So Audra, what's the 1 thing you want to loosen her to do? As soon as the episode is over? 

Well, I mean, check out, go to verbal dot com and sign up for our beta list. There's a pop up. You can email in and we'll be launching in about 3 or 4 weeks. 

We're looking at early November now, and we're starting to invite beta testers in at scale in the next couple of weeks. 

So, yeah, I would love for people to check out the platform and.
And then on secondarily, hopefully everyone's taking care of themselves in this very difficult time. 

So do something nice for yourself back right? Right. That's that's a good positive call to action. I'll definitely leave a link to verbal description. This episode. 

By the way once it goes live I, Audrey showed me that fundraising is already there. So definitely definitely. Followed there. Be a list, and Michael is going to be as usually go to the description of the episodes. 

I leave a link to verbal to and to the timeframe we should can fill out. And if I like your project, I'm going to connect you to actively invest investors. And mentors, so definitely do that. And have a good day. 

Yes. Take care of yourself.