June 26, 2021

Joining an accelerator after selling a company. By Dana Loberg

Joining an accelerator after selling a company. By Dana Loberg

Dana Loberg, Founder of Leo AR, co-founder of MojiLaLa and previously the co-founder of MovieLaLa that was acquired by Gifycat talks about her story of acquisition and the launch of a new company. We also spoke about who should join the accelerator and does it make sense to join an accelerator if you already ran a startup in the past.


Dana's LinkedIn: https://www.linkedin.com/in/danaloberg/
Leo AR: https://www.leoapp.com/

Dana's Blog on Medium: https://danaloberg.medium.com/

For those listeners who are just thinking of starting their companies: I've recently joined an awesome YC-backed startup - Firstabase.io that helps founders create legal entities in the US from anywhere in the world within minutes. Since I work there, you get the sweet 15% discount code! Just go here and use RADIO15 code!

Also here is the link to a Tech Crunch article about her startup if you would like to learn more:

https://techcrunch.com/2021/04/20/leo-ar-user-facing-marketplace-for-3d-objects-raises-3-million-seed-round/

Transcript

And today's a guest speaker,

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we have Dana founder of Leo,

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our Co,

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founder of Mo Gila and previously we Co,

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founder of movie law that was acquired by and this episode we'll talk about the acquisition,

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the 2 new companies that Dana is running and also the mistakes she has done in the past so,

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Dana,

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let's kick it off by you giving us some background on yourself and on Leo are.

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Sure, so Hi, my name is Dana. I'm the CEO and founder of, and Lilly are like a consumer facing augmented reality app.

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It's actually 1 of the leading ones in this space and you can instantly have like, flying unicorn or dragons.

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Um, you could have a space with Saturn in the moon, and the ability to actually see animals can kind of create any kind of world you want. And it's like 1 of the easiest apps to kind of create videos.

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That's not in the background on all of it. All right. My 1st question is actually going to be not about your or your previous company, but about your current residency.

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So, you'll leave in Silicon Valley your entire life, and just recently you moved out from Silicon Valley to Texas. Can you tell us a little bit of why did you make that decision?

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Sure, so I'm a native California born and raised in Los Angeles and was living in Silicon Valley for over a decade. Um, so I've kind of been in the North and South parts of California for a long time.

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And, uh, I was running a fully remote team since around, like, 2013. so Kobe didn't have a lot of major changes for me. But I felt like California during was pretty strict in general.

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And then on top of it, you know, we had fires, we had rolling blackouts in the middle of summer when it was like, 100 degrees. And you obviously are spending a lot of money to live in Silicon Valley. It's like 1 of the most expensive cities.

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And regions to live in the world I feel so I kinda was like, why am I here? I'm not meeting any investors on Sand Hill road.

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I'm not going to San Francisco to meet any investors because during coven nobody was meeting and the cost of living was.

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Astronomical, um, I'm sure most people know if they visit San Francisco just how expensive it can be. So, I started thinking of other places to live, like, places. I'd be happier with, like, more land, more nature more of like a balanced life.

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And I was choosing between Colorado and Texas, and I figured that Colorado was like, too drastic for California because it snows in the winter plays. I was kind of very similar as far as climate.

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And obviously they have a small tech scene here already. So, it wasn't like way out of the, in the boondocks in the middle of nowhere. It definitely has its own tech scene. So I choose Austin, Texas, which is where I've been here since August of 2020.

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Nice and yeah, Austin is big. I mean, definitely good good call as someone who is about to move to Silicon Valley. I can't say I'm very happy about it, but well, all right, so, let's now, let's talk about the companies themselves.

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So, let's start with the mistake and then we'll go to the app and so with your 1st company fell apart due to some disagreements with the founders it can't just shortly about it a little bit. What happened there? How do you think you could avoid that?

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Sure, so my 1st company was called our debutante and I had a female Co founder, and we were about 8 months into it. I haven't raised. We were in the process of raising angel investment for our 1st time.

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Um, and I think that, ultimately, as founders, I started to notice like, discrepancies and, like, how much we were working.

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Um, like, I felt like, my Co, founder wasn't pulling enough weight and spending enough time on the product as much as I was at least. And so eventually that ended up corroding and, you know, we split amicably.

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It wasn't a big deal and we didn't even it wasn't like an official startup with angels and investors and the cap table and stuff like that.

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So, it's just kind of my 1st experience, kind of seeing it implode based on my personality and a CO founder relationships, which is usually 80% of most startups fall apart because of this problem.

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And it, it definitely was my 1st experience in startups.

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So, based on that experience, have you changed anything in your in future Co founders? Have you made the process of choosing the CO founder more?

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Like, an interview and know where you have to spend some time working together with a person before you can call them your Co founder or.

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Exactly, I, in my next Co, founder, I did a lot of like coffee dates, and we started to slowly work together, like 3 days a week and then 5 days a week. And then, um, we were able to access.

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Um, or kind of see how our work styles were, and that we were, you know, we pretty much devote our, our lives in the beginning to us any startups.

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So, um, that was really important in the next company that I did that I felt like the communication was open. There was transparency.

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I didn't exactly have that in the 1st company, and that our work ethics were mutual, and it wasn't like 1 person steering while the other 1 kind of did other things. So I definitely changed everything for the next 1.

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Nice. So, yeah, let's, let's make sure we talk about the changes that you've made for the 2nd company, which is moving law, which eventually got acquired. So, what are the major differences between the movie LA and the very 1st company that didn't really work out.

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Well, let me just say, I mean, with this next company, my Co, founder, uh, was super experience. So that was really important for me to find a CO founder that had the experience that I lacked because, um, although had built kind of a.

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My 1st startup before that, I mean, my, my former female Co founder and I were both new, so we weren't really we're both, like, learning from scratch, which I think is really difficult.

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And so in my 2nd, 1, which was mode, you all, I really made an effort to find a CO founder that had all the experience, whether they were serial entrepreneur, or had lease and done a couple startups underneath them.

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And so that helped a lot and movie law, and also we were able to, like, officially raise money for movie law. It was a real company has 37 Angel, investors and movie law and then.

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I mean, I can talk about the differences between the next 1 after that and move on because obviously you keep learning from your journey did right and wrong. Um, and it's also, I find it interesting as an entrepreneur.

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You never really know when to quit, you know, cause you're always trying to, like, stay alive and, you know, it's a hard process.

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So, now, looking back, there's a lot of things I would have changed in movie law when we were officially off the ground and running.

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But that's all, like, through experience that I learned kind of later on.

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Well,

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let's talk about that,

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what were you changing movie law so,

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you know,

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looking back at that experience,

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even though you had an experienced Co,

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founder,

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you had more experience yourself since your 1st company started,

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what were the major mistakes that you think you made with movie law,

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what would be the major things that you were changing now?

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Yeah, so I think I would've killed the company in 2 years. Um, I lasted for years with constantly, like keeping it alive, whether that was fundraising or whether that was a business development deal.

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Um, but I feel looking back if I had stopped it after 2 years. It would have been better, but I didn't know any better. I didn't know what to compare it to. I knew startups were difficult.

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So I just thought that was the way it was. And now that with this current company, like, everything works, like, the consumers love the app. I hear them screaming about how much they love it.

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Like, people write us emails about how much they love our app. And I never got that for 4 years and movie law. And so I realized the product wasn't a great fit just wasn't the right time for that product. And I should've like not continued.

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And I feel really lucky that now I see what works and what doesn't and companies as a startup. So, now, when I look at, I'm like, oh, this is working. This is the right time. This is a good product. People are happy people like it.

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I'll continue with this company versus and movie. Everybody hated it. Everyone complained all the time. It was terrible. I was so sad and I now I know.

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That was something I should have ended earlier, but movie while I was acquired by right?

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It was, yes can you tell us a little more about that? How, how was it not doing so great as you were saying it right now but it was still acquired by duplicate how how did that happen?

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So, get the CAD and movie law were partnerships. So we had a deep partnership for several years, and they knew about us. We knew about them and I was pretty good friends with the CEO at the time was Richard. Rebecca.

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Um, and so when they were like, going through their series, a, they wanted to beef up their BD, and we had a lot of deals in Hollywood that was pretty, um, strategic for them. Um, and pretty unique in general.

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They have a startup with that many BD deals with Hollywood. Uh, so that was an acquisition that happened 4 years later in 2016. um, and we're really excited to kind of.

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You know, get them into Hollywood and, and, um, collaborate with the studios, uh, in a deeper way than we could.

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Nice so, I mean, at least you've got your happy ending there so I think it's all good.

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And after you've exit movie law, you've started the next company, the 3rd company just right away. Most most start founders, take a month off. Maybe half a year off before starting the next company. Why did you decide to start the next company?

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Right after you sold the previous 1. yeah, so moving Lala wasn't an asset acquisition.

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So I got to luckily retain my team and I really didn't have the option to kind of take a break based on the deal structure. And so I had just jumped right in.

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And to not doing what I knew to do, which is, like, fundraising, just pretty much the main role of the other than product. So I just jumped right in. And I, I definitely had a little bit of regrets.

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I started to talk to few people that were, like, other entrepreneurs been telling me, like, oh, you should take a break. You should spend some time and really? Think before you do your next 1 and just relax a little bit.

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But for me, it was always like, go, go, go, go and.

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I didn't even think about stopping it, which is sort of weird I think, because during the acquisition, I felt like.

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That was sort of my like Mini break, because I was just like, coasting involved. The deal got done and it was pretty fast. So, um.

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Yeah, I just jumped right in and did the next 1. fair enough. Fair enough. That's how some founders do as well. So, I mean.

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Good call anyways. All right so let's talk about for that company even though you've previously start to companies, you still decided to enroll into an accelerator with a 3rd company why is that? Why did you decide to do this?

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I did, yeah, I wanted a completely different experience than the 1st, 1 or with movie law with raising from 37 angel investors. It was pretty painful to do that in a lot of energy.

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So, I was like, let me do something completely different and join an accelerator and see how that experience can accelerate the fundraising process. And so.

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We joined 500 startups and right away kind of in the fall of.

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2016, and graduated in February of 2017 and really, really liked the experience. I thought it was really great for setting goals and having, um.

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More structure, and also you just get an instant community and it's easier in fundraising too, because you have a catalyst to close investors because you have a timeframe of, like, your pitch day. So I really loved it.

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And I did 3 more after that. Oh, wait, you did 3 more accelerators after that? Yeah. Yeah. I kept joining them because I really liked. I, it was so unique and it's obviously competitive to get in.

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So it's nice to kind of, you have this exclusive kind of community and they're all very different.

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So I joined 500 startups and then I joined beta works in New York City, because they were doing a specific 1 for augmented reality and machine learning.

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And then I joined Stanford because that's a pretty unique community obviously in Silicon and then I also joined quake and Deutsche Telekom,

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which was a corporate kind of a telco company accelerator with 5.

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G.

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Rolling out, so it was perfect timing for us as, like a BD to do it. Um, so they all had, like, different reasons of why I joined but I, I really I liked all of them.

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Right,

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so question is for founders who decided to go meet the similar route,

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where,

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for every single aspect of their company,

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they decide to see,

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maybe some specific accelerator is going to be able to accelerate that particular part of their company for those founders who decide to go that route do you think there might be issues down the road were investors who are planning to invest in the actual company?

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They see. So, many stories on the cap table already, and they're like, okay, what the heck, what happened there is a problem. Word did not happen to you. It totally hasn't happened to me.

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I mean, if anything, it's a plus, I've gotten a lot of credits for a W.

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S, for Twilio you name and I'm pretty much have free usage, very expensive tools for our app and I've never had an investor, have an issue with multiple accelerators and it's also not something I pitch.

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It's just on my cap table that says beta works and works. Is a very well known VSI it's actually really big boon for all of our existing investors. And obviously Stanford Starbucks has an amazing name.

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So it's always a plus versus being a negative. There's no red flag and multiple accelerators.

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Give it to English, speaking of multiple investors for immobile as you said, you race from 37 angel investors how did this happen? Why did why is the number so high it wasn't planned? Or was it just no accidental?

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Yeah, it was not planned. I was constantly looking for an institutional round bid back in 2012. there weren't a lot of seed investors. It was pretty much Angel, and then Series A and Series A was pretty much a series. B.

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so my only alternative was to keep raising from angels, unfortunately, and I think now and starting in 2015 or so, like, there's so many seed institutions out there that it's like, it's so fun to SeedInvest.

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Because there's so many investors to go after versus back. Then there was a huge gap between the angels and the Series A, and it was really difficult to manage 37 angel investors, you know, some of them, I was their 1st check in.

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And so, that means you just have to do a lot of education and how frequently you're going to be able to email them and call them. And I definitely wouldn't repeat anything that I didn't movie.

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And so when I started Lee, our, it was like, I literally just got 3 institutions and closed 1.5 and a week. Nice. Very cool to close 1.5 in a week. They're nice.

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But for those who are listening right now, and have never heard of strategies of bringing from multiple investors, that actually happened to me multiple times. I mean, I've seen it multiple times where founders specifically tried to get as many angel investors on their early round as possible.

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So, I've seen people who raised from 60.

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Yeah, I mean, it was over 60 angel investors and they did it on purpose. So, I mean, if you're looking into this right now, definitely check both ways. Maybe multiple angel investors is a good way for you to go. All right we covered that.

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Let's go and talk about your current company movie. La La? Yeah, yes. Yes, exactly. Okay.

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So I started in 2016 and I wanted to build a competitor to the chat app line, which was making 300Million dollars, selling digital stickers. Right?

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So you think of stickers as a, that you kind of add onto Slack or you have it on message or Facebook Messenger that pretty much goes everywhere. Now.

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And it instantly grew, we had, like, in 8 months, we had 2000, I mean, over 16,000 stickers and like, 2000 artists, it was a pretty instant success. And I started to see people like dragging and dropping stickers into camera.

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And so I knew chat and Messenger was kind of the last decade of tech, and the next 10 years was going to be all about the camera.

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And I had this vision around augmenting photo and video with 2 D animated stickers and then hit.

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And it was actually realistic 3 D objects and then I had to build a whole new app related to augmented reality at this point. Because now it's not a tooty static or animated sticker. It's like this whole 3 D, realistic object that you can now.

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Augment your video, um, so kind of, it's it's the same company because like, before the core of it is, like, augmenting communication, whether that's in Chad or whether that's in camera, it's all the same. So, um.

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Mozilla, and Leo are, they're sort of 2 different companies in the way that they're managed differently. But, um, it's all in augmented communication.

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Okay, understood now, I understand the difference now. Understanding how both work do you are you still writing both? So is law still active as well?

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Yeah, so what happened is we built kind of a freemium. Like, we had an API and if you, you know, you can have basic stickers with our API and then there's like a pay to play kind of with our animated stickers.

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Um, and so as soon as we started to get into our, I, I definitely needed to focus and have my entire team work on the. So we everything related to.

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So, like, if the dragons drag and drop, like, gifts, and they want to change it into stickers, our system automatically tags all the stickers submits all the stickers, send emails like everything.

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So we, the entire platform. And then our entire team to this day still focuses on the.

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Nice so, basically there's another company that's just automatically Ryan there without anyone there at all.

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I mean, sometimes so drastic, but I think, like, sometimes we have like.

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Sometimes, I'll put an engineer on it for like, a week, just to fix it if there's a bug or if there's something going wrong.

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But, yes, like, the majority of my team is only our and every, once in a while, I'll like, I'll have a part time engineer, a full time engineer, and just partially work to fix it if there's something happening. But, um, yeah, that's it.

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Nice very, very interesting. Were you ever it kind of reminds me of a model of a lot of interest where they grow something day, then they automated and then they find a CEO.

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They actually hire a CEO to run the company and further expended. Have you ever thought of something like that? Or do you just want to keep it as, you know, just assets in there until the day comes?

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I think if I saw a big.

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Vision for stickers I would definitely do that. I would like, have a, like, grow it and and make it as big as it can be, but I do feel limited and how big the sticker business can be.

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Personally, just because of, like, and all these other, um.

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Companies that before me, so.

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I don't think I have the opportunity to kind of throw this and make it like a 1Billion dollar business.

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I'm personally a big fan of a sticker, so I'm not sure what you're talking about here, but let's let's move on and talk a little bit more just 1 more question about our and Motorola relations. So basically was born from law.

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Why don't you like to call it as a pivot of Motorola?

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I think that pivots a pretty strong word. Like, I always think like, somebody pivots from doing, like, an education app into, like, a completely different consumer app.

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So, I think that when it comes to augmenting communication, it's just an extension from Messenger into camera. So, I see it just kind of like in the same playbook.

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Which is why I see it as, like, a harsh total left turn pivot.

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True, true very. Very true. So, let's talk about the major topic over the entire podcast, which is fundraising so you mentioned in this call that's, you know, as soon as you started the new company, you've started fundraising. Can you tell us a little more about that? How did you start fundraising early on?

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And how does the process looks when it's like that early on in the process of the company.

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Yeah, I would say that there's a huge difference between fundraising as a 1st time entrepreneur versus fundraising as a 2nd, time entrepreneur.

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Like, it's, it's completely on comparable and pretty unfair, because I feel in the 1st company, when I was raising angel and see, it just took longer to raise from people because they had to see your progress.

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They had to get to know you. And then, when I sold that company was on to the next 1, it was like, 1, short email and then people said, yes, over like, a 20 minute.

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I think it was Skype even we weren't even on zoom, because this was like, oh, yeah, I was like, 16. so, I mean, it was come, it's not fair like, when you see all these numbers and tech crunch of someone. So raise, like, 25Million dollar seed round.

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It's like, do that person's famous or they've done something in their past that makes it pretty unique. And so, when I did and fundraised early on, it was just much easier. And it's just a different game. When when you have kind of.

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A history absolutely. So, I mean, even when you did not have a history, you mentioned raised from 37 angel investors, which is they're insane. And especially it was back in the days when they were not that may early stage investors as there are now.

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So question is what's your advice to 1st, entrepreneurs who are we trying to raise money? Right? This moment? Sure.

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So, what I did is, I actually reached out to them 1st, through LinkedIn, and trying to get in person meetings just to have coffee with some strategic angels that had either invested in that category in the past, or I knew they were interested.

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And in my case, it was about movies so I knew that they had an interest in films and movies and then I had a I had a huge list Excel spreadsheet.

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And I had all the major Silicon Valley angels, all the Elaine angels on all the New York City angels because that's kind of in the media space.

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And then I had the top 20 at the top,

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and then the rest,

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and I kind of just constantly emailed the rest until I felt like I had my pitch down because I was practicing everyday pitching my company 2 minutes 5 minutes and 10 minutes into the camera and then I would watch all the video to see how I could improve it and I

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kind of practice a lot on these lower angels that I knew may or may not be interested in this space just to get feedback.

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And then when I felt like, I was ready to go to my top 20 angel investors, I email them pretty consistently.

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So, I would shoot out 1 email and then I would shoot out a follow up email, like 3 or 4 days later. And then another email a week later, I was really consistent in hounding them and making trying to get like a phone call.

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Or, at that time, it was trying to get a coffee meeting, which doesn't happen now. So.

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It's kind of all about creating the consistency and kind of practicing on investors who are not likely to invest in your company, but they'll give you honest feedback and that's kind of what you need to improve your pitch.

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Very true, absolutely. Love this approach and yes. Based on hundreds of previous injuries. That's exactly how it works with. Pretty much. Everyone's. So people definitely take a closer look at some investors who might be not the ideal, the ideal fit.

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Practice and them get their feedback and then go to investors who seem to be really cool. All right. Uh, on this really good advice we're moving on to the very last question of today's episode, which is a call to action.

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So, Dana, what do you want to do as soon as the episode is over.

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Anyone can go and download the, and kind of see how they can augment video and.

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And create cool scenes instantly around them. Um, and I will also tell any entrepreneurs that are listening to start early like, don't wait for a metric, or don't wait for your product to be finished or whatever in your head.

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You feel that you need in order to go out and fundraise just go out and do it because.

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What you go out and show investors now will be totally different than what you show them 6 months from now and for them to see the progress from now until 6 months we'll likely close your 1st check.

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So I always say even if you don't have a product, and you just have designed an idea, like, go out and try to meet people, because networking is like, 75% of your success in the early, early days.

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That's very true. And I think it's so true that investors absolutely just love seeing that progress, you know, 6 months later, you're going to come back to them after.

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The moment, when you reached out to them, you're like, oh, hey, have an idea and 2 people team and 6 months later, you come in with actual milestones reached. That's gonna be impressive for sure. So, great advice. Me checkout to description.

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This is episodes are going to be a few links to Dana is linked in. There's also going to be a link to, of course. So people, if you've already made reality, definitely check it out. And also there probably will be another link to.

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Do something else I'll have to talk with Dana about this to see if she might want to include something herself but yeah. Go check it out and as usually have a good date.