Oct. 5, 2020

60 investors participating in one round - how was it done and why? By Daniel Kravtsov

60 investors participating in one round - how was it done and why? By Daniel Kravtsov

Daniel Kravtsov, previously co-founder and CEO at RTBmedia that exited in 2016 and currently co-founder and CEO at Improvado talks about his approach to fundraising and why he decided to raise from so many investors. We also talk about major pros and cons of that approach and about ways to manage that process.

Speaking of management, below are the tools that will help you manage your leads, investors and clients: 

Streak - CRM: https://www.streak.com/

Quip - alternative to Notion to keep all records: https://quip.com/

Improvado -Daniel's current startup: https://improvado.io/

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


Transcript

And today is a guest speaker, we have Daniel crafts, so, who had 1 exit and raised 8M dollars for his current company. Daniel's approach to fundraising is very unique. And today we'll talk in depth into how exactly. 

Here he is fine for his companies. And why is it so unique? So, Daniel, Alaska off by you giving us some background on yourself and on improvado. 

Yeah, I sent him and Daniel, uh, my background, I'm computer science engineer I won international olympiades when I was in university. This is my 1st company at unprovider. 

We. 

Data aggregation company for marketers, main value proposition that any marketer can work with his data without engineers and his team. 

We extract data from 200 marketing and sales platform, put 1 data warehouse and help them analyze it. 

Got it that's.
Really quick. So, um.
Let's talk about even provider provider is the company that raised 8M dollars for rate. 

Correct got it and now we're recall you mentioned that there was a really decent number of investors participating in your seed round for improvado. How exactly how many how many investors were there. 

60 investors, 60 investors that is. 

Insane number. I personally that's literally the 1st time. I see that large number of investors per Spain. So early on. Can you, can you tell us why? Why do you decide to go with 16 investors? And not less? 

Not the standard 3 to 5 investors foresee round. 

Yeah, that's an action of my idea. A. 

I have a mentor or an Hoffman who is a. 

Founder of a company library, and he's can be famous here in Silicon Valley. So here is. 

60M from 114 investors, if I remember correctly. So, but definitely more than 100 investors. And the logic is simple, is that it's easier to raise. 

With more people's abuse less so it's easier to get 25000 check from 1 person and 1M dollar check. And especially when. 

You don't have a big network, and it's that was my 1st company here in the U. S. so it was easier for me to raise. 

77000 checks with a bunch of angels.
Is that a couple other glasses from this approach?
1st of all, nobody have a big stock in your company and they have less control.
2nd, all these people experts in industry, and now they're helping me to grow business. They do 
introductions to clients. 
They do introductions to future team members and so all this team, all these people, they work for you, but you don't pay them. They pay you. 

All right, that's actually that's a nice approach. I personally love when there are so many investors involved in around but, I mean. 

Let's talk about the downsides. What do you think is the major downside of having that may investors on your cap table? 

Usually people said that the major outside that now I need to change some of them to get signatures. 

But with the car type became much easier. So, X item chooses a. 

As a big problem, bad progress, that's all. 

Just you need to for, for some, for example, if you want to change your important documents, you need to right now, I need to get signatures of like, 50, 60 people. 

That's I think that's great. Thanks to Carla and other more intelligence to help a lot to manage those investor relations. But let's talk about the other thing that I want to cover real quick. 

Uh, it's the size of your seed round. It's 8M dollars. 

Slightly above average seed round or why is that why do you decide to raise more than an average. 

Uh, it was not in in 1 step. It was actually multiple steps are like, 3 or 4000000. 

And then we raise 5 more and, uh. 

So the reason why we call it supersede round, instead of maybe split and call just see it. And then 2nd, the, a. 

Is, uh, it's more like, probably PR goal that it's a sounds color when the supersede dollars them a 5M dollars. 

Then also, partially when we see, we'll talk about you, they usually compare a start up on similar stages. A company, a companies companies, visit companies. 

And so we hope with.
This approach when we will compare as with our peers, he will be on top of the list. 

That's actually a really smart strategy. I personally, like, it personally haven't run into anyone who is raising supersede or Super a ground, which is pretty interesting honestly sorry consultant. 

And also, I think it's part of a strategy for lead VC capital. 

So, I think this is kind of their specialty. They. 

Find companies, so they believe there is a gap in a market between C. 

And they focus in on this companies between CDM a, and the invest call it supersede they help them to raise separate. 
Nice. That's really interesting. I should probably political and more in depth into. That's a VC that you 
mentioned, and probably 1 day bring them on fundraising review as well but for now, let's call them more about your unique approach to fundraising. 

A lot of founders. 

Uh, tried to do similar kind of strategy, but a, very few of them actually succeed. But what you do is, you basically work full time as a fundraiser for a few months, then you close the round and then you forget about fundraising. 

Can you tell us a little bit more about that process? How does it work? Yeah. 

I learned this approach from 500 startup. 

We are participate in batch 21 and a simple that we need to do around full time. 

And you need to meet as many investor as possible, squeeze it in short timeframe and it's help you to close around faster. 

So, before I started around for a month, I prepared my meeting. 

My meetings, so I send a bunch of emails and establish meeting credentials and we see these ideas that I will have them at least the meetings a day when I will start around. 

And totally have around 200 meetings and they were like, literally every day, have the meetings. I. Uh, have a, even a record 1 they have 21 meeting.
So, when you have so much meetings, let's say, week pass and you already met 50 people.
And 1 of those 50 people will give you 1st check. Like, let's say, 25000 dollars. 

Then you will email also is 50 people and 1000 raise money. 

And then, maybe the 2nd week, you also meet 50 people, and then all of them will give you money as well and email about them and tell them a 2nd check and it'll create. 

Some sort of snowball effect that people, you'll seeing that you're a holiday and everyone and invest in you and they will invest in you more. 

So, just the checks have been the more checks and that, because you're all just like, how many meetings in 2 weeks instead of spending 2 months on it, you do it fast. And people don't forget you forget your. 

So, yeah, that's that's a squeezes many meetings as possible in short timeframe around it fast. 

Uh, get the deal as soon as faster, close over around and soon as fast and back to business. 

Nice 1st question is. 

Uh, 10 to 20 means per day, every single day for, like, a month. How how does it feel? I mean, my personnel mean capacity is like. 

I never do more than 10, because I just know that after the 10th 1, I'll be just like, completely dead and unproductive as hell. How does it work for you? How do you mentioned? It? Is for me. 

Yeah, it's true but, uh, actually, for me, it was interesting because again, that's my 1st company in U. S. and after a week when I got my shell's check. 
Then the next 2 or 3 weeks, we got a checks every day. So somebody interested in our company every day. Sometimes few people a day include weekends nights. 

Yeah, and so this fillings even outside, we're very tired, but the reward was also super high. So actually, I feel embrace. 

Well, I remember this time, like 1 of the best time in my life, because I remember that my team sit in the office and every day. 

Came in from the conference room and tells them. Yeah my, my investor, what my investor at was through Oregon, but yeah, it's. 

Is some dance and, uh.
I did the breaks. I meditate. I tried to call my mind also. I have like, strong script. 

What they do, I follow up people right away after a call so I don't forget everything what we discuss. Yes. 

I'm just, I think discipline and you can it's easier to do is discipline. 

All right discipline is a really, extremely important part, I think, for a start founder out there, but let's talk about. 

How do you get so many me? So you mentioned that throughout that whole process you have, like, 200 means in total, right? And the question is, how do you manage to schedule? So many? Where do you get all of those means? Is it solely through introductions? 

Is that you reach out to investors and ask them for me or how exactly does it work? 

Yeah, I have a few sources of these meetings. 

I did a little bit called emails, but I don't recommend actually to do it. Uh, at at least what I found that. 

When you met person called, they. 

Have already not the best contacts around you they not so interested to talk in with you and maybe result. 

Is will be worth it if you match them with a warm intro. 

So, what we did, we ask our clients to do introductions for investors in LinkedIn. You can look network of almost any person and find for any person. 

Uh, if you know some angel investor, so receive. 

And when we ask introduction, we usually don't ask introduction. Can you do now some issue to introduce to me? Because everyone is busy and people forget names. So, when we ask for introduction, we usually give 5, 7 names from the network and ask them. 

Can they do introductions to these people? So that's increase. Conversion a lot then we use platform called, um. 

And the fixed signal, and the fix, so you can connect into mail and they will give you how many we see an angel investor can connect your 2nd degree. That's also bring me a lot of people. And then. 
Oren, who was was our involvement who was 1 of our 1st investors. He actually introduced me literally 200 people. 

And that was a part of the deal.
Uh, that part of a part of the you received that, he will introduce me to 100 people.
Nice network have to learn a lot from him how he worked with. She was network and I think I also. Now, working with my network is a scientific way of how I. 

Come back to these people. Nice. That's awesome. And I personally love talking about network because a lot of my research or early stage founders who pretty frequently have, like, 2 or 3 investors in their network. And that's the most standard question. I get. 

How do I expect how to expand my network? So, people here listen to this I'll do my best to bring that expert in that working on fundraising radio but for now, Daniel, next question is gonna be about doing your homework on investors. 

So generally,
before joining Nicole with investor, 

I would recommend that founder to at least prefer something read about the investors see what they investing so that you make sure, 

you know,
who you're talking to with 10 to 20 meetings per day. 

It seems like it's pretty much impossible to do that all that preparation for the call. How do you solve this problem? 

Yeah, I prepared for call Justin and so every evening. 

I get list of the people I will map, I put them in a document. I do a quick research about each of them. 

Put some talking points in this document. 

So, every morning, uh, I already have all of it. I don't need spend time to prepare so, just prepare in advance. 

That's a really nice strategy. I love it personally. And the structure in there is superficial speaking of structuring. What would you use to keep all the investors in the database? Are you using notion or using just simple spreadsheet? 

Or? What's that? What do you use? 

We use Quip, uh, I'm a big fan of Quip. Uh, it's similar to notion to some degree. All the interesting in my previous previous company called. It's very similar to emotional to creeps. I'm a big fan of the space. I call it digital cannabis. 

So, we use, can we answer is a spreadsheet inside creep that we use to track everything. Also I use a Siri. I'm called, um. 
Streak it's an extension for Gmail. 
Uh, and it's simple, and it was useful for me to manage my pipeline for and angels. 
Nice, I'll definitely make sure to leave the link to those rooms that you've mentioned because I personally use notion I just limited myself to notion and sometimes the set up, but I think there are main more. 

I could really simplify my life, but I'm just too lazy to research honestly. So for, for those of you who don't use any terms at this point definitely. 

Take a look into this this episode, but let's move on and talk about managing those investors. 

So, managing the investors who already are investors in improvado so, 60 people, how do you keep track of them? How do you keep in touch with them and know how do you manage the day based off already exists in investors. 

Yeah, I have a, every quarter I send a.
2 emails, 1 to investors and 1 to.
Uh, advisors and, uh.
Some BC who want to be in touch so actually, after all conversation with see, I always ask them. Uh, that's the best way to be in touch. If I add them in our quarter updates and they usually. Happy to be in this quarter updates. So every quarter I send to. 

All all my network extra, not just our current investors, but even if I will after a call, if I want that, you will remember me I will always ask if I can add you to this list. 

Because again, we see have they met they met 20 founders or 10 founders so, at least 5 partners today, and they will forget. 

You in a week, so that's helped me to. 

Uh, keeps him remember me and also, um. 

I tried to keep my emails interested. 

So, we usually have some charts with revenue. We have some team photos, and some key points what we achieve and I try to be harnessed is this emails. 

And even if you have some challenges, I also mentioned about this challenges, and it's really helpful because they can give you advice with challenges, especially with recruiting. 

So, always when I recruit some level position, I ask.
My network to help me visit and.
From America, half of my executive team I heard in this way. 

Nice that's the power of network right there. That's just awesome. So speaking of network I want to touch on to something. I think you quickly mentioned, which is signal and effects. Can you elaborate on that? 
I've personally used it just a tiny bit, but I never really got into. So, can you tell us a little bit about and 
signal and effects? What is that? 
Yeah, so it's a good way to find, uh. 

Referrals secondary connection to almost any VC. So you connected to mail. 

They send you mail and they will find all your network real network so much your LinkedIn network, where I know in my LinkedIn probably people this Gmail. 

So, 

yes, 

when you talk with people, 

you have some connection with them except maybe if you spam each other, 

there are some final connections when I actually never, 

I didn't know the person, 

but with Spanish as I sent him, 

and he told me that it's rare. 

So it will give you, they will give you all your secondary connection and they have a bunch of filters so you can, for example, send it. Okay. Give me all. 

We see all angels whole focusing on sit around in Bay area, 

and with industry Mark tech, 

for example, 

and they will give you a list and they will tell you who can introduce you and basically the new users data to ask introduction. 

Go ahead, so speaking of introductions, how you mentioned that before actually starting to meet people, you spent, like, a month or month and a half to prepare the whole process, right? 

What these include basically, we're in that preparation for the fundraising. How much time does it take on average. 

I mean, usually months, so, and also, as I mentioned, I do it full time. So when I start around, I mean. 

Actually, not to be honest, full time, trying to do it full time, but still there is always some tasks that I need to do outside of fundraising but maybe like, 70% of my time. I do only fundraising. 

And during this months, so 1st, I collected data. I prepared blurb and page and deck. And I have multiple decks. I have that for your mail. 

I have that because I will share after the call, I could prepare a data room and after it, we'll start scheduling emails and I have a tiers of the companies and chairs of the angels. 

Usually, 1st, few days, I don't put the tier number 1 because I made the mistakes and, uh, there may be some questions that I'm not ready. So, just a couple days. 
I'm training on a 3 or 4 and after Thursday I start with tier 1. And, uh, yeah. 

That's so just schedule. So when I emailed them, I tell them guys are in the months, I will start me around. 

They just schedule a time, so. 

Talk about it. All right. So sounds like you're like, literally professional fundraiser you approach this I personally love your approach. 

It sounds awesome, but, you know, looking back at all your previous fundraising experiences, or maybe, even the most recent ones, what's the major mistake that you see there? 

Maybe you did, like, some things you're graduating, or you would change something in your fundraising to make it even better what would it be. 

I think follow up right away. Uh, don't wait, they of ours. 

Be ready with answers. Be concise. Don't give long answers be concise. No, no. Your data prepare a data room. 

So sometimes I hear a friend of mine that she has a data room, and they don't have it and then they spend 2 days to prepare on it. So, prepare it in advance, so you don't need to wait waste time on it around. 

And again, I think the biggest thing the biggest thing for me. 

It's not, it's not real, but, uh, still when I raise my previous companies, I, I did it on the ground. So my kind of division was like good founder have to focus on the business. 

And, like bed founders, a focused on fundraising. 

That's scandal my beliefs and that's why I mostly focused on business fundraising cause like a bigger task for me. 

And that's why it was super long always but when you do it in this short timeframe and the idea is get as many as possible the few. 

A term sheet, so you can negotiate and you can use different to the leverage to move them through all steps. 

Yeah, I think that's a quick question. Sure. I'm just making sure that I understand correctly. What do you mean by prepared the day room in advance? What do you mean by room? Is it like holding materials that investors are going to ask you for? 

Yeah, so you probably will have some sort of sit around. So maybe maybe some. 

I forgot how scar table with the ownership and stocks maybe some key clients and some information that investors may ask for due diligence. 
It's better prepared in advance. 
Perfect got it. Yeah, and I think that kind of answers my next question, which is, you know, what's your major advice to those early stage founders who are trying to raise money right now but. 

Is there something else you would recommend you know, those early stage entrepreneurs who are just beginning their fundraising process? Is there something. 

Specific, you would recommend them. Yes, it may be sound less optimistic, but I think it may save a lot of time. So if you, if you pray in your. 

Yeah, I think, and you didn't the create, like, world new invention it's better not to raise from our people. You don't know. 

So if you're prayer Avenue, it should be super warm connections like friends, full family or if you'll go with per avenue to. 

We see angels hidden now at all, it's maybe just a waste of time. That's just perfect advice right there. I highly recommend everyone to follow that specific advice. 

So we're moving on to last question of this episode, which is a call to action. So, Daniel, what's the 1 thing you want to lose her to do? As soon as the episode is over? Sorry? Say it again. 

What's the 1 thing you want to listen to to do? As soon as the episode is over? 

As soon as that is a bizarre. Okay so, 1 thing that was helpful for me, especially I, that I didn't have any network in U. S. like 5 years ago when I moved here and what's really helped me. 

It's easy in at least in Bay area. I'm not sure it's outside of us, but it's easy to make. Sure it's making this person. Even if he's average. It's easy. You can reach out to given called. 

And people are usually open to make a 1st meeting. So, but add them create a list of people you want to update your use and send them information about every quarter. So people you remember, you. 

Perfect yeah, that's a great call to action. My collection is going to be, you know, just stay in touch with people, uh, you know, my previous speaker mentioned that, you know, the best way to fundraise layer on is to offer your help when you don't need their help. 

So, do that keep keep in touch checking with them? 

It was like quarterly and my 2nd call is me go to description of this episodes. I will leave a bunch of links that Daniel mentioned during this episode. So you'll Pre. I'm pretty sure you'll find something helpful there and. 

Have a good day.