June 17, 2020

Raising after a successful exit and structuring your fundraising process - by Tristan Pollock.

Raising after a successful exit and structuring your fundraising process - by Tristan Pollock.

Tristan Pollock built and sold two companies - SocialEarth and Storefront and in this episode we focus on this - how to approach fundraising, how to get first contacts, how the life in the accelerator looks like and what happens after the demo day. Because Tristan was also a partner of 500 Startups for a few years, we touched onto that subject as well.

Tristan Pollock built and sold two companies - SocialEarth and Storefront and in this episode we focus on this - how to approach fundraising, how to get first contacts, how the life in the accelerator looks like and what happens after the demo day. Because Tristan was also a partner of 500 Startups for a few years, we touched onto that subject as well.

HumanIPO where I bought Tristan's Time: https://humanipo.app/featured

Tristan's Twitter: twitter.com/pollock

 


Transcript

This is Fundraising Radio and today as guest speaker we have Tristan Pollock, a serial entrepreneur who's sold two of his companies, and then was a venture partner at five hundred startups for a few years. So we'll talk about exactly this - building and selling several companies, and then becoming basically switching to table sides becoming the investor will see both of the perspectives of our free time and we'll talk about that but before beginning, actually, I wanted to say, thanks to human.

I bought tristan's time on human and then redeemed that half an hour to invite him to the bypass. So check it out. It's a pretty cool platform. Very innovative. I'm really supportive of them by the way they did not pay me to say this stuff.

So, I'll leave the link to human appeal and you can check it out but now it's time to go to the episode Alaska called by he giving us some background on yourself. And on your first company that should be social earth.

Yeah, thanks for having me constantly and so social earth. Wow what a throw back at this point. Probably almost a decade ago.

One of my first startups, and we wanted to build a media platform, a new site that focused more on stories of change than stories of fear.

And if you watch the news and the US and the mainstream media, it's like, a lot of times. That's what you see, there's a lot of bad things happening but how do we take those things that are happening and turn it into something that's more solution oriented.

And so that's what social earth was all about.

We ended up having around two hundred and thirty plus maybe a hundred fifty contributors across the world and like,

twenty five different countries,
all focused around social entrepreneurship, people,
Ashoka,
fellows,
school foundation.

We had all sorts of organizations and entrepreneurs, helping, share their stories on the platform. And then we grew that organically for a few years we had bootstrapped it. And then that's what brought me to my first venture back startup storefront.

Which was a, you know, an air B and B for retail space. So to speak and that's also what brought me from my home state of Minnesota out to San Francisco and Silicon Valley, and started kind of my Silicon Valley stage in my life. Right?

So, first question that sometimes get from the founders who want to feel, you know, this sense of success is the question.

How is fundraising different if you're already counting yourself as a successful entrepreneur to how does fundraising work after you already sold your first company and trying to raise money for the second one? What you say about that?

Yeah,

well,

I'd say investors are definitely still critical,

you know,

if,

if now,

if you've had a Silicon Valley exit on your on your last company that makes it pretty easy to raise money without having to even prove out much traction.

But for social earth,
you know,
it wasn't a Silicon Valley exit,
you know,
we sold it to immediate company media company, roll up sort of experience and so,

you know,
we were happy with it,
but it wasn't it wasn't,
you know,
we didn't we didn't really have an involvement or a network in Silicon Valley.

So I'd say really what helped us breakthrough is the accelerator program angel. Pat that we went through in San Francisco and that really gave us our first network of investors and good people to know in in in San Francisco.

And Silicon Valley.

Right. Actual reviews or great source of that. And I always advise early stage founders to go through. Still try to reach out to the stats and see but well, let's talk about this storefront fundraising process.

So we're not gonna talk about social earth because you bootstrap the whole thing but for store frown front, you raised important to crunch base over nine million dollars, right?

When that it's time to fundraising one was this point when you're like, okay. Yeah. Now, we actually do need money and will go out to investors. Yeah, we had a real rapid fire experience of that.

We got into angel pad. It was the only accelerator we applied to and found out that we got in three days before it started.

So, we packed up dropped everything, Minnesota moved out to San Francisco and showed up on Monday at, like, eight am waiting outside the door with the other twelve sets of founders that we're gonna be in that batch.

And and so, you know, for the next three months, we lived with two other founders that we didn't even know at the beginning of the program. So all four of us in a one bedroom apartment window furniture.

So, even my wife eventually came out and lived with us. So it was like, we had like, five people in there for a second at the end.

And and so that was our and that's, you know, and it's expensive to live in San Francisco, especially if you're coming from anywhere else, you're not coming from a major metropolitan city. It's pretty expensive.

So, figuring that out while working, you know, running basically, still bootstrap startup. Although we got funding from angel pad, but, you know, a lot as anyone who's went through an accelerator knows you don't get that funding day one.

Usually, it takes, you know, you get mid batch or sometimes even the end of the batch. And so that was,

that was the kind of the story that went into getting us there and getting it basically our first funding through angel,

Pat and their partner vc's and then the second stage of that was, you know,
alright,
like,

try to kick a** through this program build out your MVP further, get your first customers,
and we did all this and then at the end of the program,
it was like,

okay,
now it's fundraising time.
We do demo day introduce you, you really go out there and push it hard. And so it was like,
you know,
once the basically got on that that turn wheel of joining angel pad,
then it's like,

well,
then that met demo day at the individual pad and then,
you know,
that met okay see round and then a year later after we raise our seed, we got to like a round and it's just very much that kind of.

Pro grammatical systematic way that people go about fundraising if you, if you can, and you can successfully fundraise. So that's the other challenge. But we basically hit demo day and we're like, we're not sure if we're completely ready to fundraise.

But this is the process. And this is how we do it, and this is our chance to actually get a lot of these introductions, warm introductions from angel pad into who's runs it. You know, an ex Google guy.

And so that's we,

we basically dove had first into starting to raise our seed round at what I think was the end of in November,

which,

you know,

as as as anyone who's tried to fundraise in certain times of the year not all times the year.

Craig equal, and so when you're talking about Christmas and winter, and, you know, winter break for kids and kids going to school, it's not the best time. It's a little bit late for vc's.

And you, and so what we ended up doing was, like, first mistake, we tried to pitch, like, some of the best vc's first, you know, and we did that. And then we like, okay, this is not working.

We need to angels and so we started pitching more angels and so we were able to close a good portion of the round at the end of the year. Just by saying, look like gonna wrap up any more angel funding.

And then we're gonna move on and finish the round in the new year, but it was definitely a lot. A lot of things you hear. People say it was a full time job, you have to stay focused, you have to be a networking freak.

We did five meetings a day with you have to be strategic when you have meetings in San Francisco versus Silicon Valley in Menlo Park, Sand Hill road right?

Like, that could be an extra two to four hours of driving time and that cuts out of your day. So all those little strategic process, things are super important to running a fundraising process.

And and so that's one of the things I, I probably will emphasize the, most during this podcast is, you need to run a strategic and thoughtful process. Let's talk about that process. Let's start from the very beginning.

So let's pretend we will read. You've already gone through this accelerator program you are at the demo day what happens next we're actually where do you start? This? Fundraising pros the structured fundraising process wasn't before the demo day.

That you started, or was it after it?
Yes, exactly.
So your fundraising process starts long before you even have your first meeting, you know,
you can say,
roughly a month,
let's say,
you know,
I think,
you know,
for five hundred startups or angel Pat,
I think we started having meetings a month before the end of the program and, you know,
sometimes that,

you know,

we saw deals,

get done and angel pad with people close.

And there was we were, I think, the third company to close around, but we didn't close.

Until the next year,

I think,

at the beginning of March,

and so we know there were people there were a couple of founders that close around before even the program was over because they had friendly meetings with Google Ventures or index and they like them.

And they knew that they had an early shot at them, and they had already been Pre vetted by angel pad and had that dialogue with the founder of angel pad. And so, like, okay, this is great.

It's opportunity for us to get an early when normally we might, we could potentially lose out to another VC. That's willing to write a check that, you know, has a better relationship with them or has a better offering.

So, we saw a couple of rounds closed, just like that in those early meetings. Now, that said, I don't think that's how I usually plays out ninety nine percent of the time. You're gonna have to really work for it. And that's what we had to do.

And so we started, we practice our pitch hundred times, sitting in a room. My found Mike cofounder to CO founder. I would pitch Eric.

You would pitch me, and we just go over and over it and iterate iterate and change the design and change the talking points. And, you know, this is basically, this is one of the big benefits of demo day.

Now there are a lot of demo days these days. And sometimes they don't give as much attention from investors. But what it regardless, it's a great practice for founders, you know, to be honest, you should almost have your own internal demo day.

If you're gonna go out in fundraise.
You know, it's like, practice your pitch practice or pitch package. Now you have to present your pitch.

Now,

you know,

one,

and after that,

or around that time you start having meetings with friendly investors,

or or other founders,

or entrepreneurs that have raised money and raised around,

like,

similar to what you raised,

or,

you know,

in the same space and that's gonna have those friendly meetings,

you get more critique so by the time you have your first meeting you're gonna feel pretty good about what you have.

You're not going to waste a lot of time having to tweak. It will still tweak probably through the fundraising process, but you're not gonna have to tweak the deck in the pitch. And how you're presenting the company too much. By the time you hit square one of pitch meetings.

And why is that?

Well, if you start having to change your pitch, and you go back to other people and, like, bc's talk, then it's like, it's gonna seem like, you know, there isn't really a strong narrative here that you actually have thought through and really there isn't always a yes.

Or no answer for a lot of questions that pc's ask, it's happy. Yep. So, in that process, period, that when you hit that point, and you also want to get it, right? Because ideally, like, we did, you're having three to five meetings a day.

You know, it's sometimes more difficult to do in places that.

There aren't as many as Silicon Valley and San Francisco, but there's, there's a, there is a growing number of and angels in all major metropolitan areas.

So, I think you'd be surprised that I think most metros, you could probably put together a target list of a hundred investors, and then try to get as many meetings and into a warm intro setup in, like, a month or two period.

So that they're all close to each other and why does that help? Because it gives you leverage that you wouldn't know otherwise have it gives you this leverage to show that hey, we just close to twenty five K check yesterday. And actually, this VC just got involved.

You know,
this week and that's sort of kind of full Mo,
generating energy is something you would get if you have,
like,
one off ad hoc meetings here and there like,
let me talk to you,
you know,
in June and we talked to you in July and you just won't ever get that momentum so, unless you have something else.

That's really interesting about the company. Traction. Your background, you sold a company before you already have good connections. You just don't you wanna have optionality and you don't know what what investors are going to say yes.

And my experience, you know, ninety percent, ninety five percent of investors say no, even if you are successful.

Right, right, right that's a good point. But one of the questions, they're probably the most frequently asked question is how should I get those me so how do I create this map?

How do I reach out to this huge number of investors who want to meet me? What was your, what was your strategy on that?

Yeah, great question. So, a few things one ideally that you want to have warm introductions right?

So you wanna have somebody who knows this investor who this investor has invested in a friendly founder, you know, another investor that has invested in you makes the introduction.

That's obviously the ideal realm now, if that's not possible then I recommend starting out.

And this is why this is this the, the fundraising process almost never can never stop sometimes because the early part of the process getting these connections building your network. That's the part that can go year round every year.

And what do you do you know so, as soon as we gotten to angel pad, we didn't have a network in San Francisco. We met with other angel pad founders.

We got an introduction or cold emailed them. You know, guess their email found an email in their site or whatever and said, hey, we're going through angel pad right now watch your advice and how to get, you know, do the best to get through it with the most success.

And we're gonna start. You know, and then, and then that's kind of that short, you know, thirty minute conversation or so sets the stage for us to be able to show hey, one we know we're doing. We're not crazy.

If you make an introduction for us later on.

Then, you know that we've passed those tests and so now, you now, if we follow up with them in a two to three months time, they'll probably make, you know, one, two, three introductions to investors.

So, the larger, your founder network, the more introductions you can get. And then, that means just the more leads and target people on your target list that you'll be able to reach.

So,
I really think it's a strong founder network to begin with for someone who's breaking into the industry, or,
you know,

is just trying to figure out how to start their fundraising process, build your founder network,
help people,
support other founders,

you know,

have meetings and get to know,

them see if you can support them.

So then when you have an ask like an introduction to an investor, you can quickly and succinctly show them what you're gonna what you're gonna say what you're going to do.

And then they can feel comfortable making an introduction, knowing that also your demo, who isn't just a, you know, a taker you give to. That's a great point.

And by the way for people who do not want to guess investors, emails, there's a tool called sales kill, just need to find their LinkedIn and to put in the sale scale as gonna give you there email addresses. So that's a that's a good point there.

But well, I like that I, I, I wish I had that tool.
Back in the day, I think, what do we use there was a really great tool called. Oh, man, what was it called?

It was, it was kind of like, you know, we use tout, which is like, an early form of outreach, you know, use different types of email technology, or, you know, sales technology like that in early stage.

And then there was this one tool that would not just show you who, you know, like LinkedIn shows you who you're connected to but it would overlay on top of LinkedIn or AngelList and it would show the signal strength.

So, based on a Gmail integration, it would show house how many like, how recently and how often is this person emailed with this other person? So you can actually find the strong.

Now, I would love to see that tool again, full contact bot, this company, but I never thought implemented. So, yeah, yeah, that's a good point use.

There's a lot of tools out there that you can use to get creative and figure things out, you know, and another, another VC firm to look at is FX. Great.

We'll focus a lot of marketplaces, but they've created all sorts of interesting, you know, in fundraising tools like the, what the company brief was the one of the most recent ones, but they also created the network social network signal. You hope you find connections to investors.

So there's a lot there's so much more then when I think we were fundraising, seven, eight years ago.

It was, it was a lot of angel list and cold. Yeah. Getting people's emails was great. That's great.

But, you know, it's twenty twenty now so people try not to guess people's emails just try to find the right tools for that. So now, let's talk about the acquisition part, he raised successfully, he got a happy ending there.

How did this happening happened to you actual plan for the acquisition, or did just happen great question? Yeah. On the storefront side of things?

Well,
let's say starting,
like,
the social side of things,
you know,
I think there's there's this common saying,
right companies are bought not sold I think,
when you're seeing,
I think it also comes from strong relationships that you build during your company.
So, just like you build strong relationship with founders. That might pay off with an introductions later on.

You do the same with partnerships and strategic, strategic partnerships the business development relationships and other and other found her found her to relationships or founder to CEO or, you know, and so on and so forth.

So, with with social earth, we had we had formed good relationship with other players in the social impact media space.

And so then when we're ready, we kinda hit a point where we're like, we feel like it's the right time to have this conversation. You know, we could reach out to some of these people and they knew who we were.

They knew what we've been building and knew that we had built one of the most highly traffic sites out there in the space, and we could show them that sort of deck. You know, here's the breakdown of things.

So, you'll probably, we'll have a deck that breaks down the whole company kind of fits in somewhere, similar to a board deck or an investor deck, and then on the storefront side. You know, there's obviously like any startup.

There's a long startup, roller coaster of a lot of ups and downs. I think we hit a point where we're like,
okay,
this,

it's,
it's time to move this forward that we had an interest from a,

a French company doing something similar and the ability to combine this similar to actually the social story combined this into a larger kind of conglomerate within the space that we were,

we were attacking,
we had the network in the us they had the network in Europe, and we're starting to focus,
look at Asia and so it's like,
well,

we could come together and be stronger.

And at that point, I think that's when we first started start front, there was maybe a couple other, you know, nonprofits that we're doing something similar in the space. So so we were definitely one of the first movers. And then.

At five, six years later, there's.

Hundreds,

you know,

every different geography has as has a storefront copycat so coming together in that way I think it was very beneficial that now we have a new,

you know,
there's a new CEO running the running the business, and they kept the storefront brand.

So, it it lives on and so that's cool to see that we built a strong and with value to people that you're able to continue to move that on. I think I all done a lot to our community that week that we really foster. That's really great.

Yeah, Congress, that's that's impressive. But now, let's talk about your experience with five hundred start, Tony, you become the venture partner of five hundred startups and what does it mean? What do you do?

What did you do there as the venture partner? Oh, yeah yeah. A five hundred startups is great. You know, it's a very inclusive company.

They, you know, they care a lot about funding founders no matter where they're from what they look like all around the world. So I, I learned a lot from my time there.

I think it's, they're a little non traditional as well and the venture partner role, or the role entrepreneur and residents that I started in was is a lot more of like a mentor role.

You know, I kinda had that, you know, twenty percent time that Google gives a week to kind of work on whatever internal projects, external projects. And then I spent a lot of my time.

Supporting the accelerator and the companies that would we would select to come in.

So,

I sat on selection committees for six plus accelerator programs in San Francisco,

and may help make those selections and the companies we wanted to bring in and it will mentor a subset of those five to ten companies that were in the program for the four months.

That they went through it in San Francisco in our office and and so that was a lot of it. It's, like, imparting my time and giving it back to the founders in order to help them make lots of mistakes and get connected faster.

And I really appreciated that opportunity. christine's side was the one who brought in and she had actually was the one who wrote the check and the first one of the first checks into storefront. So, it was a cool like, full circle moment for me.

And I also, I talk a lot about founder mentorship and founder to founder mentorship. And it was something I, I, you know, probably got myself to the edge of burnout with storefront.

I didn't take as care, take as much, you know, care of myself physically or mentally. I worked.

Twenty four, seven for the for those years, and I also didn't leave as much time open to helping other founders.

And so, this gave me a chance once I got to the end of that, to then start giving back into the community more and be able to open up my time.

So that was the kind of role, which then transition to a, you know, a, a Trent, I then added, I guess it didn't even take away that part because I still mentored founders, but then added the venture partner role.

So then I also did some direct investing, built out,
you know,

different theses and continue to build a network of founders and try to support the founders who are most excited about bring them into five hundred invest in them build those relationships.

That part became a little bit more, maybe a traditional, you know, partner at a firm and, and as well as the other side of it. That's a little bit unique.

Five hundred is, there's a lot of time, spent supporting other programs, as we have programs, where why see what really deep, and they have to fellowship and and have the main program and they like the growth fund and then even have like a research program.

And even at the very early stages, five hundred went really wide and so they went, you know, across the globe they have different.

Venture firms and programs in countries like Korea and Japan and Mina and so all these regions right?

So that a lot of time, also, we would support these other avenues because, you know, the probably the next biggest, you know, jumped from going from somewhere out in the US, like me to Silicon Valley is, like, going internationally, rightly coming from another country.

Then trying to break into the VC realm in Silicon Valley,

and I think that was something we were very good at and helped founders really make that leap from international countries into the US,

get them first funding from a US based VC fund.

And then, you know, really be able to get things starting to to roll forward. Right? So you are not working at five hundred startups anymore.

But I was curious as a successful founder with an exits with two exits to still doing an advisor role and doing the annual investments whatsoever to the earlier stage companies are not name.

Yeah,
I do very selectively,
not as much over the past couple of years,
but I've done a handful of angel investments and advising right now I focus on advising a few companies, their fee,
or have some interesting ones I'm working with right now.

Is a music royalty free technology, you know them? Yeah, I met them, like, a year ago. Yeah, they, they just raised a million seed and yeah.

Have you know, like three hundred million access, three hundred million users through integrations and, like, I don't know, like, a million listens a day or something like this. So, they've really evolved since the first time.

I talked to them, which probably was at five hundred and and I think they were just too early at the time. I'm working on another company called cap base, which is probably really relevant to your audience.

They are helping with all the startup governance stuff, you know, from incorporation to tying that back to your legal Docs, you know, basically doing a much smarter and easier to use process.

Then something like Carta or some of the clunkier tools out there. It's it's like, being this one stop shop for setting up your startup and running it.

And so, yeah, that those are some of the, some of the avenues that I've been working with and I really appreciate that advising. I mean, I'm always, I think I'll be a mentor advisor for life, because I think it's so valuable.

I wouldn't I, that would be my number one recommendation. If I, when I got to San Francisco, we talked to a lot of founders and built a lot of relationships, but I would say once when you find someone that you click with.

Or that has some,

it has some knowledge and is interested in what you're doing has some knowledge that you don't have or it's been,

like,
one or two stages ahead of you,
you know,
like you're preceed and someone's done a seed round or a series, a round and that those,
those can be amazing people to build a stronger relationship with,

you know,

basically my mentors now are my friends and I think it's important to take a second step out of your own shoes and get an outside person's perspective on what you're doing to just understand if you know your ideas and your perspective makes sense or you're missing anything,

because it's definitely things we're missing. You just don't know.
And so,
that's where mentors come in Super valuable, you know,

and as you get funding to pick up a pick up a like an executive coach or a founder coach, you know,
that,
I think those people,

you know,
I'm kind of like,
sit in the middle of that because I'm like,
okay,
I'm like this,
like,
you know,
investor slash adviser,
slash startup founder but somebody who understands that realm and,

like,
you know,
becoming a leader and as well,
as,
like,
some of the intricacies of startups I mean,
you can also have multiple investor or multiple mentors,
so I think that's just my one,
the main piece of advice,
I'd say is find awesome people to surround yourself with have a variety of opinions, so that you're going to not miss anything as you're building your company.
Right right, right. But my personal view on.
Anyone who has a coach in their title I do not like those people. For some reason.

I think that if you want to get, like, you know, improve education on how to be an entrepreneur on how to build your own venture on whatever you want to there are great courses in big universities or the risk for Sarah.

So, I think I would we'd much rather recommend you people going through that, but, you know.

Everyone has his or own opinion so choose wisely.

Yeah, I think it could be friends, you know, I think it can be friends and and obviously, if you're selecting someone with, like, you know, who's a more formalized coach like you're saying, then it's like, you know, vet them like an employee. You're essentially hiring that person.

So, you should talk to multiple coaches, find someone that you think is a good perspective, and you can always end the relationship at any time. So I think it's, I think it can be valuable, but you're right.

I think you should also do your research and think about hiring them less than, like, contracting them.

I think I just have a Pre unpleasant experience with life coaches, and just business coaches in general as just once after, after a year and a half ago.

When I was doing my first company, and after the demo day, I was, I had a pretty good orientation. I was heavy, but I was waiting for the investors, you know, to come up and say, like, hey, man, it was a pretty good one.

Let's let's have a coffee and the only person came up to me was a life coach and I was like, hey, man.

I'm a life coach, so I want to touch. Oh, yeah I was upset so I guess that's how I do not like all the life coaches. Now. It was a, let's move on to the last topic of today's episodes. Last question.

Actually it's a call to action.

Was the one thing that you would recommend early stage entrepreneurs to do as soon as the episode is over one thing,

as soon as the episode is over I feel like we've already said it, like,
go,
I set up a weekly at least meet one new founder weekly,

I would say that was this could go into, you know,
this I mean,
you can make friends,

you could,
you know,
have future investor inter,

introductions,

you could have a mentor,

you know,

you never know where it's gonna go.

So, I was, I would that I think that's something you can do. If you just met one new person every week, then what's that?

You're gonna meet fifteen, fifty new people in a year and, you know, that's gonna really significantly build your network small ask and results.

That's a wonderful wonderful device and doesn't require too much effort and it really can't be off. What's your condition and find those fires? So do you have any tools that you would recommend? Is it just meet up or is it something else?

I think you want to read read interesting people on Twitter on sub stack on medium.

And you'll be surprised, some of the some of the best red people will be open to having a chat if you're thoughtful and you don't waste their time and you write to them very thoughtfully. So, I think yeah.

Read people,

and you can also poke around on LinkedIn or or angel list and find people in relevant categories to what you're doing,

like marketplaces, you know,
the environment, you know,

social impact,
what you can find people working in those spaces.

So, I'd say build a really strong network in your industry as well as your business model personal advice here from me, is, there was a tool called lunch club.

First clients didn't have the best experience with it, but it's really simple to use and just visually. It's tender for for founders and investors so it's really simple. It doesn't require any effort whatsoever and you just get matched with one person per week.

So, it's really helpful for that specific advisor based on and on this note, we'll wrap it up. Thanks. A lot of times we're coming out for taking your time to explain your personal experience with you. See, it can be done.

Now thanks a lot for that. And a great day, of course, thank you. And if anyone says follow up questions, feel free to tweak me at Pollock guy.

I will leave the link to your Twitter account into the script and this episode. So feel free to check it out.