- It is funny to watch VCs, try to get on TikTok.
It's painfully funny.
(upbeat music)
- Hi everyone,
I'm Diana Ransom executive Editor at Inc.
- My name is Ankur Jain,
I am the CEO of the Kairos group
and have had a chance to buy and sell
and build a bunch of different companies over my career.
And most recently ran product for Tinder.
- We're going to be looking at some of the best
and worst advice that the internet has to offer
on finding investors and working with them.
(upbeat music)
First up.
- Wow, you're a venture capitalist.
- They go out, they try to raise money.
They over estimate what they actually need.
That's where we make all of our money.
As we find guys like that
we show them what they actually need.
And then we become their only partner
- So you don't join a cap table.
You're the only investor?
- Correct. Yeah, never do that.
- Wow. And what's the biggest reason for that?
- Those people, they are obsessed with raising money
and not actually making money.
And so a lot of startups nowadays,
that's all they care about is raising money,
they don't actually care about making money.
And they get caught up
in finding the next big thing to raise money for.
And the investors never get paid.
So I care about making money.
- Would you take money from frat bro one
or two in that video?
- Right.
(laughing)
Well, actually it was funny to me that
my takeaway from that
was that they just sounded
like they were describing a Ponzi scheme.
- A lot of venture is like at Ponzi scheme.
And that's the biggest thing.
These VCs aren't actually really being rewarded
on the success of your individual company.
Their job is to get markups
meaning can they pump up your numbers
like a Ponzi scheme and growth to get another VC.
- Oh.
- To mark you at a higher rate.
And then they go back to their investors
and raise money at a higher amount,
because they said look at my gains on paper.
And by the time anybody has actually sold
in eight to 10 years
they've already collected 10 years of management fees.
This is the problem.
And so as a...
- So they're not even out for the exit?
- They're baking into their model
that most of the companies will fail.
Let's get a fun one.
- I just invested in a new startup.
And these are the three reasons that I invest in a company.
Do I like the founders and do the founders like me?
- It's Pretty funny that investors are now getting out there
putting videos saying, can I please give you a hundred
thousand dollars?
And you realize they need you as much or more
than you need them for capital.
The whole dynamic shifts and investors can smell it
- Second. And in my view,
one of the most important elements
does the business think purpose over profit?
Is it more important to the owners of this business,
to look after their users
to give them value than to make money.
And third and something I always want to instill
and ensure if I'm going to put money into a business
will I be able to add value?
- I like that he just seems like a,
he has his priorities
and he's letting you know his priorities.
Like you have to be a purpose driven company over profit.
That's something in your search
you really need to think about.
Is this investor going to value what I value?
- When you think about raising money
it's sometimes easy to forget
that you're giving up part of your company.
Raising money is like dating, right?
It's like if you come out there
and you're too desperate,
people can smell it.
Right? But when you come out and you say,
this is what I'm looking for,
you know what you want.
That confidence is half.
It's, I mean it's 80% of raising money.
Your friend might have 15 reasons for why they may
or may not think this is the right person to go
on a date with.
And the minute they hear that they went on a date
with someone else I should probably respond, right?
(laughing)
So I think that's the game you're playing.
(upbeat music)
- One Reddit user has questions about how to find investors.
And another had a response.
It takes one full month to make a great pitch deck
with all the iteration
and feedback loops needed to make it really great.
Number two, I only contact investors.
I can find warm intros to.
The same people who gave feedback
on your deck can introduce you to investors.
- This is great advice.
If you're lucky enough to be one of the entrepreneurs
that's super well connected and can just go directly
to partners at a given fund
and find people who have raised a hundred million before.
I mean, the challenge is when you're starting a new company
people haven't yet heard of
they don't know what to listen to and take seriously or not.
And so when you're a cold, cold email
they don't know whether it's real
or it just some troll writing up something there.
So if you can get a warm intro
it immediately adds the trust.
- So if you get a warm intro from an associate
and then the associate puts you in touch with the partner?
- That's the right way to do it.
- Number three, only get intros
to angels who invest their own money
or partners of a fund.
Don't talk to associates.
An associate is not gonna be as good
as getting you invested as a partner will.
But what they're saying is
that if you end up with the associate,
you're doing yourself a disservice
because that's the person who's gonna handhold you
throughout the whole process.
- No, that's not how it works.
An associate once they vet you
and they feel like there's a fit.
As much as you feel like there's a fit
they'll bring in a partner to own the deal.
And that partner will then move it through the process.
- Lastly, with the above, getting 10 to 15 meetings
we'll get you at least one investor from start to end
with money in the bank in six months, guaranteed.
Every single time it takes a lot of time.
Six months is not a lot of time.
I mean, 15 meetings and you get an investment guaranteed.
- Six months is a long time in start up
world. Six months is like a lifetime startup world.
- Okay. Alright
(laughing)
You know, you hear these stories all the time
from startups that end up, you know,
I took a hundred meetings with venture capitalists
and I didn't end up with any money.
- There's enough money out there
that if you pitch enough people, you will raise money.
But if you're looking for the right money
cause remember you're in the driver's seat
then you should take some of that feedback
and figure out what part of your story isn't resonating.
- Can you ask for feedback?
- You should always.
- Yeah.
- VCs are notoriously bad
because they want optionality.
One of the things that drives me nuts most is VCs
rarely tell you no, because they never know
if you're gonna be the one person who then breaks out
and they don't wanna burn the bridge.
Associates often will give you some of that honest feedback.
If you can build that personal relationship and ask them
you might actually get some useful feedback.
(upbeat music)
- Where do we have next
- Ross Sloan, the capital.
- Should I keep doing it?
Should I keep negging?
- No, no. I'll hand this.
They wanna negotiate using hostility and rudeness.
Well, they picked the wrong guy.
Okay. Here's my concern.
Here's my concern.
Who the hell picked out that shirt for you?
- What?
- Now this is all wrong.
I am sensing a general lack of vision.
Your muffins smell like shit.
- No. (laughing)
- So do your ideas.
- Okay. Does that work? (laughing)
- No. I mean please never be a dick
when going into a pitch meeting
- Back when you were raising your first funding ever
you did not have confidence.
You must not have. It's tough.
- It was scary.
I mean, I took every dollar I could
and that's that's the mistake I learned.
I would walk out of a meeting as a founder
worrying about if they hated me,
did I say something dumb?
Did I, did that
deck slide make sense, over evaluating everything.
And on the other side they were just like,
well let's just hold and see if anybody else bites.
If you remember way back.
I think when you and I first met, like,
I was running a company called human
and I thought it was like the stamp of success
to raise money from big Silicon Valley companies.
In every meeting we would ask.
So how do we build our revenue model?
And the answer was,
don't worry about making money,
grow your users, grow your users, grow your users
for us, that put us in a really difficult position
where a year and a half later
we hadn't built our business model.
We hadn't figured out how to drive revenue.
And when the market changed,
nobody cared about us anymore.
Right? And we were left holding the bag
trying to figure it out
who you take money from
is the most important question
(upbeat music)
- Nana. Hi!
- Michael
- People turn their families all the time
when they need help starting out.
And, if my Nana's investment club
can help the Michael Scott Paper Company become a reality
then I'm sure that's what she would've wanted.
Does want.
- How do you expect to turn a profit in this economy?
- By wanting it more.
- Michael? I don't know about this.
- Nana, I really think that Papa would want you to do this.
- I'm not so sure.
- Well, what is it exactly?
I mean, what specifically?
We don't, it doesn't have to be paper.
We could sell medicine.
- I love you, Michael.
I do.
- Okay.
- But no, I mean it, no.
- She should take Mr. Wonderful's spot on shark tank.
- Oh she's tough.
- But I'm with Nana.
What did you really offer?
Other than to say, I'm just gonna,
I'm gonna, you know, undervalue my product
- Michael Scott had zero conviction,
what he was actually building.
Right. And I think as funny as you know, the parody show was
people often try to build what they think investors want.
Right. And that's just a trap too many people fall into.
I think the answer is know what you're building
know what the problem you're solving is
and why you think you're the best
and stick to it.
- You know, I think my biggest thing with family members is
you know, you have to be careful
because you don't wanna burn a bridge with
the loved one.
- You know what the people who don't invest
professionally can also be the most is difficult
cause they're not prepared to understand the ups
and downs you're gonna go through
- Right. Can you imagine Thanksgiving dinner?
- Oh my gosh.
(laughing)
Stress. As if it's not hard enough.
(upbeat music)
- Ankur. Why don't you share with us your
your biggest takeaway from the day?
- I think at the end of the day
when you're looking to raise money,
just remember that your need to raise capital
is no more than that venture capitals and investors need
to find a company to put that money into.
Cause when you realize
that you don't need that one investor
your just mindset changes.
You start thinking about who the right fit is
how to pitch your business in the right way.
Not just what they want to hear
and you'll find the right capital.
Cause they can smell that you are building something
with conviction that people, other people also believe in.
- And let's not burn bridges with Nana.
- Yeah. That too.