A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Lee Silverstone, Pablo Srugo
[00:00:00] S0: That's the worst, the worst thing. It's like, go in, have a deck ready, present the deck, walk the person through it, control the conversation. This is a pitch. This is the, oh, let's just have a conversation. Is like, yeah, I terrible. Never do that. Horrible. [00:00:15] S1: If you have an opportunity to tell your story exactly how you want to, why wouldn't you take it? [00:00:21] S0: I think it comes from this like, humility thing. People feel like it's like being humble or whatever, and it's like, no, you're, you're just shooting yourself in the foot . Terrible idea . [00:00:28] S1: Welcome to the product Market Fit Show, brought to you by Mistral , a seat stage firm based in Canada. I'm Pablo, I'm a founder turned vc. My goal is to help early stage founders like you find product market fit. Lee , welcome to , uh, welcome to the show. Second time around. [00:00:47] S0: Second time. I'm happy to be back. I'm a vet veteran now. [00:00:50] S1: Yeah, we'll see if, if you improved or , or got way worse. I don't know . <laugh> , you , it's like the second date, like you don't know. You've already said everything and there's actually nothing left to say anyway . <laugh> . Yeah. [00:00:58] S0: Yeah. Usually , usually worse. I never have a good second showing <laugh> .
00:00:58 · Lee Silverstone, Pablo Srugo
[00:00:58] S0: Yeah. Usually , usually worse. I never have a good second showing <laugh> . [00:01:03] S1: So look, you know, I was looking at the data that Crunchbase came out with like, you know, kind of the , the January 20, 24 data and uh, it's not pretty out there. Just so make some highlights. I'm looking at this chart that obviously all of you can't see, but bottom line, you know, if you look at Angel and seed funding by month, January, 2022, so two years ago, about four and a half billion dollars raised globally just in Angel and Seed. That was down to like 2.5 billion last January and down to about 2.1 billion this January. So we're on this Beautiful, [00:01:35] S0: So still going in the wrong [00:01:36] S1: Direction. That's right on this beautiful <laugh>, we're on this beautiful downwards trend. The nice thing is it is like the , the decrease is slowing. The , the rate of of churn is slowing, right? But , uh, but no, it's not pretty out there. <laugh> . Um, and so Figur to makes sense to do like a fundraising episode because at the end of the day, regardless of macro, people do have to raise, and I will say this, like as much as it's not pretty, there's still $2 billion that are raised at Seed and Angels. So people are raising money, right? And uh, and so that's what we'll be doing today. How
00:01:36 · Pablo Srugo, Lee Silverstone
[00:01:36] S1: Direction. That's right on this beautiful <laugh>, we're on this beautiful downwards trend. The nice thing is it is like the , the decrease is slowing. The , the rate of of churn is slowing, right? But , uh, but no, it's not pretty out there. <laugh> . Um, and so Figur to makes sense to do like a fundraising episode because at the end of the day, regardless of macro, people do have to raise, and I will say this, like as much as it's not pretty, there's still $2 billion that are raised at Seed and Angels. So people are raising money, right? And uh, and so that's what we'll be doing today. How [00:02:07] S0: Different do you think this process is now, given that there probably isn't that much FOMO for VCs? Like angels definitely like almost zero because there's no rules on them for when they have to deploy capital for you guys. Like there's structure to when you have to deploy capital, there's rules to your fund. [00:02:25] S1: No, I think it's, I mean, for sure the FOMO is gone. Like it's way worse. And I think everything's just going to, like, the rounds are smaller. Uh, the rounds take longer. There's just like less appetite for risk. Those are realities. But at the end of the day, like whatever the macro, you want to put every single thing in your pocket and like dial up your odds as much as you can, right? Yeah . And these little things about , dude, like one other thing we did when we were raising a gym track, and this was for sure not premeditated, it was totally by happenstance, but it was awesome.
00:02:25 · Pablo Srugo, Lee Silverstone
[00:02:25] S1: No, I think it's, I mean, for sure the FOMO is gone. Like it's way worse. And I think everything's just going to, like, the rounds are smaller. Uh, the rounds take longer. There's just like less appetite for risk. Those are realities. But at the end of the day, like whatever the macro, you want to put every single thing in your pocket and like dial up your odds as much as you can, right? Yeah . And these little things about , dude, like one other thing we did when we were raising a gym track, and this was for sure not premeditated, it was totally by happenstance, but it was awesome. [00:02:56] S0: I don't think anything I've ever done in my life is premeditated. [00:02:59] S1: That's legit <laugh>. That's legit. But I don't know if you remember, we raised like, it's almost these concentric circles when I look back, right? Like we started with people that knew us super well, right? So like literally friends and family, like friends and family, right? Like parents like whatever, right? And we raised like they like 50 K, right? And by the way, we actually thought at the time we only needed like a hundred thousand dollars . So we told them we just need a hundred thousand dollars . We believe that, right? <laugh> And [00:03:27] S0: Yeah . Was that really? I don't remember that. That's crazy. Okay, dude,
00:03:27 · Lee Silverstone, Pablo Srugo
[00:03:27] S0: Yeah . Was that really? I don't remember that. That's crazy. Okay, dude, [00:03:31] S1: I remember maybe it wasn't a hundred, it was 200, but I remember writing it on that whiteboard that we took, you know, on top of the car or like 200 K, like with 200 K we could do everything, dude. Like it was infinite amount of money. The thing is, when you have, I think it's especially true for angels, it's harder for VCs. 'cause VCs will want you to like say, this is how much I'm raising. And like more or less committed that maybe always describe a little bit, but with angels, you , you can be like, okay, I actually think two 50 K gets me to a certain milestone, right? And I think this is very true for first time founders especially, you need that threshold of what you're raising to be like, feel achievable. Like you're pitching someone for 20 5K and you want a million dollars. They're like, okay, call me when you're like at 800,000 and I'll let you know, like, I'm not gonna move the needle. But if you're raising two 50 k, all of a sudden they're 10% of that. Like you're just way closer by definition. And we did that, you know what I
00:04:20 · Lee Silverstone, Pablo Srugo
[00:04:20] S0: Mean? And that's like this kind of like smart structuring thing that you can do that. I guess you're right. At the time we had no idea that we were doing it. But it's like, and I mean it's kind of why there's like priests, like friends and family ran pre-seed seed , right? Like you can use that terminology to chunk up around where you're like, look, to get to in internally as a founder you're like, I wanna get to a million dollars in a RR . What I need to get there is a million dollars of capital into the business, but I'm gonna chunk it up into a two 50 k raise, a 500 k raise, and a million dollar raise. [00:04:51] S1: But it's, what happened, we , we went from 200 to like 500 to seven 50 . I'll tell you something though . We were talking about how to dry FOMO in this, in this , uh, in this market. I'll tell you one story of just, I, I just consider this like, it very, it , it might seem like small, but I just found it was such a power move that , uh, somehow never seen before. So look, normally when I do these pitch meetings, like somebody's raising around end of the, one of my final questions is just like, okay, and like, where are you at in this fundraise? Right? And I'm just trying to like, obviously just get as much information as possible. And so some of the classic answers are like, oh, well actually I just started this fundraise like last week, you know, one of the first meetings. I'm like, okay, cool. [00:05:31] S0: Which is not, which is never true. Probably they've prob they've probably been doing it for like two months. <laugh>.