A Product Market Fit Show | Startup Podcast for Founders
00:24:13 · Pablo Srugo, Jonathan Awad
[00:24:13] S1: Right. Brex doesn't tell them. [00:24:14] S0: Yeah. And Brex doesn't report it to the, no offense to Brex, they're not, they're not reporting to the government. And if the government, even if when they do get a report, it's called like a SARS, a suspicious activity report. There was 5 million SARS filed last year. Guess how many percent wise were enforced of the 5 million? Just pick a percent. 20%. I mean, [00:24:32] S1: I would hope, just because you're saying he's getting low. Okay. 4% were enforced. So 20 would have been really high.
00:24:38 · Jonathan Awad
[00:24:38] S0: And so in a very simple way, they're like, hey, here's some impossible thing. Go do it. I was like, Tim, I do have a little bit network. We probably could put together a consortium. If I give you labeled data, would this be really interesting? He's like, you give me labeled proprietary data. We'll build the best risk modeling, the best machine learning algorithm in the market. You just have to go do this impossible thing. And I was like, all right, cool. Sounds good. So we put together a deck. We incorporated a company. Shout out to Tim's wife, Vivian. She used that BCG at the time, and she helped make the deck, quite frankly. I was a lizard, and I'm not bad at making decks, but BCG knows how to make a good deck. And she did 90% of this deck. Thank you, Vivian. I'll give you a shout out. I always do give her a shout out. And then Zoe Newman, shout out Zoe, at Capital on Tap, was the first person to really tell me, like, hey, for our consortium, you should look into this. Go do it. Capital on Tap's this, like, $5 billion credit card company out of London and also a huge presence in New York. And then we came together, took this idea, and then I went to a bunch of my friends and investors, and I was like, hey, I'm going to raise. And then I got some advice of, like, plan out your meetings and, like, a process. I would say in terms of fundraising for any founders that listen to this, there's a few ways to fundraise. This is my take. The really ideal way is not what we did. Okay? It's not what we did. The really ideal way, and I used to give this advice to a founder yesterday. The really ideal way is to have a bunch of friends who are investors who you'd want to work with and then do something excellent. Do something incredible and be somebody important in the industry. Obviously, that'd be amazing. Next up from that, go work at somewhere incredible. Do something amazing at that company. Have a lot of really good references at this incredible company and have a lot of amazing friends that are great VCs. Who want to back whatever you do. That is not what we did. Okay? That's not what we did at all. Going down the ladder.
00:26:24 · Pablo Srugo, Jonathan Awad
[00:26:24] S1: Yeah, going down the ladder. And then, [00:26:26] S0: okay. And then after that, YC, shout out YC. Amazing. Definitely, I recommend doing that. And then, it's what we did, which is not the bottom. There is the bottom. I don't want to get into the bottom because it's mildly offensive. And that's what we did, which is basically get introduced to tons of investors for the first time and plan out all the meetings like a month in advance, like a month in advance, and then segment them out. Week, Week, Week, Week, and that's what we did. What I didn't know, which is why the story is crazy, is it was one week, you know, week one, week two, week three, a month in advance, right? Week one, SVB crashed. Oh, God. That's why the story's crazy because I didn't realize that and I was like, oh, we got this. 75 funds, tier ones, tier twos, tier threes. I've never raised before, so like, you know, like, we got a lot of experience here now. We got this. SVB crashed on the Thursday of week one year. [00:27:17] S1: Oh, my God. [00:27:19] S0: Shout out to our investors. I'll never forget, Anamitra, A4 Capital. The conviction that this man had to be like, my money's in SVB in First Republic, but I'm still in. Crazy. You don't want to leave your rap. Crazy. Plus, you're in fintech. Like, this stuff is like adjacent. [00:27:34] S1: It's like, hey, is anyone, [00:27:35] S0: any bank going to buy anything? [00:27:37] S1: Like, all the FIs are going to be frozen? [00:27:38] S0: What's going on? [00:27:39] S1: And also, all the VC's money is in SVB.
00:27:39 · Pablo Srugo, Jonathan Awad
[00:27:39] S1: And also, all the VC's money is in SVB. [00:27:42] S0: Yeah. All the portfolio company's money is in SVB. And then First Republic is the real kicker, by the way. That was even worse. Basically, day one, going so well, getting some commits. I was saying it's safe, whatever. Getting some commits. I'm like, oh, I'm feeling good. Day two, even more. And like, we're going quick. Day three is Wednesday. The rumblings, Reddit, Twitter. What's going on? People say, have you seen this? I'm like, oh, no, no, no. This would be the worst timing of all time. No way. Thursday morning, SVB, everyone's wiring out. Everyone's telling each other to get money out, out, out, out. Thursday night, all wires done by SVB. All done. Thursday night into Friday morning, so many meeting cancellations. I mean, 40% of week two and week three canceled. And I was like, did I just use my entire network and tell everyone I'm raising? [00:28:36] S1: Dude, and fundraising is all about momentum. [00:28:38] S0: And you don't want to be the one that went to everyone and then fail. Like, you're just getting out of that is so hard. [00:28:42] S1: The only thing they remember is if you did it or not. [00:28:45] S0: It doesn't matter why. Were you trying to raise a seed like two months ago? [00:28:48] S1: What happened? Like, it's over,
00:28:48 · Pablo Srugo, Jonathan Awad
[00:28:48] S1: What happened? Like, it's over, [00:28:50] S0: dude. It's just deadly. Untouchable. Crazy, man. It was crazy. And shout out to Anamitra. I'll never forget. Like, met him on Friday, talked to him on Saturday, talked to him on Sunday, Wednesday. He's like, no, we're leading this round. I don't care. We'll figure it out. And I was like, I'm going to be honest. I barely ever tell this story. So we'll record it. My first panic attack ever was that Saturday. My ever. I've never, I'm not an anxious person. I'm not a nervous person. I am exactly how I'm presenting on this call. Basically, like this podcast. I was like, did I just use my whole network? Unlike the single, one of the only financial crises, like, in the last 20 years, like this, oh, wait, and there's now, [00:29:32] S1: yeah, 22. [00:29:33] S0: And I plan on a month in advance. [00:29:34] S1: And I was like, [00:29:35] S0: huh, is this a sign? Fortunately, you know, a lot of great investors who had major conviction, and we still ended up getting like 15 mil of interest and took like four of it. Oh, wow. And genuinely the most tumultuous, craziest emotional experience ever to like, get just straight to cancels. And then so many no's. And still just like every meeting, because I, 75. And then I met a bunch of people and it ended up being like 100 meetings basically in three weeks. And then we got, yeah, just so much emotional conviction and resilience. They're like, whoa, what a, what a story. Like, frankly, you love this show. You don't want to miss the next episode.
00:29:35 · Jonathan Awad, Pablo Srugo
[00:29:35] S0: huh, is this a sign? Fortunately, you know, a lot of great investors who had major conviction, and we still ended up getting like 15 mil of interest and took like four of it. Oh, wow. And genuinely the most tumultuous, craziest emotional experience ever to like, get just straight to cancels. And then so many no's. And still just like every meeting, because I, 75. And then I met a bunch of people and it ended up being like 100 meetings basically in three weeks. And then we got, yeah, just so much emotional conviction and resilience. They're like, whoa, what a, what a story. Like, frankly, you love this show. You don't want to miss the next episode. [00:30:13] S1: Why would you? So hit that follow button. Trust me, it's in your own best interest. That's wild, dude. I want to make sure we have enough time for the tactics at the end, but I do want to understand. So now you've, you've got some money, like a three, $4 million. You've got the, the, your co-founder and you have the idea. The idea depends on getting like all these FIs to like, agree to share data with you. That seems like the hard part of this equation. How do you start to make that happen? Yeah. You know, there's a lot of,