1 00:00:00,585 --> 00:00:03,315 - It's once again time to get gutsy with Liz Hall 2 00:00:03,375 --> 00:00:06,355 and her expert guests on the Gutsy Babe Podcast. 3 00:00:08,635 --> 00:00:10,935 - Hi. Welcome to the Gutsy Babe with Liz Hall. 4 00:00:11,645 --> 00:00:14,695 Today's topic is fundraising for entrepreneurs, 5 00:00:15,075 --> 00:00:18,535 and we have our guest Stanoff Zinc off. 6 00:00:18,645 --> 00:00:19,975 Welcome. Stanislau. 7 00:00:20,195 --> 00:00:21,295 If you don't mind, I'd like 8 00:00:21,295 --> 00:00:23,175 to just di give a little bio on you. 9 00:00:24,375 --> 00:00:25,815 - Excellent. Thank you, Liz, for having me. 10 00:00:26,395 --> 00:00:29,095 Uh, glad to be here. A little bit about myself. 11 00:00:29,535 --> 00:00:33,215 I am, um, a practical CFO Chief Financial Officer 12 00:00:33,995 --> 00:00:36,415 and, uh, what that means is that I work 13 00:00:36,415 --> 00:00:39,325 with companies on part-time basis, basis 14 00:00:39,325 --> 00:00:41,605 and, uh, I partner up with executive teams 15 00:00:42,425 --> 00:00:45,405 to help 'em scale companies with the ultimate goal 16 00:00:45,465 --> 00:00:47,285 of creating sustainable 17 00:00:47,285 --> 00:00:48,885 and transferable business value 18 00:00:49,495 --> 00:00:51,965 while at the same time throughout the whole process, keeping 19 00:00:52,485 --> 00:00:54,685 companies in a state of readiness and attractiveness. 20 00:00:55,765 --> 00:00:57,575 - It's very impressive. Stanis. 21 00:00:57,575 --> 00:00:59,975 Love - . Thank you. Thank you. Yes. 22 00:01:00,335 --> 00:01:04,135 I, uh, I feel fortunate to be one of those, uh, few people 23 00:01:04,475 --> 00:01:08,815 who knew who, whether that he wanted to be when he grows up 24 00:01:09,075 --> 00:01:11,415 and, uh, back dating back to when I was 12. 25 00:01:11,555 --> 00:01:13,615 So at 12 I knew I wanted to be in finance 26 00:01:13,795 --> 00:01:16,215 and I've carried that love for well over 30 years. 27 00:01:17,435 --> 00:01:20,175 - Wow. That's beautiful. That is also impressive 28 00:01:20,175 --> 00:01:22,255 because I still feel like sometimes 29 00:01:22,355 --> 00:01:23,535 I'm still finding myself . 30 00:01:24,435 --> 00:01:26,215 - Mm-Hmm. . I believe that. 31 00:01:26,325 --> 00:01:28,655 Well, we're all trying to find it, your version 32 00:01:29,035 --> 00:01:30,535 of ourselves throughout their lives. 33 00:01:30,535 --> 00:01:31,855 Right? Correct. 34 00:01:31,995 --> 00:01:36,815 - So true. So your official title is fractional CFO. Yes. 35 00:01:36,875 --> 00:01:39,895 Can you describe what that is and what services you offer? 36 00:01:39,995 --> 00:01:41,855 You did mention a little, but if you could go into 37 00:01:42,075 --> 00:01:43,075 - Yes. 38 00:01:43,075 --> 00:01:46,255 So a traditional CFO is somebody who is working 39 00:01:46,325 --> 00:01:49,815 with the executive team, whether it's COO, the HR 40 00:01:50,435 --> 00:01:52,695 and innovations officer, technology officer, 41 00:01:53,515 --> 00:01:55,255 the c-suite working with the board. 42 00:01:55,835 --> 00:01:59,615 Um, they work on full-time basis as a sitting CFO Mm-Hmm. . 43 00:01:59,985 --> 00:02:02,575 There are a lot of companies that don't have a need 44 00:02:02,575 --> 00:02:04,815 for full-time, CFO and 45 00:02:04,875 --> 00:02:08,135 or they may not be able to afford a full-time, CFO I'm in 46 00:02:08,135 --> 00:02:09,455 that space where they need exists, 47 00:02:09,555 --> 00:02:10,975 but, uh, it's not big enough 48 00:02:10,975 --> 00:02:12,975 to warrant a full-time employee. 49 00:02:14,125 --> 00:02:16,215 - I've heard of fractional CFO in the past. 50 00:02:16,655 --> 00:02:18,055 I feel that it's becoming more 51 00:02:18,055 --> 00:02:19,655 and more popular in the west coast. 52 00:02:19,755 --> 00:02:23,455 Now that term fractional CFO is very popular in the East 53 00:02:23,455 --> 00:02:24,815 coast for many years. 54 00:02:24,965 --> 00:02:29,095 Okay. And now it's becoming more, um, mainstream, um, 55 00:02:29,095 --> 00:02:30,375 throughout the nation 56 00:02:30,915 --> 00:02:33,375 and more, more accessible for people 57 00:02:33,375 --> 00:02:35,055 to even understand what that is. 58 00:02:35,535 --> 00:02:38,175 - I have worked with companies that are at the inception 59 00:02:38,795 --> 00:02:39,935 and all the way to companies 60 00:02:39,935 --> 00:02:44,695 that are third generation owned 50 years, uh, in the making. 61 00:02:45,275 --> 00:02:47,215 And, uh, so I've covered the full spectrum, 62 00:02:47,795 --> 00:02:51,215 but to circle back to the fractional concept Mm-Hmm. , 63 00:02:51,975 --> 00:02:53,495 I first came across it 64 00:02:53,795 --> 00:02:56,415 and when I was doing internship at a small business 65 00:02:56,415 --> 00:02:59,365 development center during my graduate studies studies 66 00:02:59,365 --> 00:03:01,725 and, um, I volunteered at the community 67 00:03:02,385 --> 00:03:04,765 and made myself available to 68 00:03:05,445 --> 00:03:07,485 business owners in the community who would come in 69 00:03:07,485 --> 00:03:10,365 and have questions regarding finances 70 00:03:10,395 --> 00:03:12,845 that they had no other resource to turn to. 71 00:03:13,185 --> 00:03:16,325 And it became apparent to me back in 2010 72 00:03:16,515 --> 00:03:19,805 that there's a need in the market, uh, that is underserved. 73 00:03:19,985 --> 00:03:22,725 And there's a thought in my heart for business owners 74 00:03:22,905 --> 00:03:25,725 who are trying to build their dream, 75 00:03:25,865 --> 00:03:27,205 but that they have this knowledge 76 00:03:27,205 --> 00:03:28,285 gap that they need to overcome. 77 00:03:29,395 --> 00:03:31,995 - That's beautiful. You did mention a little, 78 00:03:31,995 --> 00:03:33,715 but how did you get involved in finance 79 00:03:33,855 --> 00:03:35,715 and becoming a fractional CFO? 80 00:03:35,715 --> 00:03:38,035 If you wanna go even more so in detail. 81 00:03:39,145 --> 00:03:42,285 - So going back to finance, I was always good in math, 82 00:03:42,305 --> 00:03:44,005 but I did not wanna be a scientist. 83 00:03:44,105 --> 00:03:46,365 Mm-Hmm. and I come from a family of accountants, 84 00:03:46,505 --> 00:03:48,285 but I didn't wanna be an archeologist. 85 00:03:49,105 --> 00:03:51,565 And, uh, so for me, I was looking for something 86 00:03:51,565 --> 00:03:54,845 where I can take the math component and, 87 00:03:54,945 --> 00:03:57,925 and then have a future forward looking theme to it. 88 00:03:58,225 --> 00:03:59,445 And finance fit the bill. 89 00:03:59,635 --> 00:04:02,805 It's, uh, it's forward looking, uh, trying to 90 00:04:03,585 --> 00:04:07,125 create a future, whether it's trying to build a company 91 00:04:07,225 --> 00:04:08,845 and then articulate the path 92 00:04:08,985 --> 00:04:10,805 or the financial blueprint for the growth, 93 00:04:11,225 --> 00:04:13,685 or whether it's raising capital, um, 94 00:04:14,425 --> 00:04:15,805 or working with operations 95 00:04:15,905 --> 00:04:18,485 to really scale on an organization. 96 00:04:19,025 --> 00:04:21,125 Mm-Hmm. . And, uh, I majored in finance 97 00:04:21,425 --> 00:04:24,005 and I initially went to work at Morgan Stanley 98 00:04:24,025 --> 00:04:25,125 as a financial advisor, 99 00:04:25,385 --> 00:04:28,765 but, um, very quickly I've, uh, discovered that I 100 00:04:29,305 --> 00:04:31,605 didn't wanna manage people's portfolios 101 00:04:31,605 --> 00:04:33,965 and you really not managing people's portfolios, 102 00:04:33,965 --> 00:04:36,485 you're managing people's relationship with their money more 103 00:04:36,485 --> 00:04:37,885 so than you're managing a portfolio. 104 00:04:38,225 --> 00:04:39,805 And I realized it wasn't my cup of tea, 105 00:04:39,925 --> 00:04:41,085 I was more of an operator. 106 00:04:41,555 --> 00:04:44,485 Yeah. And, uh, and I transitioned to business 107 00:04:44,665 --> 00:04:47,765 and, uh, held a number of finance positions in, uh, 108 00:04:47,765 --> 00:04:51,685 between 2000 and 2010, went to graduate school 109 00:04:52,225 --> 00:04:53,245 and went back to finance. 110 00:04:54,105 --> 00:04:55,365 And then, uh, my first 111 00:04:56,035 --> 00:04:59,765 full-time CFO role was at a medical device company. 112 00:05:00,425 --> 00:05:02,885 We had four companies. I managed six departments. 113 00:05:02,885 --> 00:05:05,205 We had a public company in Australia, one in Japan, 114 00:05:05,205 --> 00:05:07,005 and two in the, in the United States. 115 00:05:08,375 --> 00:05:11,435 During my tenure, we tripled the headcount, 116 00:05:11,695 --> 00:05:12,915 10 x the revenues, 117 00:05:13,055 --> 00:05:17,995 and, um, also raised $35 million from none other than KKR 118 00:05:18,535 --> 00:05:19,555 in Silicon Valley. 119 00:05:20,215 --> 00:05:24,235 Um, I left, uh, then, uh, I was, uh, hired to take a, 120 00:05:25,055 --> 00:05:29,475 to position a f portfolio of companies for, um, 121 00:05:29,735 --> 00:05:31,075 an two PE firm. 122 00:05:32,015 --> 00:05:33,955 And, um, and that happened during the covid. 123 00:05:34,355 --> 00:05:35,355 I was head of HR 124 00:05:35,355 --> 00:05:38,715 and A CFO had six 60 employees report to me. 125 00:05:39,415 --> 00:05:41,795 And it was a heavy lift, a big undertaking, 126 00:05:41,935 --> 00:05:43,795 but, uh, we were successful 127 00:05:44,015 --> 00:05:48,515 and I finally decided that I will be a fractional CFO, um, 128 00:05:48,695 --> 00:05:50,835 for this season of my life or in perpetuity. 129 00:05:51,575 --> 00:05:53,595 And, uh, I've done quite a bit of that type 130 00:05:53,595 --> 00:05:54,755 of work leading up to this. 131 00:05:54,855 --> 00:05:58,085 So it's been a joy and a challenge as well. 132 00:05:58,865 --> 00:06:00,005 - Oh, that's very impressive. 133 00:06:01,925 --> 00:06:05,315 Since the subject is on this episode is raising money 134 00:06:05,335 --> 00:06:06,835 for entrepreneurs Mm-Hmm. , 135 00:06:07,175 --> 00:06:09,835 can you talk about a few of the most successful ways 136 00:06:09,835 --> 00:06:12,595 that entrepreneurs and startups can go about doing that? 137 00:06:13,615 --> 00:06:16,675 - Mm-Hmm. . So the first question I would ask 138 00:06:17,725 --> 00:06:19,345 is, do you need the money? 139 00:06:19,605 --> 00:06:20,665 Mm-Hmm. , uh, 140 00:06:20,665 --> 00:06:23,185 because when, when you take money from 141 00:06:23,605 --> 00:06:25,225 anyone, it changes the dynamic. 142 00:06:25,455 --> 00:06:30,225 Your business changes the single best description 143 00:06:30,895 --> 00:06:34,025 that I've come across of what it's like to raise money. 144 00:06:34,695 --> 00:06:39,585 It's equivalent to lighting a fuse. And, um, yes. 145 00:06:40,005 --> 00:06:44,355 So, and, uh, the challenge is you have 146 00:06:44,355 --> 00:06:45,595 to be accountable for that money 147 00:06:45,615 --> 00:06:47,915 and you have to return the capital back to the investor. 148 00:06:48,775 --> 00:06:51,315 So if you, if you're, uh, building a company, they, 149 00:06:51,775 --> 00:06:55,595 you effectively have to have some sort of an exit for them 150 00:06:55,735 --> 00:06:57,515 to, um, get their money back. 151 00:06:58,175 --> 00:07:02,075 So you, some people build, companies build to hold, 152 00:07:02,455 --> 00:07:04,155 but, uh, in that case, as you, as soon 153 00:07:04,155 --> 00:07:06,115 as you take the money you, you're building to sell. 154 00:07:06,695 --> 00:07:08,515 So that's something to recognize that. 155 00:07:08,575 --> 00:07:11,595 Um, so if it's a traditional startup, um, 156 00:07:12,815 --> 00:07:14,435 - That's a great point. 157 00:07:14,895 --> 00:07:17,635 And I like that question though. You have to ask yourself, 158 00:07:18,345 --> 00:07:20,195 - Yeah, well, do you need money? 159 00:07:20,255 --> 00:07:21,675 And how much money do you need? 160 00:07:21,675 --> 00:07:26,115 Because too little is, uh, will put you in a disadvantage 161 00:07:26,255 --> 00:07:27,475 and too much will dilute you. 162 00:07:27,975 --> 00:07:30,835 And, um, and you have, you have a hundred percent 163 00:07:30,835 --> 00:07:35,765 of the company, and if you think of, um, the journey 164 00:07:35,795 --> 00:07:38,205 that, uh, like if we take an average, for example, 165 00:07:39,235 --> 00:07:42,445 from inception to X exit, usually it takes seven years. 166 00:07:43,545 --> 00:07:47,045 So, uh, for seven years, you will continue to raise capital 167 00:07:47,185 --> 00:07:48,765 and continue to dilute yourself. 168 00:07:48,785 --> 00:07:50,565 So you have to be strategic 169 00:07:51,305 --> 00:07:54,685 and, uh, smart with, uh, the a hundred percent that you have 170 00:07:54,685 --> 00:07:59,525 to allocate to, uh, to incentivize, uh, the board, 171 00:07:59,785 --> 00:08:02,445 the advisory board, the investor community, 172 00:08:02,985 --> 00:08:05,605 and, uh, employees and other talent as as well. 173 00:08:05,985 --> 00:08:09,565 And then have something left for yourself. Of course. Yeah. 174 00:08:10,185 --> 00:08:12,285 So with that in mind, it depends 175 00:08:12,655 --> 00:08:15,645 where your company is currently in, in its cycle. 176 00:08:15,865 --> 00:08:17,645 So if you're at the idea stage, you, 177 00:08:17,745 --> 00:08:21,325 you'll have a different process versus if you are 178 00:08:21,925 --> 00:08:25,685 a 5-year-old company that has $50 million in revenue and, 179 00:08:25,785 --> 00:08:29,445 and wanna scale to a billion dollars in revenue Mm-Hmm. . 180 00:08:29,525 --> 00:08:32,645 So I, I, there, there, depending on the stage, um, 181 00:08:32,865 --> 00:08:35,285 of the round, that will determine 182 00:08:35,825 --> 00:08:37,365 how you approach the fundraising. 183 00:08:37,625 --> 00:08:41,405 - Mm-Hmm. , I always find it fascinating when you have 184 00:08:41,565 --> 00:08:44,885 startups where they're just in the idea phase Mm-Hmm. 185 00:08:45,145 --> 00:08:48,125 and how much revenue someone could, uh, 186 00:08:48,275 --> 00:08:50,645 potentially get and receive. 187 00:08:50,645 --> 00:08:51,965 Mm-Hmm. with just an idea. 188 00:08:52,485 --> 00:08:53,925 I mean, I understand with technology, 189 00:08:53,945 --> 00:08:56,405 but when there's a product in hand, I think it's Mm-Hmm. 190 00:08:56,595 --> 00:09:00,845 amazing. So that always blows my mind where like, wow, 191 00:09:01,145 --> 00:09:02,845 you are able to raise that much capital 192 00:09:02,915 --> 00:09:05,165 with just an idea. It's impressive. Mm-Hmm. , 193 00:09:05,985 --> 00:09:08,405 - Yes. Well, it's a little bit more complicated. 194 00:09:08,705 --> 00:09:10,125 Um, as far as, 195 00:09:10,315 --> 00:09:13,645 because investors, uh, if we think of venture capitalists, 196 00:09:13,785 --> 00:09:17,165 for example, they have certain, like a lead investor, 197 00:09:17,165 --> 00:09:19,245 they will wanna have a certain portion of your company. 198 00:09:19,505 --> 00:09:22,965 Mm-Hmm. . So in many instances, their goal is to, 199 00:09:23,235 --> 00:09:24,765 they will lead, uh, 200 00:09:25,305 --> 00:09:27,885 around they will wanna have 20% of your company. 201 00:09:28,545 --> 00:09:33,485 And, um, you may, um, raise more money than you need to just 202 00:09:33,485 --> 00:09:35,685 for them to meet the 20%. 203 00:09:35,745 --> 00:09:36,965 But that, that was more custom, 204 00:09:37,595 --> 00:09:40,045 more customary prior to covid. 205 00:09:40,705 --> 00:09:42,605 Uh, the valuations have been depressed, 206 00:09:42,785 --> 00:09:44,405 um, somewhat since then. 207 00:09:45,185 --> 00:09:47,405 So if you can raise money, great. 208 00:09:47,625 --> 00:09:51,755 But I will say this, as glamorous as it can be 209 00:09:51,755 --> 00:09:53,755 to have raised capital, it doesn't, 210 00:09:53,905 --> 00:09:56,275 that in itself doesn't build the business or the product. 211 00:09:56,775 --> 00:09:59,195 So it's almost like you have to do this to do, 212 00:09:59,415 --> 00:10:00,875 to actually build the company, 213 00:10:01,415 --> 00:10:03,675 but it, that in itself doesn't build the company. 214 00:10:05,185 --> 00:10:07,965 - You had said your analogy of lighting a fuse. 215 00:10:08,425 --> 00:10:09,805 Can you explain that a little? 216 00:10:11,055 --> 00:10:14,715 - Yes. And it depends on, uh, the investor, for example. 217 00:10:14,975 --> 00:10:18,885 Mm-Hmm. . So we can say that we can, um, 218 00:10:19,085 --> 00:10:21,565 decouple them into two categories, smart money 219 00:10:21,745 --> 00:10:22,845 and not smart money. 220 00:10:23,265 --> 00:10:26,605 And then each one have their own, um, proclivities 221 00:10:26,745 --> 00:10:28,285 and their own limitations. 222 00:10:28,865 --> 00:10:32,485 And an institutional investor will be much more rigorous 223 00:10:33,305 --> 00:10:35,965 and that they will have, uh, certain expectations 224 00:10:35,965 --> 00:10:40,605 of you when it comes to growth, governance, uh, strategy 225 00:10:41,025 --> 00:10:42,685 and, uh, traction and results. 226 00:10:43,065 --> 00:10:45,325 That's one category of investors to deal with. 227 00:10:45,905 --> 00:10:50,005 The not sophisticated investors may be micromanagers 228 00:10:50,185 --> 00:10:54,045 or trying to influence the company without really being 229 00:10:54,045 --> 00:10:55,285 subject matter experts. 230 00:10:55,665 --> 00:10:59,445 But in the end, people give you money only when they have 231 00:10:59,675 --> 00:11:00,845 some level of confidence 232 00:11:00,845 --> 00:11:02,525 that you'll return that money back to them. 233 00:11:03,065 --> 00:11:04,285 So time is money. 234 00:11:04,425 --> 00:11:07,685 So they have expectations as to when they, 235 00:11:07,685 --> 00:11:08,965 when they will receive that money 236 00:11:09,425 --> 00:11:10,725 and what milestones you have 237 00:11:10,725 --> 00:11:12,325 to hit throughout the lifecycle. 238 00:11:13,835 --> 00:11:15,455 - Can you share a success story in 239 00:11:15,455 --> 00:11:16,775 helping companies raise funds? 240 00:11:17,985 --> 00:11:22,515 - Yes. I think if we go back to the idea stage, um, so 241 00:11:23,255 --> 00:11:27,195 if, if we compare idea stage to like a, a company 242 00:11:27,195 --> 00:11:29,715 that has revenue already Mm-Hmm. , 243 00:11:29,855 --> 00:11:32,355 um, the emphasis would be when you go 244 00:11:32,355 --> 00:11:35,715 to investors is more at the idea stage would be on the team. 245 00:11:35,975 --> 00:11:40,875 Mm-Hmm. . Um, and, and people, um, will invest in a team 246 00:11:41,265 --> 00:11:44,195 because there's no traction when you, 247 00:11:44,305 --> 00:11:46,555 when you're established company more or less, 248 00:11:46,575 --> 00:11:50,435 and you have revenues, uh, the what, um, 249 00:11:50,665 --> 00:11:52,875 what you're presenting to the investment community is the 250 00:11:52,990 --> 00:11:54,205 attraction and the success. 251 00:11:54,425 --> 00:11:57,405 Mm-Hmm. . So if you can say, a revenue is growing 252 00:11:57,985 --> 00:12:00,445 20% month over month Mm-Hmm. 253 00:12:00,505 --> 00:12:03,445 That's a healthy traction, uh, that you can, 254 00:12:03,505 --> 00:12:05,165 um, showcase to investors. 255 00:12:05,745 --> 00:12:07,125 You don't have that when you have an idea. 256 00:12:07,225 --> 00:12:12,005 But what you can have is, uh, a robust team of co-founders 257 00:12:13,065 --> 00:12:15,285 and, uh, possibly an advisory board. 258 00:12:17,755 --> 00:12:19,565 - What challenges do entrepreneurs have 259 00:12:19,565 --> 00:12:22,245 to overcome when raising funds in today's economic climate? 260 00:12:24,085 --> 00:12:27,025 - That's a great question. I think, um, there's a lot 261 00:12:27,025 --> 00:12:30,305 of uncertainty and, and stability in a financial market 262 00:12:30,485 --> 00:12:32,825 and just the world overall. 263 00:12:33,605 --> 00:12:36,205 And, uh, as a result, um, 264 00:12:36,435 --> 00:12:38,765 some investors have been paralyzed, 265 00:12:38,915 --> 00:12:40,725 some have been more selective. 266 00:12:41,625 --> 00:12:45,965 And, um, I think 20 20, 20 21 267 00:12:46,385 --> 00:12:49,125 or 2019 to 2021 were 268 00:12:50,445 --> 00:12:51,805 remarkable years for fundraising. 269 00:12:52,265 --> 00:12:55,245 And people with an idea would have crazy valuations. 270 00:12:56,125 --> 00:12:58,765 Subsequently, uh, with interest rates rising 271 00:12:59,025 --> 00:13:00,965 and, uh, inflation rising 272 00:13:01,105 --> 00:13:03,805 and the cost of everything, uh, changing, 273 00:13:05,015 --> 00:13:06,225 it's been more difficult and 274 00:13:06,225 --> 00:13:07,545 there's a lot more unpredictability. 275 00:13:08,285 --> 00:13:11,265 So, uh, one way to look at it is this way, 276 00:13:11,845 --> 00:13:13,865 as you are raising, uh, 277 00:13:13,865 --> 00:13:17,465 capital throughout company's life mm-Hmm, , um, you, 278 00:13:17,465 --> 00:13:18,905 you're hitting different milestones. 279 00:13:19,365 --> 00:13:22,225 And with those milestones, you're de-risking the business. 280 00:13:22,605 --> 00:13:25,465 So, for example, you have an idea and you testing it, 281 00:13:25,685 --> 00:13:28,785 and you raise a prese round to test an idea. 282 00:13:28,965 --> 00:13:32,385 And then, and then you, you hear, you send a signal 283 00:13:32,405 --> 00:13:34,225 to the market and you hear an echo back, 284 00:13:34,245 --> 00:13:36,065 and it's, it's a positive echo. 285 00:13:36,485 --> 00:13:39,385 And, and then you go, uh, raise a seed round 286 00:13:39,565 --> 00:13:42,705 and then, uh, to build a product, uh, 287 00:13:42,965 --> 00:13:45,785 and then figure out you go to market strategy, uh, uh, 288 00:13:46,325 --> 00:13:48,065 and product market fit, and, 289 00:13:48,245 --> 00:13:49,945 and, uh, you send a signal to the market 290 00:13:50,365 --> 00:13:51,905 and you hear positive echo back. 291 00:13:51,925 --> 00:13:53,305 And then you can come back to the investors 292 00:13:53,525 --> 00:13:57,465 and say, I put it out and we have, uh, demand. 293 00:13:57,725 --> 00:14:00,495 We, we have, um, minimal traction, 294 00:14:00,555 --> 00:14:01,575 but there are signs of that. 295 00:14:02,115 --> 00:14:06,695 And then you wanna scale, um, from, from c to, um, 296 00:14:07,235 --> 00:14:10,335 to, uh, let's say a series A, it's a go-to market strategy, 297 00:14:10,835 --> 00:14:13,895 and you wanna introduce a product, um, more mainstream. 298 00:14:14,155 --> 00:14:15,935 Mm-Hmm. , um, you focus on that. 299 00:14:15,955 --> 00:14:18,895 And then post series A, it's more scaling the company 300 00:14:18,915 --> 00:14:22,665 and then later, um, B series C, 301 00:14:22,665 --> 00:14:24,385 you're focusing on more efficiency 302 00:14:24,815 --> 00:14:29,765 because the challenge is, up until not too long ago, 303 00:14:30,085 --> 00:14:32,045 startups were cash incinerators. 304 00:14:32,905 --> 00:14:35,325 And, uh, and I'm sure you've seen a lot of headlines, 305 00:14:35,605 --> 00:14:38,525 companies burning through billions and billions of dollars 306 00:14:39,425 --> 00:14:42,765 and, uh, investors just filing more cash and, uh, 307 00:14:43,025 --> 00:14:45,045 and the company's just, uh, burning more cash. 308 00:14:45,835 --> 00:14:47,525 It's not so any longer. 309 00:14:47,745 --> 00:14:51,005 And, uh, there's lot more scrutiny 310 00:14:51,505 --> 00:14:56,145 and, um, investors wanna see 311 00:14:57,145 --> 00:14:58,505 a path to profitability. 312 00:14:59,605 --> 00:15:00,975 - Yeah. Well - That makes sense. 313 00:15:01,075 --> 00:15:02,775 That's, yeah, that's one of the things. 314 00:15:03,275 --> 00:15:05,815 And then, uh, with depressed valuations, uh, 315 00:15:05,815 --> 00:15:07,695 to raise the same amount of cash you have 316 00:15:07,695 --> 00:15:11,935 to forego a greater portion of your company, which you, 317 00:15:12,025 --> 00:15:15,895 which results in, um, uh, how much company you control. 318 00:15:16,555 --> 00:15:19,975 And, um, rising costs from labor to materials, 319 00:15:19,975 --> 00:15:21,455 if it's a product Mm-Hmm. , 320 00:15:21,535 --> 00:15:25,015 um, all of those, uh, factors play into the 321 00:15:25,575 --> 00:15:28,855 challenging landscape, um, when it comes to raising capital. 322 00:15:30,175 --> 00:15:33,935 - Alright. If you were to give an entrepreneur 323 00:15:34,235 --> 00:15:37,375 who are listening today, um, two 324 00:15:37,375 --> 00:15:39,975 or three pieces of advice when it comes 325 00:15:39,975 --> 00:15:42,255 to getting an investor, what would they be? 326 00:15:43,245 --> 00:15:44,465 - So when you go to an investor, 327 00:15:44,465 --> 00:15:48,475 they'll ask you 50 questions about your product, 328 00:15:48,885 --> 00:15:51,075 about your team, and total addressable market, 329 00:15:51,175 --> 00:15:54,155 unique value proposition of your product, your go to go 330 00:15:54,155 --> 00:15:55,995 to market strategy, how you plan 331 00:15:55,995 --> 00:15:57,235 to make it to the next round. 332 00:15:57,815 --> 00:16:00,235 But in reality, they're asking one question, 333 00:16:00,335 --> 00:16:02,875 and that is, how will you return the capital document? 334 00:16:03,615 --> 00:16:05,275 So the best answer you can give them 335 00:16:05,415 --> 00:16:07,155 is, I've done it before. 336 00:16:07,825 --> 00:16:08,995 Look at my last venture. 337 00:16:09,135 --> 00:16:12,555 We had a successful exit and my investors made this return. 338 00:16:13,575 --> 00:16:16,835 If you, if you have done that, that's, that's your answer. 339 00:16:17,135 --> 00:16:19,115 If you haven't done that, then you have 340 00:16:19,115 --> 00:16:21,795 to put together a team, uh, kind of all the pieces, 341 00:16:21,795 --> 00:16:26,315 whether it's operations, technology, marketing, uh, 342 00:16:26,865 --> 00:16:29,875 with a go-to product emphasis, uh, to be able 343 00:16:29,875 --> 00:16:31,315 to have a, a team. 344 00:16:31,975 --> 00:16:35,275 If you can't have a founding team, I would advise, 345 00:16:35,375 --> 00:16:37,635 I'm a big advocate for advisory boards. 346 00:16:37,735 --> 00:16:40,715 Mm-Hmm. . And I've sort of, I certain a number of those 347 00:16:40,715 --> 00:16:44,275 where let's say three physicians wanna 348 00:16:44,965 --> 00:16:47,955 start a medical tech technology startup, 349 00:16:48,495 --> 00:16:50,755 but none of 'em know how to code a project, uh, 350 00:16:50,755 --> 00:16:52,595 manage a project, and, um, 351 00:16:53,015 --> 00:16:57,115 and they may not be able to find a technical co-founder, 352 00:16:57,695 --> 00:16:58,875 or they're not interested in that. 353 00:16:59,575 --> 00:17:03,715 But, uh, advisory board is where you make up that gap. 354 00:17:03,935 --> 00:17:06,755 And, and then the idea is to, between the pounding 355 00:17:06,905 --> 00:17:09,235 between the founders and advisory board 356 00:17:09,235 --> 00:17:13,515 to have a well-rounded group of people who are able 357 00:17:13,535 --> 00:17:15,075 to address all, all 358 00:17:15,075 --> 00:17:17,555 of the components have grown and scaling a business. 359 00:17:18,295 --> 00:17:21,635 And then I alluded this earlier during my introduction, is 360 00:17:21,875 --> 00:17:24,875 that in a, what I do is as I work with companies, 361 00:17:25,025 --> 00:17:27,515 it's important to maintain the company in a state 362 00:17:27,515 --> 00:17:28,995 of readiness and attractiveness. 363 00:17:30,155 --> 00:17:32,235 A lot of companies are not attracted to invest in, 364 00:17:32,575 --> 00:17:34,715 and a lot of companies when they do need the money, 365 00:17:34,855 --> 00:17:36,675 are not ready to be invested in. 366 00:17:36,895 --> 00:17:39,235 Mm-Hmm. , um, I'll give you an example. 367 00:17:39,375 --> 00:17:43,285 Simple example, uh, accounting books. Mm-Hmm. 368 00:17:49,035 --> 00:17:53,225 From la uh, let's take last year, uh, from AI companies, 369 00:17:53,475 --> 00:17:56,545 space propulsion companies, uh, pharmaceutical companies, 370 00:17:56,905 --> 00:17:59,905 construction companies, service companies, you name it. 371 00:18:00,405 --> 00:18:05,195 Uh, and not one company that, uh, uh, had their books 372 00:18:05,775 --> 00:18:07,235 to the standard that I would say 373 00:18:08,035 --> 00:18:10,635 a sophisticated investor would wanna see, not one. 374 00:18:11,215 --> 00:18:15,875 Wow. So, yeah. So, and, and it goes back to, are you ready? 375 00:18:15,975 --> 00:18:18,595 So if you need the capital, are you ready 376 00:18:18,595 --> 00:18:19,915 to go solicit that capital? 377 00:18:20,175 --> 00:18:22,755 Or are you gonna be scrambling for three months 378 00:18:22,775 --> 00:18:26,315 to clean the books or position a company of for success? 379 00:18:27,195 --> 00:18:30,035 Being able to succinctly articulate your value 380 00:18:30,035 --> 00:18:31,435 proposition is important. 381 00:18:31,935 --> 00:18:34,675 And, uh, I am always surprised 382 00:18:34,775 --> 00:18:37,355 how many companies go in circles, in circles 383 00:18:37,415 --> 00:18:39,275 for 10 minutes trying to describe what, 384 00:18:39,275 --> 00:18:40,675 what their value proposition is. 385 00:18:40,855 --> 00:18:43,075 And, uh, and they just lose their audiences 386 00:18:43,075 --> 00:18:46,115 because you should be able to clearly state, 387 00:18:46,735 --> 00:18:50,155 here's the massive problem I'm solving, uh, uh, 388 00:18:50,335 --> 00:18:51,355 in, in, in the world. 389 00:18:51,535 --> 00:18:54,715 Mm-Hmm. and regrettably, I, I've come across a lot 390 00:18:54,715 --> 00:18:58,235 of companies that don't have it clearly articulated or, uh, 391 00:18:58,255 --> 00:19:01,515 or they don't have it finalized where it's, 392 00:19:01,545 --> 00:19:03,275 it's a moving target every three months 393 00:19:03,615 --> 00:19:05,115 and, uh, three months. 394 00:19:05,115 --> 00:19:07,195 So as they pivot 395 00:19:07,295 --> 00:19:10,315 and shift from one value proposition to the next, all 396 00:19:10,315 --> 00:19:14,395 of the supporting materials to go soliciting investors, 397 00:19:15,665 --> 00:19:18,035 capital from investors has to change as well. 398 00:19:19,335 --> 00:19:22,235 And then, um, if you, if the investors have a proof 399 00:19:22,435 --> 00:19:25,035 of concept of some sort, if you don't have traction, 400 00:19:25,135 --> 00:19:28,515 but you have a proof of concept that would be welcomed also, 401 00:19:28,605 --> 00:19:30,075 there, there's a lot of VCs 402 00:19:30,295 --> 00:19:31,515 and there's a lot of money out there. 403 00:19:31,515 --> 00:19:33,755 There's a abundance of money out there, 404 00:19:34,135 --> 00:19:35,915 but you have to get aligned with that money, right? 405 00:19:36,095 --> 00:19:37,555 Mm-Hmm. . So you have to understand, 406 00:19:37,555 --> 00:19:42,395 like if I'm a idea based company, I have to find a VC 407 00:19:42,535 --> 00:19:43,715 or an angel investor 408 00:19:43,735 --> 00:19:45,715 who would invest in early stage companies. 409 00:19:45,715 --> 00:19:49,555 You're not gonna go, so let's say I'm a SaaS company at the 410 00:19:49,555 --> 00:19:53,195 idea stage and I need a hundred thousand dollars. 411 00:19:53,335 --> 00:19:56,395 You are not gonna go to medical device companies that 412 00:19:56,975 --> 00:20:01,635 invest in late stage pharmaceutical drug trial companies. 413 00:20:01,815 --> 00:20:04,555 Uh, and then they write checks at a minimum of $10 million. 414 00:20:04,855 --> 00:20:06,515 Mm-Hmm. , uh, post series B. 415 00:20:06,895 --> 00:20:09,835 So you have to get a line like, who are my target audiences? 416 00:20:10,295 --> 00:20:14,115 Uh, and VCs who invest in early stage companies, check size, 417 00:20:14,115 --> 00:20:16,155 they write, make sure that matches mine. 418 00:20:16,455 --> 00:20:19,875 And also within the industry that I'm in, um, 419 00:20:20,485 --> 00:20:23,155 those are the, the, the ones that come to, to my mind. 420 00:20:24,805 --> 00:20:27,505 - Excellent advice. For someone who's listening 421 00:20:27,505 --> 00:20:29,025 and doesn't know what VC is, 422 00:20:29,165 --> 00:20:31,025 can you explain just vc, because 423 00:20:31,025 --> 00:20:32,505 - They're venture capital firms? 424 00:20:32,805 --> 00:20:36,915 Um, yes. Um, they are effectively, 425 00:20:37,345 --> 00:20:40,835 effectively there firms that take money from, uh, 426 00:20:40,835 --> 00:20:42,675 limited partners called LPs. 427 00:20:42,675 --> 00:20:45,475 mm-hmm. . And whether it's institutional investors like, um, 428 00:20:45,645 --> 00:20:50,205 let's say university or endowment fund or family office 429 00:20:51,065 --> 00:20:55,165 or, uh, individual investors and they raise a, uh, a fund 430 00:20:55,305 --> 00:20:59,005 and then they deploy that fund, uh, to invest into 431 00:20:59,645 --> 00:21:01,765 companies over a period of time based on 432 00:21:01,765 --> 00:21:02,805 their investment thesis. 433 00:21:03,225 --> 00:21:07,565 So if they're companies that invest into, let's say ai, 434 00:21:08,145 --> 00:21:09,965 uh, which is a hot topic today, 435 00:21:09,965 --> 00:21:11,965 and let's say like medical device, uh, uh, 436 00:21:12,035 --> 00:21:13,645 medical software, ai. 437 00:21:13,865 --> 00:21:15,525 And so that's their emphasis 438 00:21:15,525 --> 00:21:18,325 that they seek out com companies, um, 439 00:21:18,945 --> 00:21:21,445 who are building products or services in that space. 440 00:21:21,945 --> 00:21:23,445 And that's, um, and that's 441 00:21:23,445 --> 00:21:25,325 how they deployed their, uh, capital. 442 00:21:26,145 --> 00:21:27,525 So they've gained a lot 443 00:21:27,525 --> 00:21:29,205 of popularity in the last few decades, 444 00:21:29,585 --> 00:21:31,565 and, uh, they've, there's a lot 445 00:21:31,565 --> 00:21:33,485 of them out there, uh, nowadays. 446 00:21:33,625 --> 00:21:37,245 Mm-Hmm. and I have friends who are raising, uh, rounds, uh, 447 00:21:37,345 --> 00:21:38,925 and study their own VC funds, 448 00:21:39,345 --> 00:21:41,485 but, uh, they, they're kind of in the middle. 449 00:21:41,485 --> 00:21:43,805 They take money from limited partners 450 00:21:43,825 --> 00:21:46,045 and they give money to the companies. 451 00:21:46,105 --> 00:21:50,205 So they, they're, I wouldn't say the middleman, it's, well, 452 00:21:50,595 --> 00:21:51,885 it's over generalization, 453 00:21:52,345 --> 00:21:56,605 but their emphasis is to channel money to startup companies. 454 00:21:57,705 --> 00:21:59,765 - You're very well versed in educated, 455 00:21:59,825 --> 00:22:01,165 and I've learned so much. 456 00:22:01,945 --> 00:22:03,445 So thank you, Stanislaw. 457 00:22:04,425 --> 00:22:07,125 - My pleasure. - If any of our listeners own companies 458 00:22:07,425 --> 00:22:08,925 and would like to use your services, 459 00:22:09,185 --> 00:22:10,445 how can they get in touch with you? 460 00:22:11,535 --> 00:22:14,715 - The best way to find me is on LinkedIn, believe it or 461 00:22:14,715 --> 00:22:16,835 not. - , it's a great resource. . 462 00:22:17,455 --> 00:22:19,435 - That's right. Yes. Stan love Z 463 00:22:19,655 --> 00:22:22,235 and I can't imagine there are many of us out there. 464 00:22:22,975 --> 00:22:25,395 Um, and that's the best way to get ahold of me. 465 00:22:26,355 --> 00:22:28,475 - Okay. You have a website? 466 00:22:29,915 --> 00:22:34,095 - Yes. Um, austin fractional cfo com. Alright. 467 00:22:34,395 --> 00:22:36,095 I'm based outta Austin, Texas. Yes. 468 00:22:37,055 --> 00:22:39,485 - These days, it doesn't matter where you're located out. 469 00:22:39,825 --> 00:22:41,285 Mm-Hmm, - . Mm-Hmm. . Yeah. 470 00:22:41,325 --> 00:22:43,165 I only have one client in Texas right now, 471 00:22:43,345 --> 00:22:45,125 so I'm all over the place. 472 00:22:45,905 --> 00:22:46,905 Yeah, amazing. 473 00:22:47,995 --> 00:22:50,885 - This was extremely educational and so helpful. 474 00:22:51,305 --> 00:22:53,365 So thank you so much for your time. 475 00:22:53,675 --> 00:22:54,925 I've learned a lot 476 00:22:55,745 --> 00:22:59,125 and it was, uh, eyeopening, so I appreciate your time. 477 00:22:59,995 --> 00:23:02,885 I'll be needing a fractional CFO in the near future, 478 00:23:03,185 --> 00:23:04,205 so I'll be looking. 479 00:23:04,215 --> 00:23:06,445 - There you go, . Excellent. 480 00:23:07,105 --> 00:23:08,725 - So thank you. 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