How Christal Wang Closed a $2.2M Seed Round for Shimmer (Christal Wang / Shimmer)

[00:00:00]

Chris Wang: I had so many convos with people who are just like unaligned with what we're doing and I was just so sick of it.

then just on that weekend where I was telling my co founder, I was like, okay, we're ending this after this week. And then on that Friday, that's when she was like, yeah, I'm in. And I'll co lead

the round

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The most aggravating and comforting part of fundraising is that it only takes one.

Yes. For an all to change. Everyone's saying no. And then one yes. Changes everyone's minds.

That being said, it can take quite a few nos in order to reach that one. Yes. Sometimes hundreds. Working with founders, I've realized that not every founder is able to push through that amount of rejection in order to reach the promised [00:01:00] land.

Most times, right.

When you want to give up is exactly when you need to push through the most.

Lucky for the founder I'm speaking to today, she was able to push through and reach that one. Yes. That made every no she'd received from investors all worthwhile. Today, I'm speaking with crystal Wang co-founder and CEO of shimmer. The number one ADHD coaching platform for adults. After moving through YC and closing a successful pre-seed round, they ended up pivoting and facing some challenges when going out to raise their seed round. They stuck it out and ended up closing a $2.2 million seed round announced this January. But before we talk about her round. We ended up realizing we had quite the similar childhood.

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Chris Wang: So, I have ADHD. That has been established. And actually when I was a kid, it makes a lot of sense looking back now, but I was always, there was like a few [00:02:00] phases.

When I was really young, I was kind of the class clown. I was always saying what I was not supposed to be saying at the wrong time and I had this special seat that was right next to the teacher so that I would not bother anyone else. That was That was in the positive moments. There were some teachers that were worse where I had to sit in the corner or I had to be away from friends, or I had to make sure that I was like facing a direction where I wouldn't distract anyone.

So that was kind of the earlier, earlier ages. And then as I got older, I started to like channel my energy into non class stuff. So it was really interesting where I would, I have this, these memories of me by the door of the classroom, like sharpening my pencil. And then when the teacher looked the other way, I would like run out and I would just disappear for the rest of the class and I would do that almost every class.

Cause I was just so incredibly bored during class. I was not interested in what the teacher had to say. And I felt like class was [00:03:00] just like, One step in this like larger process of needing to like six months later regurgitate the same stuff onto a piece of paper and then forget about it. So I got super involved in sports.

I got really involved. I worked actually full time while I was in high school, my boss at the, at the mall. And my boss was like, don't you have to go to school? And I was like, no, no, I will work here. It just was more interesting to me. So I think I always had this like, unconventional way of going through life.

And I think I have been blessed by great parents and a great household that I had the support system to be able to kind of act out within boundaries. And there were,

Jason Yeh: I want to jump in there because, uh, people might not see your face if they're only listening to the audio, but it seems like you're Asian American like me.

Say it again.

Chris Wang: Asian Canadian.

Jason Yeh: Asian Canadian. I'm sorry, that's such an insult. It's

Chris Wang: okay.

Jason Yeh: Uh, [00:04:00] you are Asian of Asian origin, of background, like me. And, and so, I also am ADD. Undiagnosed, but I, I know I am at least somewhere on the spectr but at least in my household, that, that would never be something that was like acknowledged.

Right. And, uh, you know, I know, even though you skipped, it looked like you were skipping school, skipping class, probably didn't do that badly because you ended up going to decent schools. So tell me a little bit about how you balance this within your household. And like, it sounds like supportive parents, but, I'm curious where that.

That upbringing and the dynamic like all played into how you got to where you are.

Chris Wang: Yeah, I've reflected on this a lot and I think it's a compilation of a few things. So one, I'm very competitive and I like to figure out like the most efficient way to do things and [00:05:00] And to kind of like, I don't know how to explain it, but for example, when I was younger, at one point, my parents told me that like, if you're spending our money, then you have to follow our rules.

So that's why I went out and got a full time job at like 13. I was like, Oh, I need to earn my own money. That obviously didn't go very well when I came home with my rationale. But same with school. My parents. I like all Asian parents, most Asian parents. I had to get A's. And so my parents would always say, okay, well, if you get A, an A here, then you don't need to do this.

Or if you have a bad grade, then you don't get this. So ever since I was younger, it was in my head that like the goal was always to get good grades. But it didn't matter like how I got it. So I, If I could not go to class and get good grades, then in my head, I was like, okay, I, I still did my job of being a good Asian kid and I got to do what I got to do.

So I think I was always looking for like unconventional ways to [00:06:00] achieve the goals that were set for me in the beginning of life. And then later on, obviously I set my own goals, but earlier on, it was so ingrained in my head that I had to get good grades that I wish it wasn't like this. But I think I learned.

Next to nothing in class because all I tried to figure out was like

Jason Yeh: No, it was like

Chris Wang: I was like how what's on the what's on the final like what do I need to know? And I would just keep trying to badger the teacher to telling me what was gonna be on the final and It's like not as direct but in different ways And so I think that I got good at other things along the way, but it Yeah, I think as a, it's hard to look at people with ADHD who are Asian and be like, Oh, because you got good grades, you don't have ADHD because like a lot of people who are Asian have good grades because it was just like what you had to get and you would sacrifice other things for it.

Totally.

Jason Yeh: And then one other thing from your upbringing or your childhood is what about role [00:07:00] models around entrepreneurship? Were your parents entrepreneurs or, or how did you, did you think that you were going to go down this path when you were a kid skipping school and working at the mall full time?

Chris Wang: So I actually don't know where the on, maybe a little bit from my dad.

So, my dad, his background is actually in geology, but he ended up, over many, many decades. Now he works in finance for. Minds, essentially, like you'll flip minds and connect people who are buying minds with each other. So, in some sense, yes. And I think like our parents generation, they just needed to find unconventional ways to do things.

Cause they had to literally like step from like here to here across the world with no support system. So I think you learn a lot from immigrant parents who are just, you know, Making things happen. Cause even Cause even when I still, I just had this memory when [00:08:00] I was in high school and I was working full time at the mall.

I actually, I don't know, you're a guy, you might not know this, but do you know Uggs? Like the, so, I, I used to buy these fake Uggs from this like Chinese lady on Craigslist. And then I would like flip them at school and everyone knew they were fake, but. I was like the hug dealer. And then I used to also sell bubble tea at school.

At some point I would drive to the mall and drive back to the school and sell bubble tea to everyone. So there was always like, I feel like it was a way that I was kind of like itching this unfulfilled, this unfulfilled part of my brain that wasn't being filled by school.

Jason Yeh: Hmm. Fascinating . Okay. Well it's a great background.

Uh, I also love just exposing this different neurodiversity in, in, in a. And a founder that we get to interview about raising capital, because I feel like some people may be worried about being ADD [00:09:00] and getting to the point that you're at. So knowing that it can be done is great. We're going to fast forward a little bit and Get you to the point where you are deciding to start this company.

At the very beginning, did you feel like I'm going to start a company that will need to have capital raised for it? Or did you just start like, because we, we love focusing on this idea of like, for companies that raise capital, how do you do it? And your first decision to raise capital, was that something that was already baked into the company or did you get to it later?

Chris Wang: So, What we currently have an ADHD coaching platform is not what we first raised money for. When previous, so we did YC in 2021, and that was with our old model of support groups for Anxiety, depression, identity based groups, interest based groups. You had a bunch of different types of cohort based groups that were happening and it was in the [00:10:00] middle of the pandemic.

So it was tackling the loneliness pandemic and we actually raised venture capital for that concept.

is because that concept is. Very well fit in our minds at the time for VC funding, because we needed to get it to mass scale, to get the right matches for people so that we could have groups for everything.

That was the vision and you could come in and find a group exactly for the things that you wanted to talk about. And so that was why we decided to go VC, the VC route. However, we ended up pivoting over two years later. And we actually shut down that first one before even knowing what we were going to do next.

And we already had investors on the cap table. So we actually didn't make a conscious decision for this business model to be VC funded.

Jason Yeh: Ah, okay. So this is great. This is, this is a lot of texture for me to react to and for people to kind of like learn. So, uh, I'm, I'm just looking at what was announced on Crunchbase.

At least you raised like a [00:11:00] tiny little bit. Round was the 1. 3 million dollar round in 2022. That was part of this, this company that you just described, right?

Chris Wang: No. So that was a compilation of all the money we had raised to that date for the

Jason Yeh: For the old concept.

Chris Wang: Right. Yes. Okay. So this round, the 2. 2 was the first round we raised off of this concept.

Jason Yeh: This new one. Great. Okay. So now, I love what you described. At some point two years in, you had raised money for it, but you're like, this isn't working and you're like, let's cut ties with this thing. direction. Now let's go move over to something else. And at that point you, you kind of hinted at it. You're not sure if this is going to be something that you continue to raise money for.

Can you tell us a little bit about the mindset? Was it just like, let's try to find something that we can solve a problem around. And maybe it's a, maybe it's just a break even business. Like tell me a little bit about that.

Chris Wang: Yeah. So for this one, we [00:12:00] had about maybe half of the money left in the bank from the first concept.

And, so I will say we already had a bias towards creating something that is VC fundable, that had venture scale returns that were possible because of the position that we were in. I don't, it's hard to say if I would have done it differently if we weren't. So we actually. Once we started solving this problem and we realized that it was such a big problem that was unsolved, it became very clear to us quickly that it was more than venture scalable.

So it ended up working out neatly, but we didn't come into the problem thinking about like, how do we make something venture scalable? I think that, We came into the problem being like, this is clearly a massive unsolved problem. It's clearly in a growing space in terms of whether it's in terms of amount of people that are being impacted or in terms of like where we are culturally to be able to accept and use a concept like this.

And the general awareness around neurodiversity. So [00:13:00] that was kind of how we thought about it. But we were already, I would say pretty strongly biased to creating something that's venture scalable. And I think that over time, just being in the space, I think we just kind of fell in love with the concept, I guess, of like being able to like quickly impact that many people, especially if we have, a mission driven product that is going to solve like real problems.

And for me personally, I've always. Been really obsessed with this concept of like, impact and profit going together and being able to prove that out like time after time. So even when I was in consulting, I was doing social impact consulting. So it meshed really well, this with kind of our previous experience, our, I guess, like philosophies around what we want to do and the problem that was at hand.

So I think it was a few things that never at the time. is neat, but you can kind of post rationalize it as being a little bit like, [00:14:00] Oh, it's a perfect fit.

Jason Yeh: Totally. Okay. So this is a great time in the, in the journey of Shimmer to zoom in and, and get to a topic that I I've been excited to bring up ever since I knew one, your background and two that we were going to talk to you which is this.

So, I have a, an opinion about Founders that come out of YC, and especially that first little bit of capital that you get to raise. To me, that fundraises. in large part kind of handed to YC founders because YC is so amazing at generating the interest in their companies, doing demo day. And so they help set up kind of all the stuff that most other founders and in other rounds you have to do on your own.

Two years after YC, you know, you're essentially pivoting starting from scratch. You don't have the glow of Demo Day at YC. And so at some point you're in this [00:15:00] journey, you're going to have to get ready to go fundraise. You have to get ready to go fundraise. And the thing about fundraising and preparing to fundraise is that there's a lot of like small, boring, annoying stuff, things that you have to do.

It's kind of like kryptonite for people with ADD. It's like, there's just like so much stuff that you really like, in order to. Set up a great fundraiser. You really have to do these things. You have to work on a boring deck. You have to ask for, you have to do all these different things. So I wonder if you could talk a little bit about what was going on when the company, when, when you were like, we're going to go raise this next round of capital.

Tell me a little bit about like what's going on in the company and then what you had to start doing to prepare to fundraise.

Chris Wang: Yeah, so I think that everything in being a founder, the first time, I would say the first time you do it is [00:16:00] like infinitely harder than every other time that you do something.

And so I say that because I do agree that it's harder to raise after YC, but if you can get the hardest one with the most amount of help, then the second time you do it, there are certain Aspects of it that are a little bit more muscle memory than someone who hasn't ever approached it. So I will say that our round was probably a lot easier for us to raise because we had went through YC, but more so because of the experience that we gained and kind of like the systems that we had set up in place, to kind of mini counteract your, your opinion.

terms of where Shimmer was at, so at the time we had several friends who went out for their Series A about two years after YC, the same time period that we were, and they did not have a good time. It was a bad market, previous Series A metrics, which, At the time when we went through YC, they're like, Oh, if you [00:17:00] get to a million in ARR, you can think about, doing a series A.

That just wasn't cutting it anymore with the market being so tough. And a lot of them had just turned around and instead just raised a seed.

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Crystal brought up some solid points about why C and certain accelerators I might've missed before. On one hand raising after YC can be difficult because of how smooth Y C made fundraising feel for founders coming out the gate.

but on the other hand, why see, gives you such a solid foundation to build off of. Much more than founders who have never raised before. When we come back, we'll hear from crystal about how her seed round came together.

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[00:18:00]

Chris Wang: and so we knew what the market looked like. And that's another thing that I would say, not just YC, but being a part of any accelerator is helpful for is like, you'll have a lot of people that are in the same stage as you to be able to calibrate years down the road when they're probably taking the [00:19:00] same next step as you, if they're still around.

Yeah. So what we did is actually, we called our old seed pre-seed which this is now common knowledge that almost everyone does. And then we called this new round of seed instead of going out to do a series A. And so we had around a million in revenue. We had a really great story too, because we had got from zero to a million in less than a year of, Just launching our product to the public and so when we went out, we knew that from a traction perspective, we were going to be far higher than any other seed stage startup that's raising.

And so I wanted to make sure that when I went out that I am in a relative, strength of position. So I could. It's like, do you want to call it a Series A and make it harder for yourself? And maybe it'll be better. It'll in some ways be better. It's like debatable because you raised your Series A or you want to do a seed and it'll be a lot easier for you.

You can close it faster and then you can get back to building and then you can probably raise your Series A further down the road. So that was kind of our thought process at the time and where we [00:20:00] were in terms of Our company. And then in terms of like how we set things up, we set it up pretty similarly to when we did it after YC.

And I think that was probably, we underestimated now, like to support your point, we underestimated that it would be a lot harder because when you're coming out of YC, literally every hundreds of other companies around you are raising at the exact same time. So when you hit someone out for an intro, they're going to send you a bunch of intros because they know that they weren't going to ask you for the same thing.

It was a lot harder coming this time because there were only like three to four people that were around me in the same industry who were raising from investors. So we kind of bunched together and helped each other, but very different from having like 300 people for who are helping you. And it'll also be very different if someone.

Had not went through an accelerator and didn't have, or like a community and didn't have even the three to four people that I had this time. Cause it's not just about anyone who's raising, they have to be [00:21:00] like at a similar stage, like looking for similar investors for you to really like trade those introductions.

Jason Yeh: Yeah. Yeah. Do you remember what your target list looked like? Do you remember like numbers wise, how many investors did you think you would, you would want to talk to for this round?

Chris Wang: Yeah, so I actually remember I had talked to one of our pre seed investors and was like, Oh, I'm going to just close this round in three weeks.

And he kind of just like laughed and he was like, good luck. So I was definitely overconfident going into the process. But we didn't have a set number. My goal was to just always keep my calendar full until we're done. So I had 5 ish meetings each day, probably more than five in the beginning phases when we're just, I was just pumping through first combos and then later, like a month or two down the road, it like dwindled down to just the folks that we were doing like later stage diligence with, so I probably did.

I actually just counted today or like I did like a rough count. There's probably around 150 [00:22:00] conversations that I did in it was probably around two months.

Jason Yeh: That's great. always love highlighting and under underlining the amount of work that goes into these things because you did graduate, you know, you did go through YC, you do have all the logos, you worked at Bain, all these things.

And I think people are like, Oh, People with less of a background and less of a network than you will go out to try to raise and do far less work and be annoyed that they didn't, they weren't successful. And so for you to be like 150 conversations, it's just, it's a, it's a good thing to hear. So kudos to that.

Two and a half months of, of conversations along the path of, of that process, there's gonna be a lot of ups and downs. Were there, were there any stories that stand out to you in terms of like gut punches or painful experiences that you're willing to share?

Chris Wang: So I think I learned the first time around to like [00:23:00] never get too excited about any one investor Because you'll probably get it pulled away from you Obviously, it's like a lesson that you learn and then you just forget about especially with ADHD.

So there were I got really attached to and I kept telling myself not to get attached to. And it's always like, if it's the second, third conversation, they're doing diligence. You're it's natural that your hopes start to go up and you start to get kind of invested in them. Also because my process is. A bit extra, like if I really like this investor, I will listen to like all of their podcast episodes.

I will like get in their head. So it's 150 conversations, but it's also a lot more legwork, especially for the ones that you're excited about. So I mean, there's, there were quite a few, like there were a handful probably this time, there were way more the first time, but there were a handful where, I don't know, you just like think that you're almost over the line.

They've like done all their like diligence. And this time also the diligence was far more than the first time because we had more data. And because [00:24:00] the markets were so they can kind of drag their feet more, but, there actually was, so our first lead investors, we have two co leads, uh, Brianne Kimmel from Work Life Ventures.

The day she came in was actually like, it's crazy how life works. Sometimes there was like one day. Where I was like, Oh, I should just, I should just give up. We don't actually need the money. We could just raise like six months later. Cause I was just so sick of the conversations. I had had so many convos with people who are just like unaligned with what we're doing and I had to end a lot of calls early and I was just so sick of it.

And then just on that weekend where I was telling my co founder, I was like, okay, we're ending this after this week. And then on that Friday, that's when she was like, yeah, I'm in. And like, I'll co lead the round And I was like, oh, okay, relief, but also, okay, now I had already, like, mentally, like, closed this book, and then I had to, like, re open it, so so I think sometimes, sometimes you just have to push through, one more, it And, and [00:25:00] that feeling is very disorienting.

Cause it could be just behind the next one, which is kind of crazy to think about. Cause it really just takes one. Yes. Like a lot of founders who have amazing businesses that you ask about their story. It's always like this one flipped it for them. Right. And they had so many emails beforehand. So like what you said, it's like, it kind of is a numbers game, especially at the early stage and especially if you don't.

Have the right, I guess, like muscle to figure out like, which, like we're looking their website through looking at their podcasts, like which ones might be a good fit so that you can have even like a higher quality funnel. It gets even harder because sometimes you're just tired and you just don't have time to make sure the funnel is quality or just like, just get me in people.

Cause I just need to practice also. So there's that as well.

Jason Yeh: No, it's, uh, Glad we were able to pull back the curtain there too, because, you know, as we start setting up this part of the story of, like, preparing to fundraise, what are you going to do? And you did one of the things that is a really great [00:26:00] tactic, which is, like, start to raise the round that you just passed by, as in, like, the A would be, like, a But for the seed, you, you know, you were at a million dollars of revenue, like you feel squarely beyond that.

And so like a very healthy seed, you, you were, you know, part of YC, like all these positive things. And we know the outcome is that you raised around, as we dig deeper, it's, you know, 150 plus conversations. You, you hit that same wall that almost everyone does. Like I will talk to people that raise a million dollars and people that raise 50 million and most of the time there's like this feeling like.

This might not happen. You know, like this, and that's, and you were telling me that you were saying, it's like a very disorienting feeling. And like, you know, should I keep pushing? But for you to get past that and get to a great lead like Brianne at work life is amazing. I do want to like, make sure we double click and have you [00:27:00] hold on to the more positive side of that, that story, which is.

When you did hear from Breanne, it sounded like, you know, at a pretty wide swing, a roller coaster of like, man, we are not going to raise and I'm going to cancel this. Tell me a little bit more about like, how, how, do you remember where you were? How did she reach out? Or was it like a complete surprise?

Chris Wang: I don't feel like any of it was a surprise because we were getting to like late stage diligence with most of the funds that we liked.

So I think that was like the one signal that we should keep going. Cause I would say that like, if you're not getting past the first conversation for like a lot of your calls, then probably there's something that you need to fix, whether it's the business itself or it's your pitch or your storytelling.

So it wasn't really a surprise, that she said, yes, it was a surprise. How early in the process it was because she didn't do a lot of, I would say like numerical diligence, which post YC, nobody really did any like quantitative diligence, [00:28:00] probably because we didn't have data and because of the market and because we were post YC, but this time most companies were doing like pretty extensive diligence.

And I think it really just came down to fit. Cause. Bri has ADHD and she's tried a lot of ADHD products and she just intuitively understood what we were doing the first time we chatted so it is also a lot just about fit and getting to that right person who actually just gets what you're doing so you can skip all the beginning part of like the Convincing them that this is a big problem, convincing them how it works, like, showing the member testimonials, like, obviously, we always do anyways, but there's some people who are like, okay, just skip through that, I get it, I know why it works, like, I believe in this, like, now tell me why, like, you're the right person to do this.

So, I think, I don't know exactly where, I mean, I was probably at home, right, like, I was just pitching the whole day, I was probably just at home, not doing anything special, but actually is. That was the year we got into 30. And [00:29:00] actually that weekend was the, uh, the, whatever they call it, the conference of the retreat in Cleveland.

And I didn't book a ticket there because I remember being like, Oh, like, if I can't raise this round, like, I don't, I don't deserve to go to this thing. So my co founder actually had a ticket in a hotel and he was gonna go by himself. And then Bree signed that. I actually remember the first thing I did was I bought a ticket to, uh, For the next day.

So that I could be with my co founder, since we were remote from like New York and at the time LA, but, so it was so serendipitous that it happened like just that day.

Jason Yeh: So good. I love ending, you know, our conversations around that story because it's, it's important, it's important and valuable for everyone to hear.

The downs, but you know, definitely want to make sure you have a chance to remember and celebrate some of the good times. One of the things that I do like asking, like kind of separately, we might not use it, uh, are just fun questions about the business. So [00:30:00] you support a lot of, I'm sure very different people with ADHD.

What are some of the crazier or, or more interesting, like, Backgrounds and characteristics of some of your customers. Anything, anything fun to be able to share about, who and how Shimmer supports its, its community?

Chris Wang: Yeah. So I, when I first started Shimmer, I thought that. Most people would be like me, like, you know, like you come, you want like productivity, you want to do better at work or like, kind of like more basic stuff.

And I was actually just floored by the diversity of the people who come. My favorite actually are, people who are retired. Oddly, we get a lot of people who are retired men and women, and they either were diagnosed later in life or they've always had ADHD or they always know knew that ADHD, but never kind of really did anything about it.

And then they put their identity [00:31:00] on work or whatever it was. And now that identity. Has been removed and they're almost like redefining their life with this new information about themselves or like reframing of looking at it. And I find it's always, I don't know, it's, it's more human and personal because it is really just all about them and what they want in life and how.

They want to spend the next 20 years of their life, how they want to reconnect with things that they didn't feel like they were able to explore throughout their life. And for me, those are always, and always the success stories as well for them are always more, I guess like heartwarming, uh, and human than some of the interesting and amazing in its own way, but like the more kind of like work related stuff that you would imagine that people with ADHD would want to be working on.

Jason Yeh: That's super touching. That's awesome. One last thing that, that I wanted to ask is, it's been very fun to connect with founders through this podcast, [00:32:00] uh, because I find that founders have amazing connections to other founders. And, and we've, because we've been doing this now for three years, uh, we've already started seeing this come around where.

We'll interview, we, we interviewed Christina Cassioppa from Vanta and we said, who are some of the up and coming founders that, that you want to shout out or that you love? Anyone in your network, you know, that's just getting started. And she was like, ah, you know, I love this guy who's coming out of intercom to start a new company.

His name is Bobby Pinero. And anyways, we just had him on the podcast because he raised his series A. Are there any other founders that are in your network that you know are just getting started that you want to throw their names out so that we can keep an eye on them in case in a couple years that they get a chance to talk to us?

Chris Wang: There's someone I think you definitely should interview. She's not necessarily just getting started, but her name's Bailey and her company's called Perimeter and they do, it's like a mapping software [00:33:00] for emergency kind of natural disaster situations all over the world and she has Such an incredible story around fundraising.

I would definitely interview her. I think the first, I'll be paraphrasing, but the first round, she probably, I think she talked to like hundreds of investors and then she had one mindset shift, which I'll let you talk to her about. And apparently since then, she's never. Gotten a no from an investor, which is crazy.

Insane.

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That was my episode with Krystal Wang co-founder and CEO of shimmer, the ADHD coaching platform for adults. As someone who fully understands the pain point, this product solves. It's really cool to see companies like shimmer get funded. I hope this episode reminds you to push through investor rejection. Your next meeting just might be your first.

Yes. When we come back, we'll see what thoughts my producer page has to share.

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Jason Yeh (2): [00:34:00] Hey Paige,

Paige Randall: Hi, Jason.

Jason Yeh (2): do you like this episode?

Paige Randall: I did. I actually did like this episode a lot, and I felt like, because sometimes I listen to the episodes and I'm like, shit, I don't really know if I have many comments or things I want to discuss, but with this episode, there was quite a few [00:35:00] things that jumped out to me that I wanted to get your opinion on and, and share.

So, yeah. Um, first thing is that I thought it was interesting. So just a quick recap is she raised for her first company, which was focused on support groups, um, and she raised a small round for that, at YC. And then she raised, I think, total like 1. 3 million for that first. Company, that first idea. And then she pivoted two years later to an ADHD coaching platform, Shimmer.

She raised her most recent round four. And my question with this was, whenever I hear pivoted, I honestly, I get, I have so many questions that come to my head and I was wondering, I'm like, She had an existing cap table. Can you just pivot to anything and, like, keep that cap table, or Cause I know there's multiple options, right?

You probably could shut it down and then start Shimmer, or you could pivot and keep that same Yeah, I'm just looking for some extra, uh, layering there.

Jason Yeh (2): [00:36:00] Yeah, so I think there, it's a great question by the way, and I can generalize it for a bunch of different things when it comes to what a founder can and can't do. I think there are a lot of things that fall under this category of like, people think that they maybe can't do something. And most of the ability to do something while running a company.

Um, falls into this category of like social expectations. There actually aren't any repercussions or, um, like for the most part, aren't any like control provisions that make a founder, um, stay on a certain business model, attack a first, a certain vertical. It's, it's more that it can feel uncomfortable and bad to tell all of your investors that you put money to back me, to do an idea that I told you about.

And a year later, I'm changing it. And that can feel [00:37:00] socially difficult to do because of, you know, what you gave as your, almost your promise of what you would do as a, um, as it pertains to like what you're allowed to do as you get, you're kind of allowed to do most things, but as long as you control the board, as in, they don't have the power to fire you, then really investors can't do much in terms of.

Deciding what strategies you employ.

Paige Randall: So you could start, like, uh, like a CPG company and then you could switch to, like, a SAS or something and keep that same

Jason Yeh (2): Totally. Totally. You could do a lot of different things to be honest. Like, and I, and I wonder if, if our legal mentor and the adamant fundraising community would, would tell me I'm wrong here, but like, there's also like, I don't know if I should even put this out in the world, but you can go raise money.

And you're, and you're like, your goal is to go raise [00:38:00] money and you're telling people you're going to drive towards a huge outcome and like. Try to get to an IPO and you can raise a million dollars and just be like, you know, no, I think I'm just going to run a lifestyle business and like, um, generate little bits of revenue and pay myself a great salary.

And I don't think there's a lot of recourse from investors. The only thing is that like that founder probably would never be able to raise money. Their reputation would be destroyed in terms of investor trust, but like. Yeah, that's possible.

Paige Randall: That's crazy to me. Yeah. Like, and, and then I was also on top of that wondering, so, um, when they decided to pivot, they still had about like half of the money they said left. I was wondering, could you like shut down that company and then start a new one and then take that money with you on the, and then would your cap table go with you because the money's attached to them? [00:39:00] I don't. Oh

Jason Yeh (2): So, um, when it, I don't know if you're exactly asking about shutting down a company or doing something different, but it does open up a really good point, which is, I do think founders sometimes hold on too long. Like there's a lot of. There was a lot of praise that gets, that gets handed out to founders that are extremely gritty and stick with it and never die and then keep figuring it out.

But at the same time, I think that messaging can be detrimental to, um, situations where founders shouldn't keep going, right? Like there's a bad team dynamic. There's like no, no product market fit and no. Energy to keep going and it's really, it's more, um, you know, it's, it's more harm than good, especially to the founder themselves.

And so in some ways it can make sense to shut down with still money [00:40:00] in the company. And in those cases, if you formally shut down the company, you would usually distribute the remaining capital to your investors, um, in terms of preference. So

Paige Randall: yeah. Yeah.

Jason Yeh (2): The, the investors and the debt holders that had the highest preference, you would liquidate the company and, uh, uh, radibly distribute the remaining capital.

There's also another thing that I think makes a lot of sense too, which is like, sometimes you are, you raise money to go after an idea and you give it. Like you really give it your best shot and you play out the hypothesis that you raised capital for. And this might be controversial, but like if you actually put it all the way out there and pushed it really hard and you figured out that that wasn't it.

I think it, in some cases, it makes sense to shut down that company. And start another company. Like if [00:41:00] you, if you had another idea and you really didn't feel like the, um, investors from the first company like contributed, you know, would, would be contributing to this next company instead of like pivoting and then maintaining the same dilution that you took from the first investors and then raising more money and getting diluted again, and then drawing this out.

Sometimes I think it makes sense to shut that company down, rest, give it some space, and then start another company. Other people would say, no, no, no. You gotta, you gotta keep going, keep going, keep going, keep pivoting, keep like taking the investors long for the ride forever. I think there's a balance anyways, bit of a departure here.

Um, but, but with her, she pivoted, kept the same investors, used that capital to then work on the next idea all under the same corporate umbrella. And so she has the exact same cap table and continue to add on to the existing cap table.

Paige Randall: I find, I just [00:42:00] find it so interesting. That's why I wanted to talk about it. Like, because you hear so much about pivoting and things and it just, in my head, I'm like, how does that, how does that,

work in her case though? I mean, it wasn't this gigantic leap. It was more so like, I feel like they found a really more niche aspect of what they were doing and they honed in on it and they killed it and then something else. So obviously they ended up, um, pivoting to Shimmer, uh, an ADHD, uh, platform. And, um, what they ended up doing is they raised a 2. 2 million seed round. But what they did was they changed. So that previous round that they had raised for their other company, they had called it. A seed round, I think, like they had already raised a seed round. And so what she said she did was change the name from that one, from seed to pre seed, and then they went out and raised a 2. 2 million seed round. And she said, this is like a pretty common [00:43:00] practice. And it had me thinking, and it makes perfect sense, obviously, as the market changes, you kind of. You have to do that, um, cause you would probably have a really hard time raising a Series A. But then it makes me feel like, does the name not mean that much then? You know what I mean? It's more so just about what they're trying to, or what they expect out of each, I don't know. Yeah.

Jason Yeh (2): you're hitting the nail on the head, Paige, and I think, again, I love it when I see you evolving and you're understanding the nuances of fundraising are really, um, shining through right now. Um, I think the biggest thing to realize here is she's showing you how much perception and expectations, Influences fundraising, right?

It's just as simple as being like, well, we raised the seed round. That positioning, meaning that like a seed round is. Getting into the first treads of product market fit. So [00:44:00] you get there and then series A is about scaling that product market fit. If you're coming in and you don't, to raise a series A, if your last round was a seed, the expectation is that you got product market fit and you're scaling it, which means if you have product market fit, you have significant revenue and it's growing.

And if that's not the case for you, even though you called yourself your first round of seed round, You're just, you're not dead in the water, you're just facing an uphill battle and, um, you're kind of forced to really tell the story and try to get people to wrap their heads around it. So a very, um, common thing to do is just like sort of rename the round.

Rename the first round that you raised that and then go raise that the thing that People would expect you to be raising at the level of traction that you're at today.

Paige Randall: And it's, it's funny too, because probably, you know, I don't know, nine months back or 12 months back, she might've been able to get away with like, cause she had around a million ARR and that was in [00:45:00] one year, she was able to get to that, which is like, Whoa, that's huge. Um, and in another time that would have been like, Oh, series A. And then things change. Right. And then it's like, Oh, that's definitely not a series A. And I just think it's, it's crazy. But you always say too, like. Like, I hope I don't butcher this, but raise the round that basically you're most comfortable with, like the one that you think you can nail. So she said, she's like, we could have tried to do the series A, but it wouldn't have been like, Oh my God, look at all that they have.

But with the seed, they're like, holy crap, this is insane traction.

Jason Yeh (2): Exactly. You have tons of traction for this.

And I definitely stand by that. Um, the haters will say, well, like shouldn't you be going after what you think you can get to? And we're like, what if they were, you know, what if they were more aggressive and they could have raised a series? I really do think too, if she were raising that seed round and it drew enough interest and people are like, man, this is crazy.

It would probably attract, Some people [00:46:00] who want to do a Series A in a bigger round and it would pull her into the ability to then push harder and raise the, increase the round size and make it more of a round that looked like a Series A. Again, we don't really care what we call it. It's more about like how much money you're raising against what valuation at that point.

Paige Randall: yeah. And my mindset's changed around too, around like what a round actually is for. And it's like, yeah, you could try to go for the big round and maybe you should. Who knows? I don't know. But, um, all you're really trying to do is get from A to B and make a big jump to get somewhere that will then You know, give you traction and,

Jason Yeh (2): also like, does she know how she would use the capital?

Raising two, two and change, she probably knew exactly how she would deploy that capital. And sometimes when you're like, Well, this firm wants to actually invest 5 billion, not 2. Then you're like, okay, well, how would I use that money? Like we're a little bit early to like deploy all [00:47:00] that capital and it can be bad, like it can force people to spend money faster than they were initially planning on.

A lot of times spending money in channels that aren't ready to be spent on. So you kind of waste the money anyways. And so you didn't get as far as you actually should have gotten with all that dilution that you're taking on. So,

Paige Randall: Yeah. Ian Swanson touched on this too. I remember he was saying like in one, I think his second venture backed company out of the three, very impressive guy, um, he was saying like they took on a bunch of capital and they ended up just not using it in the best ways. And I just had never. It makes sense when you hear it, but I feel like it shouldn't be natural or automatic to correlate more money with always being better.

It should be like, like the amount of money you need, you know, to get from, from A to B.

Jason Yeh (2): by the way, that is one of those pieces of advice that gets repeated over and over again by like investors, experts in the space is like, don't raise more money than you need. If you [00:48:00] raise more money, you'll spend more money. Like. Wastefully. And I think for most people, they think about that and they're like, really?

I meant like, I think I can manage my own spend. I think I can, and it's not until you get into the situation where you're overcapitalized and you do burn through more money than you need to, uh, where you're like, ah, yeah, that is, it's, it's very tempting to spend the money that you have, like, it's like burning a hole in your pocket.

I've seen very few cases of founders that overcapitalized at a certain Um, at a certain round and we're able to manage their own spend.

Paige Randall: Yeah, but everyone wants to F around and find out, so. Who knows, I might do the same thing if I was in their situation. Um, talk about another very impressive thing. She had 150 conversations. I know you love this too, with VCs in two months. And like on top of that was doing crazy research on each one, trying to learn more about them and stuff, [00:49:00] but again, she had.

a pretty impressive background. She worked at Bain. Um, she had been through YC. She had already raised money before and it wasn't even a thought in her mind like, let me just see what I can do with the stronger connections that I have. No, she went full force and even then it still was a little bit difficult and it wasn't until, how it always goes, she was about to maybe pull back and try again in a few months. The co leads came together and made their own happen. So,

Jason Yeh (2): Totally. Yeah. On that last point, you're either dying of thirst or you're drowning. Happens all the time. And then, yeah, I'm glad you brought it up. I feel like we need to tell this message over and over again, using different examples with all sorts of backgrounds. But it's like, if someone like Crystal with that type of network, that type of pedigree, that type of traction, et cetera, is going balls to the wall and, [00:50:00] you know, mapping out 150 tests, um, 150 meetings that she's going to have to like, if you don't have, if you even have that.

Um, level of, of assets that you can bring to the table and you're not doing it as much as she's doing, gotta check yourself. If you feel like you have less than she has and you're not doing as much as she did. Definitely have to check yourself. So,

Paige Randall: cause that's not even the full, now I'm thinking about it. If she had 150 conversations, like, and there's gotta be some that they just didn't think it was the right fit. So I just wonder what that target list looked like. Like, that's crazy. That's some serious effort. Um, the last thing I wanted to, uh, touch on is just I wanted to share some advice that she gave that I really liked. Um, and I'm just going to paraphrase it, but she was saying towards the end of the conversation that like, if you're not getting past the first convo on majority of your calls, it's really like [00:51:00] there is something that you might need to reevaluate there, whether it's your pitch or your business or something else. And I just loved how she kind of ended on that note because It's like a hard truth, right? But I just wanted to, I just liked that and I wanted to share it.

Jason Yeh (2): yeah, you know, there's, it's, it can be very hard to give a hundred percent generalized advice

Paige Randall: Yeah.

Jason Yeh (2): in life, right? In fundraising and even more. And there is this, there's this advice that makes sense, which is like, look, you, You have to believe in your pitch and you have to believe it more than other people.

And you can't be swayed by haters who don't understand the idea. And that is for sure. Correct. But at the same time, you have to have an awareness, you know, a little bit of self awareness. And you have to open your ears and be willing to listen to people's feedback and cerebral enough, analytical enough to kind of take some things and be like, [00:52:00] Okay, the first time I hear it, look, they don't understand.

I'm going to keep pushing forward. If after the 5th, 10th, you know, 15th, and none of them are progressing and people have similar bits of feedback, I agree with Crystal. You got to go back to the lab. You got to kind of look in the mirror and make sure you understand why this is happening. So it's a tough balance where you have to understand, you know, where you draw the line.

Paige Randall: Yeah. I think that might be the debrief.

Jason Yeh (2): I love it.

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