TBC: Are You on the Right Fundraising Path?

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Jason Yeh: Hey guys, welcome to the back channel. In today's episode. I want to talk about how founders generally approach fundraising and how I feel like they skip so many steps.

I have a lot to say on this topic, but I'm going to break it down. Into smaller sub episodes. And in this episode, I want to talk about the very first step, which is just evaluating what is in front of them. And what their options are, what the path for them actually should be. I think what ends up happening is founders look at their companies and their building, and they have some kind of need. And I think all needs are valid. But. For founders. The needs that they have all seemed to be bucketed into one major solution, which is venture capital. There needs could be a lot of things. Um, they could need $10 million to open up a physical plant to develop [00:01:00] a physical product. Uh, manufacturing facility, they could need a million dollars to hire a bunch of engineers and build a really technical product, or they could be really uncomfortable. Living on very little money and need a little bit of money to, uh, pay for their rent. To get their co-founder to be able to move across the country, to live and work in the same. City. The grow faster to do a bunch of different things.

There's a wide range of needs out there when it comes to your companies. And the solution a lot of times is money. And the only type of money people think about is venture capital. And I've gone through too many conversations and looked at too many options to know that that is just not the case. So what I want everyone to make sure that they do. Is take a step back.

And I know a lot of you are like shaking your head and you're like, now I know that the right path for me is venture capital. Hold on a minute and just [00:02:00] take a step back and make sure, you know, What your company is, what the opportunity in front of you is and where you want to be in five, 10 years.

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[00:03:00]

Now. There've been other episodes where we've talked about what venture capitalists need. And what you need to show them, but I want you to know that even within the realm of a venture backed company, there can be different chances of capital.

Jason Yeh: I just got done in a conversation with the founder of Aquaria who raised over a hundred million dollars. And one of his major points was when he went out to raise capital. He didn't realize what venture capitalists actually would be interested in his company. And then he didn't realize that there were parts of his company that could be financed in different ways. From debt to equity, which changes the whole equation of how he went out to raise [00:04:00] capital. And when you are thinking about what your company needs. I won't even go into the detailed. Framework to try to evaluate what your company needs.

What I want to tell you is a shortcut to try to figure out what your options are. And that is to look around the industry, look around your networks, to try to find someone who's maybe one to two steps. Ahead of you and ask them what they did and ask them. What options they considered. And ask them ask options that after they were done, they realized that they had overlooked. This is one of the most important ways to be running a company to short circuit problem solving is to not feel like you have to come up with the answer denovo on your own. That you don't need to reinvent the wheel.

That a lot of other smart people have been where you are today. I think this bit of advice. Works. We're so many different problems in life and in [00:05:00] business, but I want to make sure that everyone who is considering going out to raise capital. At least applies it to this situation. Because you might be shocked at how many good pieces of advice or at least data points for you to consider. You will run into everything from, yes, you could run, raise venture capital, but you don't have to.

Now maybe you should raise capital from angels first. Or did you realize that your company has some sort of application to some of these government initiatives? There might be some grants non-dilutive grants available to you. Are you sure you need to raise capital now, if what you actually need the capital to do, is this, have you thought about. Trying to build it yourself this way.

There are just so many different options. I hate to see people rush into the option. Without evaluating other situations without getting more advice from people that have been there and just going into the wrong place at the wrong time, with the wrong set of directions. Right. [00:06:00] So. Don't rush into just pitching or just going out to figuring out how to fundraise, make sure you take step one, which is evaluate. Your opportunities in front of you, the options in the path that are right for you. From there, you can make some way better decisions. All right.

I hope this is helpful. I hope this puts you on a great path and I hope to see you on another episode. On the back channel.

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