The culmination of fourteen pitches, six months, and over $3.8M invested by VCs and listeners, this is the season 12 finale. *Disclaimer: No offer to invest is being made to or solicited from the listening audience on todayβs...
The culmination of fourteen pitches, six months, and over $3.8M invested by VCs and listeners, this is the season 12 finale.
*Disclaimer: No offer to invest is being made to or solicited from the listening audience on today’s show. The information provided on this show is not intended to be investment advice and should not be relied upon as such.
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It’s finally here. The moment we’ve all been waiting for. The season 12 finale.
Welcome to the biggest episode of The Pitch we’ve ever made. No literally, it’s so big our studio computer couldn’t handle it! But yours should be fine. Let’s do this.
From healthcare to AI, space velcro to chips, debt collection to parties, fintech to beer, to rural robots. We covered it all on season 12. And you’re about to hear what happened after the pitch for all fourteen companies.
But first, check out this Partytrick: Time to settle in with your Christie’s Chips and listen to this Vital Audio while we Remynt and Recraft the narrative on how to make Future Money. At the end of the episode, we want to hear your Feedback (...Intelligence)
Oma-gosh, is that a gecko?
12 of 14 pitches got a deal in the room this season. These founders have accomplished a ton. But their journey since the show has been anything but easy.
Capella: this is going to be a multi billion dollar company. So I'm not worried about valuation.
Christies: Follow up with people up to the point of almost annoyance.
Devina: Someone asked me, once do you have televisions in Kenya? Yes we do. Did you go to school with lions? And I was like, It's a normal country.
Virginia: Not to sound cocky or arrogant, but like, why do I want him? This is a killer opportunity. Do I want an investor who's going to ghost to be in?
Ryan: I get on the call and I'm like, do you want me to pitch with slides or without slides? He was like, without slides. And then, I shared my screen and started pitching with slides.
Josh: What?
Ryan: [laughter] and then it was just like downhill from there
Josh: Do you find that angel investors are more helpful than VCs?
Chinar: Can I say that? Are you recording this? Yes, yes, yes.
Josh: hahahahaha
The culmination of fourteen pitches, six months, and over $3.8M invested by VCs and listeners, this is the season 12 finale…after this
[break]
In June of this year, we hosted our season 12 taping in Oakland, CA. At that three day event, we recorded all fourteen pitches you heard this season.
And 12 of them got deals. That’s a record for us. We used to be thrilled to hit 50%!
The whole pitch team was on cloud 9.
We knew this season was something very special.
A few of the deals, the hot ones, closed within weeks of the event. But then came July!
Ugh…. July! It was a cold dark VC winter, in the heat of summer! Every deal still in progress ground to a halt.
It’s like every American VC suddenly decided they were European and they were gonna take two months to bask in the Tuscan sun.
By the time September rolled around, only a few deals had made it through diligence. The rest were frozen in time.
And I was sweating. We’ve got listeners, we’ve got LPs. Everyone wants to know what happens after the show. But nothing was happening.
Despite the fact that I thought these were some of the best deals we’d ever featured on the show.
In mid-September, things finally started to move. Thank God! And we started checking in with founders.
Beginning with everyone’s favorite biomimicry expert, Capella Kerst with geCko Materials. Fun fact or rather not so fun… Capella gave her pitch with food poisoning. She barely held it together. Betcha couldn’t tell that from her pitch though.
Capella: Traditionally to attach two objects, you need tape, glue or suction. This isn't a tape. This isn't a glue. This isn't a suction
Capella: We're currently on the international space station. Honda, Ford, Toyota, GE, Intel, Hyundai are just a few of our some of our customers here on Earth.
Mac: So this is like the, the things you see in all the info commercials that are supposed to hold your picture frame up and never actually work.
Charles: Except this one actually works.
Jesse: Except this one works.
Cyan: The application I'm thinking of this is for magicians.
Capella: Oh.
Mac: So this valuation is really high.
Capella: There is no valuation set.
Cyan: At this valuation for a SpaceX, would you get in? Yes? Absolutely, you would.
Josh: So, back in June, you left the pitch room without any specific commitments, per se, but Cyan did buy $1,000 of Gecko materials in cash.
Capella: Yep, well she's a badass, so I guess that's, that's when you know you've made it, you don't need to carry a credit card.
Josh: You sold a little bit of product at the pitch event, but you still had a round to fill.
Capella: Yes.
Josh: What happened after the show? Did you connect with anyone at Long Journey Ventures? Like what, tell me about that process.
Capella: Yeah. So I think the, the call was recorded with Lee with long, long journey. And that was a great conversation.
Lee: My sense is this is a little bit out of our wheelhouse to lead at this type of price.
Capella: well, there's, we don't have a price yet. So…
Lee: 8 million dollar round implies a certain price. What do you think that the pricing will come out at? If you could guess.
Capella: I want this to be market fair and to benefit both the VC and Gecko materials. And this is going to be a multi billion dollar company. So I'm not worried about valuation. So just Submit a term sheet and we can talk and I'm sure we'll find mutually agreeable ground.
Josh: Did Cyan end up leading the round?
Capella: So Cyan unfortunately did not end up leading the round. Where they're at with their fund is just a little bit different than the stage that we're at, which is unfortunate. You know, couldn't make an exception this time and great, great folks. Love Long Journey, but we have a lead investor now who is closing the round.
Josh: No way!
Capella: Yeah. So it's being closed. We're super excited.
Josh: Who is this mysterious lead investor?
Capella: Kitty Hawk. Will from Kitty Hawk is our lead investor.
Josh: Like Kitty Hawk, where the first flight was taken.
Capella: That's where they're named after. They spun out of the Singularity University at NASA Ames Research Center. So it was an introduction and then we had a zoom call and I was like, Oh, I'm visiting customers in Santa Barbara. I know you live in LA. Do you want to come up for dinner and hang out with us and get your hands on Gecko materials? I said it in, a serious manner, but I also was like, that's a bit of a drive.
Um, but he was like, yeah. And I was like, okay, we're doing this, you know? So I brought my head of engineering to the dinner. Had some demos at the table. Had to borrow a bottle of wine. Of course, to do our little like wine trick on the pinky. And then after we walked out of that meeting, there was little geckos that were on the sidewalk. It was really cute. So I was like, okay.
Josh: It’s a sign!
Capella: That was a sign. Yeah. And we've gone through like due diligence and everything, background, both ways, obviously. Then he offered us a term sheet and then we are sorting out all the follow on folks cause we have a significant amount of follow on folks.
Josh: Okay. Tell me, what did the price get set at? Cause like, that was the whole issue in the pitch room. They were like, we love this, but like, you're a little bit out of our scope Capella. This isn't the type of deal we normally do, but we love it.
Lisa: And they all talk in that voice apparently.
Josh: Yeah. Yeah. That's how they talk.
Josh: What did the price land at?
Capella: So it is a priced seed round. I know people are like, C, like ABC. I was like, no, no, no, no. Seed. Uh, I know I was like 8 million for a C, excuse me. Um, sorry. I'm just dragging this out to give you more suspense and the listeners just keep on listening.
Josh: What is the dang price?
Capella: Come back after this commercial.
[laughter]
Josh: The price of Capella's round, coming up after this.
Capella: So, a pre money valuation of 26 million for an $8 million round is what we landed at.
Josh: Okay. I know you had multiple term sheets from VCs. How did you choose Kitty Hawk?
Capella: I chose Kitty Hawk and Will based on their previous interactions with their CEOs and the companies that they’re around. So not just the good times, but also like the hard times. But with Will, just seeing how the other CEOs talked about him. and how the firm had supported through like all the good and the bad and the ugly and stuff so... And just like, I don't think they equate it to like dating or marriage, but it's like kind of that like feeling of like the unspeakable, like just a good heart, good connection, genuine, and seems like a good fit and a good vibe like going forward.
Josh: Did you diligence us?
Capella: Of course.
Lisa: Ooh how tell us how I want to know!
Capella: Oh my gosh, I'm part of a group called Stardex, which are a group of people that have affiliations with Stanford. And I feel like somebody had somebody that they connected me with or there was someone directly on your show. So that person obviously sung your praises. Yeah, you guys are in the round. So you have, you've made the cut. Like I made the cut, you made the cut.
Lisa: We passed the test.
Josh: So this week you went to TechCrunch Disrupt.
Capella: Yes. TechCrunch Disrupt was amazing. For me as a battlefield startup, it was four full days. And because I was a top 20, they were like full, full days. There was a magician there. Actually, it's really funny. The magician is going to buy from us there too. And I told them about -
Lisa: Stop!
Capella: Yeah.
Lisa: No!
Josh: What is it with magicians and Gecko materials? What is the trick that they're all trying to do that this unlocks?
Capella: They haven't done it yet, but they're like, this can do something. And I was like, okay, go for it. Like, I'm excited that you're excited. He was a trippy magician. Oh my gosh. He like put somebody else's, my friend's ID in my hand and made it dance. And I was like, it's in my, I could feel it. And it was very weird. And I was like, Oh, this is how people must feel when they play with geCKo Materials. So!
Lisa: Cyan called it.
Capella: Yes, she did.
Josh: We are also really excited. This is our first deep tech investment we’ve ever made. You didn't get any investment from the VCs on our show, but the amount of excitement that we had from our audience and listeners and LPs in our fund about what you're doing was only confirmation that this was a really good deal for us. We're stoked to be involved and I cannot wait to see where you take this thing.
Capella: Well said it's a huge honor. I'm so excited.
Lisa: Also, I have to say my kids loved your episode. And like the other night my daughter was like, mom, come here. Come here. Come here. I'm like, why? She's like, there's a gecko on the window. Look at its feet. And she's like looking like through the other side of the window, like at the actual, like gecko feet, you know? And I'm like, oh, look, it's on his tail too. And like, it was really fun.
Capella: That's so cute. That, oh, that warms my heart. Cause like. Yeah. It's all about the impact for future generations. Like getting kids excited, like a friend said, they're like, yeah, I watched you and like, you're, you're doing the thing. And like, not to say that I can do the thing too, but like, it kind of made me think like, I can do the thing too. And I was like, no, you can do that. Like, we are all people at the end of the day. We're all like men and women just on earth doing our best. And then if you take that leap of faith to change the world, like do it. Everyone's just - We're just trying to make it through. And if we can help each other, like that's That was like gold to me to hear that. See, this is why you're in the round.
Josh: We'll have to thank our daughter later, who helped us get allocation in this round.
Many of you got some allocation too. After the show aired, we ended up hosting a syndicate for our LPs (aka listening partners wink wink) and you all invested an additional $600k in the company. And we invested another 300k out of the pitch fund!
Capella then won second place at techcrunch battlefield. People love their geCKo Materials, as it turns out.
You know what else they love? FUTURE MONEY.
Everyone’s favorite mild mannered second time fintech founder Phillip Barrar has entered the building.
Phil: We're here to help everyone create generational wealth, and Future Money is an investment platform that allows them to do so.
Cyan: I love this future.
Money
Elizabeth: When you start the rollover process. Does that mean my child would not be able to contribute to his or her Roth IRA
Jesse: Who loses? You know, if you're successful, who loses?
Cyan: What have you not figured out about this business?
Elizabeth: I think it's slightly crowded, but given your background, that's a bet I'm willing to take. So I'm in for 150k.
You know what I said earlier about how everything ground to halt this summer? Well Phil was one of the few exceptions.
Josh: During your pitch, Elizabeth committed $150,000 from Hustle Fund. Then, Jesse and Cyan were both interested in writing checks out of their funds. But they normally lead rounds, investing a million dollars or more, but you only had $250,000 left in your round. So I'm real curious what happened after the show. Let's start with Elizabeth.
Phil: We went straight into diligence with Elizabeth. She asked some very sophisticated questions that we hadn't heard from other investors, which we absolutely loved.
Elizabeth: If my kid already has a 529 elsewhere, would they not be eligible to open either your 529 or the Junior Roth IRA with you?
Elizabeth: Why is it that you have to have the account open for 15 years?
Elizabeth: So this is a long journey with your user.
Josh: And then, what happened?
Phil: She invested 150,000. Almost immediately, which was awesome.
Josh: Classic Elizabeth. We were watching this happen, and thinking, hmm, let's do a little math here. 150,000. Phil has 250,000 available. We better invest right away or we're going to miss out on this one. We were still on our summer vacation in Colorado when we ended up wiring that investment. So The Pitch Fund got to invest a hundred thousand. Thank you for having us.
Phil: Yes.
Josh: And then what happened with Jesse?
Phil: After that, we went to due diligence with Jesse. I think summer schedules were a little bit slower than we both anticipated, but we had a great diligence session. Jesse went through the onboarding experience, became a Future Money user, absolutely fell in love with our product.
Jesse:. It is super impressive, the onboarding flow, that with only your phone number, It filled out the entire form with my current address and social security number. So your onboarding flow is better than any other FinTech product I've ever signed up for.
Phil: So Jesse came in for 50,000.
Josh: Wow, that's awesome. Then what happened with Cyan?
Phil: Cyan and I have not had the chance to, to reconnect. So we are still playing email tag back and forth and we hope to reconnect soon.
Josh: What? It's like four months later.
Phil: We've been busy and she's been busy, so we're excited to continue the conversation when we have the opportunity.
Josh: You're too kind. I mean, you should tell her the round's closed. Right? I mean, you oversubscribed it.
Phil: We oversubscribed and we started the next round.
Josh: Oh, you're already raising the next round?
Phil: Already raising the next round.
Josh: What does that mean exactly?
Phil: Yeah. So the one thing that's really accelerated everything was the demand from The Pitch podcast. I've been able to connect with some of the listeners, and particularly one set of founders and operators have participated and they just wrote a million dollar check yesterday.
Josh: Are these the LPs I introduced you to?
Lisa: What?
Phil: Yes.
Lisa: Yay!
Josh: That's amazing! I heard Peter and John on our scouting team also invested.
Phil: Peter and John absolutely invested. They gave me a call. I thought they were talking about the show and they wanted to participate and I could not be happier to have Peter and John participate as well.
Lisa: And the other disciples?
Josh: Did you get Matthew and Mark?
Lisa: Sorry. It's so hard not to make that joke.
Josh: Uh, how much did you raise in total from listeners?
Phil: We raised an additional 1,020,000.
Josh: Okay. So when Cyan resurfaces, you're just going to pitch her the next round, right?
Phil: That's where we are. The company's advanced significantly since the last stage that the risk profile has changed since the last valuation as well. I mean, we're closing out the product. We were very early stage in, in metrics and we're happy to have her participate.
Josh: Well, that's a nice segue then. What's been happening in the business? What can you share?
Phil: Yeah, absolutely. we've seen fantastic month over month growth on all of our users. We have launched our new desktop version of our product. So now we have a mobile app as well as a web platform. In the last few months, since we filmed The Pitch podcast, our users are already on track to invest over $350 million for their kids.
Josh: Woah
Lisa: Wow.
Phil: And excitingly, we just finished our first B2B API, so we can now not only have consumers go and use the FutureMoney product, but we signed our first B2B partnership that allows partners to open up and offer the Junior Roth IRA directly into their platform. We’ve made a lot of progress in the last few months.
Josh: Jeez. Okay, what's your secret? How are you launching so much so quickly?
Philip: We move fast.
Josh: Did you steal the code from your first company?
Philip: Not at all. Never would we!
Lisa: Oh my gosh!
Josh: But no, but really, how are you moving so quickly? You've got like a million and a half dollars in the bank and you probably spent half of that already, like that's not that much money to build a fintech product.
Philip: So leveraging 10 years of experience in the space and building half a dozen regulated products in the past, we know what to build and what not to build. We've failed before, and this time we're able to move a lot faster.
Josh: One of the things that the investors on our show talked about was how much they liked you because you were a second time founder. They talked about how like you have a chip on your shoulder because you felt like you had to exit your first company too early. how does it feel to hear investors say that about you? Does that feel like a compliment? Like…
Phil: It's definitely a compliment and they're not wrong. I mean, at the end of the day, we're all here trying to fulfill a certain purpose. And for me, it's building financially inclusive products. I didn't necessarily get to realize the impact I wanted to have the first time around. And I can't wait to continue building products that are going to change the lives of millions or tens of millions of people down the road.
Josh: Hm! It's funny to hear you say that because the way Jesse described it, he's like, you want founders who were like successful the first time, but not like too successful. Because if they're so successful, the work ethic isn't quite there. Well, he didn't say that, but I'm reading in between the lines.
Phil: Even if we were too successful, I think that my work ethic would still be there. The idea that you can continue to have an impact is just absolutely huge. And I don't know what I'd do if I wasn't doing what I do now. I'd either be investing in startups that I believe in that have an impact, or I'd be building companies that have an impact, or I'd be running foundations that have an impact. And at the end of the day, it comes down to how do you want to spend your time? And I think I've found my calling.
Some people’s calling is … building financially inclusive products. Crazy specific I know. And some people don’t find their calling until a vegan friend says, “I really miss my sour cream and onion chips.”
Enter THE Christie. With Christie’s Chips. Does anyone actually know her last name? Is it chips?
Christie: I've created Christie's, the very first potato chip brand that crafts nostalgic flavors using only plant based ingredients.
Mac: That is a quality chip.
Christie: In 10 years, I want to create a company that takes over that portion of the snack aisle.
Mac: So the healthy, clean version of Lays.
Elizabeth: I guess when I think of potato chips, I think, oh, well, they have potatoes in them, so they're already plants.
Christie: So I'm from Indiana originally, right. And my dad is like a meat and potatoes guy and he wouldn't touch a vegan product with a 10 foot pole.
Elizabeth: It's easily a billion dollar business. Easily.
Elizabeth: I would be in for a 10k personal check.
Josh: You pitch on the show, you get a personal commitment from Elizabeth Yin for 10,000. And then Ben Taft also commits to invest personally. And he wants to do a syndicate to invite all his buddies to invest too. After the pitch show, you first get on that call with Elizabeth. What do you remember from that call?
Christie: What I remember the most was her talking about The LLC versus the C corp.
Elizabeth: Sorry, what is your structure? You have an L, L, C and uh-
Christie: I do have an LLC, yes.
Elizabeth: Okay. And then the SPV is investing in the LLC or what, what is this format?
Christie: So I, so I was talking with a mentor and they were saying the SPV, if I set up like an SPV, so Christie's snacks Co. It's like that extra protection layer around the investment. So all investment dollars will go into Christie's Snacks Co. And then there's an operating agreement between Christie's Chips LLC. Is that preferable? Is that less desirable?
Elizabeth: It sounds complex to me.
Christie: Okay.
Elizabeth: From an investor perspective, especially institutional investors, like they will not invest in LLCs. They'll only invest in C Corps because of the complexity. So my recommendation to you would be to convert this into a C Corp because that will make it a lot easier for you to bring in dollars.
Christie: That's been the kind of the whole process of the brand is like how do I want to set myself up now that in five Years, the work is much easier, right? Where like, things are much more cohesive and her saying no VC is gonna invest in you if you're an LLC. I was like, okay, that's where we want to go Right? is to work with a like an incredible VC that's done these big natural brands that are killing it now, right? That was the biggest hurdle.
Josh: So Elizabeth signed and wired?
Christie: Yeah. Quickly.
Elizabeth: So I might regret this investment for my own health, but anyway, I think you have a great product.
Christie: Thank you
Elizabeth: So I'm in personally, for 10 K on this. It's a safe 4 million post money. Is that right?
Christie: Yes, yes.
Josh: Was Elizabeth the very first check into your company?
Christie: Yeah, that was the first. That was an exciting moment.
Josh: That's awesome.
Christie: It's just cool. like makes me take a step back and realize or just look at where we started and where we are now, and when you look at that, where we are now, I would have dreamt to be here five years ago. And so it is like a moment of like reflection and gratitude to just, okay, keep going.
Josh: That's awesome. Alright. So then what happened with Ben?
Christie: So Ben, he's fantastic. After the podcast dropped he texted me that morning Like on the day that he listened to it and he was like, I forgot how excited I was send me the SAFE and so I sent him the SAFE and I was like, yes!
Josh: I forgot I wanted to invest!
Christie: well because he's like man. I it just like reinvigorated that like I such an excitement around the brand, you know, because like You just got to stay top of mind. This is like the whole game is like is Follow up with people up to the point of almost annoyance. You know what I mean? Cause you don't want to be annoying to somebody, but you need to be -
Josh: Right on that ragged edge.
Christie: Right. Cause you have to follow up…
Josh: Wait, so did Ben write the check?
Christie: Not yet.
Lisa: Oh my gosh!
Christie: I know, and I followed up with him this week like heyyy. What about that?
Josh: Benjamin.
Christie: [laughs] We'll get there. We'll make it happen.
Josh: Okay, so this happened after you walked out of the room. Cyan told us, she was like, You guys should just take the rest of Christie's round.
Christie: Yeah.
Josh: And, We did not.
Christie: Yeah. It's a lot of money.
Josh: We stuck with our model and we invested 50, 000.
Christie: Yeah.
Josh: I am curious though, like how has the rest of your round gone? Like, have you been able to close the 400K?
Christie: Not yet. Not yet. But if my meeting goes well on Monday, I think I will close the rest of the round. I have a couple other personal investments from people within The Pitch Show. You guys are incredible.
Josh: Wait, wait. Like who?
Christie: John and Peter
Lisa: wait?
Josh: oh, they both invested?
Christie: Yeah.
Josh: The scouting team writing personal checks. Let's go.
Christie: So we're about, we've raised 80 K of the 400. And so we will see. How that goes I, yeah, we're gonna close it.
Josh: You know I’ve seen, We've had a lot of founders on the show over the years and we've heard, you know, so many different reactions to the fundraising process.
Christie: Yeah.
Josh: It's very surprising to me the way you talk about it.
Christie: Yeah.
Josh: You seem very like. Unphased by it?
Christie: That's so funny. That's good.
Josh: Do you not feel that way?
Christie: No! Absolutely not! No way! That's why it's so funny. at the very, very beginning, the first meetings I took, I was sick with anxiety, worry, because I wasn't familiar with the questions they were going to ask. But as I've had more of these meetings, I've gotten more and more comfortable, because I understand kind of, there's like a consistency in the questions that you're being asked and the more that I've done it, the more I understand that I, I know the answers and I know the answers well.
And so I'm less nervous. Although going on the pitch podcast was the most nerve wracking experience, but like I've told you guys, my superpower is to internally feel, um, extremely nervous, but also have like this kind of laser focus calm of like, okay, I can do this. I know the answers. I know this business. Just say a prayer. Like, please speak through me. Help me be clear in my answers. But I try really hard not to sit in the, what if it doesn't happen?
What if we don't get the money? And, and lean more into, okay. It just may take longer. What can we do in the meantime? What can we do that's creative with what we do get and then keeping the vision. And then also just like having this, maintaining this, I can't believe I get to do this.
Like that gratitude of like, this is the coolest thing I've ever done. And this is exactly what I want to do. And just feeling like, okay, let's do this. I'll figure this out. Yeah. I'm definitely not unfazed, but I'm more comfortable now than I was six months ago.
Josh: Yeah.
Christie: Getting those checks, like the 10k, the 50k, the 10k, those are so important because like, uh we launched Whole Foods this month, and so
Josh: Get out!
Christie: I, yeah, so I
Josh: We launched Whole Foods this month. You just, you just say in passing, come on!
Christie: So I really, I, it was like, that was like, one of the coolest, if not the coolest one, because it's like, I had wanted that since the beginning, you know, obviously. And so the buyer, I was connected, I think it was March. I was connected with their forager. And then in April -
Josh: Forager
Christie: I followed up with her. It's called a local forager. that's such a funny name, but it makes sense
Lisa: I want to be a forager
Christie: Yeah. You're foraging for the local brands.
Josh: I'm foraging constantly
Christie: aren't we all? No, but then I got the okay that they're launching 9. 2. And so like over the last like couple weeks, we've seen it like starting to pop up in stores. And so buddy of mine is like going to all the stores to make sure like it's merchandise executed, whatever. And then I'm going to get there and go to all the stores and yeah!
Josh: Now I can like visually picture where the money went!
Christie: Yeah, exactly.
Josh: The money went to Whole Foods!
Christie: Yeah, yeah, exactly!
Josh: So you're launching, well, not in all the stores, but all the stores in California?
Christie: Yeah. Yeah. So we did the SOPAC region cause I want to make sure that we can really like dial up this sampling and the demos and like in store marketing and all that stuff, you know? So it's Southern California, Hawaii, Nevada, and Arizona. So there's 65 stores.
Josh: This is so fun. Congratulations on Whole Foods!
Christie: Thank you I'm so happy. It, yeah, that's the best one
Josh: The best one? better than sprouts?
Christie: Um…
Lisa: why are you making her say this?
Josh: Well, I don't know she said it's the best one. I just want to know!
Christie: When I was a little kid, I grew up with Whole Foods, right? And having that be like the metric of like, okay, this is where I want to go. There's 586. It's in other countries. You know what I mean? Like it was, And I had, okay, maybe this is also why it feels like the best one, because I had tried to pitch once before. So this is the second time around. And so, you know, there's like that buildup of like the obstacles, and then finally you get it, and it feels like so exciting.
Josh: Well, all I know is in the Sarasota, Florida region at Sprouts, you should be doing pretty well.
Christie: There's, that's our biggest market.
Lisa: Oh my gosh, we've bought so many chips.
Josh: So many bags.
Christie: That makes me very happy.
Not to be a bummer, but Ben still hasn’t invested in Christie’s Chips. Yet? But you all did! After the show, LPs invested another 120,000, bringing her total raised so far to 200k. Glen & Michael, you know who you are!
This episode was a big fan favorite. You all love your chips! Almost as much as the VCs hate the education system. In fact,
Cyan: I really would love for it to be destroyed.
Elizabeth: I guess I just go back and forth between like, do you include more people in the existing system? Or do you try to take down the system?
Our edtech founders’ respond… right after this.
[break]
Welcome back. This next segment I like to call, “Hulk Smash.”
Enter: former college admissions advisor turned startup founder Julia Dixon from ESAI. She’s using AI to help students get into their college of choice.
Julia: We are the AI platform that is democratizing college admissions.
Jesse: So you're doing it in a way that is simpler, easier to do, bite sized
Mac: Currently you say you have 2 percent of your users transitioning to paid. That’s not enough
Julia: I’d say it’s a starting place
Charles: I think I want to invest 25k.
Josh: On the show, Jesse committed 50k and Charles 25k out of their funds. What happened after the show?
Julia: I was able to get in touch with Jesse pretty quickly. And we found out right after filming that he actually works just a few blocks from my apartment. So he said, why don’t you come out in person to, to the Flybridge office. And we'll do our diligence there and we'll kind of make the final calls together in person. So that was great. It's a cool office vibe. His, his wife was working in the room next door. And I feel like we're very aligned in the vision and we just kind of immediately got into like a brainstorming session more than a due diligence session. And that's always a good sign when you're vibing on ideas versus nitpicking on doubts and stuff. That meeting was really easy and good and he confirmed, again, just verbally, but that he was in and that the 50k was a go and I felt really good. After that, it got a little less easy though.
Josh: What happened after?
Julia: Nothing happened, and I guess that's the big thing. Nothing happened for a while. it just took a while, and it does with these kind of things, but I got a little nervous.
Josh: The summer fundraising apocalypse.
Julia: Mhm
Lisa: Josh
Josh: What?
Lisa: It looks like you have cold foam on your nose.
Josh: That's embarrassing.
Lisa: Can we please have a bloopers reel with that?
Josh: No, I think you have to include it in the episode. Otherwise, people are going to be like, What the hell is on Josh's nose?
Lisa: Oh my gosh
Josh: Embarrassing.
Julia: Love it.
Josh: Um, yeah. No, literally. I mean, since COVID, this has been the slowest summer in venture I've seen.
Julia: Really? That's kind of validating. We eventually got back in touch and finally got papers signed and it actually happened. We got there. That's all that matters.
Josh: That's awesome. All right. So then what happened with Charles?
Julia: With Charles, we got in touch pretty quickly as well and embarked on this very long diligence process. He has a really cool process of getting letters of recommendation from people and… and then we did some formal background checks. And right around the same week that I signed officially with Jesse, I signed with Charles and precursor and that's a done deal as well.
Josh: Signed and wired.
Julia: Mhm!
Josh: Well, congratulations. I mean those are two solid VCs in your round.
Julia: Yeah, definitely.
Josh: I mean, I don't want to speak for you, but in my opinion, they're pretty great
Julia: No, no, I think they're fantastic. They both have excellent reputations. I feel like for pre-seed it's not super common to get. Some of those VCs in your round. Um, it's a lot of times really small funds or just angels. So I'm really grateful and you guys made that possible. So thank you!
[clapping]
Lisa: You’re welcome! I’m so excited for you.
Josh: I think around the same time, The Pitch Fund also invested 50,000.
Julia: Yesss. So exciting. So happy to have you guys on board. And it was around the same time. It felt like. I knew things were, were heading in that direction with Jesse and Charles, but it all kind of closed right around the same day. And then you guys closed right around the same day. And I was like, wow, what a Friday.
Josh: You were raising a million
Julia: Mhmm
Josh: And you had 300,000 committed as of the recording. Did you end up closing out the round?
Julia: Yep, so we have closed the round we've raised just over a million and, and we've had to start turning people away at the end It's like once you get that momentum, you're grinding so hard and then everybody wants in at once. It's just how it goes I guess.
Josh: Any updates on the business? are you able to say anything about the numbers you're seeing?
Julia: I can say that we've now reached over 200,000 students that have accounts on our platform. We just started our real big monetization push with the launch of the Common App, which was the very beginning of August and we’re beating our revenue goals. So it's been really good. The, traffic is there. The excitement is there…
Josh: I mean, trying to remember on the show, you had had, I think, 100,000 users
Julia: Yeah, so that all of our first hundred thousand were from last college app season when it was just me and an MVP. And this year we're already at that hundred thousand number. So we're definitely going to beat last year. We already are. And it's been cool to see it grow.
Josh: Very cool.
Josh: You know, the VCs on our show have been torn on a couple pitches this season and it all centralizes around this theme of like, do you play within the current system and all of its flaws and try to make it a little bit better? Or do you just Hulk smash the entire system and start over? I'm curious, like, do you think you can fix things from the inside of this system?
Julia: It's both like we can't just ignore the existing system as it is. It's not going away overnight So we do need to find ways to incrementally make it better. But things are going to change if higher ed becomes irrelevant, I don't think that's happening anytime soon, but I think I'm already thinking that way. Like I really want to help Gen Z and young students and professionals understand themselves and their stories better.
And that's great for higher ed, but it's also great for other things. We're just helping people. Build the soft skills they need to get jobs, to get into programs, to build connections. From where I'm coming from, at least, is, is college the future?
I don't know, but either way, we're going to help you figure out how to reach your goals and tell better stories to get there. And so that makes me feel like we're doing something that helps no matter what the answer is.
Chad: Our award winning game development team builds realistic learning video games focused on history with 20 minute episodes that immerse you in historical worlds and expose you to varied perspectives.
That’s Chad Wilson with ImmersionED, the other edtech founder this season. We asked him the same question…
Josh: Do you play within the current system and make it better? Or you just, just like Hulk smash the entire thing and start over.
Chad: So it's, it's an interesting question, right? I think that ultimately trying to Hulk smash the education system is different from trying to Hulk smash a non government sponsored industry in the same way. And so I think the reality of the world is something that you need to function within. And so when I hear people saying, Oh, well, let's just get rid of the whole system.
I'm like, first of all, do you know the turmoil you would cause in the interim period? And the amount of damage you would cause there. I think I'm very wary of that. I think that what you do see, though, is that there are systems within education that foster more innovation and those lead to change. And so say ImmersionED ends up being a gigantic smash hit in charter schools and private schools and homeschooling that will make its way to districts down the line as a result, but it wouldn't necessarily, there's a chance that that's where it thrives initially more so.
Josh: So since the show, like you just launched episode one with Gilder Lehrman.
Chad: Yeah, that's right.
Josh: They sent out an email to 35,000 schools.
Chad: Yeah.
Josh: Do you remember the day that email went out?
Chad: it was actually really fun. Stressful, but fun. I was on a call with my sales team when the email went live and we knew it was live, our system was blowing up. Our marketing guy was like, we have thousands of people on our website right now. I kept getting, I hadn't set up notifications properly. To make it so they wouldn't like just ping me for everything. And so my phone, just like, I felt like a celebrity. I just had like hundreds of teacher signups just happening. Like every moment there was a new ping. And I was just like, this is super exciting. And now guys, we've got a lot of work.
Josh: So how many schools have signed up so far?
Chad: Uh, a little over 4,000 And schools are still continuing to sign up every day. And so we'll see where we end up. It's an exciting process.
Josh: As someone who was homeschooled for grade school. Oh man, I would have loved to play a video game
Chad: Right? if only!
Josh: I would’ve loved that
Chad told us that to date, students at 450 different schools have played the free version of Witness to the Revolution. Which we hope becomes a revolution. That we get to witness.
Now, one system that we definitely do not want to destroy is the party system. NOT the two party system. Like, party parties. We love parties. Or as Virginia Frischkorn, award winning event planner and founder of Partytrick would say…
Virginia: We are the operating system powering the experience economy.
Ben: What validation do you have that these customers will be willing to pay those amounts of money?
Virginia: I've been in the industry for 16 years. They're the brands I've been working with. and we actually have a $47 million pipeline for year one
Cyan: This seems like a no brainer if - if it is what we think it is.
Mac: You had three businesses. You did over $100 million in events. COVID is over. The world's opened up. Why do this?
Cyan: I would love to take the rest of the round
Josh: So, during your pitch, Cyan committed to invest personally, or a larger check out of her fund. And then Ben committed 250K. What happened after the show?
Virginia: So I was able to connect with Cyan personally after some back and forth because summer travel, as everyone knows, is a thing.
Josh: Brutal
Virginia: And we had a really great quick chat.
Cyan: Thank you for walking me through that demo. That was, it's, it's very clear about your expertise and your past experience as an event coordinator and what you've done just lends itself so nicely to this product and it's so helpful and useful. And as a small scale event planner, I can already see great value in what you're building.
Virginia: Thank you
Cyan: At the time of the pitch, I know there was some of your round left, but what is, it's been some time that's passed by, so I was wondering if you could walk me through How your financing is going and what's left.
Virginia: We're raising up to 1.3. We can go up to 1.5. So if Josh and Lisa take 100, I would say 400 or so is kind of available.
Cyan: Okay. Well, my personal check size, it varies time to time based on what's going on in the world and kind of how deployed I am personally.
Virginia: Completely
Cyan: But I would like if you would have me to put in 50K personally.
Virginia: Love that.
Cyan: And then I would like to track the company, uh, for a future round with my fund.
Virginia: Honestly, it was one of the smoothest transactions that I've had in the entire fundraising process. So lovely, so pleasant and smooth. Uh was very quick to kind of sign paper, get everything wired.
Josh: Wow. Well, congratulations. Well done.
Virginia: Thank you.
Josh: Cyan responded really well to your demo. Do you find that like showing investors the demo is like the unlock they need to really understand your business?
Virginia: A hundred percent. I was speaking with a, uh, actually a PR company yesterday and we were talking about using it for some of their clients and they're like, I don't get it. And as soon as I did a screen share, you immediately see eyes go, Oh my God, Whoa, wait, where has this been?
Josh: Yeah, when you showed me the product, like before we brought you on the show, I was like, holy crap, like this thing is expansive. Whatever an MVP is, this is not it.
Virginia: For better or for worse.
Josh: So then what happened with Ben?
Virginia: So, first call with Ben was rather positive where we were able to look, talk about the business, the state of the business.
Ben: It sounds like by the end of the year, you will hopefully close a few of the bigger fish if not a hundred plus of the smaller contracts.
Virginia: Uh, the goal is a little bit more than that. We like to shoot for the stars.
Ben: How are you bankrolling your core team plus contractors right now. Pre big fundraise.
Virginia: So, uh, bootstrapped primarily. I've personally done about a million and a half into it.
Ben: Cool. I'm excited. I want you to talk to my partner so we can start moving toward a decision. I think that there's a very fine line here between, are you an event planning services company that companies are paying as a service and there just happens to be a software layer. And on the other side of the line is like, this is a full blown software platform that enables events. And it's pretty self service. I want it to be on the right side of that line. And I think it is. So yeah, why don't we get a follow up call with my partner on the calendar?
Virginia: I remember leaving that call with him being excited. We immediately set up a call with his partner. The call with his partner, I thought it clicked for him. Then they went really quiet I mean, I couldn't get a response. I probably sent eight plus emails.
Josh: Oh wow
Virginia: I keep nudging and nudging. I'm like, Hey, if it's a no, if it's not a fit, that's fine. Like, I don't want to keep bothering you and adding to your inbox.
Josh: Yeah
Virginia: So, we do finally have the opportunity to text back and forth immediately then that led to a quick phone call actually yesterday and the TLDR is he really, likes what we are building, But my partner really likes a traditional, like what we are looking for is a CEO who's doing sales and setting vision. A technical leader and it is only software driven and very small initial team. And it is a pure, like there, there really isn't much of a human component in terms of like the final product and the delivery that is really the niche that they're looking for. And then it's really like go out and just test the software, but don't touch it as a human.
Josh: okay…
Virginia: And that's just not how we're building it. We're building it a different way. So. We're not the right fit, but we want people on our team that are truly invested in what we are here for. It's not just money for money's sake, right? Like, and that was, I mean, that was a lot of the conversation Ben and I had yesterday too. It's like, why would, not like, not to sound cocky or arrogant, but like, why do I want him?
Josh: Yeah.
Virginia: Why should he be allowed in, right? Like, this is a killer opportunity. Do I want an investor who's going to ghost to be in? What are they going to be like once they're already in?
Josh: Wait, did you tell him that?
Virginia: Pretty much!
Josh: How did he respond?
Virginia: Actually really well.
Josh: What did he say?
Virginia: I basically said, you know, I want to make sure this is a mutual fit. I'm in a lucky situation that I'm talking with numerous people and we want strategic capital. And if, if people are not going to be excited about the opportunity, I don't want them in, if people are not going to be responsive, like that's not a helpful investor for me at this stage. And so he was like, no, I get that.
Josh: Well, and normally you could like, I guess, vet someone beforehand, except when you go say yes to be on a podcast. And it's just a group of people we curate and maybe not all of them are superfans of the events industry.
Lisa: I can't imagine someone who's not a fan of the events industry.
Virginia: Oh God. So many people. Events are so easy. My wife does them.
Lisa: Oh my gosh. Stop.
Josh: No.
Virginia:. I’ve heard that so many times. I also, and actually from an investor who's been very helpful in an advisory way. She's like, Virginia, you're a blonde woman in events. You are discounted before you walk in the room. You should not even try right now.
Lisa: Oh my gosh!
Virginia: I’m like yep. ok cool. watch me, have fun! And so yeah, I'm gonna take those nuggets but everyone has a different perspective. And some people are going to be a fan of me. Some people are not going to be a fan of me. Some people are going to be a fan of my business and some aren't. But the feedback has been, I mean, it's fascinating. and that's the thing, you have to love this journey and take it all with a grain of salt and like, you know, make like a duck, let the water roll off your back.
Lisa: Is this what you expected in dealing with tech investors?
Virginia: Oh God, no. I used to be able to go to a dad of a, like a client. Get 3 million off the bat and get him to hand it over. To go and get 50 grand or a hundred grand from this, where I'm like, look, I can like, I'm like, you literally are, it's, it's insane. And you're like, wait, why are people saying no? People have always said yes on this. So now, you know, make it into a game. How can we change it?
Josh: Yeah, and also counter argument to the don't have any humans in your product thing. I get it's really easy if it's just pure software, because it just scales easier but also having humans in the process can also become a moat if you know how to scale the human piece of it. And having spent a bit of time in your data room and like seeing the team that you've assembled and how you're actually running things behind the scenes I have a sneaking suspicion that the way you're gonna be able to scale this business with the human part is not gonna be so bad. It actually might be the thing that makes you succeed.
Virginia: I hope so. Thank you.
Josh: Also Salesforce, huge services component. It's not all software.
Virginia: Yep, I know.
Lisa: On that note, we're obviously huge fans of you, Virginia, so if you will have us, we would love to invest 100k into PartyTrick.
Virginia: Amazing! I would love it! Yay! Thank you guys! Yay!
Lisa: Yay!
Josh: Let’s goooo!
Virginia: Love it, love it! Thank you Lisa, thank you Josh. I think this is going to be a fabulous partnership. I'm really excited.
Lisa: I am too. I, I think the way that you are, like, combining the events side and the, like, software side is amazing, and I see it. I just get it. And so I'm really excited to be partnering with you and investing in you and And I would bet on you every day of the week for sure.
Virginia: Thank you because that’s, I mean, it's so validating and it means a ton.
After the pitch, Virginia gave another pitch… this time at the Startup Colorado pitch competition, and she won a $140,000 investment!
You know who else is on the pitch competition circuit?
Nyamitse-Calvin: I love competing. It's like my sweet spot. When someone says free money, I'm like, I'm right there.
There he is! Everyone’s favorite nontraditional first responder turned biomedical engineer, Nyamitse-Calvin with Vital Audio
Nyamitse-Calvin: We've developed the technology that takes in human voice and reports heart rate
Phone: Hold the tone “ahh” until you hear the next beep [beep]
Josh: AHHHHHHHHHHHHHHHHHH
BEEP
Nyamitse-Calvin: A small practice can process anywhere from 3,000 to 10,000 phone calls monthly.
Mac: And you'll get $5 every phone call?
Nyamitse-Calvin: Yeah.
Josh: Well, if you could carve out 50k for The Pitch Fund, that'd be great.
Josh: So, Nyamitse-Calvin, you came on the pitch. You got commitments of 50,000 from Cyan, 50,000 from Jesse, and 25,000 from Charles.
Nyamitse-Calvin: Yes.
Josh: I want to know what happened after the show. Let's start with Jesse.
Nyamitse-Calvin: Yeah, so, love Jesse. we had like our due diligence call.
Jesse: I want to go through and write the first 50k check that we're doing. But I, you know, my, my hope would be that over the next few months, we spend some time and make some intros. I support you in whatever way you, you want for me. And potentially we get to a place where we say we'd like to lean in and, and lead something in, in the near future.
Nyamitse-Calvin: After our due diligence call in about a week or so we were able to actually close
Josh: Closed and wired?
Nyamitse-Calvin: Yeah, closed and wired completely.
Josh: That's great. That's awesome. Tell me about Cyan.
Nyamitse-Calvin: We had the due diligence call.
Cyan: Could you remind me what my commitments were on the show?
Nyamitse-Calvin: The commitment was 50k. And then the opportunity for a check from the fund too.
Cyan: Okay, well. This is all I really needed. I'm going to stick with my commitment. I'm very, very excited about what you're doing. I think it's incredibly important. And I'll check in with my team on the rest.
Nyamitse-Calvin: So, Cyan was actually probably like the fastest we had. In about a week actually, we were able to get it wired.
Josh: Okay. Wow. So 100,000, just like that.
Nyamitse-Calvin: Yes.
Josh: You make it sound so simple. So what ended up happening with Charles Hudson?
Nyamitse-Calvin: He wasn't able to get himself to a yes at the moment.
Josh: What was his reasoning?
Nyamitse-Calvin: So it's around potential conflict of interest and some concerns of like, how big can we get as a standalone company. So those are the two limiting steps for him.
Josh: Okay. Well, Nyamitse-Calvin. Thank you so much for coming out and pitching on our show, which I now realize is like a hobby of yours. You're so competitive. And you surprised me because you actually like took my advice on how to arrange your pitch to be most attention grabbing, and clearly it worked for you, but, yeah, we're excited to be on this journey with you.
Nyamitse-Calvin: Thank you. Thank you. In Swahili, we do have a saying that says, “Ukimsifia tembo mwishowe hulitia maji,” highlighting that if you're too much in your head, like even if you're an elephant, you're going to drown. So you have to be open and adaptable and coachable and being able to like, get your support on like really, tell me, do some engineering problem. I got you. I'll do that. Yeah. In my sleep. Tell me storytelling. I'll be like, give me 12 hours, maybe. So having your support was greatly appreciated and we're really excited to actually be part of the The Pitch family and Portfolio.
Josh: Yeah, it's a pleasure.
Lisa: Very happy to have you.
The Pitch Fund actually came in for 85,000 on this deal, up from the 50k committed in the room. Bringing the total raised on our show to $185k.
Vital Audio also just launched a pilot with the Minneapolis Heart Institute, so the first AHHHHH phone calls are happening as we speak.
Another founder this season that was juuuust about to enter the market was Gwyneth Borden from Remynt. She came in hot pitching a new kind of debt collector, one focused on hope and redemption.
But you can’t be a debt collector with no debt. And she needed to close her round so she could buy that debt.
Gwyneth: Remynt empowers consumers to rebuild credit while resolving delinquent debt. How do we make money? We buy debt very cheaply.
Cyan: Yeah, I was issued a credit card when I was 18 and I was very irresponsible with it. And I had to go through this.
Gwyneth: In our country, I don't think we do a good enough job, when people fall behind helping them, right? We know how to punish people. But we don't know how to provide resiliency. And that's what this product is really about.
Ben: What's the, like the just the minimum viable proof point to be like this business works and how can we get that?
Elizabeth: You're in that battle for that small margin with everybody else.
Mac: I disagree with Elizabeth here. I like you a lot, and I love what you're building because what you're building is important. But I got one hang up.
Elizabeth: Not everything goes a hundred percent to plan.
Cyan: Well, I’m in
Gwyneth: Thank you I appreciate that
Cyan: I'm in for 50k personally.
Josh: First of all, how are you like personally as a human? How are you doing?
Gwyneth: I’m good it's just been an adventure this summer. Working on getting into the market. And, always there's so many fits and starts and things that like obstacles that are thrown your way that you have to like step over. I also in my personal life, my sister and I share care of my mother who has Alzheimer's. And so I have my mom for a concentrated period of time. I really want to honor her because she worked in credit, interestingly enough, and finished her career at consumer credit counseling. So I really also want to do this to honor her.
Lisa: That’s so cool.
Josh: All right, so we're gonna go back in time a little bit.
Gwyneth: Yes.
Josh: During the pitch you were $200,000 away from your $1 million goal. you got a $50,000 personal commitment from Cyan Banister and 50K from The Pitch Fund as well. What happened after the show?
Gwyneth: So right after the show, I reached out to Cyan. We were on a deadline. Basically, we were closing the round within 10 days.
Josh: Yeah
Cyan: And Cyan was great in getting back to me, getting the funds wired and the SAFE signed.
Josh: Like, did you guys get on the call with Cyan or anything? Or-
Gwyneth: She was actually traveling, but she was so great at making sure that it was taken care of. That's what I really appreciated.
Josh: That's awesome.
Gwyneth: After the show, I also got another $100,000 and that allowed me to close out my round. So I am so thrilled with Cyan’s support and your support. It made the difference. It allowed me to close that gap because basically for us, the thing was we had outstanding commitments, but they needed us to hit that million dollar mark for those to come in. And so those have now come in. And so it's a game changer because now we've been able to like put all the things in place and are launching any day now. It's just a, we've of course had our little hiccups, like our payment processor dropping us because it turns out debt collection is treated like cannabis and gambling -
Josh: Of course it is. Of course.
Gwyneth: - and those kinds of controversial industries. And so there are a lot of payment processors that won't work with us. So my next company might be creating a payment processor for debt collection.
Josh: That's your pivot. So um, Yeah, obviously we're investors through the Pitch Fund and very excited about what you're building. And I’m curious, so you said you're launching any day now. Like, does that mean you're about to start buying debt?
Gwyneth: Yeah. Yes, we actually are about to buy our first $1.2 million of debt at the big whopping price of two cents on the dollar.
Josh: Get out.. What is that $2k?
[Josh and Gwyneth do math]
Josh: A million in debt for $22,000. Amazing.
Gwyneth: I know.
Josh: This is like your, this is like your proving ground, right?
Gwyneth: Yes it is
Josh: Like so much relies on this first million dollars in debt. So like you had to pick well. Without giving away the secret sauce, like what kind of debt did you buy?
Gwyneth: Personal loan debt. The average debt balance is about $2,000 on these loans. And a lot of people took out these loans with the purpose of building credit. So it's really interesting because we're gonna be able to offer a value proposition in that way that helps them kind of come back from the mistake that they made.
Josh: So it's like the ultimate proof. These are people that are trying to rebuild their credit. They've shown intent, but failed. And you're going to come in and say, we actually care. We can help you build credit. Trust us.
Gwyneth: Exactly. And more importantly, just give them the grace that they need, right? The timeline and that they need to be able to do it. Because that's the biggest challenge people often say is that I'm calling you and today I need you to give me this amount of money. And by giving people grace, hey, you can start with $10. Why wouldn't you do that?
Some of the investors loved Gwyneth’s fire, and some of them wanted her to be more open to the idea that things might not go according to plan. I don’t know. She’s a first time founder! She’ll figure it out. That’s the bet we made.
In the latest update from Gwyneth, she bought the $1.2M in debt, and people have officially started paying it back. Without any of those pesky phone calls.
Gwyneth’s round is done and dusted.
But for others on this season, “it was the negotiation that never ends”...
You’ll remember Chinar Movsysian as the founder of Feedback Intelligence with four degrees. She’s building AI to make AI stop hallucinating.
Chinar: We help AI teams to turn automatically the end user feedback, both implicit and explicit, into actionable insights. It's called Feedback Intelligence.
Mac: Can you talk to me a little bit about your business model?
Chinar: on average we charge them 90k annual contract.
Mac: Did you raise any money for the company you were doing before?
Chinar: Yeah. One million.
Mac: And so, this new company, is this a completely new company or is this a pivot -
Chinar: Pivot. But still we are using that money for this.
Elizabeth: I would like to invest, but not at the valuation you're looking for.
Chinar: We can negotiate.
Mac: I’m sure!
Josh: On the show, Elizabeth committed 150,000 at a 10 mil cap, or should I say, offered. And then Cyan and Jesse were both interested in potentially leading or co-leading your round. What happened after the show? And let's start with that call with Elizabeth.
Chinar: Yeah. She asked a couple of questions about like the product, design partners, other like prospects that we have.
Elizabeth: How do you think about getting more folks in pipeline? And is that something that you're actively doing?
Elizabeth: I do agree that intuitively the market needs a solution, but I've also seen a lot of people just sign up for things on a wait list and then never convert as well.
Elizabeth: You essentially need to kind of be in survival mode to get you into when the market really takes off.
Chinar: You mentioned about like potential investment and your term. I would like to know, like, what is that process like? with that term, I feel like you don't need a lead or what you expect from us.
Elizabeth: Yeah. I don't need a lead. Happy to do it on a SAFE. I would want an MFN in case the pricing goes down further.
Chinar: I see. I see.
Elizabeth: basically I, I kind of put the ball in your court, like, think about it. If you want to move forward, let me know.
Chinar: I think we will get back to like Friday or earlier next week. Thank you so much.
Elizabeth: Yeah. No rush. Okay. Thank you so much.
Josh: So did you take Elizabeth's money at those terms?
Chinar: Yes. Yes.
Josh: Yes. It sounded like on the call, you like, you weren't sure if you wanted to raise at that valuation, but you ended up saying yes. Why?
Chinar: The reasoning when we decided to take her terms was like, we know we need money. And if we are building this, if we know that we have this conviction that this is going to be huge. So like 1%, more or less, it will not change anything in a Long run. And because we took this money, I didn't continue to chase other VCs. Like I was like, okay, we have money right now. We needed this money to do X, Y, Z. And also we had money from previous
Josh: From your previous round.
Chinar: Yeah. And we were like, okay. I'm just going to spend my time on customer development and product development because at that time we had only design partner and wireframe. That's all. And raising with that, it was very hard.
Josh: Like, that's crazy. Cause like you were trying to raise 2 million in the room.
Chinar: Yeah.
Josh: You raised 150 and you're like, no, that's good. We'll take, we'll just take that and run.
Chinar: Yeah. Yeah. Not run. Okay. No, no.
Josh: Take that and build.
Chinar: Take that and build. And good thing is that my team, the tech team that I have is in Armenia and, there is a huge difference between paying, there and here that was like, okay, this is a, another five months runway.
Josh: Oh, wow. That 150,000 gets you that far.
Chinar: Yes. Yes. Another five months runway for my team. And I have there like, three very talented, super cool LLM experts there.
Josh: So did anything ever happen with Cyan or Jesse?
Chinar: Not so.
Josh: What do you mean by not so?
Chinar: I mean, we had a couple of back and forth via email. And then, I didn't chase them. Like, when you raise, you actually do that job and try to make this like FOMO, you try to do these things. I feel like there are a lot of founders. They do that very well. For me, it's more about whenever you see more about your vision, more about your product, customers, you just update them. You just, Hey, let's catch up. Let's do this. And then eventually that fundraising is happening. You say, okay, now like I see the, the angle, they also see that angle. I'm ready to, to take that money and use it.
Josh: Yep.
Lisa: Always fundraising.
Josh: Always relationship building. Sometimes fundraising.
Lisa: Always relationship building.
Josh: So we invested a hundred thousand out of The Pitch Fund. Thank you for having us. So how much runway did we give you? Was that like another two and a half months?
Chinar: Something like, three months. Which is very, very helpful. Yeah.
Josh: Yeah. I love how scrappy you guys are.
Chinar: And, I'm very excited to have you in this overall journey and everything. Thank you so much.
Josh: Yeah. So that's you raised 250 K in this round or did you raise any more?
Chinar: A couple of angels, industry experts. They also joined us around 50 K and They are super helpful. Like they're ex founders, they're engineers. They know the problem and they're always helpful, even though they have small checks in the company.
Josh: Do you find that angel investors are more helpful than VCs?
Chinar: Can I say that? Are you recording this? Yes, yes, yes.
AI deals have all the VCs going gaga these days… so I’m not super surprised this deal made it to the finish line. But there was one deal this season that our investors weren’t quite sure what to do with… Dean Eberhardt’s pitch for ReCraft, a new beer technology.
Dean: We have developed a new way to make beer that's 30 percent more efficient.
[can noise]
Charles: They're both really good. the left one has a little more creaminess to it, like slightly. but they’re both very good.
Elizabeth: I actually think I like yours better.
Mac: Are you telling me I could essentially set up a brewery with less storage space because I don't have to hold the hops anymore?
Dean: Yeah and also skip some steps at the end as well.
Elizabeth: Do you have a science background?
Dean: I'm an engineer. I've come from a family of entrepreneurial engineers. We built probably like the world's coolest homebrew setup in the garage
Mac: You fit the exact founder profile that I love, and it is killing me right now that I can’t make the investment.
Josh: During your pitch, no one invested, but everyone had an intro for you.
Dean: Right
Josh: Did any of those intros come to fruition?
Dean: Unfortunately not thus far, but I'm not giving up hope yet. Probably our biggest learnings from the show was making sure that we had the right investor audience that had the right investment thesis to match what we're trying to do. And like at the time …
Josh: So the biggest learning was don't pitch people who don't know anything about beer. Is that what you're saying?
Dean: Don't pitch a bunch of tech folks in the Bay area that are looking for software, a manufacturing business, yeah that was a learn.
After the ice cold reaction from VCs, Dean decided instead to go back to his existing investors and raise a small internal round. But they also made a big change to the business itself.
Instead of making the hop juice themselves and shipping it to breweries, ReCraft will license their technology to breweries so that they can make their own hop juice.
Dean: what we saw was, Hey, we could actually establish partners. Um, that have manufacturing facilities in the beer space. They're already doing stuff like this every day. And we can do like a hub and spoke model where they are both doing manufacturing for themselves, for their own facility, but then potentially making product for the regional market as well.
Josh: Oh, so then your customers become distributors for other smaller customers.
Dean: Exactly. Exactly.
Josh: So instead of doing the fishing, you're teaching the guy how to fish.
Dean: Yeah, or supplying them with the rod and the rod is the the thing that actually catches the fish in this situation and teaching them how to use the rod. Yes.
Josh: And you own the patent on the rod, so you're good.
Dean: Mhm. And we own the rod. The design is that we would actually put .. Uh we would still own the, um, own the machines and the facilities.
Josh: Oh, you would build your own machines. Let them use it. Got it. this makes the business more scalable,
Dean: more scalable, less capital intensive and allows us to go faster.
Josh: [sigh] I just, you know, I'm a little bit disappointed if I'm honest with this new path for the company, because it means the likelihood of me getting to use your hop juice as a home brewer just got significantly slimmer.
Dean: There's always a way to figure that out. Part of this new journey , is we are, we are going to be opening a small tap room in Boulder, to showcase what's possible with the technology. And so I'm sure we could have some conversations about shipping some kegs your way of concentrate or some things you can play around with as well.
Lisa: My garage is going to be full of car stuff and beer stuff.
Josh: But you'll have such a happy husband, Lisa.
Lisa: Yes, yes, ugh…
Josh: And co founder. And general partner.
Apparently that’s a deal only a VC who homebrews could get excited about. But there was another pitch that Lisa could get excited about too - Bridgefy, a technology that helps people stay in touch when the internet goes down.
It might be because we’re Floridians; we’ve experienced this problem firsthand. In fact, this call with Jorge Rios was recorded from our home studio because Hurricane Milton hit Sarasota just two days prior.
Jorge: We build technology that makes any mobile app work without the internet
Jorge: Imagine there's a hurricane. Now you're getting all this information from the Red Cross -
Jesse: we're receiving images from Jorge on multiple devices that are all airplane mode, only Bluetooth, and they're coming in like real time.
Jorge: We're going to start with three countries, then we're moving on to five countries in two months. And by the end of the year, we're going to launch it globally.
Cyan: And are you agnostic to regions? is there any place you wouldn't sell into? Are you just into free speech?
Jorge: I am into free speech.
Jesse: What are you thinking?
Josh: I'm thinking, I don't understand why you guys aren't investing.
Josh: On the show, Cyan committed 50k personally, and Jesse was interested in potentially leading your round. What happened after the show?
Jorge: Cyan and I spoke maybe like a month after the show. She mentioned that her husband had done some research and found that it was a very crowded space.
Josh: Mhm
Jorge: And, there was a competitor of ours that was way bigger than we are. And I cleared up that that competitor hasn't operated. They stopped existing in 2018 and this space is not crowded at all. We are the market leader by millions of users. However, Cyan committed 25 and then asked me to speak to her husband.
Cyan: Well, let me also see if my husband will get on the phone with you. He seems like his, all of his information is out of date.
Jorge: I'm just worried that, your fund might've made a decision also based on, on information that is a little bit out.
Cyan: That's another thing is maybe, well, once you get Scott, if you can convince him, you can convince the fund.
Jorge: We emailed, uh, one or two times, he and I, but he didn't want to hop on a call and he said that they were going to invest 25,000, which we are very grateful for, by the way.
Josh: I mean, yeah. 25K. That's, that's. Meaningful. What ended up happening with Jesse?
Jorge: Jesse was apparently busy for a few months after the show I think it was almost three months after the show that we were trying to email him. And then he replied asking, offering to hop on a call. we hopped on a call and he said that he didn't see a lot of opportunities for our technology, that it wasn't like a super strong need. That it was a nice to have and not a must have. Ironically, he was having connection problems when we were on the call. And he said, he explicitly said, I don't, I don't have cell service here where I am. He was in some country in the Middle East. But he said that, yeah, it wasn't for him. It wasn't for his fund. So that was that.
Josh: Hmm. [sighs] I know like you needed to raise the money quickly because you were going to use it for building out each of these contracts, like has not raising the money as quickly as you hoped, impacted the business in any way?
Jorge: Not at all. No, right now things are like business is booming. Like the kids say, but yeah, we are going to open a round in around two weeks. We're going to try and raise two or 3 million dollars and it looks like we already have a few funds that want to jump in.
Josh: Okay
Jorge: So yeah, this round could go from zero to success in, in just a few days. That's what we think is going to happen.
Josh: Okay. Well, keep us, Jorge. I mean, keep us, Jorge. Posted. Um, keep us posted Jorge, we're always looking to partner with other funds to learn from their diligence process. So, if you are able to secure this lead and they're open to talking with us, we would love to jump on a call and learn through that process and then maybe invest.
Jorge: Sounds good.
Since that call, Jorge decided to stop fundraising to focus on closing new customers. They’re making money the old fashioned way.
How y'all doing? I’m not used to publishing episodes this long. I know everyone else does it, but I’ve never done it. It is time for a break? I think so.
Coming up… the real Devina Desai. You’re gonna love her.
Devina: We should keep my part of your recording very short. Like, what Elizabeth invested, what you invested, no one needs to know anything else about Devina.
[break]
Welcome back. Devina Desai’s company, Kinometrix, is solving a big problem, preventable harm events like hospital falls.
But her pitch really ruffled some VC feathers. Not in the founder coming in too hot kind of way, instead the VCs thought her vision for the company wasn’t hot enough!
But after this episode aired, a lot of you reached out to say you disagreed with the VCs. And that there’s nothing wrong with a pragmatic founder.
Devina: We began with trying to solve the problem of hospital falls from a risk assessment standpoint.
Mac: Look, y'all, I know we, we just in here, it's only 11 minutes, but at this point in the proceedings, I want to tell you, this is dope.
Ben: Who are you? What's your story? Where are you from? Like, what's age zero to the point where you decided to start the company?
Devina: I'm an immigrant founder. I moved here from Kenya.
Ben: What's your ultimate ambition with the company?
Devina: Five years from now I think we are probably going to be bought out. We’re being realistic, we realize there are much larger players -
Mac: Don’t be realistic with investors, that doesn’t help you
Elizabeth: Is it okay if I can be an asshole for a moment?
Josh: So on the pitch, Elizabeth Yin committed 50 K from her fund. And Mac said, this is dope. I want to invest 50 K out of his fund. What happened next?
Devina: so we had the due diligence call with Elizabeth. She brought up that I'm not the original founder of Kinometrix.
Elizabeth: I noticed on your LinkedIn that you started out as an advisor to this company. What is sort of that history of this company? Was this started by somebody else?
Devina: So, the name, yes. The product, no. Um, the company was originally a medical device company for physical therapists. I was with the health system, validating the device. The device didn't quite work. So the company was at the point where it was going to pivot to what the health system wanted um what we wanted. And that's when I switched from my job at Inova and took over as CEO and the former co-founders forfeited equity and everything, because they were no longer, um, working on the company. So I took over.
Josh: I don't think we've ever had a founder on the show where their story was. I was a hired CEO to come in and build this company.
Devina: The former CEO and I are very good friends because he knew the product was something that fell more under my realm than him. So he transitioned it graciously.
Josh: And I mean, cause I've looked at the cap table, like you own close to 50 percent of the company now. So you didn't just come in as a CEO to run the company. Like you are now the founder and you know, majority owner of the company.
Devina: Yes. That was part of the condition that our current lead investor had is the cap table needed to be clean and I needed to own the company.
Josh: Okay. We're going to get back to the Elizabeth Yin call. She, from what I understand, also had some questions about this round being led by a family office.
Elizabeth: Who was the lead on this? Like, are they taking a board seat or what are the details on that?
Devina: So the lead is a family office, enlightened capital management. They do have the series seat director board seat. They also get a say in the independent.
Elizabeth: You have the last seat?
Devina: I have the last seat.
Elizabeth: And have they invested in companies before?
Devina: Yes, They've invested in over 250 companies. There are 35 active healthcare companies. It's a big portfolio.
Elizabeth: Great. Sometimes with family offices, they're making their first investment and they
Devina: Oh god no. This one's old. They've had several exits.
Elizabeth: Great. Actually, going back to something that was I think a sticky issue on the pitch. Is their idea or hope to exit early or how do they think about that?
Devina: So not early. It's funny, right? Our idea of an exit is when we're a robust platform, we're looking at a hundred millions plus an ARR, but then we think we are better suited to be absorbed by someone like Oracle Health or a larger player in the market. So that's what we're looking at exit. We are not intending to exit for at least the next five to six years. We are also aware that we will probably not be an IPO company, but better suited for someone like, I'm thinking Oracle Health
Josh: In the room the investors biggest concern was when you said you would potentially sell to a competitor 5 years from now? And they felt like, well, some of them felt like, well, we need someone who's willing to take this thing to the end, like, you know, 10, 15 years or more, like they can't be willing to sell early.
Devina: it wasn't even only just the lead, but the angel groups that have invested, they've always wanted an exit plan. Everyone wants an exit plan So that's why we have an exit plan. And I'm pretty sure Mac followed up after and told me Devina, keep your exit plan to yourself.
Josh: Oh, he did. He messaged you?
Devina: Um, so we had a conversation outside and I was like, that's funny. Cause he's like, I know your angel investors like to have an exit plan, but VCs. Don't like exit plans. I was like, ah, so now I try to keep it to myself. It's like, you know, if you ask, I will respond, but otherwise just keep it to yourself. I see what they want to hear. But as someone that's been in health care for so long, I can't say something that stretches the truth. Like, it makes me extremely uncomfortable.
Josh: Yeah that's so interesting. I feel like I've definitely heard VCs ask like who buys this in the end. Like VCs on our show. But they don't criticize the founder for answering the question. It's like, if you ask who this might sell to, I'm going to answer it.
Devina: But they don't want you to volunteer it.
Josh: Well you didn’t! Ben Taft asked like, What’s the like end state of this business? Like five, 10 years from now, where are you? And you answered it with the acquisition, which I thought was a reasonable answer.
Devina: it was a trap.
Josh: [laughs]
Devina: but that's fascinating. Elizabeth dug into the financials five years from now, we do actually, what we are working on the second module. So we do anticipate revenues up over 80 million, more towards a hundred million in ARR, which to me, if you put an X on your sale, three, five, it's still large enough. It's not maybe the billion he wanted. But it's 10 percent of the market.
Josh: I say you've done pretty well. You've got 10 percent of the market.
Lisa: Oh my gosh.
Elizabeth: I think on the show I had committed 50. I'd be interested in, in committing 150. I think the only thing pending is I do want to read the docs to make sure that, okay, this is like signable.
Devina: Yes, happy to. I'll share the docs right away.
Elizabeth: Thank you. So if you can do that today, I can get back to you tomorrow with those next steps around that.
Devina: alright.
Elizabeth: cool.
Josh: So she signed and wired 150k.
Devina: Yes, signed and wired, um, like a week after the due diligence call.
Lisa: Gotta love Elizabeth
Josh: Sounds like Elizabeth Yin.
Devina: You were quick after.
Josh: Well, yeah, you only had 250,000 left, last I'd heard, then Elizabeth takes 150,000 of that, I was like, well, shoot, I don't know what Mac's doing, but we want to get our allocation too. So I emailed you.
Devina: And then, we had investors we were talking to. And we had to extend it. Um, so we decided to extend it to 2 million
Josh: Oh wow
Devina: And the, once the show aired, um, there were other investors, your LPs that were also interested. So we're talking to them now.
Josh: That's what I like to hear. Amazing. So you're going to raise 2 million in total instead of the 1.5 million you'd planned originally. And where are you at as of today?
Devina: As of today, we have, um, 1.7 committed. And then there'll be another 300 or close.
Josh: All right. Well, awesome. What happened with Mac?
Devina:, I'm not sure. I haven't heard back from Mac. I think he did mention that his fund is fundraising at the moment, so.
Josh: Okay.
Devina: Yeah.
Josh: So. This is your first time as a startup founder, yes? Were you expecting all these VCs have like this deep interest in your backstory? Like is this what you expected when you signed on as CEO?
Devina: Not really. You think the CEO of the company, you come in, you run the company, you make it great. And then everyone's like, what's your founding story? And I was like, huh? So then I went back to the former CEO who was the original founder. And I was like, What is my founding story? Like, what is this? He's like, well, you have to talk about why do you care about Kinometrix? And I was like, okay, that I can, because I did, which is why I helped them at the pivot. But I am not the founder that someone looks for that's like, Oh, I was struggling as a child or any of those. I don't have that background. So when Ben said, going back to Kenya, I was like, if you're expecting me to say, I walked with lions, my life is, I can't, the things I can’t relate with. I've been asked, someone asked me once, did you go to school with lions?
And I was like, It's a normal country, like, do you have televisions in Kenya? Yes we do. And just to clarify, Kenya is not next to Mexico. I was also asked if Kenya was next to Mexico. And I was like, what school did you go to? I judged all those people just throwing that out there.
Lisa: I’m judging them too.
Josh: I just can't. I can't right now.
Devina: So I don't have that. Founder story. I'm not that struggling founder., It was serendipity. I just, it landed at the right time with me and it was something that excited me. I was like, yes, this is where I can make a difference.
Josh: I love it. It is untraditional, but I love it.
Lisa: I think you do have a founding story though.
Devina: Yes. I mean, I connect with Kinometrix at a deeper level from just its product and it was developed with all kinds of blood, sweat and tears, I mean more tears, less blood and sweat. [laughs] I'm going to stop, you talk now, I'm done.
Lisa: I love it. I feel like we're getting to see the real Devina here and that's what I love.
Devina: I do work very hard at creating that Devina. I have also been told by my investors I come across as a child.
Lisa: What?
Josh: What?
Devina: yeah, so I have been asked to like, I can't artificially make myself look older. I don't know how to, so there's that. Don't smile much.
Lisa: Do you actually take their advice?
Devina: So I do, I smile less, during my investor calls
Lisa: No! I hate this! Don’t do that!
Devina: And customer calls, especially because I do need my customer to not think that someone that’s in their twenties thinks they've solved healthcare.
Lisa: Mhmm okay.
Devina: So when I'm on my customer calls, I have a very. serious-ish face. So it looks like, okay, this person's probably been through enough which I have. I've been in healthcare for 15 years now.
Josh: This is, uh, not where I expected this conversation to go.
Lisa: Nope
Devina: Which is why we should keep my part of your recording. Very short. Like, what Elizabeth invested, what you invested, no one needs to know anything else about Devina.
Josh: No one else… You don't want people to know the true Devina?
Devina: I have to sell into healthcare. The true Devina's, you know, smiles and jokes. Healthcare might be like, oh, you're not uptight enough. Where's your tie?
[laughs]
Josh: In responding to like something you were saying earlier about people wanting you to stretch the truth and your feelings about like, not stretching the truth. Lots of founders stretch the truth. Like, not that it's good, but…they do…
Devina: I know, but I can’t get into that mindset. So I've been told you need to think like a, um, West coast, white man that started a company and I was like no as soon as I see that person I'm like, okay 80 percent of what you said is not possible. So I call it bullshit in my head
Josh: Uh huh,
Devina: and I don't want to do that. Like well the person sitting across must know that I am bullshitting. So it's hard for me to get into that mindset and just be like, Oh yes, I'm going to solve health care. It's going to be bigger than Epic.
Josh: Yeah.
Devina: I am a very optimistic person, but I am a realist. Optimism is not fantasy. Optimism is, yes, it's going to work out. It's not, I'm going to be larger than Epic that's just fantasy.
Josh: [laughs]
Devina: Oh god. Don't air anything I say.
[laughs]
Josh: You are a great human who cares about a real problem, and so I appreciate that about you and, you know, super excited that we got to invest in your company and that The Pitch, you know, our fund and LPs and listeners get to be along for the ride. Just really excited and couldn't be bigger fans of you.
Devina: Thank you. Well, I'm glad I met you. You and Lisa just, you like brighten a room room. You guys are great people.
Josh: Thank you.
Lisa: Thanks!
Devina got one more check after that call – 25k from a pitch fund LP! She’s working to close out the last 375k.
Devina really surprised us on that call. Part of the fun of the fund is that we get to know these founders better. Particularly during the rigorous due-diligence process.
And the longest, most intense diligence process we followed this season was Dopl. The company Ryan James started to bring robotic ultrasounds to rural areas.
Ryan: Our vision is to democratize access to care through telerobotic and autonomous procedures.
Jesse: Fantastic mission
Charles: No one will let you do robotic surgery. You make one mistake, you’re out of business.
Ryan: I'm about tearing down the systems that do not work and rebuilding them to support everybody.
Charles: We'll put in 25. I have a bunch of questions, but those'll come out in diligence.
Josh: On your episode, episode 149, Charles committed 25,000 and Cyan was interested in writing a bigger check out of her fund. What happened after the show? And let's start with Cyan.
Ryan:. I met up with Long Journey and I can't remember the guy's name. I could, I could look it up.
Josh: Luke,
Ryan: Luke. Yeah. I met up with Luke and I pitched him over video and from my perspective, the pitch went not great. I get on the call and I'm like, do you want me to pitch with slides or without slides? And he, he was like, without slides. And then, I don't know what I was thinking, but I was like, okay, cool. And I shared my screen and started pitching with Slides and it was just like downhill from there
Josh: What, What happened?
Ryan: I don't know what happened, I could tell he wasn't feeling it and we ended the call early, it was, it was not great
Josh: Oh no
Ryan: Yeah.
Josh: So that fizzled out to nothing? No check from Long Journey?
Ryan: No, no check from Long Journey
Josh: Alright. Now with Charles Hudson I want you to tell me about your very first call with Charles.
Ryan: Yeah. I think he was in a car. Was he in the car?
Josh: I think he was in a Waymo.
Ryan: Oh yeah. I remember he was 15 minutes late. I remember... I remember that now.
Charles: How are you Ryan?
Ryan: I'm doing good. I created a perfect agenda for today that was going to take exactly 30 minutes. Now I don’t have… I don't have any time.
Ryan: My main goal for that call was just to see how deep I could get Charles invested in our company.
Ryan: Okay. So one of my big questions that makes me, makes me a little bit uncomfortable to ask, but I've got to shoot my shot. Um, okay. So if, if I'm going to call this million dollar round, our pre seed round. Would you be open to leading that million dollar round?
Charles: I think we'd have to like go back and revisit our check size assumptions if we're going to lead. I think if we were to lead with our current check size, I think it might be too small. I think if we were going to lead, we'd have to make a bigger commitment to the company, which. Would require me to do a little bit more work to get comfortable, but I'm, I'm open to doing the work to get there.
Ryan: What would you need for me to follow up after this?
Charles: Yeah. If you send me the data room, I'll look. And then, you know, cause when we lead the three things I usually try to think about are like, what's the price that I think would pull in the other people who we need as investors. What amount should we commit to sort of like help catalyze the round?And then like, what else can we do to help you find the capital you need? Those are always the three questi ons I ask myself when we're going to lead. And so I'd want to make sure I didn't do all of that work at the show, because we were planning to write a smaller check. So I'm happy to, to do that. And it doesn't take that long.
Ryan: Awesome. Awesome. Awesome. Thank you. I appreciate it.
Waymo: You're here. Please make sure it's clear before exiting.
Charles: Yeah, I mean, I think my experience …. Hold on, I'm just getting out of this car.
Ryan: Let me, let me let you go. I really appreciate your time today. Being open to doing more of a deep dive and potentially leading our pre seed.
Charles: Awesome, man. We'll talk soon.
Josh: So you guys then jumped on a second call. And what struck me about this call was you were super clear right up front about what your expectations and goals were for the call.
Ryan: So I had read some stuff about Charles, um, just like I, all the stuff that he posted online. And it seemed like he appreciated people who came in with, with a very clear agenda. And so, I just got straight to business.
Ryan: I've got a few different things that I want to walk you through. But before, I sent them ahead. I don't know if you had a chance to see that email.
Charles: Mm I saw the deck you sent and I saw the longer email.
Ryan: Okay, great. Before I just dive into it, I wanted to ask if there's anything in particular that you were concerned about or that you wanted me to highlight.
Charles: I think for me, the big thing is. Just understanding the fundraising sequencing plan and how that maps the milestones that, that for me is the big thing. Because we've done a few things in hardware and in logistics in sort of, I'd say in the real world and making sure that the financing plan lines up with the milestones is to me seems to be like kind of the most important thing. Like the company just needs to. Stay alive while it's dealing with the FDA. And this is like probably the TLDR, when you're in between milestones, pretty much the only people that will fund you are existing investors. Otherwise, most people just say like, it's just too risky. I'm just going to wait until you clear that threshold.
Charles: What's the number to get through 2025?
Ryan: It'll take about three, 3.3 or three and a half million.
Charles: I appreciate all the effort you put into this. So just Ryan, I'm still interested in exploring being the lead. I'm not there yet, but I'm happy to continue this process. Cause I was struggling with like, well, what are the million dollars? It doesn't get us all the way there. It gets us to a place, but does that place make it easier or harder to get what we need? So I think I have a better sense of how the, the rounds are daisy-chained together and we can plan to maybe touch base, um, next week.
Ryan: Awesome
Josh: Yeah it's interesting. Because you, you had pitched Charles prior to the show like a year or two earlier.
Ryan: Yeah, March 2023 I think.
Josh: That's weird that you know the date?
Ryan: Not saying I looked it up recently
Josh: Do you remember the first time we met why yes, I do March 18th, 2023
Ryan: It was raining outside, on a Tuesday…
Josh: Have you been stalking Charles all this time? Did you use us just to get to Charles?
Ryan: Not saying I did. Not saying I didn’t. No, no, no…
Josh: No comment. So, ultimately, where did Charles land? Did he invest?
Ryan: He invested, he, uh, invested 100K.
Josh: Amazing!
Ryan: It's amazing , so the 100k almost is, is nice of course, but it is secondary to really having a partner that can help us long term.
I feel super blessed. He's also not the only one who wrote a 100k check.
Josh: Just what are you alluding to Ryan?
Ryan: There are these other great investors that are actually the reason that I reconnected with Charles.
Josh: You don't say.
Ryan: Who also wrote a 100k check.
Josh: Yeah, we're pretty, pretty stoked to be, uh, invested in you, Ryan. And obviously what you're building, we couldn't be more excited about it. After the show, you never know how founders are going to respond. Like some of the deals you're most excited about end up falling flat for different reasons, but you just like nurtured that whole relationship. And, uh, I've been kind of in awe the whole time. At just, how you've, how you've run it.
Ryan: No, thank you.
So while Ryan didn’t get Charles as his lead investor. Shooting his shot got him a bigger check. Tacoma Ventures ended up leading the round with a 400,000 investment. Bringing his total raise to 740k. He’s hoping to close out the first million over the next few weeks.
All of the companies on this season are solving real problems. Big meaningful problems. People always say they want to change the world, but these founders are really doing it. Or at least that’s the goal.
But there was one pitch this season that was especially moving.
The final pitch, and the finale to our finale… a napkin idea that swept The Pitch Room, from Khaylah Epps of Oma Health
Khaylah: We support those nurse practitioners through an AI-enabled business in a box model. we can build a healthcare system where we keep black women alive.
Cyan: how much of the one million have you raised?
Khaylah: Zero.
Charles: We've done a bunch of these businesses, and half of the challenge is identifying people who will succeed as entrepreneurs.
Mac: There is a bit of a game to this, and I don't want you to forget that.
Cyan: I really like any business that's disrupting a broken system and doctors and physicians are such a racket.
Charles: So I have a lot of reservations, but I’m in.
Cyan: I'm going to commit 50k.
Josh: Kayhlah, how are you?
Khaylah: I'm swell. Can't complain. How are you?
Josh: I'm swell too. I haven't used, I haven't heard anyone use that word in a long time.
Khaylah: Oh, it's my favorite.
Josh: Oh, I'm swell. So back in June, besides Elizabeth Yin, who was conflicted out, you swept the entire panel. Cyan committed 50k, Charles 25k, Jesse 50, and Mac 50, which I have to say is pretty rare. Like it's only happened a few times on the show. How did it feel walking out of that room?
Khaylah: It felt amazing. Uh, I had no idea what to expect going in it. So I felt very proud of myself. I think that was the first time that I had actively pitched in front of VCs, and then highly regarded VCs at that. So it was, I think it was great.
Josh: Yeah. So tell me then investor by investor. What happened after the show?
Khaylah: Yeah. So I think it was, it was a long process. Charles process was so seamless. Um, and we signed with Charles. Cyan was able to sign our safe agreement. So that's really exciting as well. Jesse. We're still in diligence there. And then I was unable to get in contact with Mac, so that one is still, I guess, up in the air. So I would say that's kind of how the process has been.
Josh: So you're saying Charles and Cyan both invested?
Khaylah: Yeah.
Josh: Okay. Awesome.
Khaylah: Yeah.
Josh: So like Jesse's still in diligence, but like, does it seem like that's going to go through? Like, how are you feeling about that deal?
Khaylah: Yeah, I think we'll see. There's some hesitancy on his end. I think I'm, was a unique situation whereby, like I mentioned earlier, this was really my first foray in, in the VC realm and pitching here. So like, I hadn't had a lot of capital into the, the round yet. Like this kicked off the round, um, and I'm still, trying actively fundraising.
Jesse: I think is one of the concerns we have in companies that the pre-seed is not raising enough capital. I think I think it'll be it'll be a bummer to to to be under capitalized not be able to do the things that you want to do and sort of ultimately, you know, I don't want to see you fizzle out on that. And so I don't think that you will. But I but I think it's a thing. It's a real question we usually have.
Khaylah: And I think that there's a risk in perhaps not meeting the goal that I had set out for this pre seed round. So I think there's some hesitancy there. I'm a hopeless, you know, optimist. So I hope it goes through, but I think we'll cross that bridge when we get there.
Josh: So he just wants to see you make a bit more progress on the round before he invests.
Khaylah: Yeah. To actually, I think, get a lead cause these aren't, you know, lead checks by any means. So I think that's where the hesitancy comes from and it comes from a good place, right? He ultimately wants me to be successful, and there's a certain dollar amount I need in order to do the things that I set out to do for this round. So I think it makes sense.
Josh: Okay. Going back to Mac, you never heard from Mac at all?
Khaylah: No.
Josh: Just no response?
Khaylah: No response.
Josh: That's a bummer.
Khaylah: Yeah.
Josh: He seemed really passionate about your business in the room.
Khaylah: He did. I, I was shocked by that, but you know, I followed up three times and I'm, you know, at this point in my life where I don't beg anyone for anything. Like if you want to be in it, you're, you're in it. Yeah. And if you're not, you're not.
Josh: Is this how you expected fundraising to go with VCs?
Khaylah: Uh, yeah. I mean, you hear horror stories and I'll be candid. I mean, less than what, 1 percent of VC dollars go to black founders. And I think it's even smaller for black women founders. So I was under no assumptions that I was going to be an easy ride.
Josh: Hm. Well we'd love to take Mac’s 50, 000.
Khaylah: Okay?
Josh: I mean, the pitch fund would love to invest, in your company.
Khaylah: Oh my goodness. Thank you.
Josh: So that puts you at, I guess, 125,000 into the round?
Khaylah: Mhm!
Josh: And then if Jesse comes in, that's 175.
Khaylah: Yeah. So, uh, we'll see, but thank you so much. I really am touched by the support.
Lisa: Aw you’re welcome
Josh: You're welcome.
Josh: So, you mentioned on a call with Jesse that the state of Alabama has a matching program and they want to match dollar for dollar everything invested in your round?
Khaylah: Yep. But part of the stipulation is you have to have the cash in and then they'll match it. But it's the hardest part is getting that VC cash in.
Josh: Okay. I don't know if you feel comfortable like talking about this or not, but I know you've been waiting for this round to come together so you can go full time on this business.
Khaylah: Yeah.
Josh: So my question is, is that time finally here? Like time to quit and go full time on the business?
Khaylah: No, I do not have enough money yet. I just don't have the privilege to just up and quit with, with no money. So no, not yet. When I close out the round, yeah. And I was very methodical about how much money I needed to raise in order to build the company, sustain myself, you know, at bare minimum capacity. And we're not there yet.
Josh: What is that dollar amount?
Khaylah: Uh, it's 500,000.
Josh: Before the matching or after the matching?
Khaylah: Yeah, I need 250 outside capital and then I can get the match. Yeah.
Lisa: Just need 75 K from a podcast listener.
Josh: uh no offer to invest is being made to the listening audience on today's show….
Lisa: Um, what are you most excited about once this fundraise is over?
Khaylah: To build, you know, just actually chase after it and have the time to focus on something else that you believe in wholeheartedly and you want to do for your legacy and to build something on your own. It's very hard for one person to do particularly also as like a solo founder because everything is falling on me. So i'm just excited to have the opportunity to just hone in and build on on one thing.
Josh: All right, Khaylah. Well, can I just say we're really excited to have been there at the beginning we get to do this with a lot of founders, but not everyone is at the very beginning like this. And to be, uh, on the journey with you is just, it's one of the most satisfying parts of the job. So, welcome to The Pitch Fund. We're so excited to see what you build next, you know, investments like this, where it very clearly impacts an enormous group of people. where I can literally save lives and make homes and families healthier and live longer. Like, it's a big deal and, we don't take that lightly, and we're just really stoked about this.
Khaylah: Well, are you trying to make me cry again?
Lisa: Oh my gosh, yeah.
Josh: We've done it before
Khaylah: Trying to keep it together, I got to cry off screen during the pitch. But uh… Now I might cry on camera to really show my pisces side. But yeah, I can't thank you all enough, uh, for the opportunity. Yeah, I don't know if I would have been in the room with these folks any other way.
Well… Despite the cold VC summer… 12 deals came together… maybe not exactly as planned or as quickly as we all would have liked, but we got there.
In fact, 3,881,000 was invested on the pitch this season. That’s a lot.
And 2,871,000 of that was from you, the listeners. Which is crazy!
Back in 2022 when we first launched the fund on episode 101, Lisa and I had no idea what we were doing. We really didn’t!
We had solid advisors and mentors encouraging us that what we had was special and there was a there there.
But it was a bit of an experiment, would listeners really want to give us money to invest in the startups on our show?
Well, I guess you already know the answer. But we initially thought maybe we’ll raise a couple million dollars in fund I to prove this thing out. Now I’m excited to announce that 200 listeners invested over $5M in Fund I so far. I am honored and humbled. Especially considering this is one of the worst times we could possibly raise a fund.
But it hasn’t all been sunshine and unicorns. While some of our companies are doing really well, three of our portfolio companies have gone to zero. And we’re going to share those stories with you all next year, taking you even further behind the venture curtain.
Thanks you Elizabeth Yin, Charles Hudson, Christie Pitts, and Jenny Fielding for your sage advice on how to run a fund.
And I want to say a huge thank you to all our investors. I cannot wait to see where this thing goes next. And I’m stoked that I get to be on this journey with so many of you who’ve been listening to this show for years, many of you since the early Gimlet days… some of you even before that.
And thank you for sticking with me for the new format! We’d love to hear your feedback.
If you take a few minutes to fill out a quick survey, we’ll send you a coupon code for 20% off our merch store AND 50% off a one year membership to The Pitch Uncut. Just go to pitch.show/finale
Thanks for listening, we’ll see you in 2025!
And before we go… Remember, no offer to invest is being made to the listening audience on today’s show.
This episode was made by me, Josh Muccio, Lisa Muccio, Anna Ladd, Enoch Kim, and Jackie Papanier. With deal sourcing by Peter Liu and John Alvarez.
Cue the longest music credits ever… Music in this episode is by Fleece Panther, Our Many Stars, Strange Knight, FYRSTX, Breakmaster Cylinder, Onders, The Muse Maker, Dame Asu, Greg Jong, Oofla Juica, Joya, Serene Sloth, Boxwood Orchestra, Kevin J Simon, Astronaut Club, David Swensen, Cold Storage Percussion Unit, Hidden State, Graham Barton, and Frankie Lite.
The Pitch is made in partnership with the Vox Media Podcast Network.
New to The Pitch? Start with episode 101 to hear Josh Muccio pitch investors on his own show.