Hiring fundraising advisors. By Martin Hall, TEN Capital Network

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They're releasing to fundraising
video a podcast about

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fundraising for early-stage
startups, the major rule that we

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follow here is no bullshit on
this podcast.

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No music to relax.
You know, advertisements of our

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sponsors.
We only talk about fundraising

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here and nothing else.
So let's jump into the episode

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and today is a guest speaker.
We have whole Martin, founder of

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10 capital and in this episode,
he will talk about what time

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Capital is how he has managed to
spun out three.

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Angel networks in Texas.
And what does it even mean to

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spin out and Angel Network?
And at the end of the episode,

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we're going to touch on to some
legal details of fundraising and

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more specifically.
When does it make sense to start

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a c-corporation versus and then
we'll see.

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And when does it actually make
sense to start an LLC and then

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convert it to the C corporation?
So Martin, let's kick it off by

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you, giving us some background
on yourself and on 10 capital,

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great, thanks for having me.
My background is I actually went

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to Austin and work for a
high-tech company for about 20

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years and they went IPO.
So I started doing Angel

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Investing after that and we had
an Angel Network in Austin.

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Back in the 95 to 2000 era went
and joined the group because I

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wanted to learn how to do Angel
Investing.

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And I found that the best way to
do that is to work with other

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investors.
Share the deal flow and the due

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diligence.
So I joined the group and best

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in the deal and then I lost all
my money and show you realize,

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well, this is not as easy as it
looks, it takes a lot more

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skill.
And that group lasted for about

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six years, it ran from 95 to
2001.

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There were tied to the.com world
and when that went away, they

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went away with it.
We didn't have an Angel Network

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for several years and thin in
2006.

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The city did a restart and they
called it.

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The central Texas Angel Network
here in Austin.

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So I signed up as the first
member and when you do that,

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you're the first member in the
group, you're automatically on

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the board in charge of
membership.

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It's a Eight honor, no pay.
But it's a great honor to go and

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help recruit people.
And so, I did that I recruited

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about 50 members in to the
group, I was always an early

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stage guy, always wanted to help
early stage companies, as I

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thought Innovation and
Entrepreneurship, where really

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the answers to most most of
society's problems.

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And so I always fostered that
and after a couple of months of

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recruiting, I lost our director.
So I became the director and I

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let it for the first two years,
which we got a 33 x return from

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that, 5 million invested by
those.

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Investors.
So, it was a great win for the

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group and really propelled it
onward.

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And then I got a call from my
undergraduate University Baylor

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and they want an Angel Network
out of the Alumni Association.

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And when you do an Angel Network
out of a university, the

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Dynamics are a little bit
different, it's less about

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making money and more about
student experience and job

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placement and giving back to the
university.

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So I help them start that group
and it's still a member to that

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group to till this day and have
had a great time with it, even

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though it's a little Little bit
of a different game, they're a

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lot more mentorship goes into
that.

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And then I helped start an angel
group in a county north of

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Austin called Williamson County
called the Wilco Angel Network.

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And we did deal flow there for
many years as well.

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So it is starting three Angel
networks and about 2009 I was

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thinking about my second career,
I've been at that company for

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about 20 years, 24 years, as a
matter of fact and thought well

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what was the happiest time I had
in the company and the happiest

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time was back when it was just
starting Was in the early days I

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said well I want to get back to
the early stage world.

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How do I do that?
And I found I was having more

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fun with the Angel Investing
than I was with the work.

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And so I left the company and
started my own firm called

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Texas, entrepreneurs Network and
we were helping with capital

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formation and helping starts
find that in the early days and

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did that for several years until
we kept growing our investor

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Network which were originally
Texas.

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Angels and thin, they were
Angels across the country and

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then from 2010 to And 15.
I went to the Bay Area and to

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New York to find a venture
capital because that's where

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most similar located.
And then 2016, it had a whole

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bunch of family offices coming
to my network because they

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wanted to go direct.
And by 2017, I started getting

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calls from outside of Texas.
Wanting access to our investor

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Network.
So you change the name from

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Texas on a network of ten
Capital that's what ten stands

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for and started working around
the country.

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And at heart, we were doing
investor relations.

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And introductions I decide not
to be a broker because I was

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going to lose a substantial part
of my network, many VC, funds.

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Most Angel groups don't let
brokers in the deal so what had

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to go in another Direction and
so we help startups find

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investors, we help Angel groups,
find members and we help VC

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funds find limited partners and
so we're just doing Connections

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in introductions to do that,
right?

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So let's talk a little more
details about.

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What does it mean?
Just being out the network, they

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enjoy my work.
You've touched on to it quite a

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bit in your Your introduction.
But technically speaking would

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is an Angel Network.
Its is it a company?

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Is it formed as an LLC, as a
c-corporation?

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How is it legally formulas start
with that and then move on in

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that direction.
So most Angel groups back when I

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started would form a,
not-for-profit organization, and

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that just meant you were going
to be either a not-for-profit

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charity, or you were going to be
a Trade Organization But you

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didn't have to go file with the
IRS to get a true nonprofit

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status, and if you're doing any
investment inside the group,

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then you really can't do that.
You really had to file an LLC.

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So most Angel groups were really
just llc's and you have to pay

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taxes on the, on the business of
which there is not a big thing,

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as well.
Since then, a lot of Angel

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groups have decided to separate
out the investment.

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So the core leadership of the
group that runs it, they just do

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all the investment out.
Side of it, not inside of it and

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they just treat it more like a
trade Association and so many

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are able to get use an LLC or a
not-for-profit LLC in order to

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get the nonprofit status going
forward.

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And so, you typically don't have
a c-corporation, the money is

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mostly in the Investments that
the members make not in the

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organization itself.
Sometimes I'll have a fun, we'll

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just create a separate LLC for
the fund to take care of that.

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Gaucho understood.
So for investors, it's quite

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obvious.
What you get for Founders?

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It's quite obvious.
What you get which is you know,

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more exposure to more investors.
What about the people who lead

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it?
I'm just wondering you what's

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their purpose of doing it.
If sometimes ordered in most

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cases, they don't get a
management fee or anything, any

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kind of incentive.
So what makes them deal with all

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this stuff?
Which is a lot of organizational

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stuff.
So most Angel groups are Led by

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people that have a passion for
the early stage or for the

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startup and some cases, they
really don't need the salary

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that goes with it.
Although nobody likes to work

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for free.
So they do it for the passion of

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it.
For the most part.

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You don't get Super Rich running
Angel networks from a management

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point of view because it's
basically a networking group.

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And that's what one reason a lot
of people joined is they wanted

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to expand their Network and
that's a great way to meet a.

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Lot of people in a short amount
of time both Startups and

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investors is to lead an Angel
Network and found.

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Many people would come on and
take the role, especially

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program directors and deal flow
directors because it's it's in a

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high traffic area and you just
build your network that goes

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with it and from there, you jump
to maybe your own other, your

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own business doing something
that just requires that.

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You do note know people in the
community, right?

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That's definitely one way to do
it.

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Another way to do is run a
podcast about fundraising for

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three years.
So it's your call people.

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But yeah, that sounds quite
interesting.

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So eventually it has transformed
into something that you call the

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tank Capital network and on our
Queen to call, you have told me

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quite a bit about it and I would
like to focus on a few major

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things here.
One of which is the fact that

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you are not a broker-dealer
because a lot of these as you

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said or not really allowed to
have broker-dealers involved in

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their deals for understandable.
Reasons, can you tell a bit more

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to the founders?
Listen to this one.

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Does it mean to be a
broker-dealer or not to be a

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broker-dealer?
What kind of limitations do you

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have now that you are not
registered broker-dealer?

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All right.
So, yes, as you see is sighted

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two or the finra group inside
SEC.

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Has decided to anoint, certain
people with the ability to go

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and actually do transactions,
which is private stock sales and

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but they have to apply certain
compliance to it.

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You have to make certain checks
before you allow the transaction

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to go through.
And if you do that well then you

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can actually take a That goes
with it and you have to go

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through audits.
Every year they go.

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Every wants to check your
transactions to make sure you're

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doing it correctly.
We want to check to see that

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you're doing it in a in within
compliance requirements that

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they have.
And is people that have gained a

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license to actually do these
transactions and stars go to

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them because they want to find
funding or get help with it.

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And so they pay the broker a
fee.

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Typically, there's a little bit
up front and Then there's a

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success fee on the backend.
Some percent 510 percent that

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they pay the funds.
They raise that came through,

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the broker is what they do.
And like I say, VC funds don't

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have the ability to take deals
that go through them because

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they have Clauses in their fun
documents that basically say you

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can't pay anybody else.
Anything to find the deals

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because we're paying you to go
find the deals and so you can't

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Outsource that and so that's why
Brokers can't.

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Used by VC funds but basically
this people that provide the

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compliance work and they can
transact those deals.

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Gotcha.
Perfect.

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And to be easily for Founder's.
The only difference is that

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there is no such thing as a
success fee.

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Unless the company is a
registered broker-dealer.

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Correct.
This right.

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You know, you have to be a
broker-dealer to charge a

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success fee and that's that's a
pretty Sticky Wicket to get

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around.
If I you partner with the firm,

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It has a broker-dealer, you must
be yourself a compliant and that

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requires taking up several
compliance tests.

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You have to have certain
proficiencies and pass certain

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exams in order to do.
So, as well, Personal condition.

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Here, don't deal with registered
broker-dealers.

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It's not worth it in.
Most cases, it is not, but in

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your case morning, you're not
want.

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So you charge just the fixed fee
per month and on our print

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recall, you have mentioned that
it's two thousand dollars per

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month for our listeners out
there.

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And when does it make sense to
reach out to someone like

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yourself and, you know, ask for
a supports in their fundraising.

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So whenever you're fundraising
you should always leverage your

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network.
Work.

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First, you always want to make
sure that your group is

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supporting you and you put money
in and then you start drawing

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the circle.
Wider at some point, you'll run

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out of network.
And when you do, that's when you

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call us, and that's how we went
National, as I was getting calls

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from Seattle Chicago and other
places saying have talked to

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everybody, in my city, I've run
out of investors, I need more

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investors and that's when you
come to us is that will help you

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find more investors.
I do think that most startups

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should have a national
perspective on their fundraise

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from day.
One.

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The days of just raising money
from your local group.

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Only is really not possible
because, you know, your

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investors local, you're looking
nationally as well for the best

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deal.
Not just the best local deal.

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And so you have to start
thinking, where am I going to

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find more investors and we can
help help with that.

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Part of it is to get you
connected to more accredited

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investors, right?
So my major concern with

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companies like ten capital or
any companies to be fair.

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That's Thomas to connect them or
founders with investors for fee.

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Is that they're biased,
obviously?

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Because it's their customer and
it's the customer who pays

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rather than to be seized.
Is there a problem with that or

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do you think that we seized
don't really care much about

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where that's introduction is
coming from?

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Well, the way I look at it is
the company's paying a fee to

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get access to the investors
because the alternative is they

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go to their Network and they get
a friend of a friend to make an

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introduction and that that's
possible to us.

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Certain extent, but eventually
it can wear you down to try to

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leverage that much and again
your network does come to an end

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at some point, the VC or the
angel on the other side of that

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table, their job is to do the
due diligence and actually put

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the money in.
So they're not getting off free

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here.
There is still work to be done.

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So we're just trying to take
some of the cost out of it and

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try to make put some efficiency
into the process of capital

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formation and at a price that is
more startup friendly.

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There are many many groups That
would charge very high fees, but

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we don't think that you really
need to charge those fees in

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order to make it work.
Right, absolutely debatable

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subject.
Not gonna go into this one

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because we don't have enough
time, but let's talk about when

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it makes sense for for a
start-up founder to reach out to

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someone, like yourself as you
mentioned.

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You know, one of the reasons is
you run out of investors in your

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city as a person who lives in
San Francisco.

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I cannot imagine that, but to be
fair.

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Yeah, they're obviously CDs like
that, you know, smaller than

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Sanford.
Esco and less populated with

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investors, but now that
everything is online, do you

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think it is still possible to
run out of investors because you

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don't you don't care where they
are in the United States.

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You can reach out to anyone and
I've interviewed hundreds of

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investors during the pandemic
and none of them seem to care

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where the founder is actually
from, I think the pandemic

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certainly put everything online
and actually accelerated the

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move to a national perspective.
Like I was talking about a

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moment ago, one of the
challenges that you have to

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realize is that, you know, when
I started the sea, can group in

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Austin, back in 2006, they were
generalist.

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They were basically look at any
deal that was just in their

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backyard.
We would look at a gaming deal.

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Turn around.
Look at a biotech and then turn

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around.
Look at it.

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I T's a still all in one
evening, but as time is going

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gone.
Forward, many of those groups

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are becoming more You'll see
that when these as well when

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they start to look for becomes
very specific and very narrow

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and that's why they can't just
look locally.

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They have to look nationally and
so because it's such a long tail

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there.
You have to really look

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00:14:50,500 --> 00:14:54,800
nationally for your the right
investor that matches your deal.

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00:14:55,100 --> 00:14:57,400
And one of the things we do with
startups in one reason, why they

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come to us, is we do, what's
called repositioning, take your

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deal and I found you can take
any deal and you can position it

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00:15:03,300 --> 00:15:07,200
for three, four, five, six,
different kinds of Ders.

291
00:15:07,200 --> 00:15:09,700
If it's a SAS deal.
Well, there are certain SAS

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00:15:09,700 --> 00:15:12,800
metrics that SAS investors look
for let's put that on the front

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00:15:12,800 --> 00:15:15,400
and position it.
If it's an edtech deal with

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there, certain things that they
look for.

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00:15:17,500 --> 00:15:20,700
Let's put that up there, and
let's position it for that, and

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if it has an impact in there,
well then you can position it

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00:15:23,400 --> 00:15:26,600
yet a third way and it's
important to do positioning

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00:15:26,600 --> 00:15:28,600
because you have to think about
your audience.

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In this case, the investors were
they looking for and make

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00:15:31,400 --> 00:15:34,900
yourself relevant to them.
And in many cases, you can make

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yourself relevant to many, many
more groups.

302
00:15:36,900 --> 00:15:40,700
If you think along the lines of
not just one size, fits all, but

303
00:15:40,700 --> 00:15:43,700
I'm going to make this specific
to each investor group that I go

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to.
And like I say we have six seven

305
00:15:46,300 --> 00:15:50,100
positions we do for any deal
that comes to us and we also

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00:15:50,100 --> 00:15:54,000
help them with their documents.
Many of them actually need a bit

307
00:15:54,000 --> 00:15:58,600
more help on the documents
itself and and pitching as well.

308
00:15:58,600 --> 00:16:01,800
They have what I call the curse
of knowledge which is they're so

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00:16:01,800 --> 00:16:05,000
close to it that they assume too
many things.

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00:16:05,000 --> 00:16:07,700
And so I'll eat I'll watch it.
A pitch, and I'll have to go

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00:16:07,700 --> 00:16:09,700
back and say, well, that's
great.

312
00:16:09,700 --> 00:16:13,000
But what do you do?
So you have to go through and

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00:16:13,000 --> 00:16:16,400
make sure that your mate, you're
making those things clear and we

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00:16:16,400 --> 00:16:18,500
help a lot of people in that
direction as well.

315
00:16:19,700 --> 00:16:20,400
Right.
Yeah.

316
00:16:20,400 --> 00:16:22,700
And as quite important,
especially for Founders who

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don't have much experience
fundraising.

318
00:16:25,300 --> 00:16:29,200
That is definitely where
advisors and companies like ten

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00:16:29,200 --> 00:16:32,500
Capital Network, can help quite
a bit.

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00:16:33,400 --> 00:16:35,900
So, let's talk about some legal
stuff, which I have promised

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00:16:35,900 --> 00:16:38,100
where you can cover at the end
of this episode.

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00:16:38,100 --> 00:16:42,600
We're closer to the end of this
episode which has when to start

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00:16:42,600 --> 00:16:45,600
an LLC and then convert it to a
c-corporation.

324
00:16:45,700 --> 00:16:49,300
I work for first base, which is
a start-up out of Y combinator.

325
00:16:49,500 --> 00:16:52,800
Which specializes in
incorporating companies in the

326
00:16:52,800 --> 00:16:54,800
US.
So, I've seen quite a few of

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00:16:54,800 --> 00:16:58,300
those cases where Founders reach
out to us and ask us to convert

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00:16:58,300 --> 00:17:02,100
an LLC that we have created
earlier and convert it into C

329
00:17:02,100 --> 00:17:04,300
corporation because they have
found an investor.

330
00:17:04,800 --> 00:17:07,800
You Martin said that it
sometimes might make sense to do

331
00:17:07,800 --> 00:17:10,200
that on purpose.
Even if you know that in the

332
00:17:10,200 --> 00:17:13,099
future, you might be raising
Capital, can you elaborate a

333
00:17:13,108 --> 00:17:15,300
little bit on that idea?
Why do you think it makes sense

334
00:17:15,300 --> 00:17:18,700
to do that?
I find that many May startups

335
00:17:18,700 --> 00:17:21,500
even.
Cecil co-founders are going

336
00:17:21,500 --> 00:17:24,099
through several iterations on a
business.

337
00:17:24,099 --> 00:17:26,900
They'll start a business and it
doesn't work, and so, they

338
00:17:26,900 --> 00:17:29,100
quickly drop it and they go to
the next one.

339
00:17:29,100 --> 00:17:32,300
And so, it can be kind of
expensive to start with a

340
00:17:32,300 --> 00:17:35,900
Delaware.
See on every every single idea

341
00:17:35,900 --> 00:17:39,400
you have, it's best to start
with something simpler like an

342
00:17:39,400 --> 00:17:42,500
LLC.
There's cost is lower seizure

343
00:17:42,500 --> 00:17:45,100
put together as a couple hundred
dollars with the secretary of

344
00:17:45,100 --> 00:17:47,000
state.
So it's easier to spin up and

345
00:17:47,000 --> 00:17:49,800
have a legal entity.
You do have to have an To do in

346
00:17:49,800 --> 00:17:53,500
order to raise funding open a
bank account and do a lot of the

347
00:17:53,500 --> 00:17:56,600
basic things that go on.
But as you go forward and you

348
00:17:56,600 --> 00:18:00,200
start to move to venture capital
funding at that point, they're

349
00:18:00,200 --> 00:18:03,600
going to want a Delaware.
See and when if and when you get

350
00:18:03,600 --> 00:18:06,400
to that stage, well that's when
you convert from an LLC to a

351
00:18:06,400 --> 00:18:09,300
Delaware, see it's very easy to
go from an LLC to a

352
00:18:09,300 --> 00:18:11,900
c-corporation.
It's very hard to go from the C

353
00:18:11,900 --> 00:18:15,800
corporation back to an LLC.
And my role is when there's an

354
00:18:15,800 --> 00:18:19,100
investor they're ready to invest
in your business and pay for the

355
00:18:19,100 --> 00:18:19,700
conversion.
Jean.

356
00:18:19,700 --> 00:18:22,000
Well, that's when we do it.
And so you're always open to the

357
00:18:22,000 --> 00:18:25,600
investors saying I'm an LLC but
happy to move to a c-corporation

358
00:18:25,600 --> 00:18:28,200
upon funding will be glad to do
that.

359
00:18:28,200 --> 00:18:32,200
And the other issue is VCS over
their documents are based on C

360
00:18:32,200 --> 00:18:34,900
corporations and they're not
changing it for you.

361
00:18:34,900 --> 00:18:38,700
So if you do get Venture Capital
funding coming in, you will be

362
00:18:38,700 --> 00:18:40,900
converting, but that's very
standard.

363
00:18:40,900 --> 00:18:43,200
There's a lot of benefits that
come with that as well.

364
00:18:43,500 --> 00:18:45,200
So that's why we want to start
with LLC.

365
00:18:45,200 --> 00:18:48,600
Is that not every deal, or every
business you start even if

366
00:18:48,600 --> 00:18:52,200
you're successful Is going to be
the one you want to carry

367
00:18:52,200 --> 00:18:56,400
forward, and as LLC is just a
lot lighter and cheaper, in

368
00:18:56,400 --> 00:18:59,600
order to do that
experimentation, right?

369
00:18:59,600 --> 00:19:02,700
That is actually good points.
My aunts recommendation is,

370
00:19:03,000 --> 00:19:06,000
don't start with a legal entity
at all, unless you start seeing

371
00:19:06,000 --> 00:19:08,900
some profits coming in or you
just need to do it for tax

372
00:19:08,900 --> 00:19:10,200
purposes.
Sure thing.

373
00:19:10,200 --> 00:19:13,700
Go for it.
Otherwise it's a hassle quite

374
00:19:13,700 --> 00:19:16,300
frequently not worth it.
Because as morning, you said

375
00:19:17,100 --> 00:19:19,400
most ideas need to be revised
numbers.

376
00:19:19,500 --> 00:19:21,600
Times.
Some of them are just not going

377
00:19:21,600 --> 00:19:24,300
to work in any shape or form and
you just have to close the

378
00:19:24,300 --> 00:19:25,600
company.
So, it doesn't really make sense

379
00:19:25,600 --> 00:19:28,700
to open and close, open and
close, open and close might as

380
00:19:28,700 --> 00:19:33,200
well not open at all until you
think that it is viable.

381
00:19:33,500 --> 00:19:37,100
So let's go on to the next
subject which I really, really

382
00:19:37,100 --> 00:19:40,700
wanted to cover in this episode,
which you have mentioned on our

383
00:19:41,000 --> 00:19:45,600
pre-interview call reaches the
rule of four for your valuation

384
00:19:45,600 --> 00:19:47,500
strategy.
Can you tell us a little more

385
00:19:47,500 --> 00:19:49,400
about that rule would does it
mean end?

386
00:19:49,600 --> 00:19:52,300
Don't you think Founders
should've LED their startups

387
00:19:53,200 --> 00:19:54,600
here?
So I came up with the idea of a

388
00:19:54,600 --> 00:19:57,100
rule of four.
It's been around for a while but

389
00:19:57,100 --> 00:20:00,500
I found that many, many startups
struggle with uation.

390
00:20:00,500 --> 00:20:03,800
How should I value my business?
And you know, the wrong answer

391
00:20:03,800 --> 00:20:06,100
is to think about how much you
want to own at the end of the

392
00:20:06,108 --> 00:20:08,300
process.
And then try to figure out how

393
00:20:08,300 --> 00:20:11,200
to make your business work that.
And I think the right answer is

394
00:20:11,200 --> 00:20:14,200
to articulate all the values
that are in the business today.

395
00:20:14,600 --> 00:20:17,800
And so I came up with the idea
of that, for every one of these

396
00:20:17,800 --> 00:20:21,100
four things, give yourself one.
Million dollars evaluation if

397
00:20:21,100 --> 00:20:25,800
you have it fully installed.
And that sells that steam that's

398
00:20:25,800 --> 00:20:27,300
product.
And that's intellectual

399
00:20:27,300 --> 00:20:30,300
property, those four things.
So if my sales is completely

400
00:20:30,300 --> 00:20:33,300
installed, everything's working
and got a recurring Revenue, I

401
00:20:33,300 --> 00:20:35,800
got all the everything's
clicking, give myself a million

402
00:20:35,800 --> 00:20:37,800
dollars.
If on the other hand I have a

403
00:20:37,800 --> 00:20:41,100
few beta cells and so forth.
Well maybe I give myself three

404
00:20:41,100 --> 00:20:44,100
hundred thousand dollars, you
know, something less and then if

405
00:20:44,100 --> 00:20:47,600
the team everybody's in place or
beige working a million dollars,

406
00:20:47,600 --> 00:20:49,400
well maybe only have half the
team in place.

407
00:20:49,500 --> 00:20:51,800
I'm still looking for the other
half will give myself five

408
00:20:51,800 --> 00:20:54,800
hundred thousand and then you
apply that to the product is it

409
00:20:54,800 --> 00:20:57,000
shipping?
Is it working million?

410
00:20:57,000 --> 00:21:01,500
If it's a not, not fully there,
let's make it less and same

411
00:21:01,500 --> 00:21:03,800
thing for intellectual property,
if I've got been awarded the

412
00:21:03,800 --> 00:21:06,900
patents and everything's in
place million dollars, if I have

413
00:21:06,900 --> 00:21:10,200
three provisionals file will,
St, myself, 200,000 for that.

414
00:21:10,500 --> 00:21:13,400
And the idea is, you're actually
looking at the values in the

415
00:21:13,400 --> 00:21:16,800
business and putting a price tag
on it and then you add them up

416
00:21:16,800 --> 00:21:19,300
and the most you can come out
with is about 4 million dollars.

417
00:21:19,500 --> 00:21:21,100
Hours.
And for early-stage companies,

418
00:21:21,100 --> 00:21:24,000
that that's where most
businesses really are.

419
00:21:24,000 --> 00:21:27,000
There are some that are on the
Unicorn track and they're,

420
00:21:27,000 --> 00:21:29,700
they're going to be trying to do
a high-velocity moved.

421
00:21:29,700 --> 00:21:31,800
There may be a different game
there.

422
00:21:32,100 --> 00:21:34,900
But when you go to an investor
no matter what number the

423
00:21:34,900 --> 00:21:37,400
startup puts out there for
evaluation, the investor is

424
00:21:37,400 --> 00:21:40,200
going to push back into going to
ask how did you get to that?

425
00:21:40,500 --> 00:21:43,000
And the winning answer is the
one that can go through.

426
00:21:43,000 --> 00:21:46,200
And clearly articulate, the
values that are in the business

427
00:21:46,200 --> 00:21:49,300
and come up with a number that
the investor would say.

428
00:21:49,500 --> 00:21:52,800
Yet that's probably how much
it's going to be worth and you

429
00:21:52,800 --> 00:21:56,100
can get to negotiation faster
with that.

430
00:21:56,300 --> 00:21:58,000
And it's the back of the
envelope one.

431
00:21:58,000 --> 00:22:00,900
You can also find comps and
other things that go on, but

432
00:22:00,900 --> 00:22:04,700
those things can be hard to find
in hard to get agreement upon

433
00:22:05,000 --> 00:22:07,400
what's in the business.
Today is one of the best things

434
00:22:07,400 --> 00:22:11,800
to use to get alignment with the
investor, right?

435
00:22:11,800 --> 00:22:14,500
That's very true.
And again, most early stage

436
00:22:14,500 --> 00:22:17,400
rounds are not priced.
You just need evaluation to

437
00:22:17,400 --> 00:22:22,400
establish a Valuation cap, which
is not always super important.

438
00:22:22,400 --> 00:22:28,400
So, the rule definitely works a
love that rule probably disagree

439
00:22:28,400 --> 00:22:32,300
with a patent part, but that's a
discussion for a different time.

440
00:22:32,900 --> 00:22:37,300
One more question on that rule
of four in terms of valuation,

441
00:22:37,600 --> 00:22:41,000
when you see that the whole team
is in place or half the team is

442
00:22:41,000 --> 00:22:46,000
in place, what qualifies as the
full team being in place at the

443
00:22:46,008 --> 00:22:49,000
very early stage, you know,
there's completed.

444
00:22:49,500 --> 00:22:52,100
Team at all times in running a
business and that they're very

445
00:22:52,100 --> 00:22:53,900
early stage.
There's somebody building it and

446
00:22:53,900 --> 00:22:56,700
somebody selling it.
There's two people as you start

447
00:22:56,700 --> 00:22:59,800
to grow and get Revenue, it goes
to three people as a complete

448
00:22:59,800 --> 00:23:01,700
team, and we're talking about
the top levels team, the sea

449
00:23:01,700 --> 00:23:04,500
level people in the business and
so that's what you're looking

450
00:23:04,500 --> 00:23:07,000
for.
If I've got a Founder but I

451
00:23:07,000 --> 00:23:10,600
don't have the co-founder yet.
I've got half a team in my mind.

452
00:23:10,600 --> 00:23:13,800
You really need somebody that's
doing both sides of it and even

453
00:23:13,800 --> 00:23:17,400
if you're Outsourcing the
technology, someone in the team,

454
00:23:17,400 --> 00:23:20,600
still needs to own that process.
Yes, and that's where they go

455
00:23:20,600 --> 00:23:22,000
wrong.
So many times is all, just

456
00:23:22,000 --> 00:23:24,100
Outsource it.
Well, you really can't Outsource

457
00:23:24,100 --> 00:23:26,800
the management of that that
still has to be on your core

458
00:23:26,800 --> 00:23:28,800
team.
And if you haven't hired that

459
00:23:28,800 --> 00:23:30,600
person, well then that that's
value.

460
00:23:30,600 --> 00:23:32,400
That's not there if you have
hired it.

461
00:23:32,400 --> 00:23:34,300
Well, that's value that you
should be getting credit for

462
00:23:34,300 --> 00:23:36,100
because that's a very important
role.

463
00:23:36,400 --> 00:23:39,300
And so I look for a complete
team to people in the very early

464
00:23:39,300 --> 00:23:43,200
stages to launch these
businesses because it's just a

465
00:23:43,200 --> 00:23:46,200
tremendous amount of work and
even for two people is

466
00:23:46,200 --> 00:23:48,700
tremendous amount.
So you have to have the right

467
00:23:48,700 --> 00:23:52,700
people there. 100% definitely
agree with you on this one.

468
00:23:53,100 --> 00:23:57,300
And on this agreeable note,
let's move on to the very last

469
00:23:57,300 --> 00:24:00,300
question of today's episode,
which is a call to action.

470
00:24:00,300 --> 00:24:04,200
So morning after this episode is
over after the last two words

471
00:24:04,200 --> 00:24:06,500
are said, would you want to
listen to do?

472
00:24:08,300 --> 00:24:11,700
If you're a startup founder and
you want to raise funding, go to

473
00:24:11,700 --> 00:24:17,000
10 Capital dot group, gr oup and
look us up and see if for a good

474
00:24:17,000 --> 00:24:19,800
fit.
If you run out of network, let's

475
00:24:19,800 --> 00:24:21,500
get a call.
Going in, glad to talk with you

476
00:24:21,500 --> 00:24:24,300
about it.
If you're a startup investor and

477
00:24:24,300 --> 00:24:27,000
you're looking for deal flow or
you are looking for members, for

478
00:24:27,000 --> 00:24:30,300
your group, is an angel group or
a limited partners for your

479
00:24:30,300 --> 00:24:33,200
fund, go to the same place to
stay in capital dot group.

480
00:24:33,200 --> 00:24:35,900
There's a place for investors
and we'll be glad to help you

481
00:24:35,900 --> 00:24:38,600
find more.
People for your group itself.

482
00:24:38,600 --> 00:24:42,400
So we call it, funding is a
service and it's helping all

483
00:24:42,400 --> 00:24:46,300
elements of the ecosystem, not
just one, the startup, the angel

484
00:24:46,300 --> 00:24:51,100
group leader, and the VC fund
manager, we help at every stage

485
00:24:51,100 --> 00:24:55,200
of the way looking forward to
seeing you on our website, what

486
00:24:55,200 --> 00:24:57,900
you said, VC fund manager.
So you helped facies fundraise

487
00:24:57,900 --> 00:25:00,200
as well.
Well, we help them find limited

488
00:25:00,200 --> 00:25:03,300
partners and primarily because
raising funding from family

489
00:25:03,300 --> 00:25:07,200
offices.
And so many funds now are Sub

490
00:25:07,200 --> 00:25:10,300
100 million dollar funds, so
they really aren't raising from

491
00:25:10,300 --> 00:25:15,100
pensions in that category and
they're looking for, you know,

492
00:25:15,100 --> 00:25:17,700
more limited partners.
And so, there are many, many

493
00:25:17,700 --> 00:25:21,700
family offices that want to be
in the funds there.

494
00:25:21,700 --> 00:25:26,300
Like I said before, there was a
move to get away from fun fees,

495
00:25:26,300 --> 00:25:28,700
and go direct.
And I think some family offices

496
00:25:28,700 --> 00:25:32,600
are successful.
At that, I found if the area is

497
00:25:32,600 --> 00:25:35,500
clear and you can find deal flow
and you understand the space.

498
00:25:35,500 --> 00:25:37,300
Well then you can invest your
Directly.

499
00:25:37,600 --> 00:25:39,300
But there are many spaces that
are not.

500
00:25:39,300 --> 00:25:41,400
That clear.
Blockchain is a good example of

501
00:25:41,400 --> 00:25:46,300
that today and you can't find a
good deals or value.

502
00:25:46,300 --> 00:25:47,300
Mm.
So a very well.

503
00:25:47,300 --> 00:25:49,700
And there, it makes sense to go
through a fund.

504
00:25:49,700 --> 00:25:51,800
And you're part of a larger
group and get the

505
00:25:51,800 --> 00:25:55,600
diversification benefits that
come from that 100% quite

506
00:25:55,600 --> 00:25:59,100
frequently family office cannot
spend their entire time working

507
00:25:59,100 --> 00:26:01,100
on that.
So yes investing funds to us

508
00:26:01,100 --> 00:26:05,300
make sense for them quite
frequently that is awesome for

509
00:26:05,400 --> 00:26:09,300
2% of the investors.
In bear in mind for ten Capital

510
00:26:09,300 --> 00:26:12,700
network, if you're looking for a
moral piece, definitely check

511
00:26:12,700 --> 00:26:14,200
them out.
I'm going to make sure to leave

512
00:26:14,200 --> 00:26:15,900
a link in the description of
this episode.

513
00:26:16,200 --> 00:26:21,000
Same thing goes to the rest 97%
of the founders and 1% is random

514
00:26:21,000 --> 00:26:24,500
people, but I'll leave all the
links in the description of this

515
00:26:24,500 --> 00:26:26,300
episode.
And of course, there's going to

516
00:26:26,300 --> 00:26:31,000
be Shameless plug in off our
course, which is focused on same

517
00:26:31,000 --> 00:26:34,800
thing as sine Capital network.
But you have to self educate

518
00:26:34,800 --> 00:26:38,600
yourself through Reading.
Through all our guidelines.

519
00:26:39,000 --> 00:26:41,200
And yeah, that's gonna be my
call to action.

520
00:26:41,200 --> 00:26:42,800
Check out the description of
this episode's.

521
00:26:42,800 --> 00:26:46,600
Bunch of links are going to be
in there, and as usually have a

522
00:26:46,600 --> 00:26:47,500
good day.