Pajamas and SAFEs: Raising 2M during the Pandemic

I’m at an interesting place as an entrepreneur. As of last week, I’ve become what’s called a serial entrepreneur. What on earth does that mean, how did I get that title and where is it taking me? Well, it actually just means that I’ve founded more than one startup. So when did N go from 1 to >1? Publicly on March 17th, to be precise, when I published this medium post announcing that Automate Medical had raised a 2M USD pre-seed round to give superpowers to medical professionals by transforming messy medical data into useful insights.

What does it feel like founding a tech startup the second time? Well to be honest with you, it feels a lot like the first time, and a little bit like something totally different. And that’s why I’m writing this post — to share some of what I’ve learned the second time around, not only because you learn each time but also because this time I was raising funding smack dab in the midst of a global pandemic. Part of what makes being a software entrepreneur awesome is just how much time others have freely given me to help me learn and get better, so I share this article in that same spirit, to help all the brave entrepreneurs out there who are about to raise. I’m rooting for each and every one of you.

Tale of the Tape

First things first — know your audience. When you’re raising venture capital, that audience is usually going to be an analyst, partner, or panel of partners. And what are you going to use to pitch them? Well, a pitch deck of course. It’s the one tool you’ve got heading into that meeting, so you need to know it like the back of your hand. But that’s not enough — you also need to know exactly what the audience is doing with it when you are not around.

Knowing that I was going to have to run this fundraise digital-first I chose to upload our pitch deck to DocSend which is software that allowed me to get a wealth of information including alerting me if and when the deck was opened, by whom, what links within my deck investors clicked on, and even how much time each investor spent on the pitch deck as a whole, right down to how much time per slide. What did I find out? Well, for one thing, I learned that a lot of my assumptions about eyeball time were just flat out wrong because VCs spent a lot less time in my deck than I thought they would.

According to DocSend data, the average time spent by a VC on a deck in the United States is 3:27 mins total. Say you have 15 slides? Well, that means about 15 seconds a slide. 20 slides? About 11 seconds a slide. Think about that. Using DocSend allowed me to see which slides VCs spent more/less time on and helped me A/B test copy and the order of my slides as well. I also learned that investors who did end up making an offer typically visited the deck multiple times so that was always an indicator I would watch out for and made sense.

I also learned something completely counter-intuitive: investors who spent the most time in the deck were generally the ones who said no. I’m going to think more on this and aim to write a blog post on it down the line but I think basically the algorithm is you start seeing negative returns after the 4th or 5th visit to the deck or the 25th+ minute aggregate time spent in the deck — whichever comes first. Our most popular slides were our Go to Market and Competition slides. That made sense. I’ve taken a lot from athletics and I view the growth of an entrepreneur the same as an athlete. Success has a lot to do with ability, but it has much more to do with perseverance and preparation — which takes me to my next point.

Process, Process, Process

This second time around I fully committed to something I had only experimented with in the past — I practiced my pitch with funds that weren’t at the top of my list of picks before beginning my outreach to the funds I thought would be a better fit with our mission and vision. Why? Because even though a lot of life at a startup is like drinking from a firehose, that doesn’t mean your fundraising needs to be. Start small, dream big, take notes, and keep improving with each pitch.

Do you know what else was different this time around? I mentioned it before, the existence of a global pandemic. What did this mean in practical terms? Well, it meant that fundraising was now done over Zoom. Was this awkward at first? Sure. Was it ultimately really awesome though? Totally. Why? Simple logistics. In a digital raise you can pitch a lot of investors in one day whereas in the past there was a limit to meetings I could take in person as I drove around the Bay Area, Greater Toronto Area, or flew to other cities to meet people for coffee and preliminary meetings. Always remember that for entrepreneurs distraction = death, so any flight we don’t have to take for a first-round pitch meeting is a huge win.

This means you can really establish a tight process that works to the entrepreneur’s advantage. Here’s what I did: I ended up making a list of about 50 investors I wanted to chat with, ranked them from most desirable to least based on a variety of factors, then went about booking back to back pitch times via Zoom with the VCs I least wanted to work with first to debug my pitch and get warmed up. In the past, I’d do something similar however the feedback loop could be days whereas this time I was getting tons of feedback hourly, helping me refine my pitch and deck and iterate at a pace I never thought was possible. On some days I was pitching 8–10 investors. In just about seven days or so I was ready to start pitching the investors I wanted to work with which in the past took me a few weeks to feel I was ready. I am a believer that your fundraise should be run similar to a sales process so I always build a lightweight CRM using excel or Google Sheets. This was all the more important when working with the ambitious timeline goal I had set with my cofounders.

Same Same, but Different

So on a macro level what had changed since I last raised capital? A few things. First of all, pre-seed was becoming the new seed round. Secondly, as opposed to my last time raising early rounds, the pre-money SAFE was out and the post-money SAFE was in, definitely a welcome change. How about timelines? As a “serial entrepreneur”, I was able to accelerate them considerably in this digital-first environment. We ended up raising our round in about 6-weeks which was great as I had targeted 2 months (8 weeks) as my internal goal. This is a big win for entrepreneurs everywhere. Investors are looking for great ideas and killer teams, they no longer have to be based in the Bay Area and if they like what you are up to they will cut a check.

Spin me Right Round

I’ll always remember the first thing a friend with several startup successes under their belt told me when I started on the entrepreneur journey in 2015. “They say that time in the life of a startup entrepreneur is a bit like dog years.” In some (most) ways that’s a blessing, but if you aren’t proactive, introspective, and meditative without still maintaining a bias towards action it can be a curse. Time moves so fast, new methods and learnings become out of date and entire industries change in the blink of an eye which can be overwhelming. But that’s what I love about it and I wouldn’t change it for the world. And it just so happens that I’m not alone in that. Tech entrepreneurs, no matter how busy, will always take the time to talk to each other, share advice and even just lend a shoulder to lean on.

We’re all in this together and I can’t wait to keep sharing my learnings but more importantly learning from yours. Let me know what you like about this post, what you didn’t, and where you want me to focus on next. I’ve got some ideas and I’m just getting started. For those raising or about to raise, best of luck.