0:00:00 - Alex Shevelenko
Welcome to Experience-focused Leaders! I'm delighted to introduce you to Nathan Beckord. Nathan is the CEO of Foundersuite which is a solution for startups looking to raise money, and Fundingstack for VCs and I-Bankers. We are delighted to have Nathan on to really weigh in on the key challenges in the growth ecosystems, whether it's from startups, VCs or advisors, on how they raise capital and enable growth more efficiently. Welcome to the pod, Nathan!
0:00:36 - Nathan Beckord
Thanks, Alex! Thanks for having me. Happy to be here!
0:00:40 - Alex Shevelenko
So, Nathan, tell us a little bit about what are the main challenges in investor communications. You have a really great insight into investor communications from startups or growth companies to VCs and then VCs themselves raising to limited partners that fund their funds. So you have a pretty holistic view. I think we discussed earlier the essence of simplicity and not overloading people with too much information to begin with. But let's dive into more details because I can't think of a person who has a clearer view of that than yourself.
0:01:22 - Nathan Beckord
Yeah, on the startup side, startups approaching investors communication has to be almost painfully simplified and short. One of the top bits of advice I give founders all the time is to make your intro request email as short as humanly possible. A mistake I see is founders will put their entire history in the intro email — five paragraphs of dense text and then attach a 45-megabyte PowerPoint. And they're wondering why they're not having much luck on their fundraising. No one actually looked at your stuff. They saw that email — “nope”, and they move it beyond.
0:02:05 - Alex Shevelenko
We can treat VCs in this case as any busy decision maker, whether it's an executive who gets pitched a lot of ideas, or VCs who get pitched a lot of deals. They're overwhelmed with these types of introductions. We distinguish between VCs and, for example, angels that don't have the same volume. And they're scanning this on their phone in the toilet or whatever on the move, on the run in between meetings. And that is the context for where a lot of this could be received. Is that accurate? One of the challenges is getting through to these busy people.
0:02:51 - Nathan Beckord
Absolutely, that is! That's a good summary. They are getting hundreds of these intros a day from people they know. They're getting a lot of cold emails, too. So it's both. That's all coming into their inbox, into their phone. They're spending a few seconds really skimming these emails, looking for something that catches their eye. “Oh, this guy was an early Meta employee, now doing something in AI.” Whatever. They're looking for little diamonds that are jumping out. Then they might click through to the deck and see what this person's all about. But they're not taking the time to thoroughly read and contemplate your long email. They might not even go through and click through to the deck unless it really catches their eye in the email. So, again, to summarize the picture, they're getting hundreds, even a couple hundred startup intros a day coming at them. They're just processing each one in a matter of seconds. That's why short is better, right?
You can get into more detail as your relationship with the investor progresses. Hopefully, your intro email leads them to at least look at your deck. I always tell founders to have a little teaser deck, often a link. We have a pitch deck hosting tool in Foundersuite and you can put it up online. So they can just click that to see it. A couple of slides, five slides or so, talking about what you're doing, problem solution, market traction team. And that's interesting enough that they say, “Thank you for contacting me, here is my assistant to set up an intro chat.” That intro chat, maybe it's 30 minutes, maybe it's a little longer. They like what you're doing, they get a vibe from you. They want to have you come into maybe an hour-long meeting. Progressively, the information flow gets deeper and deeper, the time and attention spent gets longer and longer as you progress. But that first part has to be minuscule, microscopic.
0:05:01 - Alex Shevelenko
To play with this idea.
So what we see is that in normal human interactions, imagine you're going out on a date and somebody asks, “Tell me about yourself.” And you go and, “Where do I begin? I was born and I dated, I divorced this person and I have two kids.” You just go into all of your stuff. And this is too much of an overload of information versus a conversation where normally you would stop yourself at least after one minute. Normal people would stop themselves in their little monologue and go back into conversational mode. What we see, whether it was investors or in general, the best storytellers create what you're just describing. They peak a little bit of interest and so, “Okay, this is interesting, I want to learn more.” So one way to peak interest is to book a meeting with the assistant. And I think that's a big-time goal. But another one is to say, “Hey, here's a teaser”, but provide a way to double-click on the area of big interest.
Ideally, not the type of area that makes it no more relevant to have a meeting but picks even more curiosity. The best date is where you learn a little bit about one person in one's environment. Then you go have a coffee, then you go for a walk and you have a different context of how you get to know someone. That's how we're thinking about business communications where it's more relevant to what people are interested in. What picked their interest in the initial approach? How are you seeing this play out? You have a deck but then it needs to be seen by multiple people that may have different interests. I was in the VC partnerships. Some may care about the case studies, others may care about financials. And they all drilled into different areas. So how do you balance these different peaks of interest for different people with simplicity?
0:07:19 - Nathan Beckord
It goes back to what I was saying. It's a progressive kind of peeling the onion, providing more information as the relationship builds. I think that's the summary. That's how it goes. You build that relationship with the investor. As you get further down the process, more and more information is supplied and digested.
0:07:42 - Alex Shevelenko
So we agree on this, but how do you account that some deals happen much faster? At least in the heydays a few years ago, people would go really fast. Is it just pure fear of missing out on behalf of investors? Or is there more that can help build confidence and help progress that relationship? Because, as a founder or as a seller, you don't have infinite time either. You don't want to go build a gazillion relationships. Some of them may pay out, some of them not. Investors have some power in terms of there may be fewer of them, but they're also capitalist commodities. And so how do you protect entrepreneurs' time in this process? Or in general, what are you seeing the most successful entrepreneurs do in building these relationships at scale?
0:08:44 - Nathan Beckord
It's hard to protect your time because you're asking for others' time. As a founder, you're reaching out to a couple hundred investors in many cases when you're raising capital, asking for their time. You have to be a bit of a pretty flexible on that. No, it's going to suck up a lot of your time.
I always tell founders the more time you spend researching, doing the due diligence, qualifying investors before even reaching out, before even asking your friend or your business school classmate for an introduction, the more time you will save. You don't want to be reaching out to people who are not qualified. I use the term qualification in a sales context. You want to make sure they actually are investing in your stage, your sector, your geographic focus, that they have some money to invest, and that they have a new fund they've raised. If you do that, it will save you time down the line and you're not wasting your time seeking investors that aren't a fit.
The other kind of element to your question was fairly long, but how do you make it go faster? How do you get these deals that happen fast? Part of it is doing that work right. If you're a healthcare AI startup, you want to be talking to investors who are seeking an AI healthcare startup and that's how deals can go fast. Because this investor has a thesis that AI is going to reshape how telemedicine is done. I'm just making things up, but they have a thesis of how the future might unfold. They're looking for startups that kind of fit that thesis. And when they find a startup that does something like that and they like the team, they like the background of the founders, it can go really fast. So it's a matchmaking process, like the dating metaphor, you said. It's finding people in the right age bracket and marriage stuff like that. All those criteria.
0:10:54 - Alex Shevelenko
It's not that different from enterprise sales, where, ideally, you want to identify people who believe that this is an opportunity or a problem versus spending all your time educating somebody who doesn't know what healthcare or doesn't know what AI is and invests in private equity-type manufacturing deals. It's completely new to him and he has the only common thread is that they're capital allocators.
It's pretty obvious. But do that work to accelerate the feedback cycles and the getting to know. It sounds like you don't need to educate people as much about the opportunity. So if, let's just say, you've succeeded, you have that meeting with a VC and now you're getting some feedback, this is where, whether it's VCs or customers, a lot of people building new things are torn between different types of feedback. I actually will quote one of your other interviews where you said investors are typically very smart people. 40% of all VCs went to Stanford or Harvard and they're a highly opinionated group. You say if you ask a question of 10 VCs, you'll get 12 different pieces of advice.
So I think sometimes even the same person will say two different things. It could be that and it could be this. And maybe they just want to appear smart because they went to Harvard or Stanford. I can say that as a Stanford alum. I think it's overrated that it's a sign of intelligence, but there is something that people are able to communicate some ideas incredibly fast. And then they do have the benefit of pattern matching. So if you're wearing the shoes of a founder and you have, "Hey, this is your feedback on your deck or your business model", how do you see the most successful founders be agile and leverage those conversations but also not be overwhelmed by that feedback?
0:13:03 - Nathan Beckord
It is tough because these people are smart and their opinions, like you said, are often given strongly. I think it's hard not to get kind of investor advice whiplash sometimes, right? Because sometimes it is conflicting or makes you just jump all over the place. Find patterns when you've had seven pitch meetings with investors and six of them are confused by your go-to-market strategy. They're asking questions in the meeting that make it clear they don't really understand your go-to-market strategy or they don't like it, or they're confused by it. You can just tell that's a pattern. That probably means you need to listen to feedback about your go-to-market strategy, work on that and improve that. Others will just have wild advice on what you should build as a product. They should go after different markets. I tend to, "Okay, thanks, I'll put that in my little product ideas note and file it away, but not pivot my startup based on that."
I think the danger is that the founders pivot their startups based on every bit of feedback. You can really damage your startup by doing that. Just look for patterns, take it all with a grain of salt, take it in, meditate on it a little bit, but don't necessarily always act on it. Frankly, I've learned this a bit of a hard way. I weigh the opinions of my customers and users 10X more than what a VC says. Yes, they are very smart and they have pattern recognition. They're seeing a lot of things out there in the market, but it's really my customers that I listen to, not as much the VCs.
0:15:08 - Alex Shevelenko
It's interesting. I think you have a chance to have VCs as customers, right? So that's a very unique approach.
0:15:15 - Nathan Beckord
Yeah, we're unique in that. We have customers who are also VCs.
0:15:20 - Alex Shevelenko
They're interested in potentially having the founders that they backed, right? To be able to raise more capital. So both of your products have relevance to them. We also have some investors as customers and the ones that actually use the product. They're like, "Oh yes, I'm paying attention to what you have to say." But also within reason, they may not be the core market that we're going after. So we need to be still aware of that. But how do you see the investors as a customer type? Are they behaving very differently when their needs as a customer are being met versus general advice to startups?
0:16:04 - Nathan Beckord
Hopefully, this won't be confusing. I'll try and make this little story as clean as possible. Back when we were raising capital a long time ago, we had some advice from a VC. We were selling our product Foundersuite to startups. We're selling to start raising capital, and we had a VC give us some advice. Like, "Yeah, that's interesting! But you should build a backend platform that the VCs could use as well to manage their portfolio companies." We spent six months and X thousands of dollars doing that and then tried to put that out there to investors. We learned that all these investors manage their portfolio companies in 10 different or 100 different ways. Some of them have built their own internal systems. Some of them are using spreadsheets. We couldn't sell a product to save our lives, it just didn't work. So advice from that VC about what we should build was bad advice. It led us down a dead-end path. We threw all that code away and wasted time and money on that, which is dangerous as a startup because you're pretty limited in time and money. That was an idea from a VC that we pursued down a dead-end path.
More recently, on Foundersuite, we started to get some VCs using it. Oftentimes they would be pulled in by their startup founders who were raising capital. They would invite their VCs into the account. The VCs would be using it and then contact us and be like, "Hey, I've been using this with one of my companies. But I have seven other companies that are raising capital. How do I work with those companies?" We haven't thought of that. But we had enough of those VCs identifying a use case. They wanted to do that. And we built a product that ended up becoming Fundingstack. We've launched that, and we now have several hundred VCs using it. So we were pulled into that market by actual customer need and demand versus an idea from a VC if that makes sense.
0:18:25 - Alex Shevelenko
What you're saying is ideas are cheap. Customer behavior, actual usage and what they do with your product is the real driver. If VCs become users, referrers or some part of your go-to-market, that's a way more valuable signal.
0:18:47 - Nathan Beckord
That's a way more valuable signal. They were using our original product, Foundersuite, in a way we hadn't even designed it for and it wasn't perfect for that. It wasn't really built for that, but they were still using it and finding enough value, even with its imperfections. We were like, "All right, if they're willing to do that with an imperfect product, let's actually build a real version for them!" And it's been pretty good in terms of adoption. Yeah, let your customers, whether they're startups or VCs, pull you into that market.
0:19:26 - Alex Shevelenko
I think what's interesting is how you quickly roll out new products and then also communicate. So that your existing customers actually use the new features. Your future customers know about them. We see a lot of organizations struggle with that, even relatively small organizations. Both in the velocity of rollout and then communication, do you see that this is a pervasive challenge? Is it becoming faster with SaaS companies or other types of companies that are a little bit more equipped to have faster release cycles? You've had a pattern match on this over time. And then, how important is that velocity in the investment process?
0:20:13 - Nathan Beckord
From what you've seen, I wouldn't say we're the masters of this. We could probably do better. Our approach or process is pretty simple. Again, I consider us a startup, even though we've been around for several years. We're still fairly small, about 31 people, and we're resource-constrained. We can't build everything people want or ask for or every idea that comes into our brains.
I always wonder what Foundersuite or Fundingstack would look like if we had raised $100 million. We probably would have gone on all these other paths, dead ends and great building crazy stuff. And it'd probably be a very bloated product. Part of the beauty of being resource-constrained is you can only build a few things at a time. We're looking for patterns from our users. Here's one very simple example. We have a pitch deck hosting tool. You can upload your pitch deck, send it out through the system, see who opens your email, who opens the pitch deck, how much time they spend on the pitch deck.
Over and over again, we're getting customers saying, "I want to track the per slide views", which is something DocSend and some others have. It's a pattern, right? The market expects that in the functionality, so we're going to build that. That's just one simple example. Sometimes that's like keeping up with competitors, but other times it's something a little bit more innovative where customers are like, “Oh, it'd be so cool if I could do XYZ. When we start to see that pattern, then we figure out how much time it will take to build it, what kind of business impact it will have, and whether it could actually leap us forward a little bit. Here's an example of leaping forward. We're about to launch a ChatGPT integration to our email tool. No one else really has this, whereas the DocSend viewing the time per slide is keeping up with the market. We're making sure we're competitive with the market. This is actually fairly innovative, I think, but it'll help you write emails to investors and others, things like that, and we're getting people signaling around that.
Now how do we communicate this stuff once we launch? Here's why I'd say we're not the best at it. We usually put it in an email newsletter and say, "Hey, new product!" And that's about it. Sometimes, we'll have a banner or I'll show it on our onboarding webinars. We do periodic webinars for new users, so I'll show new features. Or I'll put it on our funding hacks talk.
0:22:58 - Alex Shevelenko
I think one of the things that we found is that product marketers are, at least in my head, some of our early adopters. Because that's the challenge that they deal with. They have to launch new products. Typically, the more complex organization they have, the more stakeholders they need to have in there. Then they create relevant use cases where people could identify, "Oh, okay, I have this problem!" And then all those features come into play. But just saying, "Hey, I have a feature", doesn't really work on its own. Because you need to connect that feature to a real problem, and not everybody has that problem.
If you're lucky, you will get through without those features that everybody could benefit from. The majority of enterprise innovation is limited.
Salesforce organizes features in themes. The themes are relevant enough, so people review, "Okay, I'm on this theme. Let me review the latest and greatest bundle of features." And I think that's what we see folks do. But back to the secrets of what you do to communicate. You've been running a podcast on how people raised it, How I Raised It. And so I'm really curious what have you found as some of the unexpected patterns from having done so many interviews with other founders?
0:24:33 - Nathan Beckord
Yeah, we started our podcast, and it's called How I Raised It, a couple of years ago as an experiment, just a fun thing. It's turned into something really great. I just love it! I used to think I knew everything about raising capital. And I didn't know a lot because I used to work in investment banking. I've been doing it for a while, and I've raised money for FounderSuit. Interviewing other people about how they raise capital, I learned so much, especially during the first year of the podcast. I probably learned more in that first year than in 5-10 years of raising capital. But that's one advantage: you learn a lot from smart people. It's such a beautiful way to do that. It's also been really good for marketing. We'll turn them into, obviously, podcasts. We'll turn them into some blog posts and other content forms: video snippets, stuff like that. But to answer your question, it's almost contrary. We learned that there are hundreds of different ways to raise capital. We've had 275 episodes, and there are 275 different ways to raise capital. But there are also quite a few patterns in those, and some of the stuff we already talked about is qualifying your investors, finding the right investors.
One quote I learned on a podcast which I just almost want to get a tattoo of was “Fundraising is not about educating and convincing people. It's about finding believers.” Basically, finding people who already are seeking what you're doing. They're already believing in your market. Just find those people. So it's not you convincing, "I have a good startup." It's just going through the numbers to find those who already believe.
Also, it's just a relationship game we talk about. And I talk about fundraising as a sales process all the time. That's a big core of our webinar on how you've got to talk to a lot of investors. You've got to run it like a sales process where you're trying to move them along through your process, yet at the same time, it's not totally transactional. It's very much relationship-based. You've got to put in the cycles to get to know these investors, to build trust with them. I was just at an event this past weekend in Texas, called the Texas Venture Alliance. And it was just like it sounds, a Gala for Texas-focused investors. And that was the thing. Just going to the cocktail party before the dinner or meeting after a panel and going out to the lobby and chatting. It's just building those relationship touch points with investors that ultimately lead to deals. So that's another common theme. I mean, I could go on and on, but those are a couple of things.
0:27:25 - Alex Shevelenko
Anything that really surprised you, that pattern that surprised you, that's jumped out? I mean, there are some Bible materials in the art of fundraising. It's been around. But I think sometimes the best fundraisers do something different and they interrupt the investors. They interrupt the flow to get disproportionate outcomes. Have you seen some patterns around that?
0:27:54 - Nathan Beckord
We've had a few people who have been able to break the mold and raise capital extremely fast, and it's been interesting. I don't know if this is exactly what you're seeking here, but oftentimes they will. I know one lady in the biotech space who hired a COO to take over all her jobs. So all she could do from 6 am when she gets her first cup of coffee till midnight is focus on fundraising and just hustle like you've never hustled before. And I think if you're able to put in time like that, you can get the momentum going which makes these rounds go faster. So that's been something a bit of breaking the mold. Instead of having a three-month, four-month fundraiser where you're methodically having meetings, they've compressed it all. That was interesting.
0:28:51 - Alex Shevelenko
So that's fantastic examples! And back to your view on relationship building, you brought up that it's a relationship business. A lot of people are not fundraising. But this is a perfect time, hopefully, to build a relationship. But as an investor, you don't have time to build a relationship with everyone who's not fundraising, right? You've got a fund to deploy, you can only do that much relationship-building.
So there's this tension. Have you seen startups get more of the attention or the bandwidth from investors to invest in those relationship steps? Is it like the updates that go out? Is it some more personalized touchpoints, like not everybody can go grab a coffee because a lot of the locational advantages are more towards Zoom? So what's been your take on what patterns of success are in this relationship-building pre-investing?
0:29:53 - Nathan Beckord
You touched on both of them already. Even when you're not fundraising, you're traveling to Austin or whatever for a weekend. I live in the Bay Area. But it was an office for a weekend, pinging bunch of people that maybe you've had some touch point. "Hey, I'm going to be in town. If you have a few minutes, if you're going to be at this Gala, let's catch up over a beer real quick."
It's that sort of thing like using your downtime to nurture those. A lot of times people say, "Hey, I'm not in town", or "I'm too busy", or whatever. But you've still made an effort to reach out and connect with people. Then it's what you also said. It's doing the updates. I'm a huge believer. Of course, we have a product for this called Investor Updates.
But I'm just doing a simple, pretty short little one-pager on a pretty regular basis, monthly, every other month if not. But just a short update of what's going on in your business and the good stuff that's happening. This is my favorite part. The good stuff that's happening, the progress you're making, new products, new team members, press, whatever it may be, metrics, growth, new customers, whatever it is. Just sending out a regular update. Maybe only half the people on your investor list or your distribution list actually read it and look at it. But you can track that in the analytics and you can see who's doing it. If you get into that habit, that really doesn't take more than 20 minutes a month to do once you get into the pattern. It's a great way to try to nurture those relationships.
0:31:28 - Alex Shevelenko
Nathan, this has been so helpful for a lot of the problems that some startups and investors may be facing. You already have some tools. So how can people find you and leverage the tools that you've built to address those needs?
0:31:46 - Nathan Beckord
Sure, of course, here's the plug time, right? Foundersuite.com is our platform for startups. We do have a free plan, and the paid plans are pretty affordable – $69.99 a month. And then, if you're an investor or VC raising capital, we have fundingstack.com, a little bit more of our enterprise version, a database that has more LP investors, ways to manage multiple deals at once and some other features. Foundersuite.com, fundingstack.com, and then pretty active on LinkedIn. Nathan Beckord on LinkedIn. Mention you saw me on Alex's show and I’m happy to connect with you. We publish pretty good content all around fundraising and a lot of stuff we've already talked about today, a couple of times a week. Some of it is pretty viral stuff.
0:32:37 - Alex Shevelenko
Amazing, Nathan, thanks so much for joining us and sharing your expertise! And all of you looking to fund your startup or investors out there, please take advantage of these tools! We believe in digitizing the fundraising process, sales process, marketing process, and Nathan is part of the tribe that believes in that and is helping with that. So really excited to have you on and share your expertise. Nathan, thanks so much for joining us!
0:33:07 - Nathan Beckord
Thank you so much! Appreciate it, it was fun!