00:00all right let me get some music going
00:03and we'll welcome people now I for how
00:08yeah all right let's
00:13everybody Welcome everybody hi Gabby
00:21Gonzalo morning good morning Michael
00:26hello hey guys um we're just going to
00:30give it a a another minute while people
00:32join um but it's great to see you all
00:36feel free to share maybe the chat where
00:37you joining for um we'll just get
00:50s awesome got a lot of uh North American
00:54representation today uh Jing from Canada
00:58San Diego Chicago Philadelphia
01:02I'm just pasting the link in the slack
01:09here all right I think we can we can get
01:11started now so welcome everybody thank
01:16for giving us an hour of your Wednesday
01:19um I know it's a busy time as we wrap up
01:21the the year so grateful for grateful
01:24for your time um super excited to have
01:26Emily today um with us Emily has been
01:28just a big friend transcend like an
01:31amazing supporter um in one of those
01:33rare investors who have like just a ton
01:37of experience as a founder and so you
01:39you'll you'll see how like the way she
01:40speaks to Founders the way she like I
01:42don't just thinks about like the world
01:45of being a a Founder uh is just a little
01:47more grounded on the reality of doing
01:50something that's impossibly hard rather
01:51than kind of just sitting back and being
01:53like let me know how it can be helpful
01:55type of thing so I appreciate that a lot
01:57about Emily so I'm really excited to
01:59have her experience today um and uh yeah
02:02basically what we're going to do is as
02:04always just get a to get a feel for
02:06who's in the room we're going to do um
02:08intros so we're going to try to keep
02:09them to 30 seconds so basically name uh
02:13name um where you're joining from today
02:16and one line description of what you're
02:18building and I'll I'll share the the
02:20link in the chat so so there's um
02:22there's more context but yeah um maybe
02:25we can start with the shortest hair in
02:28the room uh maybe I think Gonzalo and
02:31Michael maybe if you want to
02:33start sure why not uh this is the first
02:35time uh I've been the shortest hair but
02:38sure all right so my name is Gonzalo or
02:41Gonzo for short I'm calling in from
02:43Canada today and examin is a
02:46non-invasive alternative to online
02:49proctoring that is scientifically proven
02:56youo um maybe Michael if you want to go
03:00hello thanks Emily for being here um
03:02yeah Michael from San Diego uh my
03:04company giant leaps learning is an
03:06online enrichment program that develops
03:08confidence curiosity and 21st century
03:10skills for for high school students um
03:12and we do it through a combination of
03:14one-on-one coaching and a personalized
03:16curriculum amazing thanks for being here
03:18thank you Michael um I don't know if aab
03:20can can hear us but uh feel free to
03:23introduce yourself uh share one line of
03:26mid angle where you're joining from
03:27today and then I think maybe I don't
03:29know who will have the shortest hair
03:31after maybe sa you can go after because
03:34I have my hair up yeah gotcha hi guys my
03:37name is Dr Muhammed aib I'm the founder
03:39and CEO of Med angle I'm calling from
03:40Karachi Pakistan today and Med angle is
03:42Khan Academy meets stack Overflow for
03:44future Health Care Professionals and
03:46future doctors we're an all-in-one
03:48educational SAS platform for future
03:50medical and healthare
03:52professionals amazing thank you okay so
03:55I'm up all right so my name is Isabella
03:58Johnston I'm the founder of employers
04:00for change I'm out of Orlando Florida
04:02and employers for change uh accelerates
04:05Dei skills Recruitment and upskilling
04:09the employee as well as the intern so we
04:11work with intern and students
04:14both amazing thank you Sabella um I
04:18cannot really tell who can go next maybe
04:21Gabby and then lizza Lia sorry sure it's
04:26list um yeah I'm Gabby I'm calling in
04:30from Chicago and building a business
04:31called spark this day where we cultivate
04:34and deliver critical unrealized data for
04:37hr/p professionals through our employee
04:44e and I'm Liza I'm calling in from
04:47Atlanta um building real discussion
04:49which teaches K12 students face-to-face
04:52communication skills that they're just
04:54not developing in our kind of
04:56tech-centric World um so that's what I'm
04:58up to amazing thank you Liza um I'm
05:03just adding your link I think we got
05:06everybody's um so um Emily I think we
05:09can um hand it over to you you can share
05:12a little bit more about um your
05:14background in in the space and um then
05:16we can transition a little bit more into
05:19um fundraising which is the topic of
05:20today uh just one angle that U I wanted
05:23to kind remind everybody in the room is
05:24we're going to be really kind of diving
05:26deeper into Emily's experience and um
05:29one of the kind of main themes we wanted
05:31to talk about is timeline like when to
05:32start fundraising to kind of uh uh make
05:35the most have the highest Roi as a
05:37Founder um but uh but Emily has ton of
05:40experience in space so I'm excited to um
05:43ask have a couple questions I prepared
05:45for her and then but we'll have plenty
05:46of time for Q&A so you can ask questions
05:48as well uh so Emily over over to you
05:51awesome well thank you Alberto it's very
05:53nice to meet you all I love the
05:55transcend Network and it's um every year
05:57that I every time that I meet meet
05:59different fellows or talk too I'm just
06:01impressed with everything you're doing
06:03starting with how succinct you all are
06:05at explaining what you're doing which I
06:07think is a skill in and of itself so
06:09good job on that front um so I'll give
06:11you a little bit of back background
06:13about myself before we dive into the
06:15topic for today um I have had you know
06:20career I'll start from the beginning and
06:22then go to the end which I'm now an
06:24inventure but I was a teacher for five
06:26years so that was chapter one actually
06:28Liza started in Atlanta and Teach for
06:31America and then um I was a education
06:35lawyer for just for two years but was in
06:37school for three years and then I was an
06:40edtech entrepreneur like all of you um
06:44chapter our company was acquired by
06:46instructure and so I sat in the
06:48executive team there and so part of a
06:50larger company which was much different
06:51than a startup which is why I think of
06:52it as a different chapter of that
06:54experience and then I guess this is my
06:56fifth chapter which is now I'm in
06:58venture I'll give you a little
07:00background on um where what our firm
07:03does just so you know for context and
07:05hopefully we'll all be able to stay in
07:06touch when you're ready for for our
07:08stage of investing so our firm's called
07:12Osage and we have been around 17 years
07:15we're a smaller firm based in
07:17Philadelphia and the
07:20firm kind of why we do what we do is we
07:22believe in the power of businessto
07:24business software to unlock human
07:26potential and for the last 17 years
07:28we've been investing in in B2B software
07:31um companies specifically we we're
07:34generalists but when we look at our our
07:37history of investing about 70% of it has
07:39been in future work or future of
07:41education and when the pandemic hit we
07:44reassessed all the markets and try to
07:47think about okay this moment in history
07:50like SARS did for e-commerce like these
07:57global catastroph rhes that happen are
08:00often followed by incredible periods of
08:02innovation and where did we see the
08:05biggest markets for that and the B
08:07opportunity and we saw future of work
08:09and future of Education as massive
08:12opportunities we looked at Healthcare we
08:13looked at retail we looked across all
08:15the sectors we've been involved in last
08:1717 years and then we looked at okay what
08:20have we invested last 17 years where do
08:22we have the most expertise in the most
08:24Network so that we can be the most
08:26supportive investors to our companies
08:29and really was in those spaces of future
08:30work future of education so that is
08:32where we we're focusing on our our next
08:35fund that we're just fundraising now
08:36we'll start investing out of next
08:39year um it should be around $150 million
08:42fund We join we um are typically the
08:46First Institutional investors so mostly
08:49series a but sometime about you know
08:51like a quarter of our investments are in
08:54stage everybody defines all those things
08:59we are post- Revenue investors so our
09:02sweet spot is when you're around a
09:03million in recurring
09:05Revenue but we will go for a few
09:07Investments we'll go a little earlier
09:09like a few hundred, to 750 in Revenue um
09:14that's recurring and then we'll we'll
09:16write like a two to8 million check the
09:19earlier ones will write like a 500 to $2
09:22million check um and we always Reserve
09:25Capital to continue to support the
09:27companies as they get to their next
09:28stage of because often times you'll need
09:30Bridge funding to get to the next stage
09:32if the timeline's longer than you
09:34expected um and so that's us I will
09:38pause there see if there's any questions
09:40about my background for who o sages as a
09:43firm and then um and I guess the last
09:46thing that may be helpful to just ground
09:47it since you all know education and
09:48future of work some of the Investments
09:50that we were the initial you know seed
09:52or series I investor in those spaces
09:54include exec online which combines um
09:59helps companies bring world-class
10:01leadership trainings when they partner
10:03with um top business schools in the
10:06country so or in the world actually so
10:09that's exec online noodle education
10:11which was founded by John katsman who
10:13started tuu and um Princeton Review so
10:16we were his first uh series a lead
10:19investor um full measure education some
10:22newer ones are transo which was back-end
10:25software to help um schools track and
10:28manage different Pathways of
10:29post-secondary success so not just going
10:31to college but what other Pathways can
10:34high school students go to and then that
10:36they use that software to report up for
10:38funding teach FX which is a really cool
10:42um platform that captures in-classroom
10:44data to help give the teacher um
10:46feedback on how they are um how they are
10:49teaching with known principles that
10:51impact student outcomes so a couple in
10:53the Ed World many more in the future of
10:55work but I will pause there and see if
10:57there's any questions on my background
10:58or oage and then we can shift to the
11:06day so easy perfect perfect and Robert I
11:11think you're new if you wanted to
11:12introduce your before we started
11:15chatting more sure thank you uh
11:18apologies I had a customer meeting uh
11:20more important most important
11:24yes um it's very good we signed our
11:26biggest deal yet this week so congrats
11:30awesome um thank you uh so gifted we
11:34help companies uh screen and hire for
11:38culture fit and discover hidden talent
11:40using our SAS enabled Talent
11:43Marketplace um and our solution or the
11:46tech engine is powered by Behavioral
11:48Science measures and machine learning so
11:51basically we help you stack rank
11:53candidates that fit you uh based on
11:56their abilities personality preferences
12:01fit thank you rob all in one solution
12:04yeah awesome nice to meet you thank you
12:07um so I think uh Emily you um you
12:10mentioned you had some ideas you wanted
12:12to uh to share I have a couple questions
12:14that I prepared too so like um like feel
12:16free if you have anything you want to
12:18start with um we can go there and then
12:20um I can G of prepare some questions and
12:22then we'll open it up for for Q&A yeah
12:24what what do you think's better I I mean
12:26I didn't prepare that much just kind of
12:29so I I guess I'll I'll uh pick up from
12:32where we were uh we we're just Closing
12:34one Fellowship cohort and uh I was
12:37mentioning it's very relevant because we
12:39in the last session uh we were kind of
12:43uh we were talking about uh sort of the
12:46materials that are needed the timeline
12:47that is needed what what you even need
12:49to get in front of a um an investor um
12:53and I guess one of the things that came
12:55up was a lot of Founders mentioned like
12:57I started fundraising really early
12:59um and that actually proved to be uh a
13:02little bit counterproductive because I
13:03didn't have the metrics that investors
13:05were asking for so I spent all this time
13:07talking to investors I guess in your
13:09experience as both a founder and an
13:11investor when do you recommend that
13:13Founders start thinking about
13:15fundraising um is it as soon as they get
13:17started um is it once they've identified
13:20a customer is it once they start having
13:22like real attraction um kind of if we
13:25start from the very very beginning
13:26assuming like very very early stages um
13:29when do you think is a good time for
13:30Founders to start thinking about this
13:32question sure so it's a great question
13:34there's not a simple answer to it and I
13:36think that's Mainely because every
13:38company has a different
13:40trajectory which means there's no
13:42timeline for there no one timeline that
13:44everybody should follow um there's kind
13:47of two things to think about
13:49is did you validate there's a problem
13:52that needs to be solved one and then can
13:55you demonstrate a demand for that
13:56solution and that there may be different
13:58metrics to validate a demand so it may
14:00be Revenue like people are willing to
14:02pay for it it may be a product L growth
14:04strategy so it's like wild numbers of
14:07users that are actually staying on your
14:12so those are the kind of two things I
14:14think I always learn best with examples
14:16so if you don't mind Alberto I'm happy
14:18to share how did practice company we
14:22co-founded in 2011 validate there was a
14:25problem that needs to be solved and then
14:27how do we demonstrate that there was
14:28going to be demand which are the two
14:30things and then when did we actually
14:31start funding so I can give you that
14:33data point of one I'll share that story
14:35and then can go into a couple other um a
14:39couple of things to to think about
14:41so we were trying to solve the problem
14:44of you leave college or graduate school
14:47often times without skills for the
14:50workforce but more just with knowledge
14:52and we identify the problem as being
14:54because our school system is a on to
14:56many model just kind of Capt knowledge
14:59which is very efficient and cost
15:01effective but not always the most
15:04effective from building School skills
15:06for the work force and so the first way
15:09we validated there was a problem was my
15:11Prof it wasn't me it was my professor
15:13taught a class that focused like you
15:15were going to leave that class with
15:16actual real world skills and he taught
15:17an apprenticeship like model the demand
15:20for that class was off the charts but he
15:22couldn't scale it there's only he could
15:23only have 10 students at a time in that
15:25class so then what he and I did was
15:29um competition this was I was in law
15:31school at the time so was a law uh
15:33competition for people to learn
15:35transactional skills there's tons of
15:37competitions for litigation skills in
15:39law school there's basically two skills
15:40you're supposed to get how do you
15:41litigate and that's fighting and how do
15:44you do transactional let's see if to two
15:45people have to come together for a
15:48contract um and there's nothing for
15:50transactional skills so we started a
15:52competition a national competition we
15:54had 10 schools do it and then the second
15:56year there was 30 and then the the third
15:58year I had graduated school and there
16:00were 50 there's only 200 law schools in
16:02the US so in three years we had um uh
16:06maybe it's four years 50% of law schools
16:08doing it so we knew there was demand for
16:11learning and nobody paid we had
16:13sponsorship so we didn't test it by that
16:16way we then wrote a grant to the
16:18government and got money to build a a
16:22tech solution that would allow more
16:25Educators to teach how Carl taught in
16:27his class and how we taught via the
16:29competition um and that was money that
16:33gave we didn't know if there would be
16:35demand for a scalable solution to teach
16:38like this but we knew that there was
16:40demand for a solution to the problem
16:42based on the class size and based on the
16:45competition um so then we kind of had to
16:47start you know at that stage can we
16:50validate demand for a tech solution so
16:52I'm going to pause there so we basically
16:53did like analog testing after we
16:55identified the problem can we you know
16:59there was a problem that needs to be
17:00solved and we we demonstrated demand for
17:02that through the classroom and through
17:04the competition and then we got money to
17:06see like would there be demand for a
17:08tech solution for that
17:11um we didn't know that and so that's
17:13probably where kind of you're closer in
17:15the journey now we're starting to build
17:16the we were incredibly fortunate to get
17:19Federal funding non-dilutive which means
17:22they're not taking any Equity from us to
17:25to build the platform and MVP to then
17:27test is there demand for this type of
17:29solution like there was for the
17:30classroom experience and the the law
17:33school competition um and so we we
17:36started that and we found there was a
17:39lot of demand we took about three years
17:40to build and test we ended up getting
17:43over $2 million in grant funding and we
17:45so we were granted you know close to
17:48three years actually to really test it
17:50and iterate it and make sure the product
17:51was effective and started doing slow
17:54testing of would you pay for this to
17:57answer the question like is there going
17:58to be demand for this and people
18:00answered yes we we did surveys of how
18:03much would you pay they said like
18:04ridiculously high numbers because they
18:06saw value in it and then we had to
18:08actually okay let's see if people will
18:10pay and they did not a huge amount
18:14because we didn't test a huge amount but
18:15a small amount and that was the trigger
18:17for okay we can go to raise outside
18:20funding now because we don't want to
18:22grant funding forever but we have one
18:25valid that we have valid there's a
18:27problem and there needs and a solution
18:29that can solve it and we've now
18:31demonstrated that there's demand for
18:32this and the way we demonstrate demand
18:34was that people were going to pay okay
18:36I'm going to pause that was very
18:37long-winded I apologize but that was my
18:40example for that and see if anybody has
18:46there if anybody has any question yeah
18:48Rob I have a question regarding the
18:50grants and uh that's because we also
18:54Grant we preed stage uh and it's very
18:58helpful but I'm wondering how um well
19:01the grant has in itself is a sort of
19:04validation of the problem and the needed
19:07solution but would investors actually
19:10accept that uh as one of the validation
19:15points it's not as strong from an
19:19perspective I think it's actually a
19:21stronger tool from a perspective of
19:24customers to show like this is valued by
19:27very well respect group it doesn't hurt
19:30from investors but really at the end of
19:31the day at least from our perspective we
19:34are looking at one will people pay for
19:36this and put aside product leg growth
19:39strategies because that is a a true sign
19:42two what does the usage look like
19:43because if it's early stage and we
19:45haven't yet hit a renewal cycle maybe
19:47they're just really good at sales and
19:49they get in the door but then nobody's
19:51using it and they're going to turn the
19:53next year so if we haven't gotten to
19:57renewal cycle where people are have to
20:00actually reup their contract we'll look
20:03at we'll look really deeply at the usage
20:04data and see how sticky is this and is
20:08it going to be hard to not churn does
20:11sense so that's much more validation
20:14that we're looking at than grants they
20:15don't hurt but they're they're not going
20:17to tip the balance in one way or the
20:21othering to underline how Capital
20:23efficient we are uh because that's more
20:26valid probably yeah yeah definitely and
20:29it's great because you're not diluted as
20:31a Founder so you have more ownership
20:33which we look at that too we want to
20:34make sure that our Founders and you know
20:37the the team are all incented in the
20:40right way and if you're not we figure
20:42out how to make sure that you're getting
20:43the right amount of incentive when we
20:47pool thank you you're welcome and gono
20:50it looks like you have your hand up yeah
20:52um yeah a couple couple questions I
20:53think that when you said stickiness it
20:56kind of triggered a few things that I
20:57wanted to ask uh deeper so firstly
21:00generally speaking it seems to me like
21:02seed stage investors say you know have
21:04this um relative Benchmark as a proxy
21:07revenue is a proxy for traction or a
21:09proxy for for all these things and so
21:11they give a general rule I've seen
21:12people raise a seed round with you know
21:1510 grand in revenue and I've seen people
21:16wait to million to get it right yeah is
21:19it is really what you're looking for is
21:22like data points and if so it's like you
21:25know five different institutions are all
21:28willing to pay for this and yeah right
21:29now there's only one instructor but this
21:31one institution went to 20 and like
21:34there's like is that what you're looking
21:35for and if so like is there a magic
21:38number or is it more of a feeling yes so
21:41good question there's not a magic number
21:42and it's not because it's a feeling it's
21:44because each business is different and
21:46each go to market strategy is different
21:48and each you know usage so I saw a
21:50company yesterday where um once a
21:54quarter usage was actually really good
21:57but if you didn't know the context of
21:58the business you be like that's going to
22:00churn because it's not being used every
22:02day or it's not in the flow of work but
22:04it's actually pretty good metric for
22:06them um and so to to your question it's
22:09hard to say hard and fast what we're
22:11looking for but your general examples of
22:14what you're showing for is yes that's
22:15what we're looking for so if it's five
22:17schools and there's you know a few
22:19professors in each and actually one of
22:21them those Professor professors created
22:24a ground spell that the department head
22:25now bought it for it like those would be
22:27indication okay there's something here
22:29the professors liked it they got
22:30together now they have the department
22:32pay for it if the strategy is a Bottoms
22:33Up strategy to to get in the
22:36door there I saw another company the
22:39other week and they had amazing
22:41logos but then when you dove into the
22:44data like hardly anybody was using it
22:48they also when you looked at the revenue
22:50breakdown there was high concentration
22:52and actually only one of those companies
22:54paid like a big six figure and the rest
22:56were paying like 2500 which you're like
22:58oh somebody had a credit card that could
23:01easily get this without getting higher
23:03approval so we also look at that like
23:06who was part of the buying process and
23:08how much of a paino is this solving and
23:10is this you know rising to the top which
23:13doesn't have to be also in every
23:15scenario doesn't have to have be top
23:16needs to be you know you have to have an
23:18executive sponsor for it but if you do
23:21that typically is assign that there's a
23:22real pain point across the organization
23:26solving but it could be somebody that's
23:29you know at a lower level that doesn't
23:31have to have anybody approve their
23:32credit card purchases so for example at
23:35practice we had Dell really early but it
23:38$7,500 contract there was a manager that
23:42was in charge of training that swiped
23:44her credit card and because they didn't
23:46have to get approval over
23:4810,000 and I remember I was pretty naive
23:52I was like we have Dell like this is
23:54amazing every investor is GNA be like so
23:58impressed with it they weren't impressed
24:00until and it took two years for Dell to
24:03start using it and turn into like a sixf
24:05fig deal but that took a lot of time to
24:08get them but I remember early days when
24:10I talked to investors they didn't really
24:12care that Dell was a customer because it
24:16was a manager of a group of you know a
24:18few dozen people she was
24:20training does that make
24:24sense one reflection on what I've been
24:27hear Emily that um I think every space
24:30particularly within the future of
24:31learning work like has a specific kind
24:34of Market Dynamic and um something kind
24:38on that first um I guess like that that
24:41second component that you mentioned of
24:42like validating if people are willing to
24:44pay for it or if there's like a real
24:45sort of demand for it um what you're
24:47looking for is for a couple indicators
24:49that show a true understanding of the
24:51market dynamics where like maybe you
24:53don't have a ton of Revenue but the
24:55revenue points are kind of based on High
24:58usage um in companies or something like
25:00that like you're looking for a couple um
25:03key metrics that show a deep
25:05understanding of that market um and even
25:07if it's early being able to show how
25:10that leads to a a much more really
25:13strong kind of long-term mode um sounds
25:16like something that I don't know it's
25:18kind of like kind of what I've been
25:19hearing I I don't know if this resonates
25:21definitely like there are strong leading
25:23indicators that that you're generating
25:26you know you have generated interest
25:28from your end users I think the flip
25:30side of that with the higher question of
25:33the session is when do you go to
25:34fundraise if you haven't generated
25:38users um wait for fundraising if you
25:42have enough resources obviously wait if
25:44you can still bootstrap if you don't
25:46have time for the process don't go don't
25:49go out to fundraise either um but if you
25:52have a on the flip side if you have a
25:54ton of interest from users however
25:56you're measuring that I would just be
25:58very clear on what are your metrics of
26:02success and what are your customer's
26:04metrics of success what are they trying
26:06to solve some people want to just maybe
26:08they're like we just want to make sure
26:09it's easy to use we already know we want
26:11this so how are you measuring that and
26:13and showing them that it is so that you
26:15can renew the contract um if you're
26:18going to run out of cash you should
26:20start if you need more support not just
26:22dollars because investors can offer a
26:24lot more um that also may be a reason to
26:27go out even if you don't need the
26:29dollars so I guess a followup question
26:32to that is uh did you explore uh as a
26:34Founder a sort of bootstrapping um uh
26:38practice uh with I guess both with the
26:41grants and like just kind of with your
26:43own Revenue was that something you
26:44thought about and I guess how has that
26:47thinking evolved or like I guess one of
26:49the common questions come up in with
26:51speaking with Founders it transcend is
26:53like I have a business I don't know if
26:55it's venture pable like I don't know uh
26:59if I'm if if if my business fits here
27:02how do you think about kind of whether a
27:04business is fit for the Venture model
27:07versus more of a bootst stru one um no
27:10so I'll answer that in two ways I'll
27:13answer what I went through as a Founder
27:15to think about that and then secondarily
27:18how Osage looks at companies to see like
27:23is this a venture back business because
27:26the question typically is if it gets to
27:28us for a meeting the question typically
27:30isn't is this a good business it's
27:33usually a really good business it's is
27:35it a venture back so I'll explain to you
27:37what we think about for is a venture
27:40back um but first from my experience so
27:43we started to have early indication that
27:45one this product was actually effective
27:47and working and then you know like two
27:50years after building it and testing that
27:52we got indication that oh yeah people
27:54are actually going to pay for it so
27:55there's demand for it and so the
27:58question we asked ourselves and it was
28:00myself and my two Founders so
28:01co-founders so Carl Koto and Paul Zen
28:04was what do we want like what are we
28:07motivated by we this could be a really
28:09nice lifestyle business where we work
28:12exclusively in legal education or
28:15exclusively in healthcare those are kind
28:16of the two places that first took off um
28:20and we could very easily map out that we
28:24could make good money with not many
28:28and but all three of us have good
28:30salaries and ride off into the
28:33sunset or you know were we motivated by
28:37a big pay a big payday or were we
28:40motivated by making you know a pretty
28:42significant impact on how uh how people
28:46are educated and what that means for for
28:51outcomes and it was a big debate because
28:53you know one of us was more motivated by
28:56one thing than the other and back and
28:58forth but at the end of the day it was
29:00really bucket three of what motivated us
29:02of like we want to act make as large of
29:07possible in you know in the shortest
29:10amount of time possible and so with that
29:12rationale we fit into a venture model
29:16because we couldn't do it without just
29:17we couldn't do it with grants alone we
29:20couldn't do it without funding um none
29:22of us were independently wealthy so to
29:24fund it ourselves so that's that's what
29:28we went through and I think it's worth
29:29asking yourself that question when
29:31you're thinking of your own Venture and
29:34you could have different buckets in the
29:35three we had but that's that's kind of
29:37the three we thought
29:40about any questions on that and then I
29:42can go into the Venture and I'll
29:43actually pull up give a minute I'm gonna
29:44pull up a slide to help this one
29:50um any any questions on um on that
29:54before gu well Emily is setting this up
30:00um no worries if not no pressure um okay
30:05let me get show my screen in the
30:08meantime I'm gonna share something uh so
30:11no no rush on your end uh one one
30:13resource uh we built in this last
30:15Fellowship for Founders that are
30:17thinking about fundraising um from
30:19Venture Capital specifically is a this
30:21notion page um we built with like all
30:24this uh like basically
30:28um a a process that you can follow with
30:32some resources uh some past recordings
30:34from sessions we've done in the past um
30:37transcend and um yeah some ideas that
30:40will be pretty practical practical I
30:41think uh for all of you who funraising
30:43atend um so just wanted to plug that in
30:46the meantime but Emily I see got it um
30:51okay so I and forgive me if you all know
30:54this stuff and tell me to to jump ahead
30:56but um as a Founder I did not know a lot
30:59about the fundraising world and I wasn't
31:01lucky enough to go through a transcend
31:03program um Fellowship
31:06so stop me if you guys know this and I I
31:10offended the way that um so Venture
31:15funds and funds have um let's see funds
31:20that raise a certain amount of dollars
31:22and the people who put money into funds
31:24whether it's institutions or individuals
31:26or family offices or whoever me be are
31:28called the limited partners and they are
31:30the funds investors and the people who
31:32manage the fund are called the general
31:34partners and they are the stewards of
31:36the limited partners money and so
31:38they're our shareholders and we you know
31:41have fiduciary duties to to do a good
31:43job with their funding and be good board
31:45members and follow governance unlike FTX
31:47and everything else you're seeing in the
31:49news when you when you raise a fund um
31:54so let's say we raise a $10 million fund
31:57how we do it at oage and everybody can
31:59be different so I'll give you just oage
32:01perspective when we assess a company we
32:06company return at least 50% of this fund
32:10to us ideally we would love to return
32:13the 100% so for example so if it's a $10
32:15million fund so our limited partners
32:18each 10 we have 10 limited partners say
32:20each invested a million we want to make
32:23sure if it was to return 50% of fund how
32:27much when we're looking at each company
32:28how much are we expecting the return
32:30will be to us from each
32:32company you can show me with your
32:38hand so if I was looking at Gabby's
32:41company I would say all right if we
32:44Gabby's when if we sell it I want to
32:47make how many how many dollars to return
32:50half the fund of a $10 million
33:00are people putting in the chat and I'm
33:01not looking at the chat we're seeing uh
33:05yeah 50 million five
33:0915 five different I'm looking at now so
33:12it would be so it's a $10 million fund
33:14it we we would expect Gabby's company to
33:19million so if Gabby came to us that's so
33:23that's half the fund so we're like could
33:25she could this company and Gabby I
33:27forget the name of your company what's
33:29the name of your company spark this day
33:32spark this day so could spark this day
33:35could they give just Osage $5 million so
33:40the next question we ask is like Okay
33:42can they do that within seven to
33:44typically seven to 12 years so when we
33:47start a fund our limited partners we
33:49have a contract with them and you the
33:51fund has a life a timeline to it and
33:54typically it's around 10 years and so
33:57our limited partners our investors are
34:00return within that 10 years and we start
34:03giving out dividends as we get as we
34:06have exits and money starts coming in to
34:08distribute it back to our
34:10LPS and so contractually we need to we
34:13that company Gabby's SP this day needs
34:16to grow from the day we
34:18invested you know within around a
34:2010-year timeline and we need to have an
34:22exit or we need to think she has the
34:24ability to have an exit that will return
34:26us 50% % of the fund and the fund in
34:28this madeup world is $10
34:30million so that doesn't mean that Gabby
34:33sell so okay let me now back up so Gabby
34:36comes to us her fund has a million
34:38dollars in Revenue because that's our
34:40sweet spot and we say yeah we'll give
34:43you we'll give you money we'll um we'll
34:47value you at like four times your
34:49Revenue so your valuation today even
34:51though you have a million Revenue we'll
34:52say you're you're worth $4
34:55million and we're going to give you 2
34:57million so we own 50% of Gabby's
35:01company so Gabby needs to I'm terrible
35:03at math that's why I'm using baby
35:05numbers so Gabby needs to sell her
35:08company so that she gets a $10 million
35:11valuation at least and we own five of
35:14that so that's we own 50% of that so we
35:17would get five million back um and that
35:20would hit our goal when we assessed it
35:23so we have to say is that realistic
35:25could spark this day
35:28go from 1 million to
35:30probably right now edtech companies are
35:33being valued at five to seven times
35:35their revenue so could it go
35:38to like two million 2 million times 5 is
35:4310 if we think yes it could and she
35:45could sell it at 10 million then we
35:47would get five million of that does that
35:51sense okay I was using like real baby
35:54numbers because I'm like awful at math
35:56so so we assess that and then we assess
35:58like can she do that in our time period
36:01in our 10 years because we have to
36:02return the fund you know return um
36:06proceeds to our limited partners within
36:09zone and so we'll assess where you know
36:11spark this day of like actually no the
36:14Market's not quite ready for it it might
36:16not be able to do that in 10 years it
36:18might be more of a 15-year horizon or we
36:21don't really see the data points that
36:23there's like strong Market pull from
36:25this um so maybe there's not demand
36:28there for this to grow from a $1 million
36:29business to a 2 million where it will
36:32get a valuation of 5x that's Revenue to
36:35get to 10 million so that we get five
36:37million back do that all make
36:40sense um so that's how we that's kind of
36:43how we think about it so it's a
36:47combination of can it return our fund so
36:50you should always ask I don't know if
36:53every Venture firm I think most of them
36:54do it this way you should always ask
36:55what's your fund side
36:57and then like kind of calculate and ask
37:00them say do you you know what are you
37:01looking for what kind of return do you
37:03want um and our fund is 105 million the
37:07next one we want to be 150 so we're
37:09looking at companies like can they make
37:10us 50 $50 million right
37:14now one question Emily here um when when
37:17you think about the return I I thought
37:20you you meant 50% of the uh fund size
37:23but like with the full return right like
37:25the assumption that it like I ideally
37:28you're like 3 exing at least your
37:31investment over that decade right as a
37:33fund because that's what essentially
37:34gets you to a point where you're kind of
37:37you're good as as a fund um but you're
37:40thinking 50% of the fund size the
37:42original Fun Size right yeah exactly
37:45because I think um this might be my bias
37:49like even earlier stage than than you
37:52guys but I think uh a lot of like preed
37:55funds um don't think
37:57they look for even larger returns uh
38:00like they will like what I had heard was
38:0250% or at least the we we calculate for
38:04example in our own fund is 50% of the
38:06fully returned fund so in our example
38:09like we're a $2 million fund um very
38:12very small but like when we think about
38:14what we need uh the ideal outcome is we
38:16have multiplied by three our initial
38:18investment over a decade so roughly like
38:21if if we're imagining that it's like 4X
38:24um of gross gross returns to get 3x net
38:27um we think about how every company we
38:31invest in should be giving us 50% of our
38:33fully returned fund which would be $8
38:35million uh so 50% would be $4 million um
38:39I think because you guys invest a little
38:41bit later stage there's probably a
38:42higher percentage of uh companies that
38:45survive whereas even earlier stage
38:48there's like um there's more of a uh
38:50churn rate for those startups so I would
38:53say like um uh just a reflection that
38:56sometimes investors want a more
38:57aggressive uh number because they are
39:01earlier stage the the failure rate is
39:03much higher than what oage probably sees
39:06because you guys invest a later stage um
39:10that's yeah exactly and and so we're
39:12later stage and every fund's different
39:14like there's some funds that do the
39:15power law curve which is they'll invest
39:17in a 100 companies and just expect one
39:20to be this massive winner um we're oage
39:23and each of our funds we invest about we
39:25invest in about 20 say 15 to 20
39:28companies in each fund and we realized
39:34probably four of them will return the
39:37fund for us or 50% of the fund and
39:40then four or five and then like 10 of
39:44them will be like good outcomes but
39:46they're not returning the fund but
39:48they're not losing US money it'll be
39:49like you know 1X 2X and then they'll
39:52probably be four or five that don't make
39:53it that's kind of the r that's how we we
39:57think about it but every fun Tober chose
40:02different I'm curious if this is
40:04something that like um had Founders in
40:06the room like explore this before is
40:08this new information is this uh
40:10insightful uh would love to just hear
40:13from a couple of you you can just go of
40:19share I'll go so um this is the first
40:23time I've had this kind of transparency
40:25in the conversation so I really
40:27appreciate it um it's probably
40:29information that I can find online I'm
40:31sure but I haven't I haven't reached
40:34that place um where I found it so the
40:37conversation has flowed and Alberto your
40:40ability to also um add to it was really
40:44helpful too so it's dual two wins yay
40:49well I'm so glad I I had no idea what I
40:52was getting into when I was first the
40:53founder I was so naive and then I I
40:55actually it's not even really until I've
40:57been in the Venture art I'm like oh oh
41:00my exit actually wasn't that good for
41:01Venture but I thought it was
41:04great like everybody returned we
41:06returned like two or three Act of people
41:08I'm like oh we were not a success I'm
41:13it so I like to to share it Forward pay
41:17forward thank you thank you for sharing
41:20Emily um so I love to open it up for uh
41:24Founders any questions you might have
41:25around the fundraising process uh feel
41:27free to share it in the chat um and
41:29while we take in kind of the last
41:31questions in in the chat I guess one
41:33question that I I want to ask you that
41:34we've asked a couple investors in in the
41:37last few few months Emily is when you
41:39look at the materials that a Founder
41:41shares with you I guess I would love to
41:44get some thoughts uh from the moment
41:46that you first interact with a Founder
41:47what are the best ways that you found
41:49for Founders to reach out um and what
41:51are the materials you like to see from
41:53them to feel like okay this is like this
41:56is perfect this exactly the information
41:57I needed to make my investment decisions
41:59uh whether it's like the deck or yeah
42:01anything in that on that front would be
42:03really really helpful sure so
42:08um I like and I think I don't I will not
42:11speak for every investor
42:14um I'm gonna start with the story first
42:16and I'll tell you what I like and then
42:17I'm going to share with you what our
42:19processes for investing because in this
42:22slide I'll share with you it kind of
42:24shows you what we ask for um so you can
42:28start you know working backwards um when
42:32I first started in this job a good
42:34friend of mine said like you are going
42:35to be so bored um because operating is
42:39like so different than being a venture
42:42um it is quite the opposite it is the
42:45because we see so many companies um and
42:51and it's amazing and it's in a privilege
42:53job because you're seeing like real
42:55problems super smart people like all of
42:57yourselves really creatively thinking
42:59about how to solve this and often times
43:02that also has a like fantastic social
43:06and but to to that to that point is I
43:11like Decks that are very easy to
43:15understand and kind of a flow and you
43:17guys thought I know and this is maybe
43:18very dated but there is I'll put it in
43:23um by kazasi do you guys know this
43:27guy this is very uh I think this is like
43:30when I was an entrepreneur so it was a
43:32long time ago but basically he has a
43:34breakdown of what should be in a slide
43:36deck and I think it's very helpful and
43:40very high level like just get the
43:42attention there's a you know there's a
43:44real pain Point there's a problem here
43:47we have proven that there's a demand to
43:49solve this problem our product is
43:51actually the thing that fits it there's
43:53a big Market um and we have the team to
43:56go after it so that's like very um very
44:01simple of kind of what I want to see
44:04then the way that it works in our world
44:07and I'll show you this because I'm a
44:10learner so Alberto to your question of
44:13how do we um want to be approach we we
44:17respond to you know every email that
44:20comes our way somebody on our team there
44:23are some Venture firms that don't and
44:25it's it's not because they're jerks or
44:27anything it's it's a very overwhelming
44:29world you're constantly getting kind of
44:31pitches I forget where our funnel is but
44:33there's like you know thousands of
44:35companies that come into our funnel at
44:37top of the funnel um what typically will
44:40happen we like to see you before you're
44:42ready to uh for us to invest so just to
44:47build that relationship don't spend a
44:49ton of time you don't have to set up you
44:51know a ton of meetings you don't have to
44:52set make a lot of material it's more
44:55just who who are you what are you doing
44:57and what are your goals for the next
44:58three six months or 12 or whenever
45:01you're going to be ready for to raise
45:02your SE ground or your series a where we
45:04play and the reason we like that and
45:07I'll just Orient you to this this slide
45:09here this is a timeline for how we
45:14company before we give you a term sheet
45:17so this is all the pre-term sheet and a
45:20term sheet just says here's what we
45:21value your company here's how much we
45:23want to put into it let's get going
45:26when we give a term sheet at oage and
45:28it's different for every firm we have
45:29pretty much decided we want to go
45:31forward borrowing any fraud that we
45:33uncover Etc we will go forward this is
45:37postterm sheet what do we do and this is
45:39okay we made the investment what do we
45:41do but just focusing on this area here
45:44you see the first bullet is an analyst
45:46on our team we like to track companies
45:49before they're ready to invest and we'll
45:51typically have a few calls so like six
45:54nine months a year before you're ready
45:56to invest before excuse me before you're
45:59ready to fundraise you may want to reach
46:01out to you know hear the top five 10
46:04firms that fit fit with me and and make
46:07sure that you know the firms because we
46:10do get a lot of um pitches and we're
46:13like we're not B Toc or we're not life
46:16science so just know who you're going
46:18it's going to save you time and it's
46:19going to save the investor time so we'll
46:21track and these calls are like 15 20
46:24minutes first ones to get know you and
46:26then the catch-up calls are like are you
46:29progressing the way you expected if yes
46:33great if no why we know that there's
46:35pitfalls and so just have a good reason
46:37for why you didn't hit your goals um and
46:40then if the analysts are like Yep this
46:43makes sense they'll share it with a
46:45partner and then we'll come in and do a
46:48longer call um that's just a deeper dive
46:53on the high level who are you that's
46:55where we spent most most of the time
46:56because at the early stage of teams most
46:57important what's the pain Point what's
47:00the solution you have and you know
47:02pretty deep and then what's your early
47:03traction what's your goto Market
47:04strategy and what's your funding needs
47:07and just a deeper dive there if it gets
47:09past that call then we'll have bring in
47:11a larger part of the
47:12team and before that team we do this
47:15deep dive on the data room so this is
47:17what you should have ready of a
47:19financial model it's your sales pipeline
47:21return analysis sales efficiency metrics
47:26um Revenue divided by your burn your
47:29product usage data anything you have on
47:32customer Health Market competitive
47:34research or cap tabal evaluation
47:36analysis you may not have all of it but
47:38that's what we ask for and it's okay if
47:39you don't have all of it but that's what
47:41we'll we'll start with and again to
47:43Alberto's point you all learn at this
47:45stage this is like seed series a so this
47:48is much closer to when you have
47:50typically the proxy um to gono point
47:53proxy of um Revenue typically the
47:56revenue markers is when we'll start to
47:57Just Around million then we'll have
47:59second team meeting we'll want to see a
48:01product demo a go to market meeting we
48:03do a ton of reference calls before the
48:05term sheet we won't call your customers
48:07because we know how precious those
48:08relationships are we will only call them
48:10after the term sheet um to know that
48:13we're really going to partner we don't
48:14want to you know have you asking your
48:16customers to do a ton of investor calls
48:18and the reason we do them postterm sheet
48:19is so we get to know the business really
48:21well so we can be good partners um but
48:24we'll do a lot of Industry references
48:25people who know the the market better
48:27than we do and then we do a culture call
48:30as well with the CEO to make sure we
48:33know that that person is going to one
48:34build a strong culture and that they can
48:36both attract and retain really good
48:38talent which is probably the most
48:39important thing at this stage um so I'm
48:42going to stop sharing that's kind of
48:44what we do at the beginning hope that
48:45was helpful for what what types of
48:47things we'll be looking
48:49for any questions specifically on that
48:52uh around what materials to share kind
48:54of reaching out early uh
48:57hi first of all em thanks so much Emily
48:59a quick question um after you lay out a
49:01term sheet you do still quite a lot of I
49:04would call it like additional due
49:07um what's like what's the likelihood
49:10that you still like um basically take
49:12back your term sheet like how many times
49:14has that happened or is that more like a
49:15just like a I don't know like a
49:17reference call when you hire an employee
49:19if you know what I'm doing yeah so a
49:21great question um we do a ton of
49:27and there's um one main reason for it
49:30once we give a term sheet because we
49:31actually do a lot of diligence before
49:32the term sheet too once we do a term
49:35sheet we we are going to go forward the
49:38companies our firms around 17 years and
49:40we've pulled three and it's because um
49:44one was I wasn't here I was only here
49:47for one of them and that one was
49:49basically they lied to us about um like
49:52something that was pretty consequential
49:53the other one was uh around their
49:56financials where they said it was like a
49:57recurring model but it actually wasn't
49:59it was episodic um and I forget the
50:01other was another fraud I think and so
50:06that the point is we will Almost Never
50:09pull it unless we uncover something that
50:12um you know fraud or that totally shakes
50:14the Trust In in working with this
50:16partner the reason why we do we continue
50:20diligence is because of what type of
50:22investors we are after we we invest
50:25we're we're pretty Hands-On um and this
50:28type of diligence prepares us to know
50:30the company as deeply as we can so that
50:33we can be good partners and this post
50:37investment uh part of the slide shows
50:39what we do after we invest so we take
50:42all that diligence that we learned from
50:44the deep diligence and we create
50:46something that we call an acceleration
50:48model you can't see it here but
50:50basically this says Talent sales and
50:52marketing product customer success
50:56engineering strategy and you'll see
50:59we'll do a 0er 30day plan 3090 and 90
51:03post and the blue is what we will do
51:06what we think we should do to help make
51:07you know the most use of those dollars
51:10purple for them because this is this
51:11company's logo color is what they should
51:13do and you'll start to see as like 0o to
51:1630 we do a lot like introduce them to
51:17Bankers because it's a really good time
51:19to get debt once you have Equity you'll
51:21get a better deal um we we have a really
51:24extensive kind a resource center so
51:26we'll introduce them we'll introduce
51:27them to other CEOs in our event in our
51:30portfolio or maybe they don't have a
51:32product leader yet we have folks that
51:34can help you know fill those gaps until
51:36you get a more stable team um but as you
51:39get to the 30 990 and 90 plus there's a
51:41little more on the company side and this
51:44is a iterative um document but it says
51:48living document but our diligence
51:50informs it coupled with you know 17
51:54years of experience experience of doing
51:56this and knowing what is going to be the
51:58things that you should prioritize in the
52:00first couple months after an investment
52:02to make sure those dollars are are put
52:03to good use um and so that's why we do
52:06deep diligence so that we can we can be
52:11partners amazing thank you so much for
52:13the transparency Emily um I think we'll
52:15have a couple questions I think will'll
52:16be just sort of like rapid fire uh to to
52:19kind of end the session um sure so um as
52:22I was asking about the multiples that
52:26uh more on the consumer side I know this
52:28is like not your area of expertise but
52:30uh do you see um kind of a larger range
52:34of um kind of consumer multiples um just
52:37I don't know uh anecdotally I know it's
52:40not your area of focus yeah so I I don't
52:43even want to speak to it because I know
52:45it's a have higher multiples typically
52:47than than B2B but I don't know enough on
52:50that world to speak to it but I from a
52:53multiples with the edtech world at the
52:56of Boom times last year I think it was
52:5917x on your Revenue um recurring Revenue
53:03not the service revenue and then now
53:06it's back down to around five to
53:08seven I'd say preced U we have seen like
53:13a crazy crazy range too like it depends
53:16a lot on the uh but we've seen companies
53:18with out any meaningful Revenue rais
53:21like large seeds last year U and those
53:24are not really happening anymore they're
53:26kind of rare but um but yeah it's all
53:28over like it changes a lot but um but
53:33yeah thank you for for sharing Emily um
53:36sorry to answer that one that well no no
53:38worries like it would be really
53:40interesting to get um more yeah like
53:43just get get some data on this I think
53:45we' be well positioned to take some of
53:47this data um so uh Liza was asking about
53:51uh investing in a venture uh recognizing
53:53that there needs to be a change in
53:54leaders ERS ship or a key you hire is
53:56this um kind of how do you weigh in into
53:59your analysis uh for for
54:02investment yeah so um it is not uncommon
54:06at the stage that we invest that the
54:07full leadership team isn't built out so
54:10it's not a negative it's more
54:13uh are you the type of founder that can
54:16attract and retain the right people to
54:18fill those spots and do you recognize
54:21that you have gaps to fill um if it's
54:24like you know we had this founder or we
54:27were co-founders and this one wasn't
54:28right and and we they moved on it's no
54:31big deal that happens it's more like and
54:34now we have these gaps and these are the
54:37responsibilities that I'm really good at
54:38and these are responsibilities that
54:39others on my team are really good at but
54:41here are the gaps and here's how we're
54:42going to go about filling them or here's
54:44where we need help um and that's that's
54:47a positive for us because it shows like
54:50you have awareness and it also shows
54:52you're going to be a good partner and
54:54and you want ort and you're going to
54:55seek it from the right
54:58places thank you Emily um I think we
55:00only have time for one more question and
55:02I thought Rob's last question was super
55:04relevant um which is what are you what
55:07are you seeing in the fundraising uh
55:09Market in 2023 um any yeah any advice
55:14for for Founders um as as they kind of
55:17think about fundraising this
55:19year yeah I think it's
55:22um some of the things that we're seeing
55:25is as Hero's Point like a rational the a
55:28rationalization of the market of things
55:31are not the valuations aren't wildly
55:33high right now um and that's namely like
55:36just to like simplify it is the m&a
55:39market isn't as active so there's not
55:41homes for all these companies to be
55:43acquired or you know have an IPO and so
55:47it's going to until that market comes
55:50back it's going to take time and so the
55:53impact of that is that valuation come
55:55down they're not as hot because there's
55:57not all these places for them to land um
55:59and people to get their return and then
56:02the other impact of that is Founders
56:05have to be really cognizant of um cost
56:10and keeping their burn low so that they
56:13Runway so we're looking like you know
56:17when I I'm I've only been doing this for
56:18two years or two and a half years and
56:20when I first started or a little after I
56:22first started because I started right at
56:26after the scare of the pandemic and
56:29people and Tech kind of started to have
56:33um you know you you burn a ton of money
56:37because you're making a lot and you have
56:38a Runway of 12 months and then you go
56:39out and you raise again and it's it's
56:40not a big deal but now in the investing
56:42world you're looking like can you have
56:44at least two years of Runway because
56:46there's so much uncertainty of what the
56:48Market's going to be next year or even
56:50the year after and so you want to just
56:52you're entrepreneurs are more in
56:54survival mode of how can I I ex you know
56:58work with less to go
57:01further amazing thank you Emily um I
57:04know we didn't get through all the
57:06questions but uh hopefully these were
57:08these were the most relevant ones so uh
57:10thank you so much Emily for the
57:12transparency for just uh sharing your
57:15insights uh with us and uh yeah it was a
57:17great session so thanks everybody also
57:19for for making the time um Emily I think
57:21you've been to a good number of uh
57:23events at transend so you know that we
57:25close our sessions with a go team uh so
57:27if uh if you can please join us we'll
57:29put the hands in the middle go of mute
57:31when we can and the kind of three we're
57:33gonna go go team so three two one go
57:37team team thanks everybody thank you all
57:40so good to meet you thank you
