FFW x Kelley Arena - Golden Hour Ventures - Full Ep
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[00:00:00] Hey, business besties. Welcome back to the Female Founder World podcast. I'm Jasmine. I'm the host of the show and the person behind all things Female Founder World. Welcome to the show, Kelly. We've got Kelly Arena from Golden Hour Ventures here chatting with us today.
You are now entering female founder world with your host, Jasmine
Garnsworthy.
For people that don't know Golden Hour Ventures, what are you doing?
What's happening over there? What are we doing over here? Um, we are investing in female founders and really trying to get more women on cap tables generally as well. Okay, so more women investors and more women invested in. Definitely a two pronged approach. And I think the lever we're pulling is aggregating more women investors to identify as capital deployers.
with the broader mission of getting more capital in the hands of founders that are women. Amazing, because we all know the stats. We do. Less than two percent, and it's going down. It's getting worse. Investor money is going to women owned businesses, and yeah, we're not seeing improvement. Um, so [00:01:00] the work that you're doing is very important.
This is a community of women owned. Women business owners. And so I think everyone's got a lot that we can learn from you today. These are definitely my people. Yeah, these are your people. Um, talk to me about like the background. How did you get into this kind of work? Yeah. Um, the short answer is like through the side door.
The longer answer is I, you know, traditionally had worked in Male dominated field. So I, it's like such a hashtag right now. You were an investment banker? I was an investment banker. I worked at a professional football franchise. I worked for a big pharmaceutical company. So really had experience what it was to be one of like the only women on a trading floor, only women in a sports franchise, and you know, started to become a little bit disenfranchised with how cultures were built for women and, you know, really started to think about why that was the case.
I left investment banking when I started a family, for obvious reasons, like culture wasn't compatible, and started to consult, um, I [00:02:00] like to say that's what we do when we don't know what to do with our lives, and was really working with founders who were product folks and creative folks, building their business plan and, you know, financial forecast and modeling, and through that lens started to see the difference between how our male founders were accessing capital and how our women founders were accessing capital.
And again, started to see, like, things were starting to come together, like, Oh, no wonder there aren't cultures built for women, because the earliest stages that get funding are generally men. So the hypothesis that I developed now and has guided my work since, um, is that it's really a fragmented network.
And, uh, the capital deployers of the world really kind of look like one type of person. And by capital deployers, you mean investors. I mean investors, yeah. I mean, and more than investors, I mean people making the decisions around who gets capital. So I use that term because You don't have to be a professional investor to be a capital deployer, right?
I work with angel investors all the time who are writing small [00:03:00] checks, but it's not their primary job, but they still get to choose, you know, what companies get access to their capital. Okay. So the person who is deploying this capital, making these decisions looks like a very specific Yeah. kind of guy.
Yeah. Typically, typically white men. Yeah. Right. So that's solving for one kind of problem. Um, you know, we all, we all have biases and what we see in the world and, you know, My hypothesis was that if we had more women that were capital deployers, they would be looking to solve the kind of problems that they identified with, which would kind of naturally use bias to kind of shift the way capital moved around the ecosystem.
And if you also look at the, um, I'm not going to, I'm going to butcher the number if I tried to remember exactly what it was, but the way that women control consumer spending and then over 80 percent going into women led companies, it's like the disparity just does not make sense. Exactly, right, right. So women control over 80 percent of consumer spend and yet the products that they're buying are largely Developed like by men and marketed to them.
[00:04:00] So it's just I hate this so much so much You know my other thing that I hate that really like let's just let's just talk about everything that pisses me off but one of the things that really pisses me off is when I see and like I have a son. I love men. I love you. If there are any men listening, I love you, but Please do not create a beauty product for a woman that is targeting some insecurity that they have and you're gonna profit off it and you're going to like build this big company and get investors from other men and then leave the space for Leave the space.
Like, leave the space for women to be able to, in vetting, to solve their own problems. Because there are enough of us out here trying to do it who just, like, don't have access to the capital that we need to be able to scale and compete at that level a lot of the times. And so every time I see a beauty company raise 10 million and they have, like, three men on the founding team, I, uh, yeah, like, I, I die a little bit inside.
Yeah, I think the better call is if you see an opportunity in that space, invest [00:05:00] in a women building unit. Yes, if you think it's a great opportunity, go be an advisor and give them some money. Exactly, exactly. And let the, let the women be the leadership team. be the consumer, drive the innovation and the space.
And also because they'll just like do it better than you are. I was just talking to Barbara from Ceremonia just before this conversation and, and she was talking about how, you know, she is the customer for her business and what a superpower that is. And I think so many women in our community are building for Uh, people just like them solving a problem that they've experienced.
And she was, she was saying, like, if you're looking at data to make all of your decisions as an innovative business, you're already behind because you're looking at, you're looking at something that's like already happened, whereas if you can also bring in a level of like. intuition and personal experience, then you can be the one setting the trends and moving forward.
And I was just like, that is such a great way of like clarifying why we need women to be building in these spaces. It's such a great take. And I'm a huge believer in [00:06:00] using data driven approaches, like with your decisions. However, data is a terrible marketer, right? What you need to market is real human connection, identifying with the problem, understanding that there's other folks that also identify with the problem.
And um, you can't. Do anything with a consumer business unless you really have strong marketing and storytelling and, uh, and a why, right? Data doesn't, data can give you numbers, but it doesn't give you, uh, that point of connection, which is your why. I want to talk about your actual business now, like Goldeneye Ventures.
How does one start a company like this? Right. Well, um, going back to my hypothesis was that we just need women to make more decisions. I started to put my own money where my mouth was. And so, you know, through my own investing experience, investment banking, and just, you know, kind of building my own financial literacy, um, carved out it.
A bucket of my own capital, but I wanted to invest in women, so I started to do that just as an angel. I really kind of caught the startup [00:07:00] bug when that happened. I became obsessed with being a part of early stage companies and being part of the builders and working alongside of the founders to, in the branding and the naming and the customer acquisition strategies and the focus group and it all became so intoxicating and wonderful.
And then from there. As us women do, you know, kind of got my friends involved like, Hey, have you seen this deal? Have you seen this deal? And like, again, I was learning that we're so socialized as women to talk about like, I love your boots. I love your handbag. Where'd you get that lip gloss? Oh my God, your hair looks fantastic.
But it was more gate cap to talk about. What we're doing with our money or is our capital going? What are you investing in right now? Are you looking at this? Like, what do you think about crypto? So the private markets, um, was another space. It just felt like we weren't talking about it. So as I was like getting my friends involved in different deals that were all like high net worth women and accredited and really empowered in their careers, but yet felt really hesitant to write checks.
I was like, how could I tackle this? It [00:08:00] became like this really sticky problem for me that I wanted. I knew I wanted to spend my life working on it. So from that was the genesis of Golden Hour, where I was just dedicated to really building up a network of angel investors that were accredited. I can define that if that's helpful.
Being an accredited investor means that you make 200, 000 a year, 300, 000 as a household or have a net worth of over a million dollars. Then you are accredited by SEC standards. There's no like test one has to take. It's kind of just a definition test. And then you're able to invest in the You don't get like a certificate.
Exactly. There's no like, Yay, I'm accredited now. It's just you kind of self attest, check a couple boxes, and then you are empowered to invest in, in private companies. So really started to build out that network and focused on sourcing what I believe to be really high quality deal flow and then essentially syndicating out that deal flow to my network.
So, that's how it started, and it's still how I deploy capital today. It may not be how [00:09:00] I do it tomorrow, but, um, I'm really attached to this model because it allows me to do those two things that we talked about at the same time. I can build, um, education around angel investing and being empowered with capital.
And I can divert that capital to founders that I really believe are building companies that are making the world a better place, which generally happen to be built by women. Yeah. Amazing. Yeah. Okay. If somebody is listening to this and they're, they want to raise money and they just want me to get straight to the, straight to the questions about how does someone get a check from something like Golden Hour Ventures or a firm like this, what are you looking for in the companies that you invest in?
Yeah. I mean, That's, that's such a big question. Um, in fact, Annie, who you know and has been on the podcast before, Annie Evans from Dream Ventures and I have like built content around this in the form of an accelerator because there's so much to the fundraising process that is also [00:10:00] gatekept, right? You know, like, how do I know what note to raise on and how do I?
What's this? How do I build my investor's CRM? And what's a cap table? And how do I think about deletion? Well, I'm going to ask you all these things. Oh, great. So you're going to have to go through them. Perfect. That's great. That's great. That's great. Um, but I'll say, I'll start with my mandate for myself, and then I can talk generally about the fundraising process if that's helpful, but, um, for Golden Hour, specifically, I'm really looking at, Um, companies that are about C plus to series A.
So a little bit de risked on the early stage side. And the reason for that, again, it's like, it's not my assets under management. It's my precious, precious network of accredited investors. So I really want to have something that has a little bit of product market fit or honing in on product market fit that has some real revenue under its belt.
Like what? Like what does real I'm looking for Uh, five plus. Yeah. And our last few investments have been like closer to 10. Yeah. Um, at the series A stage, but, um, in our C plus we're looking around five. Yeah. I'll take some flyers on things that are earlier stage, particularly if there's like a tech [00:11:00] component and like looks a little bit different, but, um, I like to see 5 million IRR.
Really, it's about the founder always first and foremost. And if we talk about what I look in founders, it's someone who is a product obsessed, really someone who needs this to be their job and their role in the world. Um, I know there's founders that identify this white space and now I would like to fill it.
That's often not the founder for me. I want a founder who is obsessed with the product, who wants to iterate on it, wants to make it the best in its class, and almost doesn't feel like work. Like we all know that being a founder is The most work always, but if you're not obsessed with it and need this to exist, like you will burn out.
You have to have a really strong why. So I look for that first and foremost and my founder, like you can, you can, you just can tell. Yeah. You're talking to someone like, oh yeah, they, they've got it. What are some companies that you've invested in that we would know? Yeah. Um, most recent was, [00:12:00] um, Brightland.
Yeah. Yeah, which is California olive oil. Um, Hey Jane provides abortion care and digital health platform. Um, amazing founder. Um, Within, which is a acupuncture studio here in New York City with three locations. We had them at Summit last year. Yay! That's right. Doing ear seeds, yeah? Right, exactly. They also have a consumer brand as well.
Um, you should get their body magnets. They're amazing. Yeah, they just launched. Um, Vareo, which is neuroscience backed fragrance, my first beauty investment actually, so you can spray scents all over you and also change your mood, manifest while you smell amazing. , I can never list off my portfolio companies under, 26 now between Golden Hour and my personal investments.
Yeah. , and I always feel like everyone's like, name your portfolio companies and I blank. We can go to your website. You can go to my website and check them out and shop all of them. I'm going to ask you about the process of fundraising and how people do this and [00:13:00] your advice.
But first I want to, you, you mentioned the, the type of founder and the stage of business that you invest in. But for people who are at idea phase, like what do you recommend to them to get started? the cash that they need to get this thing off the ground. Because I hear this so much in the Fema Foundable group chat.
And if you guys listening, if you're not in it, download the app on, um, it's on iOS now. And it's free, join the group chat. But one of the conversations I hear a lot is like, but I'm just starting. I'm not eligible really for many grants yet because they want to see traction. No investors want to invest in me yet because they want to see traction and I don't have a network.
Um, and like, I'm not really sure how I'm going to fund this thing. So like, for someone who comes to you with an idea, what advice do you give them on how to get the money they need to get it off the ground?
[00:14:00] [00:15:00]
Yeah. I'm going to give a little bit of a hot take here. Yeah. I think part of that unlock of getting the capital to fuel your business, it's almost of a little founder test.
It is difficult to access capital if you don't come from privilege or generational wealth or have, you know, I call it like rich uncle money. You know, like if you've got a rich uncle, I highly recommend you hit them up. Yeah. Right. That's it. That's it. That was the first, if I want to be quite pragmatic about it, I would say the first thing is like, go to your friends and family.
They call it friends and family, but it means, you know, essentially anyone. Professional network. Go to your professional network. Bosses that you used to work with. They can like believe in you. Yeah. And have a solid pitch. Ready? Like, start your pitch deck. There's like plenty of templates out there. Like, we've got one.
Build a pitch deck. Really flesh out your storytelling and your why behind the vision of your brand. What it could be. Understand the market. Like, understand the market really, really well. Be able to pitch to how big this could be. And go to [00:16:00] everyone that you know that believes in you. And that has cash and see if you can cobble together 30 to 50, 000 to get a prototype right to get to formulation to get to anything that's tangible once you're tangible in some way becomes like easier to sell.
I will acknowledge that there is such a gap in privilege and that. early stage in whether you have access to initial capital to get your funding off the ground. And it frustrates me to no end. There are grants available. But again, as you were saying, so often they want to see you post revenue and they want to see you attraction.
But part of part of the game. If you want to have a, an investable business, if that's the dream for your business, not saying everyone has to, there's lots of, you know, bootstrapping ideas out there. Part of the game is like being resourceful. If you can be resourceful enough to find the money to get your idea off the ground, then that's a really, really great signal, even for me as an investor, to know that you're going to be resourceful enough to actually take this business the distance.
So it's a little bit [00:17:00] of a litmus test, like just tell yourself that I'm going to do it and start there and then pragmatically Grants, friends and family, um, debt, credit cards, loans, there's a couple of, you know, venture funds that are kind of pivoting to like the loan space too. Also, debt is a little bit sexy right now because there's actual real return from the investor side.
Um, there's syndicated debt platforms out there like the Kick Brothers of the World, Fearless Fund has a loan program right now. Um, And I would say there's also, you can look to your equity, not your equity, your product crowdfunding sites, you know, to see if you can sell your vision that way to people. I think there's a, there's a group of people who are real junkies for the innovation stage and like tap into that.
Reddit, community, start with social media. Um, I think that that's a great way to prove traction when traction doesn't exist in the form of product sales. Do you have social proof? Right? Do you have people that are engaging with your ideas? Can you start to create content? And [00:18:00] everyone's a content creator now, but it's, it's meaningful.
Do people care? Like if you can show people care, then you can get capital. There is money out there. There is money out there. Just remember that. There's going to be so many people telling you that. Tattoo it to your hand while you're fundraising. So much. Many out there, whenever you feel stuck, this is if you take nothing away from all of my blathering words, if whenever you feel stuck, expand your network, get out from behind your computer, get out from your zooms, go places, go to South by go to Basel, go to places where the money is like stay with a friend.
Get in rooms. Join a tennis club. Join a tennis club. Just get out there and shake up your network. I promise you, things will start to break and move. Just expand your network if you feel super stuck and frustrated. Okay, for people who are new to the fundraising process, walk me through what that looks like.
Yeah. Well, it looks different for every founder is the annoying answer, but I would say, meaningfully, if you think, okay, here I am, I need to raise capital right now, where do I start? I would [00:19:00] start with building a business plan or a financial model. I'm saying this because I come from a financial background.
It's really important to me, but I think numbers are a crucial, crucial way to storytell. Yeah. So, um, obviously if you've got, if you are post product and you have, you know, financial reporting, you want to have a really tight reporting around your, your P and L, your balance sheet, what you owe, what you have.
Um, but I really. want to see from a founder, a nice thorough set of like three to five year financial projections, acknowledging that it's totally made up, but it will show me one, what you think the capability of your business is. And ideally that can be a starting place for like, well, why do you think you're growing from here to here?
And like, why do you think your expenses are this? Where do you think you're going to acquire customers? Like how is that accounted for in the numbers? For me, that's kind of a nice, um, it's almost just like a poster for talk me through how you're thinking about your business, as opposed to asking 1 million questions, I can, I can see it in the numbers.
So I would say, start with a financial plan that you can really [00:20:00] understand, like what levers you'll pull to grow a business. Um, the other thing I would say, if you're fundraising, you better be really clear on how you're going to use that capital, not to just fund the operations of your business, but how you'll scale the business.
I see this as a, as a big mistake when I'm, when I look at Dex all the time, it looks like, okay, so we're burning a hundred thousand dollars a month. We're raising a million dollars. So here we go. We've got like 12 months of runway and like, that's great. I'm like, okay. But as an investor. When you put that hat on, when you're investing in a company and your valuation is X today, I want that to be 2X in 10 to 18 months when ideally you're going to be raising again or you will have grown in some way because that's how I get my markup and set the trajectory to my eventual exit and liquidity and my payday.
So when I see founders just saying like, well, I need to raise money so I can fuel the operations of my company, but they're not thinking of how I can parlay this investment into. [00:21:00] Um, And so what are some of the ways that a, that a founder might be saying that they're going to do that? Is it through like securing a retail partnership or like what are some of the things that that might look like?
Yeah, I would say retail partnerships is a big one. If you're a consumer brand, um, really thinking through your. channel strategy, right? If you're like going into a retail partner, but that means your margins will decrease significantly from your D to C presence. How are you also kind of funneling marketing dollars to build those relationships with your customers in a D to C way?
Or how are you going to manage velocity once you get into that retail partner, right? Getting into retail partner is only one small part of it. How do you support that once it's there? Are you thinking through the costs associated with that, including the marketing, the sales? Um, maybe it's team. I don't like to see a ton of dollars going to team early on.
It's one of the fastest way to burn through capital in a hurry. But if you're like, I know if I bring on one salesperson that maybe is making a flat fee a month and they're getting a percentage of [00:22:00] every sale made, then I can increase my sales by, you know, 10x. And like that, that's a very clear way of saying investing a little bit.
Is exponential and it's return like I want to see that formula happening. Maybe it's, you know, maybe it's marketing and even if it is marketing, like, please don't give me a pie chart that says like 20 percent marketing, 10 percent team. Like I don't want, I don't want that or like 20 percent product development because that, that shows me nothing of how, again, you're going to get that exponential return.
If it's marketing, I want you to say. Okay, well we're spending 2, 000 a month on our ShopMy platform and we brought someone in freelance that's going to engage and all of our influencer and like you, organic creation, organic content creation, and that will, we predict that that will give us the da da da da and TikTok shop and like So get more specific about the tactics that you're using for this growth.
Granular growth is what I want to see. And are you putting all this in a deck? All this detail? No, but you better be able to speak to it [00:23:00] really, really clearly. So if you've got that pie chart, when you get to that slide in a conversation, I want you to be able to really, really speak to it. Yeah. Yeah, and I think I see that a lot that, like, well talk me through, like, what you're going to do with this money, and it feels unclear.
Um, or it feels really just high level and nebulous as opposed to someone coming in with like a, like a really precise plan. And this plan is going to change a hundred times too. I know it and you know it and the founder knows it, but that's okay. It's just, it's the, it's the having a plan and the roadmap to get you to the next stage, which is really impressive to me as a founder, as an investor.
Amazing. Um, my next question for you is for people who don't have that network. You mentioned like, uh, Trying new things, getting out there and, um, expanding your network so that you can get introduced to more investors. How do you think that once you've made a connection or you've identified who you want to invest, how do you reach out to them?
What's the process? What does that look like? And what materials do you need to have [00:24:00] ready? Yeah, that's such a great question. I feel like someone could do a course just to like networking one on one and staying in touch. Every investor is going to have a different preference. So again, start with that annoying, annoying answer.
One thing I will say that I think is really, really important is that just like every other industry, Uh, The venture capital, the investor networking, it's relationship first, it's relationship first. I beg of every founder listening, if you're an investor event, don't walk up to someone and just start pitching them.
I find it to be It's a little bit rude, but also it's dehumanizing and it puts this power imbalance in place right away that shouldn't exist, right? There should be no power imbalance in a conversation just because I'm an investor and you're a founder. We're two humans. Yeah. So if you see someone that you're interested in connecting with, go and just have a conversation like, Hey, introduce yourself.
Yeah. Sure. Tell them where you're from, but then say, what are [00:25:00] you investing in right now? What's, what's interesting to you? Maybe you get the in that way, right? If they're like, well, I'm investing in, in B2B SaaS. Well, then you're going to save them the conversation by pitching them. And instead, you know, learn about what they're investing in and like hear from them and be like, Oh, cool.
Actually have a consumer brand. And, you know, this is what we're building. And she's, and then say, anyone here you think I should connect with? Use your, your relationships as just a way to get more relationships in a really authentic way. It's a generic answer, but I've, I find that the folks who do the best, it's the skill set.
It's a little salesy, it's a little schmoozy, but be likable and get to know a person as a human before you pitch and start making offers. Um, As far as like a professional system of fundraising, I'm a big believer in having a tight CRM. If you're one of those people that have an encyclopedic memory of people, God bless you, but I use, you know, [00:26:00] I use an Airtable.
And the CRM is literally where you're tracking who the investor is, where they work, when you last spoke to them, your outreach. It can just be a Google sheet, right? It can be a Google sheet, it can be a spreadsheet. I would not, like buy a system for this, just use whatever you can get up the curve the fastest with.
So whatever you use currently, um, and every conversation you have, every target that you have, make notes of them and your CRM. If you have a conversation with them, even if they're a no, keep notes. In your, in your CRM and, you know, make a, I want to follow up with them in six months. Set yourself a reminder if they wanted you to follow up.
I'm also a really big believer in, uh, the investor update, even with people who are passes just so people can follow you along on your journey, particularly if you're not like one of those public builders who is like documenting Tik Tok and Instagram. Set yourself a goal to make a quarterly update, and I think this serves two purposes.
One, you get to kind of put a stake in the ground with someone you had a conversation with, and you get to keep [00:27:00] them apprised of what's going on without constantly reaching out to have like a catch up or a one on one or a coffee. Smart. And if you're like, hey, this is what we set out to do in this conversation, and then, you know, four months later, they get that update and they're like, oh my gosh, wow, they really, they Got that target partnership and like, wow, their formulations.
Don't worry. Wow. That branding looks incredible. So you're kind of building with them and also kind of making good on the promises as you go, which is kind of a way to build credibility as a founder. So don't take nose as a. A pass for always. Tech Nose is like, great, you're gonna go on my investor update and you're gonna follow me from now until the end of the year.
If you fundraise once, you're gonna be fundraising again. I was fundraising, baby. ABF. Um, you mentioned before like, founders who build in public and posting on TikTok and whatever. What are your Do you have any strong thoughts about whether that's the way to do it? Does that, do you like that? Do you not like that?
Like, how do you feel about founders that are the face of their businesses? Because I feel like all of us are now. All of us are now. Yeah. I think if that's your skill set and it [00:28:00] comes naturally to you, you would be crazy not to employ it. Yeah. I understand that it's not everyone's skill set, and if it's this massive curve that's taking you away from actually building your business, it's okay.
Founders are snowflakes. Lean into your skill sets and what you do really well. I think being self aware as a founder is, um, It's really important and you can bring in people to support you in the place where maybe you feel a little more challenged. So if you're not a natural content builder and that feels really stressful and taking time away from you being an operator, then don't.
Hire a Gen Z. Go to home from college and get a Gen Z. Yeah, exactly. Right. Or let your product speak for yourself. You don't have to be the face of your brand. It does help. Yeah. It does help if you're great at it. Yeah. If you're terrible at it, it can sabotage business, too. So, like I mean, luck with everything, don't you think?
If you're terrible at it, bring in some expertise. Yeah. Okay, I want to talk about, you mentioned before, like, um, the different ways that founders can kind of, like Get that scrappy cash together, but one of the things you mentioned is debt [00:29:00] and I think it's not just early stage founders that are using debt like at all different levels and I want like I'd love you to speak a little bit more about that and what it looks like because I think it we don't we don't hear about that as an option as much as we hear about this like No one's announcing in Business Insider that they just borrowed a million dollars.
You know what I mean? Like they talk, but if they raised a million, like that's getting announced. So like we don't hear it in the same way, but often it can be the smarter decision. And so I'd love to know your thoughts about debt and who should use it and when and how. Yeah. Um, that's so interesting. I never thought about that.
No one's like, just got that big two million dollar SVV loan. Right. But I see it happening all the time. And it's, it's often smart money. Well, it's also particularly later stage, right? When you're looking not just at capital infusion, but you're looking at cap table dilution, right? And so when you're looking at taking in capital, you have dilutive capital, which is where you're giving away equity in exchange for capital as well as non dilutive, which is a grant [00:30:00] money or anything that looks like debt or loans.
So I think when you are navigating, like maybe you've just raised around and you really want to fuel some operations and use your investor capital for growth. I mean, it's all fungible, but thinking about it that way, um, where you could take in some capital to maybe fulfill some purchase orders or maybe finance some inventory without actually giving up ownership.
It makes a ton of sense. Like the last thing we want to see as an investor or a founder is getting to the A and B stage and, you know, owning You know, 30 to 40 percent of your company and then how incentivized are you to kind of take it the distance at that point. So I want to see a really heavily capitalized founder or co founder.
As far as early, early stage, you know, when you're just getting off the ground, I think some of the, some of the best sources are like literally going to your local bank, you know, to your credit union, um, you know, talking to the bank of your parents. I think that. If you're younger, I think that one of the things you have to look out for is like personal [00:31:00] guarantees and tanking your own personal credit.
Yes. I'm meant to ask you about this. Yeah. Because I think we see this a lot, um, for, I think particularly with women led businesses because of the lack of access to, uh, to, to investors and, and funding that often, like businesses are being grown through credit card debt. And like the quickest, most accessible debt that they can get and a lot of it, women are taking out like personal guarantees and I don't see that happening with male led companies as much and I'm, I'm interested in that.
Yeah, I wish I had the solution for this one. I think sometimes It feels like the only option to go to credit card debt or to go to these personally backed loans, and I've seen it work out for folks. I think when we talked about investor capital, we talked about how are you going to parlay that into extra value.
When it comes to debt, I almost want you to think about it as like, how are you going to replace it with revenue dollars? So, Yeah, it'd be great if you can parlay it into value, but at [00:32:00] minimum, how will you be able to replace debt with revenue dollars? Like think of it almost as a lien on your revenue as opposed to like, I'll just borrow it and like hope that this all works out.
Right? So an example of that would be if you get, um, you secure a retailer and they, they are placing an order, you don't have the cash to fund that immediately. So you're like, okay, I can borrow that knowing that in 90 days I'm going to get this money back. Something like that. Absolutely. Yeah. Like thinking it from like a balance sheet perspective of like, where will I backfill this from?
And if that answer is really nebulous to you, I would sit with it for a second. Right? And then you have to, then it becomes very personal, right? Then you have to zoom out and think about your personal finance, your whole picture, right? As it relates to, are you, like, are you still working? Is there income that can replace this if it doesn't work out?
Yeah. Um. I'm a, I'm a big fan that women should take risks and big swings, but really smart, calculated risks as well. Yeah. Um, and also again, like if, if you're [00:33:00] not, if it's, if you don't have revenue dollars to back that up, maybe sit for a second, maybe start with community, maybe start with, social proof, maybe start with, you know, building your Instagram account and building with a community.
And once you have some proof, maybe that's enough to get you a friends and family round. Um, if you can do that, if you can cobble together like 50, 000 to get an idea off the ground before you're taking debt with a PG or personal guarantee or, um, you know, actually like institutional capital, I'm a big fan and syndicated out.
Where do people, uh, go to get business loans? Um, again, credit unions, your personal bank, um, obviously there's, you know, the big banks of the world, you know, Bank of America and J. P. Morgan, um, there's a lot more debt facilities. I have a, actually, I have a resource I'm like happy to share with you and your community too that are a little more like, I would say, alt loan structures.
They're like syndicated debt. There's some that Uh, [00:34:00] specifically sourced from donor advised funds that can actually have like a reduced interest rate that's meant to kind of serve like women founded businesses or black founded businesses. So there are more like alt debt sources popping up right now, especially in light of a higher As in like alternative?
Yeah. Yeah. Yeah. Yeah. Exactly. That don't look like your traditional banks, credit unions, credit cards. Okay. We'll definitely share that in the group chat if you're happy to. For sure. Happy to share it. That sounds awesome. Okay, the question, this is, this is a big question.
Answer it however you feel comfortable. For a business that does go the venture capital route, and for an investor that comes in at the seed stage, I want to know when the company eventually has whatever the liquidity event is in however many years time. What does success look like financially for the investor and for the founder?
Like, what is a good outcome? Because this is what we see. We see headlines of XYZ sold a company for this much. And [00:35:00] then I'm sitting here thinking, okay, they've hustled on this for 10 years. They've like. Um, probably not taking a salary for five, like what, but how much money did they get? Was it financially worth it versus if they just stayed working in investment banking or whatever they were doing, or if they worked for a startup and just got equity that way and got built wealth that way.
So I want to know like, what is a good outcome? What's the best case scenario that we're working towards here? I mean, Siete selling their chips for 1. 2 billion. I mean, okay, yeah. That's the, I mean, the best case is you're, you know, you're one of the, you're a unicorn, right? And you have a billion dollar valuation.
Like, what is success? Like, from a venture perspective, it's, it's easier to answer than from a founder perspective, to be honest. From an investor perspective, you know, the way venture has And I think that's something that's entered into the consumer ecosystem has been really interesting to watch, right?
Like there's a reason why venture existed mostly to fuel tech companies because those outcomes were almost [00:36:00] binary, right? They're like big pops or big fizzles and not a whole lot in between. In the consumer space, I think earlier on when you saw that D2C bubble, you did see these like big pops like the Warby Parker's of the world and the, you know, the like Casper's and all of the these like D2C darlings.
Um, The world has changed a lot since then, so now a consumer exit looks like a lot of different things, right, and sometimes they're not lovely, sometimes they're kind of just like a return of capital to investor and the founder kind of like takes their meager winnings and goes home and maybe they start again or, um, maybe not.
But like what does success look like to you as a founder? It's so deeply, deeply personal. Right? And part of it is, again, like understanding your own risk tolerance and am I willing, it's like why you have to love what you're doing so much, am I willing to love what you do? Bet it's not just my, my, you know, my money here.
It's [00:37:00] opportunity cost of your career. It's your career. It's your opportunity cost of investing in a different career and in a job that pays benefits in a 401k. Do you have a family at home? You know, it's, it isn't for everyone. It is a high risk, high return type of. of business, both on the venture side and on the founder side.
So I don't know how to answer that from a founder's perspective. I would like you to be able to 100x your investment of like time, energy, capital, resources, blood, sweat, tears. Right? Is there, when we like read headlines about what What a company sells for at the, you know, whatever the exit is. Is there like a percentage that you look at and you're like, okay, the founder probably got X percent.
Is there like a standard amount by the time we get to, by the time we get to an exit? Yeah, I know this is a big question, but it's a good one. It's a good one. And also these things are, aren't often. public, right? This is the thing about private markets too, [00:38:00] it's so opaque. It's not public and it's also not spoken about even if you know the person.
Exactly. They're not going to tell you. When I say this industry is gatekept, it really truly is. And you have to know, oftentimes these accents aren't even publicized, right? So, you know, there's often founders who are like, yeah, I exited this company, I exited this company. But you know, if you know, then.
Exit actually wasn't a positive one, but you still get the, yeah, you still get the badge of saying I have like an exited company, which is meaningful, truly, that there's, there's pride and success in that too. But was it meaningful to the founder? Like, I don't know. Are you going to disclose, like, what percentage of the cap table you had upon exit?
Like, probably not. Like, I would never, right? Um, so. The answer to that, um, no, I don't read a headline and say like, Oh, I bet the founder walked away with, you know, 600 million from that sale. Right? No, I very rarely can tell unless I have someone on the inside who understands how that went down. I mean, sometimes, sometimes [00:39:00] like the writing's on the wall and you see these like companies that bootstrap their way to 100 million before they took like their first round of PE capital and like those founders are amazing.
Yeah. Right? And there's some, we all know the big bootstrapping, like, case studies, which are really fun to, like, watch and, and dig into, um, I'm assuming that they made bank, right? Because they waited a really long time before taking investor capital, and, like, that's the, the upside to pausing before you take an investor capital is that you have 100 percent ownership, but 100 percent of, you know, Zero is zero, so it is best to, you know, get some capital in and have some real valuation and have a percentage of something that's real if you see it going in the distance and you think that you're a venture backable company.
The last thing I want to ask you, Kelly, is for a resource recommendation for anyone who's interested in, uh, finding ways of financing the company. So I was going to ask you specifically about fundraising, but let's like be a little bit more broad. What's a resource that they should go and check out? This could be like a download or a [00:40:00] tool or something that, that, um, you've created.
It could be an, uh, a product, it could be a habit that they should take up, like something that they should go and, um, go and look into if they're like interested in growing in this area. Yeah, I would say don't sleep on your current team around you if you're there, right? Do you have an attorney that you work with to get to your LLC docs and and your copyright like talk to them first?
Like what they're so tapped in to all of the founders that are currently incorporating and fundraising and they're doing their safe notes and convertible notes Talk to your attorney see what resources they have on offer what they've been seeing inside their ecosystem If you've got a banker, even your, you know, go to your like local bank or something, talk to someone there.
It's like, what's on offer for small businesses. Go to the small business administration, whatever country you're in, like whatever. I know Canada has a ton of resources. We do too. They're a little bit more nebulous and hard to work with. There's also state venture funds and a lot of our states [00:41:00] in New York has one.
I know Connecticut has a thriving one. Go to them. To see both if they're interested in investing, usually they have mandates to invest in companies that are in their current state. I would talk to them. Also, they're tapped into the resources that are available to grease the wheels of entrepreneurship in their own state.
But there are like federal and state programs that I think get missed all of the time just because our government isn't great at advertising. Yeah, I need to get all these into a list to share with people. Yeah, and we have, we're working on one right now too, the capital playbook that will be coming soon.
So I'll send it your way. That is really great. Exactly that. Trying to roadmap all the different ways to access capital. That is so valuable. Start, like, hyper local. Like, literally look around you and, like, your parents, bankers, your, you know, your insurance provider, um, your 3PL, like, anyone that you're currently working with, just start having conversations with them because they're talking to all of the same, um, all of the same folks, right?
They're really tapped in. Kelly, thank you so much for chatting with me on Female Founder World, and thank you for the work that you do supporting female founders. We love [00:42:00] it. Thank you for the work you do.
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