In this thought-provoking episode of "Venture Declassified," hosts Mike Kelly and Jacob Schpok, alongside guest Ben Pidgeon, delve into the complexities of investment decision-making in the venture capital world. This episode shines a light on the critical factors that influence whether to continue funding a company or finally "wave the white flag.

The discussion starts with the importance of not relying solely on pipeline slides, which Mike Kelly criticizes as potentially fictional. He emphasizes past performance as a key indicator of future success and stresses the need for recent achievements rather than mere future promises.

Ben Pidgeon brings up the founder education dilemma, highlighting the point at which early-stage investors must decide if continued investment in educating the founder is worthwhile. Real-life examples are shared, such as a company keeping the same big clients on their pipeline slide for a year, which Kelly uses to illustrate how tangible progress can outweigh stagnant predictions.

Jacob Schpok and the team then navigate the nuances of bridge round considerations, underlining the necessity for strategic decision-making to ensure companies have enough runway to pivot effectively rather than just cover immediate expenses. They also touch on the operational pressures and challenges that come with urgent cash flow issues, advocating for clear communication and negotiation to resolve these matters.

The conversation further explores the importance of understanding a startup’s burn rate and founders' commitment, signaling their belief in their venture by adjusting salaries when necessary. They also dive into the contrasting perspectives of funds versus angel investors, the limitations of the VC model, and the significance of maintaining pro-rata shares to avoid dilution.

With practical insights, real-world scenarios, and expert opinions, this episode provides invaluable guidance for investors and founders alike on navigating the turbulent waters of venture capital. Tune in to gain a deeper understanding of the investment landscape and the crucial decisions that can make or break a startup.

Key Topics

• Pipeline Skepticism: Emphasis on past performance as an indicator of future success
• Investment Decision Framework: Evaluation based on recent achievements and learning
• Bridge Round Considerations
• Burn Rate and Founders’ Commitment
• Profitable vs Break-even Companies: Assessment of stagnant investments and a discussion on investing in break-even companies
• Importance of Maintaining Pro Rata Shares
• Liquidation Preferences
• Founder Education Dilemma

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this special episode of "Venture Declassified," recorded live at the Rally Innovation Conference, hosts Mike Kelly, Ben Pidgeon, and Jacob Spock engage with a series of live pitches and conversations with entrepreneurs and founders. They unpack the complex dynamics of the fundraising landscape for startups, exploring how the backgrounds of entrepreneurs—whether they are repeat founders or first-timers—significantly influence their approach and success in securing investments.

Mike and Ben discuss their roles as sherpas for first-time founders, guiding them through the serpentine process of fundraising. Repeat founders, having been through the process before, often present with confidence and humility. Mike shares his heuristics for pitch evaluations, emphasizing the importance of trusted personal introductions and subject matter expertise.

The episode begins with Rockland Page, CFO of ROCKaBLOCK AR, who offers a candid glimpse into their "executives in residence" program and aggressive recruitment strategies.

Next, Jim Bartek, CEO and Business Architect of Growth Heroes, shares insights on the transformative power of digital transformation for SaaS companies and the importance of strong elevator pitches to attract both talent and investment.

Emily Edwards, founder and CEO of Paradise Spreads, then pitches her innovative plant-based spread, highlighting her company's growth as it enters grocery stores and negotiates with major players like Whole Foods.

Tony Petrucciani, CFO of Boomerang Ventures, discusses his journey, focusing on building relationships and gaining traction in the market.

The episode wraps up with AJ Richichi, founder and CEO of Sprockets, who provides insights into the importance of clear direction and modest valuation expectations for startups.

Catch this episode for a blend of practical advice, real-world pitches, and strategic insights that can help guide both founders and investors toward more fruitful engagements in the startup ecosystem.

Guest Bios

Rockland Page found success in the corporate world as a graphic designer but he always wanted something he could call his own. In 2017 he launched ROCKaBLOCK, a boutique apparel shop. Built upon Rockland’s talent for original artwork and design, his work focuses on the richness and depth of Black culture.

Website

Instagram

Jim Bartek is an experienced business consultant who works with executives at growth companies to increase profits and streamline operations through automation and process improvement. As a Salesforce.com Consulting and ISV Partner, Jim and his team specialize in redefining business processes and managing the implementation of CRM, ERP, and online accounting systems. They also developed Sales2Cash, an application that automates SaaS contracts, revenue operations, and invoicing within Salesforce. With a background in advising tech startups and co-founding a consulting company, Jim is actively involved in the entrepreneurial ecosystem, serving as an organizer for major events such as The Innovation Showcase and Indy Startup Weekend. He is also cer

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this enlightening episode of "Venture Declassified," hosts Jacob Schpok, Ben Pidgeon, and Mike Kelly take a deep dive into the intricacies of Series A valuations, fundraising strategies, and the unique challenges faced by Midwest startups. The episode sheds light on the complex dynamics that come into play when a company with $3 million in annual recurring revenue aims for a Series A round, touching on standard valuation multiples, dilution impacts, and capital efficiency.

The discussion begins with a look at the typical Series A valuation process, where companies with substantial annual revenue might see a valuation around 6x their annual revenue. This segues into a crucial conversation on securing new capital and the potential for significant dilution—up to 50%—when raising both new and old capital during this round.

Ben shares insights into how first-time founders, especially in the Midwest, often navigate multiple seed rounds and rely on bridges because of the challenging investment climate. This leads to an emphasis on demonstrating effective use of initial capital to reach significant revenue milestones within 18-24 months. The hosts underline the importance of validating customer needs early and prioritizing capital efficiency to establish a strong product-market fit before seeking heavy investment.

Jacob and Mike touch on the democratization of information, encouraging founders to back their valuation hypotheses with solid data. They also highlight the advantages of starting a company in the Midwest, where lower costs and a strong workforce create a favorable environment for startups.

Mike rounds off the episode with reminders about the importance of investor diligence, considering the founders' understanding of their market, and the critical role of minimal spend on non-revenue activities for early-stage companies. The episode is rich with examples of successful pivots and strategic investments, making it a must-listen for anyone interested in the nuances of early-stage funding.

Key Topics

• Series A Valuation and Fundraising
• Funding Challenges and Trends
• Revenue Expectations and Capital Efficiency
• Midwest Bias and Relocation Incentives
• SAFE Investment Structure
• Case Studies and Success Stories
• Valuation and Risk Assessment

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this episode of Venture Declassified, hosts Mike Kelly and Ben Pidgeon explore the complexities of managing angel syndicate groups and the art of curating investment opportunities.

Both Mike and Ben run angel syndicates, creating SPVs (Special Purpose Vehicles) for investments, and they highlight the challenge of recommending numerous deals each year without overwhelming their investors.

Ben elaborates on his group's approach of working on multiple deals simultaneously, often over a two to three-month window. He stresses the importance of maintaining investor interest through a strategic marketing campaign—using compelling headlines and consistent updates. Mike, on the other hand, details his group's shorter, two-week window for deals and contemplates adopting more aggressive marketing tactics.

The hosts emphasize the significance of transparency and thorough due diligence in maintaining investor trust. They also discuss the benefits for individual investors of joining an angel group, which helps filter out less favorable opportunities and ensures more efficient use of their time.

Towards the end, Mike and Ben talk about the delicate balancing act in angel investing, such as assessing the idea's potential, valuation, and the founder's quality. They agree that perfection across all dimensions is rare, making trade-offs inevitable.

Listeners gain valuable insights into the behind-the-scenes efforts of managing angel syndicates and the strategies involved in balancing deal flow with investor engagement.

Key Topics

• Challenges in Angel Groups
• Balancing Attracting Attention and Managing Multiple Deals
• The Role of Marketing in Angel Investment
• Building Trust and Conviction in Deals
• The Competitive Nature of Deal Filtering
• Benefits of Joining Angel Groups
• Evaluating ‘Best Opportunities’
• Handling Interest Levels and Commitments

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

Episode Summary

Welcome back to Venture Declassified. In this episode, we continue our conversation into the nuances of creating an influential pitch. Jacob and Ben share their insights on the significance of active listening to evaluate a team effectively. We then pivot to tackle the challenging topic of setting valuations and discuss vital metrics including revenue, customer acquisition costs, and churn rates.

Expect to hear candid conversations about founders' narratives, why presentation skills can trump slide content, and our biggest pet peeves in investment pitches. Plus, we suggest how founders enhance their narrative, run experiments, and adapt based on market feedback – all crucial for capturing investor interest.

Later, we unpack the art of negotiating investment terms and the nuances of valuations, term sheets, and understanding current market conditions. But it's not all terms and numbers; we also explore traction indicators before revenue, stressing the importance of a committed founding team and setting realistic milestones.

Stay with us as we declassify the fine print of startup investment, question conventional wisdom, and strive to empower founders and investors alike with actionable insights. Let's get started.

Key Topics

• Techniques for quickly evaluating teams
• Importance of Team Dynamics
• Avoiding unrelated metrics
• Mike's Experience Raising Funds
• Runway evaluation and financial management
• Investor Intuition vs. Presented Information
• Viability of ambitious plans with limited resources
• Key figures in generating investor confidence

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

Episode Summary

In this episode of Venture Declassified, hosts Mike Kelly, Jacob Schpok, and Ben Pidgeon come together to talk about the fundamentals of an influential pitch. This episode promises to strip away the misconceptions and focus on what truly matters during investor presentations.

As the hosts delve into the narrative aspect of pitch decks, they emphasize clarity and accuracy in communicating the startup's vision and potential. The episode also explores the strategic presentation of competition, underscoring that a well-researched landscape can significantly bolster a pitch.

Venture Declassified's episode is not just about the content—it's a masterclass in fine-tuning the pitch to align with the investor mindset. Listeners can expect to gain valuable insights on constructing a pitch that not only resonates with investors but also positions their startup as a beacon of focus and potential.

Key Topics

• The Art of Crafting the Perfect Pitch Deck
• Understanding the Pitch Process
• Prioritizing technical aspects and demos for due diligence
• Highlighting the need to present benefits over features
• How UX reflects the company's professionalism and competency
• Expectations from companies concerning utilization of funds and delivering results
• Leveraging Competitive Advantages

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this engaging episode of "Venture Declassified," hosts Mike Kelly, Ben Pidgeon, and Jacob Schpok dive into the pivotal role of technology, specifically AI and chat GPT, in revolutionizing the world of investing and due diligence. The episode is packed with insights on how these cutting-edge tools can streamline and enhance the investment decision-making process.

The hosts kick things off by discussing the importance of validating business ideas, assessing the competitiveness and innovativeness of solutions, and determining market size to attract investment. Ben shares his experience using chat GPT for due diligence and market research, suggesting it might even score pitch decks. Mike also leverages chat GPT for deal filtering and understanding healthcare deals' competitive landscape. Jacob adds a practical tip: including "please" in prompts can make chat GPT results 3% better!

They delve into utilizing chat GPT for pre-screening companies and creating targeted question sets. The hosts explore using AI to analyze assumptions behind projected revenues, which could be a game-changer for angel investors spread across multiple deals.

Throughout the episode, the trio underscores the importance of AI in gathering information, detecting market trends, and mitigating bias from historical data. They discuss AI's potential in forecasting future technologies and market opportunities. Emphasizing the founding team's importance, they argue that focusing on the founders is often more crucial than the market or industry itself.

Tune in to hear their insightful discussion on AI's transformative impact on investment strategies, and why it's a missed opportunity for angel investors not to leverage these powerful tools.

Key Topics

• Validating a Business Idea and Attracting Investment
• Use of AI and Chat GPT for Due Diligence and Market Research
• Practical Applications of Chat GPT in Investment Activities: Pre-screening companies, creating a question set for analysis, scoring pitch decks
• Chat GPT’s ability to gather and analyze information from various platforms
• AI’s role in predicting future technologies and market opportunities
• Practical Experiences Using Chat GPT
• The Cost-Effectiveness and Accessibility of AI Tools
• Technological Advancements and AI Utilization in Investing

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this episode of Venture Declassified, hosts Ben Pidgeon, Jacob Schpok, and Mike Kelly dive deep into the intricate world of board hygiene and governance, shedding light on the critical aspects that can make or break early-stage companies.

Jacob Schpok and Mike Kelly explore into the nuances of good board hygiene. They underscore the significance of managing personal biases and relationships in boardroom decision-making. The conversation also touches on the value of board observer rights and the strategic use of 1099 contractors as operating partners to enhance board insights without compromising control.

Ben Pidgeon brings a gritty reality check by discussing the pitfalls of passive boards, emphasizing the necessity for boards to be active and scrutinizing. He asserts that boards should hold the CEO accountable and ensure the company remains financially viable. The trio also underscores the importance of transparent communication to prevent surprises during board meetings—a theme echoed throughout their discussion.

Jacob discusses the importance of CEOs managing their boards effectively, setting clear expectations, and retaining control and equity to attract Series A investment. The importance of robust, diverse boards for better scrutiny and decision-making is also highlighted, with differing viewpoints seen as a strength in navigating complex business landscapes.

This episode is packed with insightful discussions and practical advice for anyone navigating or considering board roles in early-stage companies. As always, the hosts remind listeners that the information shared is not investment advice but an exploration of best practices and experiences in the venture capital world.

Tune in for an enlightening conversation that blends real-world anecdotes with strategic insights, ensuring you're well-equipped to handle the challenges of board governance.

Key Topics

• Challenges in Communication with the Board: Importance of over-communicating during both good and bad times.
• Pros and cons of inviting investors to board meetings.
• Discussing good board hygiene, including personal biases and decision-making relationships.
• Need for professionalism in board behavior, especially in early-stage companies.
• The necessity of active, scrutinizing boards in order to ensure success.
• Board Members' Responsibilities: Value of quarterly board meetings and tracking minutes for transparency and strategic insights
• Effective management of board members, setting expectations, and avoiding surprises in meetings.
• The value of a diversified board for robust decision-making and accountability.

Connect

Mike Kelly
LinkedIn - Website - Developer Town

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.