Hello, and welcome to the Startups in the Studio Podcast!
TL;DR
We are a podcast that interviews founders who have successfully raised money while being headquartered in cities outside of traditional capital centers like New York, California and Boston. They will tell their stories and give you tips on how to do the same!
For those of you who are curious what this podcast is about and want some background about why we are launching this podcast, read on. For those of you who would rather just go ahead and hear from some successful entrepreneurs and listen their stories about their capital raises and entrepreneurial journeys, you can easily just skip this post and jump to one of the other show note posts or listen to interview episodes.
So why another podcast about raising capital? I read a lot of content about venture capital, startups and fundraising. There is a lot of great content out there, but what I am finding is that the vast majority of it is stories or advice from startups in huge capital centers like SF, NY and Boston. They tell their stories of raising from VCs, or in the case of VC-authored blogs, how to get their attention and how to pitch them.
But for startups outside of those regions, that advice is not usually very relevant. First off, only 3% of startups raise money from VCs or organized angel networks. We will hear stories that are relevant to the other 97% of entrepreneurs. Those who have had to figure out other, creative and non-traditional ways to get funding for their companies. Those are the stories that are relevant to the vast majority of startups outside of capital centers, and that is where the biggest lack in advice is, in my opinion.
I do want to note, however, that we will also be hearing from startups who have raised from VCs and fit into that 3%, but even in those cases, the stories will be from entrepreneurs who successfully raised that capital from a location outside of traditional capital centers.
As for the name of the podcast, Startups in the Studio - I felt that, being located out of and recorded in Nashville, the reference to the studio was relevant, both for our history in the music industry, but also because the studio is a place of creation – which of course is appropriate for startups. We also will be talking with startups in a recording studio, so it also quite literal, too.
I thought it would be helpful as a first blog post to do a few things. First off, I wanted to give some background on why I think this podcast will be helpful, and who I think it will be most helpful for.
Secondly, I thought I would fill the listeners in on some details about my background and some views I have on fundraising which I think will clarify the purpose of this podcast and where it is coming from.
Over the years, I have come to realize that there are hundreds of ways to raise money, although most entrepreneurs think of only two – VCs and Angels. What I love to do with startups is ask them about their goals, and from there, help them figure out what is the best way for them to bring capital in the door. In some cases that will be angels or VCs, and some cases it will be bootstrapping, customer financing, non-traditional investors like customers, suppliers or others. Again, only 3% of companies are getting funded by traditional angels and VCs.
In this podcast, we will hear stories of companies from all ends of the spectrum. There are some companies that have raised from angel investors, and some that have raised from VCs. There are some that have never raised capital and bootstrapped. There are some that raised money from angels but have no intention of raising round after round from VCs to support growth. There are some who have and want to raise round after round from VCs to support faster growth.
We have some who have had great exits, and we will hear from some who are still running their companies. We might even hear from a few that did not make it but still have lessons to share on their own raises and mistakes.
But what they all have in common is that they did this outside of the traditional capital centers, like California, NY and Boston.
Every conversation we have will be anchored by that main focus – raising money outside of capital centers.
That is the first purpose and main focus of this podcast. However, going beyond the capital raises, I also think it will be more interesting to hear not just about their experiences raising money, but their backgrounds – how they got started as entrepreneurs, how they came up with their ideas, launched their companies, funded their companies, grew their companies, and in some cases, sold their companies.
I am going to bring in a bunch of founders to interview. As a point of reference, any founder I bring in will have raised at least $1 million in funding.
I thought it would be helpful to talk about my experience as an entrepreneur and an angel investor. Also, if I take some time to do that now, while I do plan to add ideas, advice and feedback to the stories of the entrepreneurs I interview, we will not need to waste time with my story and why I think this podcast is so important in the actual episodes.
The reason I am starting this podcast is because I am an avid believer that education should never stop. The second you feel like you know everything, new ideas prevail in the marketplace and you are out. I will be 80-years-old and still keeping up with the latest trends in the startup and investing world. For that reason, I regularly follow 40-50 blogs and spend several hours a week just reading and keeping up with fundraising trends and startup success stories – and failures, too, which are always educational.
Like I mentioned earlier, a lot of what I read, is targeted towards entrepreneurs in cities like SF and NY and Boston. How to pitch to VCs, how to get a meeting with a VC, what to present in your pitch to a VC, etc. etc. What if you are in a city, like Nashville for example, that outside of healthcare has zero VCs. There might be organized angel networks, but they will not look at you without at least $1 million in ARR.
Now, as I mentioned above, this is not just a podcast for companies that do not want or need VC funding. We will hear some of those stories too. But we will also hear from companies outside of capital centers who have successfully raised VC money, and their paths to that capital are very different to those in capital centers where there are 100s of funds that can get you from pre-seed, to seed, to post-seed, to series A to bridge rounds, and on and on. If you are not in a capital center, your path to that capital is going to be very different.
So I have gone out and connected with founders who have raised at least $1 million, and in many cases have gone on to raise from well-known VCs outside or within their communities. They will tell the stories of how they raised the money and what strategies you can employ to help with your early capital raises. Most importantly, these are all companies from outside of capital centers like SF.
As I mentioned earlier, we will also dig into their pasts to learn more about their backgrounds and how they got their companies launched.
So why am I doing this – why me?
Well, I saw this funding gap in my home city of Nashville, so in 2012 I started a company called InCrowd Capital, that while it evolved into an angel network and venture fund, was originally set up as a tech company that would allow entrepreneurs to raise capital through an online portal. We do not need to go into too much detail there, but the point is that I made all the same mistakes entrepreneurs make when they set out to raise capital.
Most entrepreneurs, myself included, think, “I have this great idea, all I need is some money to go build it! I will share my great idea with angels and VCs, they will give me money, because that it what I have read they do, and I will launch my company from there.”
Well, that is not how it works. To make matters worse, all of the advice I was getting was how to raise money from VCs and angels, who I came to realize are not investing in ideas – they want to see proof that your idea can work and that you can execute on its launch before they fund your ideas.
No one was able to tell me where to go first – where to get the initial capital I needed to get the company off the ground. And even after I did get that money, how do I get the attention of investors, and what is the right fundraising strategy for my company as a whole – the long-term plan. Especially in a city that has very few investors outside of the healthcare industry.
Learning to pitch VCs and angels was putting the cart way before the horse.
Skipping ahead six years and over that time as an entrepreneur and an investor, I was able to learn what was a more realistic path to raising capital outside of coastal capital centers. Our first fund at InCrowd has a portfolio of 16 companies, and I continue to make personal investments and will continue to make investments personally and with other fund platforms.
What I learned after meeting with over 1,000 companies, is that every company’s path to raising capital is different. Even if a company is not an investment fit for one of my platforms, I always am able to help the entrepreneur think of other ways to get capital in the door. I learned to sit down with companies, learn about the goals of the founders, and help them figure out what was the right type of capital for them, and what strategies they could use to get it.
For some, companies that wanted to grow to $10 or $20 million in revenue and a couple million in profit – they are going to build great companies and have great lives, but they are not likely getting VC money. But there are many other ways for those companies to get funding, from individuals and institutional investors. We will hear from founders who have followed that path.
For some companies, they have plans to grow to a billion dollar company and raise round after round of VC money – we will hear from those founders, too, but again, all of them will be based in a location outside of a traditional venture community and had different paths to getting that capital.
We will hear from all kinds of these companies. But the key is that each one had a different path to capital raises, and unlike the content we read from the valley, many of these companies got funding outside of the traditional VC and angel communities.
Along the way, I will plan to chime in with some nuggets of wisdom I have picked up over the years, but I think the best way to learn is to hear from those who have successfully done it themselves.
Outside of these interviews, if you ever have a specific question about raising capital outside of a capital center, shoot us a note here at the podcast. I might have future episodes where I go through email questions and answer as many as I can. Or I might even bring up emailed questions with my guests, picking out questions that are relevant to their paths to a capital raise or their backgrounds.
And finally, if you are a founder who is passionate about advising others and want to share your unique story of your capital raise, shoot me a note and I will either share it with the audience, or in many cases, I would love to invite you to jump on an episode to share your story on the podcast.
You can reach me at phil@startupsinthestudio.com.
Thank you for listening to our podcast, and I hope this it helps you get some cash in the door!
