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April 25, 2024 15 mins

In this episode of Topline Hotline, the hosts discuss the challenges faced by non-technical founders looking to raise a seed round for their startup. They provide advice on building a pipeline of VCs and positioning the business.

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Episode Transcript

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(00:00):
Yeah
got a top line, cause we've got a band andwe've got Topline Hotline in the band.
Welcome to Topline Hotline in your face.
We're playing saxophones and skyscrapersall over the place.

(00:23):
Where we answer your questions about go tomarket.
I'm going from a fish thing.
to like just like a folk, folk, you know,folk.
you?
You take the hard route.
Like there was an end point there, but youknew it would be cool to take it the other
place.
You're like, I'm gonna go for it.
That's how you do great things in life.

(00:43):
of my favorite things is to make peopleuncomfortable, you know, so.
I'm saying in your face.
In your face is your favorite thing.
feedback on Topline and I'm not sure I'veever heard anyone talk about Sam's Diddy.
So if you love Sam's Diddy's out there,all the time, okay.
I'm like, do you like the substance of ourpodcast other than his singing?

(01:07):
They're like, yeah, not bad.
That's okay.
If you're out there and you wanna doubledown on that, let us know.
AJ's feedback wasn't quite positive, alittle passive aggressive.
He's a little tired of it.
And I understand.
I do get it.
I won't do it next week.
This is Topline Hotline where we answer.

(01:28):
Sam, I took over the one week you didn'tdo it and I thought I did okay.
I did all right.
I did all right.
All right, thank you.
Okay.
All right.
questions from the go -to -marketcommunity and from the Topline Slack
channel, from our community.
Asad, over to you, sir.
This one's a fun one.
So I'm a non -technical founder looking toraise a seed round for my startup.

(01:49):
I don't have a great network of investorsand executives to drive warm intros.
I'm also struggling to figure out if Ishould sell the biggest vision with AI all
over it or the business I really want tobuild that's a bit of a smaller business
where AI is just not the main character.
Any advice on how do I build a pipeline ofVCs to TOT2?

(02:13):
and how I should think about positioningthis business.
That was like four questions wrapped upinto one, by the way.
I was like, oh, they want to know how tofind a technical co -founder.
Oh.
the end of it's like, which VC should Italk to?
But by the way, I'm not sure I want tobuild a venture scale business.
It's like, well then maybe don't raiseventure.
concern.

(02:34):
I think the let's take the smaller out ofthe equation, right?
I think what that person means by sayingthat is that AI seems to be this like
everything has to be this big AI businessand anything that's not AI seems smaller.
It seems like you're compromising on whatyou can build because investors just want
to deploy into AI companies.
This is a legitimate challenge for seedround companies today.

(02:57):
If you're not AI first, it's hard toraise.
But let's tackle it one at a time.
What about the intros?
AJ, you've raised multiple rounds offunding.
How does this person get in front of you?
are they trying to find a technical co-founder or VC in this?
Okay.
Okay.
All right.

(03:17):
Um, well go meet the VCs where they are.
I think like rather than forget about likejust cold emailing them or reaching out or
whatever, go to their events.
If you live in a city in a Metro, go findthe top ones and find if they're having
any events and go talk to them.
You're going to talk to associates.
You're going to talk to operatingpartners.

(03:38):
not the main partners that will be doinginvesting, but just like talk to them and
have a conversation treated as, you know,when you go and you don't want to like do
something official and you go have aconsult.
I, you guys don't probably don't havethis.
Okay.
Let me take a step back.
If you have, if you have a situation,yeah.

(03:59):
But if you're, if you're not familiar withthe landscape or with the environment,
then you're not going to be able to liketalk in a way that is going to connect
really well.
And you're going to come.
look a little like strange and funny.
So I would go, go meet VCs and founders atthe event, go meet the founders of those
portfolio companies of the funds thatyou're like thinking about and talk to

(04:20):
those founders of like, how did you getstarted?
I wish I'm sure they were first timefounders or good chances they were and
they'll have good feedback.
So I wouldn't actually start with the VCs.
I would start with founders that haveraised from their VCs.
levels for a second.
Do you know what's the hierarchy?
Like if I need to raise money, what roledoes the analyst versus the principal
versus the partner play?

(04:41):
think about it like a go -to -marketfunnel, which is SDR, BDR versus AE versus
VP.
And like, it's the same type of salescycle.
It's literally the same type of salescycle.
So the BDR, if you're talking to likeInsight has dozens upon dozens of analysts
that goal is to map all of the ecosystems,which is a brilliant move.

(05:03):
But if you're talking to one of them,you're not pitching them on like your.
trying to raise capital in that moment intime, you're trying to understand if they
even have an interest in your industry.
It's less about your company and moreabout like the thesis of that ecosystem.
It's sales.
Yeah, it's just sales.
I mean, at the end of the day, a deal is adeal, right?

(05:25):
So.
I personally think the cold emailing worksreally well.
Like I think if a well -designed, well-crafted cold email gets responses from
people like Keith Raboe, Mark Cuban.
wasting their time and your time.
If you're that early into the VC game andyou don't know what you're doing, you
don't have enough reps and practice atthat.

(05:46):
you're conflating network withunderstanding of the game.
Those are two different things.
Well, this person said that they were likeearly in their, their founder and they
don't know VCs that well.
I
VCs.
That doesn't mean they don't understandwhat a seed round versus a series A versus
how VCs work is.
That's just a Google search.
person's shoes and rewind the clock 10, 15years that you might not even know who

(06:09):
Keith Raboi is and what he does.
That's what I'm saying is that this personis starting at ground zero.
And if you're starting at ground zero,read Venture Deals by Brad Feld, read
Founders' Dilemma, read books that arejust going to get you into the mindset of
all of these founders.
Founders at Work is another great one.
Just get your mindset into it before youjump into like the I need to start

(06:33):
pitching.
That's my point.
Sam, what are your thoughts on this?
You look perplexed.
Well, I've
won't.
I mean, I guess I heard there's a coupleof things in there.
I'm serious about, well, they had onequestion, should I pitch the business I
want to build or should I pitch some AIspin on the business?

(06:57):
I don't know.
Maybe I'm just too naive, but I think youshould pitch the business you want to
build.
I don't think faking AI as a means ofgetting, I just think there's lots more
types of investors and way more peoplewith money than just VCs.
And so part of,
The reason I look perplexes cause I'mtrying to like, is I'm trying to empathize

(07:17):
with this person.
And what I'm hearing, again, they'resaying like, so first of all, they're,
they're, they're saying which businessshould I pitch?
Which tells me that maybe there's a lackof clarity on what they, what their
business is, but let's assume that there'snot, they know exactly what it is.
They know exactly what they're trying todo.
They're just, it's just a positioningissue.
Then the second thing I'm hearing isalmost like making an excuse for like,

(07:43):
setting up a pretense for not buildingtheir business, which is like, there's
just way more types of capital out therethan venture capital.
And there's friends and family, likethere's lots of people with money.
And if you truly are passionate about whatyou're doing, I don't think you need to
ask permission.
And I think that's a big test for a lot ofinvestors is why are you asking for

(08:04):
permission to, it's like, well, unlesssomebody tells me,
how I approach VCs.
I can't start my company.
It's like, of course you can start yourcompany.
You can start your company anytime youwant.
Why don't you just start doing whatever itis that you're doing either in your spare
time or start building right away.
Start talking to other people aboutwhether they will invest.
There's family offices, there's high networth individuals, there's your rich

(08:25):
uncle.
Like get $200 ,000.
Maybe this person comes from a workingclass background and they don't have a
rich uncle.
I get that.
But I'm saying there's something in themthat wants to go to somewhere else.
and knock on a select number of doors.
And the point is, if you really believe init, you're probably going to have to ask a
lot of people.
You're going to have to put yourself in anuncomfortable position and not just be

(08:49):
anointed a startup founder by some thirdparty VC.
You just have to, you are a founder.
So go found.
I don't know.
That's, I just heard that in the question,you know, this, this defensiveness of
like, well, if, you know, if top linedoesn't answer my question, then I guess I
can't start my company.
That's true actually.

(09:09):
You should take that to the bank.
with these founders, I think what doeshappen is you go and you believe that
there's limited understanding.
You don't know the whole landscape and youdon't know that there are all these other
ways to do it.
You know a little bit.
And the little bit that you know is, Ineed to go and get some starting capital

(09:29):
to start this business.
And there these people call VCs that giveme the starting capital.
And you pitch and you pitch and you keepgetting nodes.
And the reason you're getting nodes isbecause, oh, you're not an AI company.
We're only looking at AI investments,right?
I can see how a person gets into this modewhere they're like, this seems to be the
only way to start.
And this is the main thing that they'relooking for.
This is really depressing.

(09:50):
I think one of the things that I enjoyabout this podcast is that we are
highlighting the fact that there are manydifferent ways to solve this problem that.
you'd get different sources of startingcapital, they're different types of
businesses.
The VC doesn't get to tell you that youhave a business or not.
They just get to tell you if you have aventure fundable business or not.
And maybe you're not building a venturescale business and that's okay.

(10:13):
You can go and figure out.
But even to that, it's really hard tobootstrap.
It really is like Adam was like, I had amillion dollars and it's like, most people
don't have a million dollars to start abusiness.
And so it's just, it's really tricky andhard.
And so I feel for these people that are inthis market trying to get started.
too, just to be clear.
I feel for them too.
It is really hard, but I think so that'strue.

(10:37):
And also sometimes people, they have thisromantic notion of I should be a founder
and they kind of work backwards from thatidea.
Not I have a problem.
I see a problem in the world and I'mdesperate to solve it and I want to solve
it no matter what it is.
I should be a founder and this is how I'mtold founders go about their business and

(10:57):
isn't that romantic.
And then they get really frustrated whenthey start doing it and it kind of sucks
and nobody's celebrating them and it'staking way longer.
And the truth is that, you know, foundinga business, AJ has been doing this, what,
six years, quote a path, right?
Yeah, six years, we just celebrated oursixth birthday.
I mean, and this is, and if Quotapath isgoing to be truly successful, I'm not

(11:19):
saying they're not, I'm just saying trulysuccessful, this is, there's at least four
or five, if it's going to be anindependent company, five more years, he's
going to have done this.
I've been working on Pavilion for five anda half years full -time and I've been
working on it total for 10 years.
And I'm still four years, three years,three to four years away from some kind of

(11:42):
meaningful outcome.
Should I wish to pursue it?
Um, and so, and if you had told me itwould take this long.
Yeah, I'd be fine with it.
Cause I really like what I do, you know?
And because I had.
You have to love that thing, not the role.
Like the role itself, most of the rolesthat because of the pull of the role that

(12:04):
you land up and you realize are prettyannoying roles, right?
Like being a CEO for the sake of being aCEO is not fun.
Being a CEO, solving the problem in thebusiness that you want to solve that
problem in, that's really fun.
That's the most fun thing in the world.
Sam, according to PitchBook, I have a 90 %chance to be successful as a successful
outcome.
So I'm fine.

(12:24):
you're going to, you already aresuccessful.
I'm saying if you're going to pursue apath to a hundred million on your own
independently, and I would imagine thatthere might be a strategic company that
inserts themselves beforehand and snapsyou up.
And that's awesome.
But if you were going to try to get to ahundred million, it would be a long way
from here, just like it would be a longway for STA or Pavilion.
10 year, 100 % agree with you.

(12:46):
And I think that if we had had thatconversation two years ago, I would
disagree with you.
I would have disagreed with you, but I donot today.
years ago you would have been in zeroplanned everyone was going to make a
hundred million in two years.
While they were doing the sniff testbefore giving money.
Yeah here you go.
only giving me this much of it throughquota, but this much is still infinitely

(13:10):
more than STA is giving me.
building a massive media conglomeratebigger than Conde Nast.
That's what we're doing here.
are building the number one
advisor at Odapath, I take that veryseriously.
I'm just waiting for the day it's gonnaturn out randomly.
I said, give me some of that profit.
Give me some of that beautiful profit.

(13:31):
meeting tomorrow.
Maybe I'll just throw that into the...
Yeah.
I don't care what you...
Come on.
Let me let the last story last storybefore we go.
I was going on my way to the marathon.
I think it was 10 years ago.
Wow.
It was 2014 and I got in a new burn.
He was taking me to Staten Island ferryfor my first New York City marathon.

(13:53):
And the guy was talking about how he wentback home and everywhere he goes, he's
like, everywhere I go, people are saying,let me hold something.
Let me hold some.
I was like, what does that mean?
Let me hold some.
I mean, he said, it means give me somemoney.
And I just love that phrase.
Let me hold some it just me give me someyou give me some why because I asked
That's why give me some money, please.

(14:14):
I said, please now give me some damn Letme hold something
me hold something.
It's so good.
Oh my god.
Just walk up to me.
Can I hold something?
Okay.
Because I want some, that's why.
Because I like money and you have too muchof it.
telling you money like why you beingawkward about this okay on that note

(14:38):
that's the episode
for listening to Top Line Hotline.
Give us five stars in the iTunes store.
Join our Slack channel, which is free.
You don't have to be a Pavilion member.
We'll talk to you next week.
Thanks, everybody.
everyone.
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