March 25, 2025 • 25 mins
Step behind the scenes of venture capital funding with Rachel Johnson, co-founder of J&O Law Firm and founder of Ami Health. With a decade of experience guiding high-growth companies, Rachel shares her dual insights as an attorney and founder, offering invaluable advice for entrepreneurs navigating the world of funding. 📈💡
💡 Key Takeaways:
🔹 Is Venture Funding Right for You? Not every business needs VC backing—know your path.
🔹 Go All In: Why full commitment and massive growth potential are essential for VC success.
🔹 Scaling Smart: Avoid common pitfalls like rapid, unstructured hiring post-funding.
From board dynamics to strategic growth and the realities of investor relationships, Rachel’s practical advice is a must-hear for founders at any stage of their entrepreneurial journey. Don’t miss it! 🎧
🎧 Tune in now! #HandbagDesigner101 #VentureCapital #Entrepreneurship #ScalingSmart #StartupSuccess
Our Guest: Rachel Johnson is the co-founder of J&O Law Firm and founder of Ami Health, offering a rare dual perspective as an attorney and entrepreneur to guide high-growth companies through the challenges of funding and scaling.
Host Emily Blumenthal is a handbag industry expert, author of Handbag Designer 101, and founder of The Handbag Awards. Known as the “Handbag Fairy Godmother,” Emily also teaches entrepreneurship at the Fashion Institute of Technology. She is dedicated to celebrating creativity, craftsmanship, and the art of building iconic handbag brands.
Find Handbag Designer 101 Merch, HBD101 Masterclass, one-on-one sessions, and opportunities to book Emily Blumenthal as a speaker at emilyblumenthal.com.
Buy Emily’s Books: “Handbag Designer 101” & “Savvy Suzanna’s Amazing Adventures in Handbags”
Youtube: / Handbagdesigner101-ihda | Instagram:/ Handbagdesigner
TikTok: / Handbagdesigner | Twitter: / Handbagdesigner
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
It's hard to not get excited.
I think in our industry, whenI'm talking to you or doing a
potential new call, I alwayswant to know you know what are
you building, who are yourcustomers, what are you doing?
So I think, naturally to be inthis space, you have to be
excited about new ideas.
Speaker 2 (00:17):
Hi and welcome to Handbag Designer 101, the
podcast with your host, emilyBlumenthal, handbag industry
expert and the handbag fairygodmother.
Each week, we uncover thestories behind the handbags we
love, from the iconic brands andtop designers to the creativity
, craftsmanship and culture thatdefine the handbag world.
Whether you're a designer,collector or simply passionate
(00:39):
about handbags, this is yourfront row.
Seat to it all.
This is your front row seat toit all.
Speaker 3 (00:49):
Welcome Rachel Johnson to Handbag Designer 101,
the podcast, Rachel, who isco-founder of Ami Health and the
J&O Law Firm.
Did I say all that correctly?
Yes, Huzzah.
Speaker 1 (01:06):
Yes, and co-founder and managing partner of J&O Law
and then I am founder of AmiHealth.
Speaker 3 (01:08):
Yes, the flex is better coming from you than me.
Yeah, well, I tell my students,linkedin is where the old
people hang out.
That's where you should showoff, like I'm proud to announce.
Seriously, it's out of hand,but we connected on Substack,
which right now I think isprobably one of the kindest
platforms.
Everyone seems very supportiveand excited and there's not a
(01:31):
lot of anger there yet, which isnice, and it's really great to
connect with people who arelike-minded, excited that we
were able to go back and forth.
And I know you said like well,I'm not in handbags.
And I said, but you've done somuch that I think people would
really benefit from learningabout.
You know a story?
(01:51):
That's Rachel Johnson.
Speaker 1 (01:53):
Yes, and when you said you teach entrepreneurship,
I knew that I could give somegolden nuggets of wisdom of just
what I've done over the pastdecade of running J&O and really
working very closely with highgrowth companies.
Speaker 3 (02:08):
So how did you end up being someone who was working
with high growth companies?
Because that just does nothappen overnight.
Speaker 1 (02:16):
Yeah, so I started in big law.
I worked for one of the biggestlaw firms in the world.
Dla Piper has thousands andthousands of attorneys.
I always knew I wanted to goout on my own.
I worked for lawyers with theirown practices while in law
school.
I could see them kind of havingautonomy over their own lives,
coming in and out of theiroffices, and I've always been a
(02:39):
hard worker but I've alwayswanted to do it on my terms.
So I always had an inkling thatonce I got into law I would
have my own practice.
I went to big law because it,you know, to learn from the best
is always great, and I had lawschool loans that I wanted to
pay off and I just knew if Icould like stick it out and go
(03:02):
through that for a few years, Icould start something on my own.
My co-founder was the same way.
She was also in Big Law, and soafter our early years in Big
Law, we decided to go out on ourown.
10 years ago we just celebrateda decade of J&O Wow and we have
grown and now we workexclusively with high growth,
(03:26):
mostly venture backed companiesat all stages as their outside
general counsel, and our teamloves doing it.
We now have a team of almost 17that we have offices in South
Florida and New York and we workvery closely with high growth
companies to get them on theright track and hopefully have a
(03:49):
good ending and be with them onthe journey, which is very up
and down and a roller coaster,but it's exciting and I always
say it's like the best if youcould be a lawyer and working
with founders that are buildingtheir dream companies.
It is the best type of legalwork.
It's exciting, it's fun and wesee all sides of the story from
(04:13):
beginning to end.
Speaker 3 (04:14):
Sure, you know you said something that's
interesting and it's one of thethings that I think a lot of
people don't take intoconsideration.
Essentially, you are anentrepreneur.
You started your own company.
A law firm is still a company.
It still has the same issuesoverhead, clients, accounts
payable, accounts receivable.
I think it should not bedismissed, diminished the fact
(04:37):
that you had the wherewithal towork for someone big before you
went off on your own to takeadvantage of learning their
resources, clients, how tointeract, paper flow and all
that.
And I think so many brands,designers and so forth are so
excited to jump off and dothings on their own that I don't
(04:59):
think it should be discountedhow important the experience is
working for someone else thatwants to do that that you want
to do, like the learning curvefrom that, you should be paid
for the learning curve, notgoing to debt for it.
Speaker 1 (05:12):
Yeah, and we, when I like mentor law students, I
always say you know, some peoplelove big law and that's a
forever, but no matter what, itis an amazing place to start
your career and you learn how to, you know, be at the top of
client services and at the endof the day, we are a services
business and we have to beresponsive, we have to be
(05:35):
efficient, we have to be on topof it, and big law really,
really teaches you that.
Speaker 3 (05:41):
So I want to just dive right in.
You deal with brands andcompanies and businesses that
you said are venture backed.
How do you recommend now thisis like a wild big question If
someone felt that they wereready to be venture backed, what
should they have in line?
(06:01):
So meaning looking for outsidefunding?
Just to be clear.
Speaker 1 (06:07):
Right, yes, and I think that nowadays a lot of
people think that to have abusiness you need outside
funding and that's not the case.
There are several companiesthat maybe they take in a little
friends and family round in thebeginning.
Maybe they bootstrap theirsecond time founders and they
had an exit and they're usingtheir own money to start.
(06:28):
So you do not need to raisemoney and it's definitely not
for every company.
Every company does not need tobe venture backed.
We do represent some companiesthat have been able to just
become profitable companies andneed outside general counsel and
have a team, become profitablecompanies and need outside
general counsel and have a team.
(06:48):
So if you need capital to dothe thing whether you can't
bootstrap or you need a lot ofinventory or you're building a
lot of technology you go theventure route.
And in the venture route youalso have to go big, because
these venture firms want bigreturns.
So it's not for somebody thatwants to start a more like
(07:10):
smaller lifestyle business evenhave a couple million in revenue
.
You know this is going big andit is a responsibility.
I think you know taking onother people's money is a very
big responsibility, so you haveto be ready to take that on and
really committed, and it comeswith things that you know go
(07:33):
with running a venture backedcompany, such as having a board
of directors, working with alegal team, doing things that
aren't necessarily the core ofthe business.
You're running a venture-backedcompany that has certain
requirements.
Speaker 3 (07:48):
Yeah, I think that you touched upon a lot of things
that people tend to think and Ithink this just comes from
being green and potentially lackof experience that they assume
that if and when they want tostart a company, that the first
thing they need to do isfundraise.
And there's so much that needsto be done even before you get
(08:10):
to that point, like do you havea product that people will pay
for?
Is it something that will sell?
Do you know your competitiveanalysis?
Do you know who your customeris, what they eat, sleep, drink,
drive, all of that, all thesethings need to be done.
Is this part of some of theback-end work you do before you
(08:32):
take on someone, or is someonecoming to you already with the
funding?
Speaker 1 (08:36):
So it depends.
We take companies at all stages.
So some founders come to us andthey just want to form their
entity and they're going toraise funding In the next few
months.
Most people that come to ushave a pipeline or they come to
us and they're like listen, I'vebeen working on this for a
while.
I took some early friends andfamily money, but I'm ready to
(08:57):
take more institutionalinvestors on.
Do you think do VCs and so forthwant or expect founders to put
(09:17):
in their own money to somecapacity?
If they think that's the caseand it's understood that not a
lot of people are going to havethe funds but I think it comes
from sweat equity and workingfor the company and taking a
salary that you normallywouldn't.
A lot of our founders, evensecond, third founders, are
making salaries that are verysmall because they don't want to
(09:39):
take away a lot of thecompany's funds and they want to
be nimble.
So it's a lot of time that'sput into it and what's really
important for investors is thatit is your full-time role that
you aren't, you know, have afull-time job and also working
on the side on this thing,because they need to see you're
committed and unless you'reready to go all in, investors
(10:04):
are not going to want to puttheir money in.
Necessarily and that'ssomething that's really
important Like you have to bewilling to take a risk on
yourself and go for it beforeother people will do it.
Speaker 3 (10:18):
So when do you go to the meetings, when they meet
with VCs, ie venture capitalists, or is this something you are
not part of?
Speaker 1 (10:26):
Yeah, no, we do not go to the meetings.
Normally it's founders meetingwith the VCs.
We'll help document theinvestment and we will, of
course, from like a legal lens,give advice on what the terms
should be and help negotiate.
We are always company counsel,but we do not attend the
meetings.
We try and work with ourfounders to make sure that they
(10:49):
understand how these investmentswork.
It is a lot of legalese andsometimes you are just given
paper and not reallyunderstanding.
You know how much equity are yougiving away?
What is this?
You know 500,000 investmentreally going to take from the
company and what are theexpectations?
Are you know?
Is this000 investment reallygoing to take from the company
and what are the expectations?
Are you know?
Is this VC getting a board seat?
(11:10):
Are they expecting to getupdates?
What really is the expectationthat comes along with the
investment?
And I think that's reallyimportant, especially if you're
a first-time founder and you'venever done this before.
Just you know getting in themoney is the first step.
Right, it's.
You know there's so much thatgoes along with it as well.
Speaker 3 (11:31):
What kind of red flags would you say if someone
was potentially getting VC money, that you as a lawyer would say
I don't think this investmentis going to be good for you
because the expectation of theVC potentially might be too much
or not realistic.
(11:51):
Is that possible?
Speaker 1 (11:53):
Yes, I think what all founders do that I've you know,
I think this is kind of norm inthe industry now is that most
founders talk to each other andget a sense of you know they'll
talk to other companies that theVC invested in and see what the
temperature of the investor is.
How in the weeds are they?
(12:16):
How much control do theyactually want?
And some people want theirinvestors to be really involved
and it's, you know, a strategicchoice to have them involved and
they want them to haveconnections and introduce them
to people, and so it reallydepends on what you're looking
for.
And some people just want themoney right and don't want to
have the requirements and havingsomebody like, really in the
(12:39):
day to day of everything.
Speaker 4 (12:42):
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Speaker 3 (14:14):
How does that work then?
If you're to get, let's justsay, one VC, and then you wanted
to get another VC, and you'regetting multiple people involved
and giving away percentage onpercentage, on percentage, how
does that work?
The dance between multiplepeople giving you money in terms
of the expectation of youtrying to keep everybody happy
(14:34):
as per what contractually you'vesigned?
Speaker 1 (14:37):
Yeah, I mean I think that's like the whole dance of
founders, why everybody says itis such a grind.
You know you have a board whichis kind of the center of the
company and has the control.
So typically every majorinvestor will want a seat on the
board and the board all otherinvestors are really trusting to
(14:59):
make the right decisions forthe company.
So, as a founder, reallyimportant is who is on your
board and keeping at least apulse on that and making sure
that you feel really stronglyabout your board.
How many people should be on aboard?
When you start it's normallyjust you know the founder, two
(15:19):
founders, and then with eachround of funding you know
normally with your Series A,there will be another board
member.
Round of funding, you knownormally with your Series A,
there will be another boardmember.
So it depends.
You know there can be boards ofone or there can be boards of
five and we've seen them all youknow work in different ways and
be successful.
It really depends who's on themrather than the number.
(15:40):
What do?
Speaker 3 (15:41):
you think some of the pitfalls are of founders, once
they've received money, that youas legal counsel are kind of
like screaming on the insidelike what are you doing?
Don't do that.
Oh my God, this is going toblow up in your face.
I think that would be reallyhelpful.
Speaker 1 (16:01):
Yeah, I think it's really exciting when you get
funding to hire, because a lotof times you know you've been
doing this yourself or reallywith a really small team and
people get really eager to sendout you know 10, 20 offer
letters and let's get all thesepeople on.
And you have to be reallyintentional.
You know your team iseverything once you start
(16:23):
scaling and you need a lot ofpeople work with.
You know a strategic.
We have a director of peoplethat works with our clients to
really focus on.
You know who do you actuallyneed right now and what is the
like management of the companygoing to be once you start
adding all these people Becausethe founder can't manage
(16:45):
everybody.
Right, you start adding allthese people because the founder
can't manage everybody.
So you need to have strategy inplace.
Even if you have five people,you need to work with somebody
If you don't have that personalready on your founding team or
your team to say, okay, we havethis money in the bank, but
let's hire really intentionallyand make sure that there are
(17:06):
managers for people that we arebringing on and teams, because
very quickly you can get to ateam of even 30 which say isn't
so big, but is there performancemanagement in place?
Are people doing check-ins?
Are there the things in placethat can really make a
successful team?
Speaker 3 (17:26):
that's so much to take into consideration.
Have you worked with people whoare designers per se and do you
, if it's something like that,do you, as legal counsel, ever
review what they've created foryou to put in your personal
opinion if you think it'ssellable?
Or do you keep your mouth shut?
(17:47):
Because I know that in dealingwith factors, we had Christina
Amelios on from Hilden and, assomeone who is a factor, they
absolutely review yourassortment, they look at your
product, they look at your P&Land all of that, but they also
look at the product to see andcheck all the incoming invoices
(18:10):
and all of that.
Do you have anything to do withthat?
Or it's like hey, if it sells,it works.
Speaker 1 (18:14):
We don't care.
Yeah, it's hard to not getexcited.
I think in our industry, whenI'm talking to you or doing a
potential new call, I alwayswant to know you know, what are
you building, who are yourcustomers, what are you doing?
(18:35):
So I think, naturally, to be inthis space, you have to be
excited about new ideas and itis a lot of companies we
represent our technologycompanies and SaaS companies and
they really evolve after theyget out there.
You know they're developingsoftware and it's hard to know
what will stick because they dopivot so much as they build
their product.
But yes, like I, you know we'renever giving product design and
that feedback advice unless weare specifically asked.
(18:58):
But naturally, our team isalways excited to represent
really cool companies that aredoing awesome things and, you
know, making a difference.
I think it is hard to not lookat the product and say, you know
, is this something that's goingto be successful?
And, of course, we want everyone of our clients to be
successful.
Speaker 3 (19:18):
Are you involved with what's going on tariff wise and
saying maybe you should startthinking about manufacturing
someplace else?
Do you ever have a say or thinkabout any of those things for
your clients?
Speaker 1 (19:29):
Our clients are very involved with their
manufacturers, mostly on like abusiness sense.
Most of them are very strongrelationships that they've had
for years and years and years.
So it's, you know, touchy toget in there with legal, unless
it's about the contract, and wewill always get in there and
(19:50):
look at the contract and makesure it's in the best interest
of the company.
But, as you know, formanufacturers it's very
relationship heavy and it doesmean a lot reputation-wise of
who your manufacturer is and whoyou're working with.
Speaker 3 (20:05):
Yeah, this is all so exciting, I think.
And then, if you could share,if someone was about to start
shopping around for VC money,what should they have in place
for presenting?
Speaker 1 (20:18):
Last year we interviewed some of New York's
top VCs.
I'll send you the link.
We did VC conversations in ouroffice and we asked them
specifically this we had, youknow, interviews everybody at
J&O, some of our partners didthese interviews.
You know what do you look forin these first meetings and how
does somebody get in touch withyou.
It was very, very interesting.
(20:41):
You know some people were likedid you pick up some new things?
Yeah, I mean, it's just thisday and age people are like I
respond to Twitter DMs fromfounders.
You know it doesn't like, yes,a personal connection helps, but
I think these days people arevery open to you know, just
connecting directly to founders.
(21:02):
So I think that's veryinteresting.
I think always, like you hearabout pitch decks and putting
together your first deck, and weget into what's really
important in that pitch deck andwhat's really important in that
first meeting, to make surethat you are especially if
you're meeting with VCs you havea you know VCs, you have a you
(21:27):
know VC-backed type of deal.
You're thinking big becausethat's what the VCs want.
So I think, really reallyresearching what VC you are
talking to and especially theactual person you're talking to,
and trying to find podcasts orinterviews where they are really
questioned on what they lookfor, because you know a lot of
people are looking for differentthings.
A lot of people have differentvalues.
Speaker 3 (21:49):
That's so interesting , and do you have those
interviews available for peopleto listen to?
Speaker 1 (21:55):
Yeah, yep, they're on JOLawco.
You can listen to VCconversations.
They're, you know, 15 to 20minutes and they really really
give good information tailoredto that specific investor.
Speaker 3 (22:07):
How much, in your opinion, if someone was looking
for a VC, a venture capitalisttype money, can you speak to
theoretically what thedifference is of saying I'm
looking for 200,000?
That probably wouldn't be a VC.
That might be an angel investor.
That might be friends andfamily.
Can you just do a quick youknow, one-on-one on what each
(22:28):
one is?
Speaker 1 (22:30):
Yeah, Typically friends and family.
You're raising a couple hundredthousand dollars, sometimes
even a million or two million,and VCs you are more in the
millions range.
Some VCs are very early stageVCs, so they will write larger
checks in their early roundsbecause they want to get in
early, right, that's when theprice is a really great value.
(22:54):
The company's worth nothing.
So you know, a lot of VCs dowant to get in in these early
rounds but there has to be sometype of valuation that makes it
worth it.
It can't be a company that's,you know, worth $500,000.
You have to somehow say, youknow, have justification that
your company is worth $20, $30,$40 million, right.
Speaker 3 (23:18):
Wow, I just Rachel.
This has been so enlightening.
I think we may need to have youback on for a part two, just a
day in the life, of what ittakes to lock in a VC.
I know our listeners areabsolutely going to really go
crazy over this, because this isa lot of questions that we get.
I have this brand, now whatit's making money.
(23:38):
Now what I want to scale.
Now what?
What am I doing right?
What am I doing wrong?
I think ironically, since peoplehave been remote for so long
that I think the desire to haveoverhead and have a pretty
office and have all thesewonderful things is making a
comeback for founders who wantto prove that they have
(24:00):
something to show.
And maybe it's not worth havingoverhead.
Maybe people should stay remoteuntil they shouldn show.
And maybe it's not worth havingoverhead.
Maybe people should stay remoteuntil they shouldn't.
And where should you bespending expenses and where
should you?
I think there's a lot of thingsthat people need to take into
consideration before they startlooking for money to make sure
they're packaged with a bow.
To start asking people,wouldn't you?
Speaker 1 (24:20):
agree, yes, and I think it all comes down to like
the team as well.
You need to hire a lot ofpeople to make this work and
knowing that to do that it'sturning the company into
something that's different, andalso of the line that not every
company needs to be a venturebacked company, and there's, you
know, a probably the majorityof companies don't need to be
(24:44):
and they can turn a profit andbecome an amazing company and
get acquired and they haven'traised venture money.
Speaker 3 (24:52):
Right, wow, rachel Johnson, it has been an absolute
delight.
Thank you for taking your time.
How can we find you, follow youand learn more about all the
amazing things you do?
Speaker 1 (25:03):
Yes, you can find me on LinkedIn, Rachel Johnson.
We, J&O, also have a LinkedInpage and our website wwwjoballco
, and then I also write aSubstack newsletter called Ami
Health.
Speaker 3 (25:18):
Perfect, thank you.
And how do you spell Ami HealthA-H-M-I?
Okay, wonderful, thank you somuch for joining us.
Speaker 2 (25:26):
Thanks for listening.
Don't forget to rate and review, and follow us on every single
platform at Handbag Designer.
Thanks so much.
See you next time.
It's hard to not get excited.
I think in our industry, whenI'm talking to you or doing a
potential new call, I alwayswant to know you know what are
you building, who are yourcustomers, what are you doing?
So I think, naturally to be inthis space, you have to be
excited about new ideas.
Speaker 2 (00:17):
Hi and welcome to Handbag Designer 101, the
podcast with your host, emilyBlumenthal, handbag industry
expert and the handbag fairygodmother.
Each week, we uncover thestories behind the handbags we
love, from the iconic brands andtop designers to the creativity
, craftsmanship and culture thatdefine the handbag world.
Whether you're a designer,collector or simply passionate
(00:39):
about handbags, this is yourfront row.
Seat to it all.
This is your front row seat toit all.
Speaker 3 (00:49):
Welcome Rachel Johnson to Handbag Designer 101,
the podcast, Rachel, who isco-founder of Ami Health and the
J&O Law Firm.
Did I say all that correctly?
Yes, Huzzah.
Speaker 1 (01:06):
Yes, and co-founder and managing partner of J&O Law
and then I am founder of AmiHealth.
Speaker 3 (01:08):
Yes, the flex is better coming from you than me.
Yeah, well, I tell my students,linkedin is where the old
people hang out.
That's where you should showoff, like I'm proud to announce.
Seriously, it's out of hand,but we connected on Substack,
which right now I think isprobably one of the kindest
platforms.
Everyone seems very supportiveand excited and there's not a
(01:31):
lot of anger there yet, which isnice, and it's really great to
connect with people who arelike-minded, excited that we
were able to go back and forth.
And I know you said like well,I'm not in handbags.
And I said, but you've done somuch that I think people would
really benefit from learningabout.
You know a story?
(01:51):
That's Rachel Johnson.
Speaker 1 (01:53):
Yes, and when you said you teach entrepreneurship,
I knew that I could give somegolden nuggets of wisdom of just
what I've done over the pastdecade of running J&O and really
working very closely with highgrowth companies.
Speaker 3 (02:08):
So how did you end up being someone who was working
with high growth companies?
Because that just does nothappen overnight.
Speaker 1 (02:16):
Yeah, so I started in big law.
I worked for one of the biggestlaw firms in the world.
Dla Piper has thousands andthousands of attorneys.
I always knew I wanted to goout on my own.
I worked for lawyers with theirown practices while in law
school.
I could see them kind of havingautonomy over their own lives,
coming in and out of theiroffices, and I've always been a
(02:39):
hard worker but I've alwayswanted to do it on my terms.
So I always had an inkling thatonce I got into law I would
have my own practice.
I went to big law because it,you know, to learn from the best
is always great, and I had lawschool loans that I wanted to
pay off and I just knew if Icould like stick it out and go
(03:02):
through that for a few years, Icould start something on my own.
My co-founder was the same way.
She was also in Big Law, and soafter our early years in Big
Law, we decided to go out on ourown.
10 years ago we just celebrateda decade of J&O Wow and we have
grown and now we workexclusively with high growth,
(03:26):
mostly venture backed companiesat all stages as their outside
general counsel, and our teamloves doing it.
We now have a team of almost 17that we have offices in South
Florida and New York and we workvery closely with high growth
companies to get them on theright track and hopefully have a
(03:49):
good ending and be with them onthe journey, which is very up
and down and a roller coaster,but it's exciting and I always
say it's like the best if youcould be a lawyer and working
with founders that are buildingtheir dream companies.
It is the best type of legalwork.
It's exciting, it's fun and wesee all sides of the story from
(04:13):
beginning to end.
Speaker 3 (04:14):
Sure, you know you said something that's
interesting and it's one of thethings that I think a lot of
people don't take intoconsideration.
Essentially, you are anentrepreneur.
You started your own company.
A law firm is still a company.
It still has the same issuesoverhead, clients, accounts
payable, accounts receivable.
I think it should not bedismissed, diminished the fact
(04:37):
that you had the wherewithal towork for someone big before you
went off on your own to takeadvantage of learning their
resources, clients, how tointeract, paper flow and all
that.
And I think so many brands,designers and so forth are so
excited to jump off and dothings on their own that I don't
(04:59):
think it should be discountedhow important the experience is
working for someone else thatwants to do that that you want
to do, like the learning curvefrom that, you should be paid
for the learning curve, notgoing to debt for it.
Speaker 1 (05:12):
Yeah, and we, when I like mentor law students, I
always say you know, some peoplelove big law and that's a
forever, but no matter what, itis an amazing place to start
your career and you learn how to, you know, be at the top of
client services and at the endof the day, we are a services
business and we have to beresponsive, we have to be
(05:35):
efficient, we have to be on topof it, and big law really,
really teaches you that.
Speaker 3 (05:41):
So I want to just dive right in.
You deal with brands andcompanies and businesses that
you said are venture backed.
How do you recommend now thisis like a wild big question If
someone felt that they wereready to be venture backed, what
should they have in line?
(06:01):
So meaning looking for outsidefunding?
Just to be clear.
Speaker 1 (06:07):
Right, yes, and I think that nowadays a lot of
people think that to have abusiness you need outside
funding and that's not the case.
There are several companiesthat maybe they take in a little
friends and family round in thebeginning.
Maybe they bootstrap theirsecond time founders and they
had an exit and they're usingtheir own money to start.
(06:28):
So you do not need to raisemoney and it's definitely not
for every company.
Every company does not need tobe venture backed.
We do represent some companiesthat have been able to just
become profitable companies andneed outside general counsel and
have a team, become profitablecompanies and need outside
general counsel and have a team.
(06:48):
So if you need capital to dothe thing whether you can't
bootstrap or you need a lot ofinventory or you're building a
lot of technology you go theventure route.
And in the venture route youalso have to go big, because
these venture firms want bigreturns.
So it's not for somebody thatwants to start a more like
(07:10):
smaller lifestyle business evenhave a couple million in revenue
.
You know this is going big andit is a responsibility.
I think you know taking onother people's money is a very
big responsibility, so you haveto be ready to take that on and
really committed, and it comeswith things that you know go
(07:33):
with running a venture backedcompany, such as having a board
of directors, working with alegal team, doing things that
aren't necessarily the core ofthe business.
You're running a venture-backedcompany that has certain
requirements.
Speaker 3 (07:48):
Yeah, I think that you touched upon a lot of things
that people tend to think and Ithink this just comes from
being green and potentially lackof experience that they assume
that if and when they want tostart a company, that the first
thing they need to do isfundraise.
And there's so much that needsto be done even before you get
(08:10):
to that point, like do you havea product that people will pay
for?
Is it something that will sell?
Do you know your competitiveanalysis?
Do you know who your customeris, what they eat, sleep, drink,
drive, all of that, all thesethings need to be done.
Is this part of some of theback-end work you do before you
(08:32):
take on someone, or is someonecoming to you already with the
funding?
Speaker 1 (08:36):
So it depends.
We take companies at all stages.
So some founders come to us andthey just want to form their
entity and they're going toraise funding In the next few
months.
Most people that come to ushave a pipeline or they come to
us and they're like listen, I'vebeen working on this for a
while.
I took some early friends andfamily money, but I'm ready to
(08:57):
take more institutionalinvestors on.
Do you think do VCs and so forthwant or expect founders to put
(09:17):
in their own money to somecapacity?
If they think that's the caseand it's understood that not a
lot of people are going to havethe funds but I think it comes
from sweat equity and workingfor the company and taking a
salary that you normallywouldn't.
A lot of our founders, evensecond, third founders, are
making salaries that are verysmall because they don't want to
(09:39):
take away a lot of thecompany's funds and they want to
be nimble.
So it's a lot of time that'sput into it and what's really
important for investors is thatit is your full-time role that
you aren't, you know, have afull-time job and also working
on the side on this thing,because they need to see you're
committed and unless you'reready to go all in, investors
(10:04):
are not going to want to puttheir money in.
Necessarily and that'ssomething that's really
important Like you have to bewilling to take a risk on
yourself and go for it beforeother people will do it.
Speaker 3 (10:18):
So when do you go to the meetings, when they meet
with VCs, ie venture capitalists, or is this something you are
not part of?
Speaker 1 (10:26):
Yeah, no, we do not go to the meetings.
Normally it's founders meetingwith the VCs.
We'll help document theinvestment and we will, of
course, from like a legal lens,give advice on what the terms
should be and help negotiate.
We are always company counsel,but we do not attend the
meetings.
We try and work with ourfounders to make sure that they
(10:49):
understand how these investmentswork.
It is a lot of legalese andsometimes you are just given
paper and not reallyunderstanding.
You know how much equity are yougiving away?
What is this?
You know 500,000 investmentreally going to take from the
company and what are theexpectations?
Are you know?
Is this000 investment reallygoing to take from the company
and what are the expectations?
Are you know?
Is this VC getting a board seat?
(11:10):
Are they expecting to getupdates?
What really is the expectationthat comes along with the
investment?
And I think that's reallyimportant, especially if you're
a first-time founder and you'venever done this before.
Just you know getting in themoney is the first step.
Right, it's.
You know there's so much thatgoes along with it as well.
Speaker 3 (11:31):
What kind of red flags would you say if someone
was potentially getting VC money, that you as a lawyer would say
I don't think this investmentis going to be good for you
because the expectation of theVC potentially might be too much
or not realistic.
(11:51):
Is that possible?
Speaker 1 (11:53):
Yes, I think what all founders do that I've you know,
I think this is kind of norm inthe industry now is that most
founders talk to each other andget a sense of you know they'll
talk to other companies that theVC invested in and see what the
temperature of the investor is.
How in the weeds are they?
(12:16):
How much control do theyactually want?
And some people want theirinvestors to be really involved
and it's, you know, a strategicchoice to have them involved and
they want them to haveconnections and introduce them
to people, and so it reallydepends on what you're looking
for.
And some people just want themoney right and don't want to
have the requirements and havingsomebody like, really in the
(12:39):
day to day of everything.
Speaker 4 (12:42):
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Speaker 3 (14:14):
How does that work then?
If you're to get, let's justsay, one VC, and then you wanted
to get another VC, and you'regetting multiple people involved
and giving away percentage onpercentage, on percentage, how
does that work?
The dance between multiplepeople giving you money in terms
of the expectation of youtrying to keep everybody happy
(14:34):
as per what contractually you'vesigned?
Speaker 1 (14:37):
Yeah, I mean I think that's like the whole dance of
founders, why everybody says itis such a grind.
You know you have a board whichis kind of the center of the
company and has the control.
So typically every majorinvestor will want a seat on the
board and the board all otherinvestors are really trusting to
(14:59):
make the right decisions forthe company.
So, as a founder, reallyimportant is who is on your
board and keeping at least apulse on that and making sure
that you feel really stronglyabout your board.
How many people should be on aboard?
When you start it's normallyjust you know the founder, two
(15:19):
founders, and then with eachround of funding you know
normally with your Series A,there will be another board
member.
Round of funding, you knownormally with your Series A,
there will be another boardmember.
So it depends.
You know there can be boards ofone or there can be boards of
five and we've seen them all youknow work in different ways and
be successful.
It really depends who's on themrather than the number.
(15:40):
What do?
Speaker 3 (15:41):
you think some of the pitfalls are of founders, once
they've received money, that youas legal counsel are kind of
like screaming on the insidelike what are you doing?
Don't do that.
Oh my God, this is going toblow up in your face.
I think that would be reallyhelpful.
Speaker 1 (16:01):
Yeah, I think it's really exciting when you get
funding to hire, because a lotof times you know you've been
doing this yourself or reallywith a really small team and
people get really eager to sendout you know 10, 20 offer
letters and let's get all thesepeople on.
And you have to be reallyintentional.
You know your team iseverything once you start
(16:23):
scaling and you need a lot ofpeople work with.
You know a strategic.
We have a director of peoplethat works with our clients to
really focus on.
You know who do you actuallyneed right now and what is the
like management of the companygoing to be once you start
adding all these people Becausethe founder can't manage
(16:45):
everybody.
Right, you start adding allthese people because the founder
can't manage everybody.
So you need to have strategy inplace.
Even if you have five people,you need to work with somebody
If you don't have that personalready on your founding team or
your team to say, okay, we havethis money in the bank, but
let's hire really intentionallyand make sure that there are
(17:06):
managers for people that we arebringing on and teams, because
very quickly you can get to ateam of even 30 which say isn't
so big, but is there performancemanagement in place?
Are people doing check-ins?
Are there the things in placethat can really make a
successful team?
Speaker 3 (17:26):
that's so much to take into consideration.
Have you worked with people whoare designers per se and do you
, if it's something like that,do you, as legal counsel, ever
review what they've created foryou to put in your personal
opinion if you think it'ssellable?
Or do you keep your mouth shut?
(17:47):
Because I know that in dealingwith factors, we had Christina
Amelios on from Hilden and, assomeone who is a factor, they
absolutely review yourassortment, they look at your
product, they look at your P&Land all of that, but they also
look at the product to see andcheck all the incoming invoices
(18:10):
and all of that.
Do you have anything to do withthat?
Or it's like hey, if it sells,it works.
Speaker 1 (18:14):
We don't care.
Yeah, it's hard to not getexcited.
I think in our industry, whenI'm talking to you or doing a
potential new call, I alwayswant to know you know, what are
you building, who are yourcustomers, what are you doing?
(18:35):
So I think, naturally, to be inthis space, you have to be
excited about new ideas and itis a lot of companies we
represent our technologycompanies and SaaS companies and
they really evolve after theyget out there.
You know they're developingsoftware and it's hard to know
what will stick because they dopivot so much as they build
their product.
But yes, like I, you know we'renever giving product design and
that feedback advice unless weare specifically asked.
(18:58):
But naturally, our team isalways excited to represent
really cool companies that aredoing awesome things and, you
know, making a difference.
I think it is hard to not lookat the product and say, you know
, is this something that's goingto be successful?
And, of course, we want everyone of our clients to be
successful.
Speaker 3 (19:18):
Are you involved with what's going on tariff wise and
saying maybe you should startthinking about manufacturing
someplace else?
Do you ever have a say or thinkabout any of those things for
your clients?
Speaker 1 (19:29):
Our clients are very involved with their
manufacturers, mostly on like abusiness sense.
Most of them are very strongrelationships that they've had
for years and years and years.
So it's, you know, touchy toget in there with legal, unless
it's about the contract, and wewill always get in there and
(19:50):
look at the contract and makesure it's in the best interest
of the company.
But, as you know, formanufacturers it's very
relationship heavy and it doesmean a lot reputation-wise of
who your manufacturer is and whoyou're working with.
Speaker 3 (20:05):
Yeah, this is all so exciting, I think.
And then, if you could share,if someone was about to start
shopping around for VC money,what should they have in place
for presenting?
Speaker 1 (20:18):
Last year we interviewed some of New York's
top VCs.
I'll send you the link.
We did VC conversations in ouroffice and we asked them
specifically this we had, youknow, interviews everybody at
J&O, some of our partners didthese interviews.
You know what do you look forin these first meetings and how
does somebody get in touch withyou.
It was very, very interesting.
(20:41):
You know some people were likedid you pick up some new things?
Yeah, I mean, it's just thisday and age people are like I
respond to Twitter DMs fromfounders.
You know it doesn't like, yes,a personal connection helps, but
I think these days people arevery open to you know, just
connecting directly to founders.
(21:02):
So I think that's veryinteresting.
I think always, like you hearabout pitch decks and putting
together your first deck, and weget into what's really
important in that pitch deck andwhat's really important in that
first meeting, to make surethat you are especially if
you're meeting with VCs you havea you know VCs, you have a you
(21:27):
know VC-backed type of deal.
You're thinking big becausethat's what the VCs want.
So I think, really reallyresearching what VC you are
talking to and especially theactual person you're talking to,
and trying to find podcasts orinterviews where they are really
questioned on what they lookfor, because you know a lot of
people are looking for differentthings.
A lot of people have differentvalues.
Speaker 3 (21:49):
That's so interesting , and do you have those
interviews available for peopleto listen to?
Speaker 1 (21:55):
Yeah, yep, they're on JOLawco.
You can listen to VCconversations.
They're, you know, 15 to 20minutes and they really really
give good information tailoredto that specific investor.
Speaker 3 (22:07):
How much, in your opinion, if someone was looking
for a VC, a venture capitalisttype money, can you speak to
theoretically what thedifference is of saying I'm
looking for 200,000?
That probably wouldn't be a VC.
That might be an angel investor.
That might be friends andfamily.
Can you just do a quick youknow, one-on-one on what each
(22:28):
one is?
Speaker 1 (22:30):
Yeah, Typically friends and family.
You're raising a couple hundredthousand dollars, sometimes
even a million or two million,and VCs you are more in the
millions range.
Some VCs are very early stageVCs, so they will write larger
checks in their early roundsbecause they want to get in
early, right, that's when theprice is a really great value.
(22:54):
The company's worth nothing.
So you know, a lot of VCs dowant to get in in these early
rounds but there has to be sometype of valuation that makes it
worth it.
It can't be a company that's,you know, worth $500,000.
You have to somehow say, youknow, have justification that
your company is worth $20, $30,$40 million, right.
Speaker 3 (23:18):
Wow, I just Rachel.
This has been so enlightening.
I think we may need to have youback on for a part two, just a
day in the life, of what ittakes to lock in a VC.
I know our listeners areabsolutely going to really go
crazy over this, because this isa lot of questions that we get.
I have this brand, now whatit's making money.
(23:38):
Now what I want to scale.
Now what?
What am I doing right?
What am I doing wrong?
I think ironically, since peoplehave been remote for so long
that I think the desire to haveoverhead and have a pretty
office and have all thesewonderful things is making a
comeback for founders who wantto prove that they have
(24:00):
something to show.
And maybe it's not worth havingoverhead.
Maybe people should stay remoteuntil they shouldn show.
And maybe it's not worth havingoverhead.
Maybe people should stay remoteuntil they shouldn't.
And where should you bespending expenses and where
should you?
I think there's a lot of thingsthat people need to take into
consideration before they startlooking for money to make sure
they're packaged with a bow.
To start asking people,wouldn't you?
Speaker 1 (24:20):
agree, yes, and I think it all comes down to like
the team as well.
You need to hire a lot ofpeople to make this work and
knowing that to do that it'sturning the company into
something that's different, andalso of the line that not every
company needs to be a venturebacked company, and there's, you
know, a probably the majorityof companies don't need to be
(24:44):
and they can turn a profit andbecome an amazing company and
get acquired and they haven'traised venture money.
Speaker 3 (24:52):
Right, wow, rachel Johnson, it has been an absolute
delight.
Thank you for taking your time.
How can we find you, follow youand learn more about all the
amazing things you do?
Speaker 1 (25:03):
Yes, you can find me on LinkedIn, Rachel Johnson.
We, J&O, also have a LinkedInpage and our website wwwjoballco
, and then I also write aSubstack newsletter called Ami
Health.
Speaker 3 (25:18):
Perfect, thank you.
And how do you spell Ami HealthA-H-M-I?
Okay, wonderful, thank you somuch for joining us.
Speaker 2 (25:26):
Thanks for listening.
Don't forget to rate and review, and follow us on every single
platform at Handbag Designer.
Thanks so much.
See you next time.
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