And none of this would have been possible if SpaceX hadn't figured out how to do what they do. Absolutely not. Let's be honest about this. Elon led the way here. He showed that, you know, if he got the money for building Falcon 1 through Falcon 9 and Dragon that there was a huge kind of pot of gold at the end of that rainbow. And this really allowed VC to open up to say, holy s**t, these companies can actually exist in their possible.
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Hey everybody. Welcome back to this week in startups today. Got a really interesting interview. Lineed up view. Today's guest is Matt Gullich and he is with the company called AstroForge. Does AstroForge do? Well, they're using SpaceX's ride sharing program to get into space and launch devices. That will be able to mine asteroids. And just two weeks ago, AstroForge sent its first vehicle into space, the broker one vehicle. Here's what it looks like for those of you watching. Looks like two solar arrays with a box in the middle. And we'll get into what it does in a moment. But first, let's welcome Matt to the program. Hey Matt. Hey Jason, thanks for having me on.
All right. Why should we be trying to mine asteroids? What are on asteroids that's not here on planet Earth? What's the point?
好的。为什么我们应该试图采矿小行星?小行星上有什么地球上没有的物质?这有什么意义?
Specifically, we are starting out first with what are called the platinum group metals. So you probably heard of some of these right. There's jewelry that's made out of platinum. But there's six of these elements that are used in all of our industrial applications. I mean, your cell phone is every single one of these metals in it. And we're running out of them both as a nation, but also as a planet. There are limited resource that we're mining and we're destroying our planet as we mine it.
Well, we have a ton of evidence to suggest that there is very, very high concentrations of these PGM's off-world. And that's what we're doing on Earth. PGM's are called. Yeah. PGM's for platinum group metals. Got it. Aridium, Asmium, Ladium, Platinum, Rodeum, and Ruthenium. If I'm pronouncing any of those correctly.
You got them all correct. These all come from asteroids or these are found on asteroids, but also found on planet Earth. Yes. In fact, one of the leading theories is the only reason we see them on the crust of the Earth is due to asteroid impacts that have happened, you know, millions of years ago. Ah, fascinating. And these are extremely valuable metals, correct?
They're extremely valuable. I mean, you can look at the spot prices. These are traded commodities that are, you know, traded on the London spot market. They range anywhere from about $400, announced all the way up to about $20,000 announced. Got it.
So we see some pictures there of your satellite or vehicle. Would be the prop car vehicle internally, right? It's something that's traveling out there. But yeah, it is a satellite bus or a vehicle that will go out to the asteroid. So I guess the question is how far out into space are these asteroids? How much does it cost to go find one? And has anybody in history ever successfully docked with an asteroid and brought materials back to Earth on an unmanned mission? Is that something we do now?
So all great questions. To answer them, yes, we've done it, right? We have sent as a human species, both NASA and the Japanese space agency have sent craft out to asteroids, docked with them, taken samples, and brought them back to Earth, right? The Japanese space agency, the famous vehicle there was called Hybus II. It went out to an asteroid and took a sample. And then from NASA, we sent out a mission called those Cybershecks. This mission went out to an asteroid called Bennu, took a sample of it. And I believe it's dropping it off this September. So this September will have reentry from a Bennu sample and we'll be studying it on Earth to see what it's made out of. So yes, space agencies have, private companies have not. And we are definitely forging a path here into the future that hasn't been done before.
These are very, very low cost launches for us. We are taking a lot more risk than a large space agency would take. And that's the only way that the business case really closes here, right? You have to think differently. You have to think cheap. You have to think non-scientific. And that's exactly what we're doing.
All right. So let's talk about that a little more specifically. It's really affordable to get to space because of the engineers and the progress made at SpaceX. Correct? I mean, space has been on the up for a while. We've seen SpaceX, which was backed off of, you know, the government programs as we've gone forward. But yeah, SpaceX has revolutionized the price to get to space. More specifically, recently, they've revolutionized the price to get to the moon. I mean, think about it. We're launching from the moon.
If I was going to tell you 10 years ago, we were going to fly to the moon. You could have laughed me out of the room. The rocket at that time would have been a delta four and that would have been, you know, around 400 million dollars. We could do a fraction of that cost now, which then allows us to send these very cheap vehicles into space and take a lot more risk. The ride is just that much cheaper.
Got it. So you've sent the blocker one up. One of the chances it finds an asteroid. And then I guess subsequently, what's the chances that it comes back?
So broker one went up to show that we could mine an asteroid in space. It is just in low earth orbit. It is not going outside of Earth's gravity well. It is orbiting the Earth right now and we'll start experimentation with it shortly to show that we can refine what we expect to be one of these asteroids, right? This ball of iron with very high concentrations of PGMs on it. Okay.
So there's a low Earth orbit asteroid that we found out that. We brought up our own asteroid. Oh, I got it. So we're just proving that this can work in space. We're proving that we can mine in space. Yep. Nobody has been able to really refine in space, right? And that's a big process of what we need to do. So we want to prove that in a very cheap, easy to use.
Six-year cube set, which to be fair, SpaceX still has the transport emissions. That's what we went on. And those are a fraction of the cost that we could have even got to space 10 years ago. So what is that closer to? Well, park to send something up these days. Obviously, we're under NDAs with a lot of companies. We can't talk about, but you can go look on SpaceX's website, right? A ride chair slot is about 1.1 million dollars to send. I believe those are 200 kilogram slots.
Got it. Okay. So their standard ticket price is a million bucks. It's very affordable. We're not talking about tens or hundreds of millions of dollars. But the key to your innovation is you're going to do the mining in space.
So does that mean this, I mean, I'm sorry to be a neophyte here, but does that mean there's like a drill bit on this thing? And it's going to drill in, take a sample and then process it and say, hey, this is dust. Oh, this is platinum. Let the dust flake off and just only bring platinum back.
So the way we do it is we go out to the asteroid. We dock with the asteroid. Use the right word. They're right. These are very small bodies. They're about 30 meters in diameter. So we're talking very, very small rocks that we're docking with. We use a process of directly heating the surface till it vaporizes. So there is no actual mechanical parts here. This is all done with a laser. We vaporize the surface. We collect that vapor and then we sort it. And this is essentially the experiment we're testing out in low-eth orbit. We've proven it to work in our thermal vacuum chambers on earth. That allows us to sort out platinum from stuff we don't care about, right? Iron, cobalt, other trace minerals in these asteroids. And then we bring back only the platinum group metals.
Now the reason for that is bringing back is still expensive and weight in space means a lot. We only want to bring back the stuff that's worked a lot of money. We are kind of limited on what we can bring back. So that's how we do it.
So the lasers pick out the good stuff, it's just sorted out. Then how does it get back? Because every time I see something come back and burns up, these asteroids burn up before they hit. So how is your vehicle designed so that it can bring back the payload and how many ounces is it going to bring back?
Yeah. So I mean, our vehicle has a heat shield on it. And the nice thing about our heat shield is we're not bringing back humans, we're not bringing back really experiments. We're bringing back raw commodities, right? This is a block of metal, which means when coming a lot hot and heavier than really any other spacecraft, there's a lot of presidents for doing this before NASA has done deep space return multiple times. So we really understand the physics behind deep space return and it all comes down to sizing the heat shield correctly.
Got it. On average, with our projections right now and our trajectories, we can bring back right around a thousand kilograms of platinum group metals per mission. So that's what we're aiming to bring back. What is a thousand kilograms? It's about a ton. It's a metric ton. Wow. GM's permission. You can be able to bring a ton back.
Okay, so how big is your vehicle? Is it like the size of a car? It's not that big. The vehicles that we will mind with are about 200 kilograms. What's the size of them? She said the asteroids were about a hundred feet wide or something. So the vehicle itself is 10 feet or 20 feet. They're about the size of a mini fridge. It is not a big vehicle when you look at it. Yeah. Well, platinum is very, very dense, right? It's like, quite is very, very high. So we store this metal right behind the heat shield. It's volumetrically actually not that much material that we bring back.
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And so when it comes back, okay, you got the heat shield. I got that. But then how do you catch it? Is it going to have a parachute on it? Does it hit the water? If it hits the earth, I mean, it's just going to be turned to dust. So you got to have some sort of plan for landing. What's the what's the landing plan here?
Yeah, our current plan right now and we're discussions right now is with there is a giant range in Utah and by the Air Force that you can do deep space reentry from. In fact, I believe this is where OSIRIS Rex is landing when they come multiple people use this as a range to return from space on. That's where we'll land. We use very, very small shoots to slow down the vehicle. Right now our mass shows us hitting the earth at about 30 kilometers an hour. So we're not going super slow, but we're not going super fast. But keep in mind, this is just a block of metal. We can take risks with bringing it back at a very different from a human or scientific space flight.
Got it. Yeah, if the refrigerator gets dented or cracked in half and there's no big deal, you're just going to pick up the pieces and you're all good.
我明白了。如果冰箱凹陷或断成两半了,也没什么大不了的,你只需要拾起残片就好了,一切都会没问题的。
And so when you do a startup like this, how long does it take in your estimation? You guys have raised, you know, over 10 million bucks, you got 15 employees last we checked. Or maybe you've raised 20 million. I've seen two different numbers of pitch book and CNBC. So you raised low tens of millions. How wide of a runway do you need to build a company like this? This seems quite ambitious. How long will it take for you to prove this out and then start generating actual revenue?
Yeah, for sure. It's a very ambitious company and these things are very, very high risk. Right. I will say this that with our current funding, we've been able to fund our first two missions that includes going to the asteroid. And that's what we need to do. We need to be able to prove out each one of these milestones so that we can raise additional money and get to our end goal. Right. We have a lot to prove as a new company. I think any deep tech company does. You got to be able to prove you can hit your milestones to raise the next branch of capital.
For us, we have a very clear plan to do our first to actually bring back our first amount of metal by the end of this decade. And that's what we're holding to on a very kind of crystal clear schedule for us. And if this works, what does the future look like? Are you going to be just sending out dozens of these every day to collect these? I mean, how does it scale? I guess becomes the next question. So if you can pull off this insane mission and actually get a refrigerator full of flattening back to Earth or whatever other one is the most expensive. How do you scale it? And what does that look like?
Yeah, I mean, look, we can start to talk about buying entire Falcon 9 instead of doing ride share anymore and sending out multiple missions per rocket or even going, I mean, I'm sure everybody watched the Starship launch, right? You can see what the future holds for us when we go about this and we talk about sending up hundreds of these vehicles to God into space and mine. One other thing I like to touch on here is while we are starting out with mining the platinum group metals, our refinery can mine really any elemental metal. So as we go out there, we can start to mine other materials, bring them back to Earth as long as the cost reward benefits us permission. It's got to be a profitable endeavor we're going after. And that's how we look at the future. We hope long term to bring all mining off Earth. Mining is a very destructive process. It accounts for a huge amount of the CO2 emissions on Earth.
I don't think we hear about all the time because we don't have open pit mines in our backyard, right? They're not outside of LA or San Francisco, but they're damaging to the Earth and we want to stop that. And I think this is the only way to do that going forward. And yeah, so when you find that like alien goo or stuff like that and biological stuff that will obviously cause like an alien invasion, you just don't be recognized that and don't bring that back. That gets we just we just leave our ship there and we never return at home.
Good. Okay. Good. I think that's really the big lesson of Sigourney. We have story arc is don't come back to Earth with any of that. Assumance contaminated and do not come home no matter what. In all seriousness, as we think about this, one of the chances we find something out there that we are not aware of when's the last time a space mission found something in space that was a material or an element that was new to us us being human.
Yeah, it's always interesting here. Like when it comes to new elements, we don't find them in space. We do find some new molecules, right? In fact, Lindy, who is running the psyche mission for NASA just had a new material named after her because we find these things as we go out into space. None of them are going to be organic matter or aliens that can really take us over. Some of them may be hazardous. They may be radioactive and small amounts, right? But that'll be cleared out with our refining process. We won't be bringing that back. And those are all things that we'll have to kind of account for as we get there. But right now we have pretty good idea of the asteroid, what we're going after, what it's made out of, what its concentrations are. Well, we can always be surprised to some extent. I think this process will be pretty clean and safe and it's not really a worry to humanity about us bringing it back. Keep in mind, we're going to very small bodies that are blasted by the solar winds and radiation all day long. We're not going to another planet that has an atmosphere that can harbor life.
Yeah, and you've got some experience in crazy hardware-based startups. You worked at Birdsgooders, which had a really rough go of it. They couldn't figure out the Union Economics there. Then you worked at Virgin Orbite and Virgin Galactic, Virgin Orbite, couldn't make it work and Virgin Galactic still in the game. So tell me, when you look at those three experiences, what have you learned that you know that we as founders may be making software or apps and things that are less ambitious about this hardware production cycle, the capitalization cycle, and in just in general how to run these companies to get the best chance of success?
Yeah, I mean, I think, look, deep tech companies are very different that SaaS companies in some ways and very not different. It's still very important to be very capital-efficient. Think about how you grow the company, not spend money on dumb shit that you don't need to. I mean, we have to really, really counter pennies here because they're so critical to us.
The difference is the time that it takes to get to profitability and really these capital purchases we have to make. Instead of buying a SaaS subscription for 20 bucks to increase my, you know, or a subscription to OpenAI, like I'm buying a Falcon 9 rocket. That costs a lot more than 20 bucks a month. And so planning for that, understanding the, the unit economics and the financing of that are very, very important to think of.
At Virgin Orbite, we learned a lot. You know, we got a lot of money very early at that company. We were able to grow, but, you know, Virgin tried really, really hard. There was a lot of great people there. Explain what Virgin Orbite did because there's some confusion between orbit and galactic. I know galactic is the one Shemaoth took by SPAC, and that was space tourism on that galactic, you know, glider or whatever it is that goes up on top of a plane. What was Virgin Orbite? Because it was a different company.
Yeah, Virgin Orbite, we are launching a rocket off the wing of a 747. So from an engineering perspective, like this is amazing, right? You get a work on a rocket that's going to be dropped off a gigantic aircraft, lightest engines, and try to go to space. It was a ton of fun to develop to think about, to understand how to do it, to go through it. But at the end of the day, it pointed out one really big thing. You still have to have a business that makes sense. And at the end of the day, putting a rocket on a pad and pointing it towards space is a lot better space to start with than off the wing of an aircraft. And I think we saw that in their performance as a business. That was what Virgin missed, kind of the same thing that Bird missed, right? Like you mentioned, the Unite Economics could never get there with the Bird Vehicle.
When we went to Bird, when I went to Bird, and that's where I met my co-founder, Jose, there was explosive growth at that company. We were doing some crazy on-heard of timelines, and it really showed me how fast the company could work when everybody was in sync and really going for it. It was kind of an eye-opener. But it still didn't, you know, it's still needed. It doesn't matter how fast you go or how successful you are, you have to still have a business at the end of the day that makes money. And Bird didn't have that. The Unite Economics didn't work out. It's been a big focus of us here. If this works out, and if we can show that technically we can do everything, we better be able to make a sh** load of money. That's what we're going to do.
Yeah, you better be able to find, I don't know, some rare metals that are incredibly precious. Exactly. Exactly. If you look at the Bird's Gooder phenomenon, it was loved and remains loved by a certain group of people in certain geographies. But let's be honest, these things cost $200, maybe $200 bucks, those scooters were costing. They got the heck beat out of them. And paying more than five or ten bucks, you're better off jumping in a lift or an Uber or X. So there were better financial solutions out there with Virgin Orbit. It seemed like a clever idea, but it does it just turn out that it's too expensive or it's just actually not a good idea because it doesn't scale because it does seem like 747s can get up to 40,000 feet. Is that just not enough enough of an advantage? It's not enough of an advantage. You have to overbuild that rocket a lot to handle different arrow forces on it. It has to turn 90 degrees to go towards space, which is really, really difficult to do and it introduces a lot of new forces. And at the end of the day, what do people care about in the space world? They care about price per kilowatt. That's all that really matters. How cheap can you get me to space? When we're evaluating missions, that's what we look at. How cheap can it be to get to space? And Virgin wasn't competitive there.
And then Virgin Galactic, that's actually working. They've done some missions, correct? Virgin Galactic has had a couple flights that have gone up. A couple of one-offs here. I think they're still having a challenge scaling that and getting it to really production for space tourism. So they have some challenging times ahead of them. I think like all space companies do, right? You have to be able to perform and hit those milestones and they've taken a lot longer than I think they would have hoped to get there.
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Is venture the right modality funding source for these companies like yours? Or should this be government partnership? Or you know, government's making these investments alongside because you know, it's made it work. But most of these other space companies have not. I don't know if the mortality rate of space companies is actually lower than regular startups or not. I don't have a collection of the, you know, the list of all of them and how many have actually not worked out. But what are your thoughts there?
And we would see them our government would have a very big interest in what you're doing for national security reasons. So why don't they just give you a quarter billion dollars and and do some contract with you to make sure this works because if it does work, my lord, this is important for national security. If we don't have these rare earth metals, in our competition with other parties on the planet, it would seem that you're a pretty important project.
I think we can talk about governments and how they work all day long and where the money gets allocated to. At the end of the day, I need to show that I'm a profitable company with or without the government's help. I want to be a commercial space company. And in my opinion, that's what venture is built on, right? Venture is built on taking big risks for big payoffs. And that's what Astroforges. That's what SpaceX was, right? SpaceX just hit and had that big payoff. We hope to do the same thing. I actually think this was venture was founded on.
I think what we see in venture now where we have a lot of people investing in these kind of monthly gross SaaS models, you can make quite a bit of money there, but they're not going to change the world. Let's be honest about it. These kind of companies that I'm trying to start will change the world if they're successful. And I think that's a different level for us to go after and what we're trying to do. And Venture has been great to work with so far.
We have a lot of support from obviously a lot of VC firms that have been huge for us, including, you know, we came out of YC and then around with you. Gary Tant, and Alexis Ohanian. So you got two amazing YC previous founders, Post-Rus, was Gary Tant's company and Reddit was Alexis's company. So you got some really great support there from them. And then now you've just got to get, you got to level up to the next level of scale VC, I guess. Yeah, exactly.
And we've had great support from our investors. And as we continue to go forward, we'll see what happens. But again, in these kind of deep tech things, it's all on us right now. We got to hit our milestones to show we can perform and make it to the damn asteroid. And that's what we hope to do the end of this year.
And none of this would have been possible if SpaceX hadn't figured out how to do what they do. Absolutely not. Let's be honest about this. Elon led the way here. He showed that, you know, if he got the money for building Falcon 1 through Falcon 9 and Dragon that there was a huge kind of pot of gold at the end of that rainbow.
And this really allowed VC to open up to say, holy s**t, these companies can actually exist in their possible. And I mean, again, 20 years ago, I think we would have been laughed out of every room because it just wasn't feasible to do.
In fact, you saw this, right? Planetary resources and deep space industries that too asteroid mining companies that came before us. Their cost models were just so much higher than ours are now to go try to do the same thing. I mean, both of those founders have been awesome and been very helpful to us. And I think their timing was just off.
I think the timing is now for this to happen due to rideshare and the decrease in launch cost. I mean, planetary resources started in 2009. So they basically started not long after SpaceX. And you're starting three or 12 years later or more than a decade later.
That's actually a huge opportunity for you because it would be like starting. If you look at YouTube, you look at Dropbox, those services, they only worked because of Amazon's cloud computing offering, lowering the cost of storage S1 or S3, whatever it was called back in the day.
I think it's still called S3. You know, those kind of enabling technologies made new services available. That's what you're doing. You're you are a service that's made available because of the cloud platform that is SpaceX SpaceX is cloud.
And it's not just SpaceX. It is the whole space economy that has really matured to the fact that we can buy satellites. We can buy pretty much everything we want on the map.
Explain that. The components. Yeah. So how much of the components are you making and how much of the components are off the shelf for OEMs, as they say. Yeah. So for this, the broker to mission that we are sending out, we have bought the spacecraft.
So we are not building the spacecraft. The spacecraft is being built for us. That being said, we work very, very closely with the people building the spacecraft because we still have the program it. We have to teach it where to go.
We build the images on it that are going to take pictures of the asteroid. We obviously do a lot of the software that's on these vehicles. So it's not like we just said it and forget it. There's a lot of work that goes into it with the spacecraft.
But the fact that I don't have to build solar panels or figure out how reaction wheels work or buy an attitude system or even our propulsion system. That is a huge time saver for me. That's the only reason why we can do this so quickly.
I mean, one of the things we did recently is we came out of we came out of starting the company in 16 months later. We were in space. That's actually not like a good sign on astrophorge. I mean, yeah, we were able to move quick.
It's actually a really good sign on the space economy in words at the fact that we could do that that fast right from inception to being in space in less than a year and a half. That's unheard of. And it's all because of that in space or the space economy.
Well, and if have you ever seen how big starship is like have you seen in a person yet? I have not. I was going to a lot of Falcon 9s in person. Yeah. Not starship. It's wild. I've been inside of one like the cone portion of it like where the payloads go.
And it's like looking into the belly of like a giant, you know, the largest yet you've ever seen. And I think you can fit 300 people inside of it if you have like seating. So we can fit whatever luxury, without luxury, like an international and one of those multi-deck you know, airplanes are that you see going, you know, to Asia from SFO. You can fit a lot of people and to our cargo.
And it seems to think he can get two or three more of those out this year. Perhaps more. I think it's going to be pretty crazy how cheap or this is going to get. And you would never been against Elon.
I think we've all seen that when it comes to space, like he never went against the lot. He has shown so much progress with SpaceX. And obviously, I mean, my co-founder came from SpaceX. We know a lot of people at SpaceX like, yeah, it is great to see what that company has done and what they continue to do.
And the fact that they continue to iterate this far into the game, I think really goes to show how awesome of a company it is. And we're really just building a company off the backs of SpaceX. And it's amazing. You can get the satellite and then you only have to build the software, the drill bits, whatever it is, the lasers. That's also amazing.
It's like being able to buy like, I don't know, an ice engine and the transmission and a bunch of other pieces to put into your car. And then, man, you just narrow your focus to what really matters. How many people do you have at the company? We have 17. As of today, we have 17, which would be crazy if I told you, we're going to go mind an asteroid of 17 people. But I think, hopefully, with understanding that most of this can be purchased.
We don't have to reinvent the wheel. We can do this with a very, very slim down workforce and keep it small. And that's the goal of the company. I'm not going to grow my company via headcount, right? It's important to be very capital efficient. And that's the way we do it. Incredible. I mean, if this was 10 years ago, you probably need 17 people just for the solar arrays on this, right? You probably need 200 people to do this company, but a decade ago. Correct. Now we can buy it all.
And that's just, it's a game changer for us, Jason. It's totally different than it was a decade ago. And you know, I can't wait to see what happens in another decade. But hopefully, we're on the forefront of showing people this is possible on a totally different regime.
All right. Listen, Matt, continue to success. I know you got the 17 people. Any open positions now for these lunatics who want to join you on this insane mission to mind space. It's a noble and insane mission. Do you have any open positions or you're full of?
We got a couple of open positions that we're always looking for right when it comes to physicists and top engineers. So if you're interested, hit me up on LinkedIn. Okay. Hit you up on LinkedIn. And then the website is astroforge.io. You can find out more about it there in our news articles. All right. Listen, continue success. Thank you for doing this hard work for humanity. And I wish you great success on it. And it sounds like you're going to get it done. So congratulations on this incredibly impressive effort. I really mean that sincerely.
Awesome. Thank you, Jason. Thanks for having me on. All right. We'll see you next time. Then we'll see you all of you next time on this week in startups. Bye-bye.
Probably the most common challenge I hear from founders is related to building. Either they are in technical and are searching for a technical co-founder or they can code, but they're just spread to then. This is one of the first major obstacles you're going to face. And I know how discouraging it can be, but there is a solution.
Do you have a great idea, but you don't have a technical co-founder? Well, crowd-bottaks can be your CTO as a service. But just like that, this means you can focus on building an awesome product and delighting your customers rather than wasting your time on infrastructure planning, architecture, compliance and all that boring stuff. Crowd-bottaks also offers professional scoping to help you flesh out your project at the MVP stage and beyond. So cut out the hassle and get back to building that perfect product for your delighted customers.
When you think crowd-bottaks, I want you to think getting your time back to focus on product. Product drives everything in a startup. So let the folks at Crowd-bottaks show you how it works, schedule a free scoping session and get your detailed build plan at crowdbottaks.com slash twist. That's crowdbottaics.com slash twist.
Hey everybody, today on Founder University of the podcast, we're setting up a fundraising process in learning how to prepare for your first investor calls. As someone who's pitched my own startup for funding and now having taken hundreds of founder calls as an investor, these are my best tips for success. Let's go.
Today we'll cover setting up a fundraising process. We'll review the funnel and how to stay organized. Then we'll prepare for your first investor meeting and we'll wrap up with how to prepare for your post meeting follow-up.
Now we need to understand the fundraising funnel. This is the first step towards success in creating a fundraising process. Just like sales, fundraising is 100% a numbers game. Think of this as a funnel. Here is what it should look like.
As you can see, in order to get a term sheet or potentially multiple term sheets in a hot fundraising market, you need to work backwards and ensure you have enough folks in the top of the funnel to get folks downstream at the bottom. So how do we fill the top of this funnel?
First, you need to start a target list. Here are a few places to start looking for investors. As you're searching, please be mindful that you are targeting the right investors for your business. For example, if you were preceded, it's probably too early to pitch investors who participate at Series Beyond Words. If you have a D to C company, you want to focus on investors who invest in D to C companies. It seems simple, but we see this all the time. Also, note that firms have a thesis.
It's not always public and transparent, but you can usually tell by their previous investments. And while you're doing this research, please triple check that the investors are still at the firm that you found them for and that they still have a focus on the type of businesses that you think. This can be as simple as checking the firm's website, but since folks move around and jobs change, even in VC, this step will save you a lot of time and energy in the long run.
Okay, a couple to point out here that are a little less obvious. You may see funding announcements that list investors and you can pull leads from here for the top of the funnel. Also, founders are a great resource. If they have a connection, they may even be willing to give you a warm intro. Now, while we're talking about warm intros, each investor and firm have different expectations here.
Some will require a warm intro. Others have a complete open door policy, send the cold email. We love to get them and others will require companies to reach out through their site or some other standardized form. Don't wait too far into this, but do reach out in the way that they ask. It's going to help you get there faster. And now for Twitter. Twitter is such a powerful tool.
You can search for things like active VCs, active investors, and then take that search a step further. You can add stage, for example. So search for active early stage investors or active seed stage investors. You can see on the examples here that these are really recent threads and they also have a ton of replies. In addition to finding lists by stage, you can keep searching even deeper on Twitter.
Folks will often do lists and threads like this with specifics for technology, business model, industry. The example here is specifically calling out investors and AI who also do seed stage deals. If this is the type of investor you're looking for, this list is going to literally be a cheat sheet for you. So please take a look at Twitter and see how it might help.
Great. Now you have your list of investors and you'll need to track the outreach of these results. Again, very similar to a sales pipeline. You'll want to have one place not only to keep the contact details for everyone you're reaching out to, but also track the stage of the process you're at with each of these different folks. So this doesn't have to be fancy and you don't need to use an expensive CRM.
You can use tools like Google Sheets or Excel. I prefer Strik, which is an in email CRM that's lightweight and has a premium version. You can also use whatever CRM your team is currently using. But again, you don't necessarily have to buy something expensive to run this process. All right, let's talk about a few of the basic fields you'll want to track in your pipeline.
First name, the best practice here is for any CRM that you want to include the first name and the last name in separate columns or fields. And this is so that you can mail merge and use tags to personalize emails without having a lot of manual work later on. You'll want to track email, the firmware company name, check size, do they lead, and how do they prefer to be contacted?
Again, those Twitter lists probably will tell you all of these details and give you that cheat sheet to fill this in quickly. Then you'll want to track where in the funnel or the pipeline each of these folks are. Here are a few stages to get you started on creating your own pipeline. And please customize this. Make it your own. This isn't the end all be all.
It's just a few that we've seen work well. All right, first step, not yet contacted, pretty self-explanatory. This is when you've just found them, but not actually reached out. Then email or application sent, you know that you actually did your first step and you're waiting to hear back. Next we have conversations started.
Often there is some back and forth before the actual call is scheduled. So we like to have that broken out and have a specific stage for first call scheduled. Next up, we have post meeting one and two. There will be downtime in between meetings and conversations. So having a stage where they can kind of sit and you know exactly where they're at is going to again help you stay organized.
Great. Now we're into the outcomes. You'll want to keep clear notes here. So when it's time to raise again, you can go back and know exactly where you left off with each one of these without having to dig into old emails. Or remember.
All right, first step we've got committed. This can also include companies you're in diligence with or you can break those out if you prefer. Next is send monthly updates. This should be a pretty big list. Anyone who passed that may come in at a later date, you'll want to send updates again. Remember investors like to invest in lines, not dots.
And then these last two categories are probably going to be used sparingly. Not a good fit. We passed is one that I like to use almost as a no-fly list. So this is for folks that you had a bad experience with if that happens unfortunately or firms that may be you're too early for or you know that you're not a great fit for their investment thesis, which again sometimes changes. So use this sparingly. And our last stage is they passed don't add to updates.
Again, this is going to be very infrequent when you want to use this. But a couple reasons you may want to not include investor on updates are things like they've invested in a very close competitor, which makes you feel uncomfortable or you don't feel strongly that there's a chance for a relationship later on. Otherwise go ahead and include them on your monthly updates. And again, when it's time to raise, you can circle back around with them.
And before we leave here, the last step to creating your fundraising process is to hold yourself accountable. You should set some targets for outreach, investor calls, and even getting to a decision like sales, getting to a know is often hard, but it's better to know that early and redirect the energy. And a huge punch up here is whether you're using a spreadsheet or a CRM, you can actually have it auto calculate how many days since you're less interaction. And then this way you don't get busy and leave a conversation to go cold on accident. Investors have lots of shiny objects. So responding quickly and staying top of mind is going to help you not get lost in the mix.
Okay, I have to pause here. Also like sales, you have to take the emotion out of the process. I see very often on Twitter, threads, a founders adamant about burning a bridge and never taking money from an investor who passed early on. But I suggest you take a step back. Remember, investors have several factors that they're considering when looking at your business. They have things like, does this fit into their thesis? How much of their fund has been deployed and how much is still available? How many investments are they aiming to make per quarter or per year and where are they at with those targets? And also how well does your business fit into all of this? So you'll never know all the factors for why an investor may have passed and assuming they weren't rude or a really bad fit, I encourage you to reframe your expectations. Don't burn the bridge and instead remember that investors invest in line snuts. Add them to the updates and start building that relationship. You never know what might come of it.
Great. Under our second agenda item today, we are figuring out what to do once you get a reply. You've got that interest. They're in your inbox. What do you do to prepare for that meeting? First of all, don't freeze. It may sound simple, but if you've never done this before, it can be super intimidating. So reply to the email, answer any questions that they asked. Use very plain English and just be normal. Also, you don't want to wait too long. Again, when you have their attention, you don't want to lose it. These sees expect founders to move fast and if you take weeks to reply, you failed.
And next up, we want to do our research on who you're speaking with. So this is going to help take the edge off if you're nervous and also help you prepare. So we've replied to the investor's email. We're getting the conversation scheduled. Now it's time to really prepare for that meeting.
First step, you want to research the firm you're meeting with. You want to check things like their website and look them up on Twitter, LinkedIn, CrunchFace. Here, you're looking for a few different pieces of information. Things like what type of businesses have they invested in previously, what business models, what stage, and can you get an idea of their check size. Then you'll also want to research the person you're speaking to. It'll come one, make small talk, a lot more comfortable, and two, it'll help you gauge how well they understand your business so you know how deep to go.
So a couple examples here, I think are really helpful. If you're an e-commerce marketplace and they were a founder of a marketplace, you can assume they're going to understand your business very well. In contrast, if you're building a highly technical product or building in an industry that they don't have deep experience in, you'll want to be mindful of the language you use and how deep you go. So for example, if you are pitching a security startup to an investor who doesn't have experience specifically working in security, you'll want to be mindful of how technical you are, as well as what acronyms you're using.
Our next pre-meeting prep step is to send materials for them to review. Not all investors will have time to read through everything you send, but if they do, you'll be able to start the conversation on second base. Make sure that these materials are easy to access and quick to consume. If it's anything dense, it will probably be ignored. Some of the materials that you may want to send are things like aluminum, which is great. A deck also really helpful.
You can also consider sending materials that overcome key objections you anticipate the investor will have. So for example, you might include a timely article that helps explain your why now, if that's a question you've received several times before and know that they're going to ask. All right, our last step of pre-meeting call prep, you want to have questions prepared. Here are some basic questions you can ask if you're not sure. So things like, what is your investment thesis and how do we fit into it?
What size check do you write? Do you lead? And how many investments do you make a year? You can also ask things like, how do you support founders beyond the check? And here's a pointed one. What would it take for you to invest in our round? This last one here is really interesting, especially if you're talking to someone who's a little less senior, understand that they can be a champion for you.
You can ask, 'do you need anything for me to help you pitch this internally?' This could be the difference in them asking for what they need and maybe to embarrass to ask alone or them passing because it's not handy and it's not outright clear. Great. Now, our last step of our session today, how do we prep our post-meeting follow-up? As a general rule, you'll want to follow up the same day or next.
So everything you want to send afterwards, you should have prepared in advance so that you're avoiding the fire drill after the call. These are a few of the things that we suggest having prepared in advance. In your follow-up, here's a few things you can send. A deck, a loom, and your requested items they had during the call. And here's the really critical piece to help you stand out.
Follow up on any concerns or questions they had on your call, especially if you asked, what would it take for you to invest or do you have any concerns and they outright tell you, go ahead and overcome those in your follow-up email, even if you talked about it on the call. Here's a great example. If they ask about market size and seem skeptical with your response, you can send a bottom-up tam and any supporting links or data to help you explain how the market is actually what you think it is and not what they have made assumptions based on.
So let's imagine you have your call and you don't hear back. It is okay to follow up and ping them in a week or two. Please note though, every time you ping an investor, you want to have something of substance to share. Not just, hey, floating this to the top. You'll want to include either some update to catch their attention or some new piece of information that will get them re-excited.
Rather than, hey, floating this to the top, a better option would be just checking in to see if you needed any additional information. Since our meeting, I've signed two new customers and crossed 20,000 in monthly revenue. And if you don't hear back, go ahead, add them to your monthly updates so that you're staying top of mind and hopefully you can convert them over time.
There are a few key takeaways from today's discussion.
First of all, it's important to have a clear and concise pitch that highlights the problem you're solving and the value your company brings to the table.
Secondly, research potential investors and tailor your approach to their specific interests and investment criteria.
Thirdly, always be prepared for questions and have a solid understanding of your financial projections and growth plans.
And lastly, don't be afraid to follow up and persist in your fundraising efforts. Investing in your business is a long-term commitment, so it's natural for investors to take their time and consider their options.
As you move forward in your fundraising process, remember to stay confident and focused. You've put in the work to build a great company, and now it's time to share that passion and vision with the world. Good luck out there, Founders!