Omer (00:09.280)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
In this episode, I talk to Brian Parks, the founder and managing director of Bigfoot Capital, a company that specializes in lending growth capital to B2B software companies.
Now, going out to raise money for your startup can be overwhelming, especially if it's the first time that you're doing it as a founder.
You have a business to run and if you're not careful, fundraising can easily consume all your time.
Brian has an interesting background.
He was an investment banker for several years.
He's raised money as a startup founder himself and now he's investing in early stage SaaS companies and recently raised $30 million for Bigfoot Capital.
So he has a unique perspective on fundraising and I thought it would be helpful to have him share his insights on how founders of SaaS companies that are looking to raise money can increase their chances of success.
In this episode, we're going to talk about the five mistakes that startup founders make when it comes to fundraising, how you can avoid making those same mistakes and and we'll share some actionable steps to help you raise capital with more confidence.
So I hope you enjoy it.
Brian, welcome to the show.
Brian Parks (01:31.950)
Thanks for having me.
Omer (01:33.150)
So tell us about Bigfoot Capital.
What do you do?
Who do you help?
What's the business you're in?
Brian Parks (01:38.430)
We are in a very simple business, I'm happy to say.
We, we provide capital to B2B software companies, predominantly SaaS companies, in a non dilutive format, which is also known as debt.
So we've been doing that since 2017.
Really started Bigfoot after having been an operator myself, having raised equity for a company I started and other companies I was involved with, knew a bunch of folks who had done the same.
And then the genesis was, well, I think there should be another way to fund these companies than just equity, angel or venture.
You have no option but to bootstrap.
So that was the thesis.
I'm not going to say we came up with the thesis, the only people out in the world to do it.
But we started executing it in 2017 and having a great time doing it.
Since we've funded about 35 companies, been able to play a part in a lot of good outcomes for those companies.
Equity raises, sales of the business, other things of that nature.
We're just growing the company in a sustainable format.
So that's what we do non diluted capital to B2B software.
Omer (02:34.580)
What type of B2B companies do you look at?
What's the main criteria that you're interested in?
Brian Parks (02:40.660)
It's broad.
So say B2B software, you know, predominantly SaaS, which in and of itself is very broad.
We'll also look at some other business models, marketplace and more transactional oriented, even some tech and enabled services businesses.
But for us it's from a fundamentals or quantitative standpoint.
There's three buckets that we think about revenue scale and revenue quality.
For us we'll go as early as a million million and a half ARR.
Up to 10.
Our sweet spot is generally two two and a half to six.
Putting 500 to $2.5 million into those companies growth rounds as I think of them not drip feeding know small amounts of capital.
So revenue scale, revenue quality, the operating metrics and efficiency really matter to us.
And then it's really how do we align with where they're trying to get?
Can we meet them where they are, are they at the right stage?
Can we provide them with enough capital and a reasonable format for where they're trying to go next in their growth stage over the next couple of years?
So that's what it's really all about.
You work somewhat sector agnostic, we fund enterprise software companies, SMB oriented, verticalized, horizontal, all different sorts of product applications in new markets really across the country.
So pretty broad.
Omer (03:49.640)
Okay, great.
So today we're going to talk about five common capital raising mistakes that you've seen founders make.
And then we're going to also going to talk about how you can avoid making those mistakes.
You and I talked about these ideas a little while before we started recording this episode and this is something that you've written about as well.
So is this just based on your experience in terms of what you've seen happen repeatedly with different founders?
Brian Parks (04:14.690)
Yeah, I mean it's based on my own experience.
Right.
So I've raised money as I mentioned for Bigfoot.
You have to have money to put into companies and it's not unfortunately all mine.
So I think I started writing this content actually I did this content back in probably like 2017 for a microconf talk.
And then I refreshed it after I raised $30 million for Bigfoot in 2020 into 2021.
Actually 2019 into 2021 took about 15 months and you know, so my experience is there.
My experiences prior to that, raising money for Brand Folder, a company I started back in the day about a decade ago and Then, so those are my experiences.
And then it's really, we talk with a bunch of people that are raising money all the time or think they're raising money or think they should be raising money from us or others.
So it's a kind of correlation of my experience directly and then indirectly through the conversations.
Omer (05:05.810)
All right, so the first mistake is what you call conducting the casual raise.
Tell me what you mean by that.
Brian Parks (05:13.450)
By that.
Yeah.
So I have a not very good saying that casualization is not capitalization.
And what I mean by that is you're either raising or you're not.
So raising capital is a full blown effort that can take some time, depends on what kind of capital you're raising.
But generally speaking, it's going to take some time, focus effort from yourself and possibly folks on your team.
So if you're not really committed to that and ready for it, I say basically put it out.
Put it out to passenger, put it to the side.
Don't let it distract you and your team because you got other stuff to think about and work on.
If you're not able to do that and you're kind of, kind of raising, I think you're doing yourself a disservice and probably not going to be all that successful to driving an outcome.
So that's what I mean.
And I think we can step into that in a little more detail here of what that actually looks like.
Omer (06:02.250)
Yeah, so one clarification here is that when you say you're either raising or you're not, how do you think about.
I mean, founders shouldn't not think about fundraising until they're like, they desperately need money.
So there's probably some prep they need to be doing.
Where does that fit into what you're talking about here?
Brian Parks (06:23.670)
Yeah, really good point.
Maybe I'll like segment it between prep education, discovery being one thing, which is super important, and then go to market.
So I think before you go to market, you should have done some prep education and discovery things like.
So when you go to market, you're strategic and you're focused and you're clear and you're not casual and you're way more prone to being casual if you haven't done some upfront work.
So point well taken that prep discovery education is really the building of the plan that you can execute on when you go to market.
So understanding why you're raising capital, how much capital are you raising?
You have a plan to put that capital to work.
What does that look like?
That probably bleeds into having a projection model of hiring People and growing revenue and doing marketing and things like that that you don't want to show up to and go to market and be asked for and not have anything to show because it just makes you look bad.
So I think having some conversations with other founders and people that allocate capital, whoever they may be, is worthwhile to learn and discover much as you would do for any other aspect of your business.
I hope, if it's product sales and marketing, what have you, you have to learn before you do.
Learn and prep before you do.
Omer (07:36.720)
Yeah.
So what are, what are some of the hallmarks that you see of founders who sort of are casually thinking about fundraising?
Brian Parks (07:45.040)
So there's.
There's three that jump into my mind, and this is my viewpoint as a.
On the receiving end of someone who is seemingly going out to raise capital.
So the first one is you're unprepared.
So like we were just saying, get prepared.
That means you don't have your stuff in order, you haven't been doing your homework, and anything that manifests in the fact that, like, you don't have organized materials.
If I ask you for something, you can't provide it or it takes way too long.
I think my goal always when I'm in, when I'm raising money, which I have to do for Bigfoot with some regularity, is to be the most prepared, quickest to respond person that my counterparty interacts with.
They probably have many people coming to them for money.
There's no reason I shouldn't be the best prepared and fastest.
May not have the best business, I may not have the most experience, I may not have whatever, but I should always have the best preparation.
And I think a lot of that comes from my investment banking background.
It's kind of just drilled into you.
I recognize a lot of people don't have that background.
Probably good enough, smart enough just to prep yourself.
So it can be evident that you're unprepared to get prepared.
Like I said, you're too slow.
Common thing.
Time kills deals.
Right.
Time also erodes trust and confidence.
So just be fast.
I never want to be the one when I'm raising money or when we're providing capital, slowing down the process.
It's always be on the front foot, be proactive.
My job on both sides of the table of raising and deploying capital is to drive timelines, get people off the fence, get people to yes and no, get them to take the next step.
You really have to focus, be organized, and hustle to make that happen.
You can't just be passive and.
Oh, okay, yeah, you maybe asked for that.
Maybe I'll get it to you.
Oh, I got pulled in this other direction.
Okay.
Is this actually important to you?
Is this how you treat the partners and relationships in your company holistically?
Okay, now I'm doubting your operational acumen.
Right.
I think the last one is.
That's being slow.
Last one is just too passive.
If we've started to build some sort of relationship at the very earliest stages, maybe I had a good conversation.
Maybe I read something you wrote, what have you.
I'm looking to be engaged.
Right.
Until I'm not.
Right.
So engage me and qualify me and even don't feel afraid to try to put me to work for you.
That kind of shows me that you're actually doing something here and in the driver's seat.
Omer (10:05.150)
What do you mean by that?
Like, put you to work?
Brian Parks (10:06.990)
Ask me to look at a model you've built.
Ask me to look at a deck.
Infinite amounts of time, but I've got five to 10, 15 minutes.
What have you to look at?
Something specific and scoped.
Maybe the after we hop off a call for the first time, don't ask me for an intro maybe or I don't know, but ask me to do something practical that can help you in your efforts and help you improve what you're using as you go to market.
Does that make sense?
Omer (10:30.110)
Yeah.
Yeah, totally.
So one of the things you said was also about be in the driver's seat and make sure that you're pushing towards an outcome.
And that reminded me of something that another founder had once said to me was like, you keep following up until you get a yes or a no.
But I think people are still reluctant to do that because they're going to just come across as annoying with investors.
So, so now we're talking to investors.
Like, how, how do you perceive that when people are constantly sending you follow ups?
Brian Parks (10:56.850)
I'm fine with it.
I mean, I do it all the time, so I'm probably that annoying person, right?
Because I'm trying to get to yes or no to both.
Both to, you know, again, people and groups I'm trying to raise money from and to companies I'm trying to get capital in to.
It's just kind of like, hey, are we doing this?
Are we not doing this?
Like, are we taking a next step?
Are you interested?
Okay, it's six months out.
Is there anything I can do for you?
It's just.
It's just the mode of operating and I think it applies more Broadly beyond just raising capital as well.
And maybe it's in your DNA or maybe you can just teach yourself to do it and realize the benefits and importance of operating that way.
I don't know.
I wouldn't be worried.
It's synonymous to.
I still have fears about this.
Oh my gosh, are we sending out too many emails?
Are we, you know, to our list?
It's like, no, no, you know, and people can unsubscribe.
Anyone can tell me, hey, dude, like, you're pushing too hard.
And a lot of people don't tell you that.
And you actually end up getting stuff done.
Omer (11:45.590)
Yeah, that's, that's good stuff.
Okay, so the second mistake is what you say call shooting from the hip.
What's all that about?
Brian Parks (11:53.830)
It's about not having a process.
So I think it's, you gotta have a process.
I mean, again, this applies to a bunch of stuff beyond raising capital.
But I think it's, it's definitely important to run a very streamlined, effective, organized process as you, as you go through this.
Because it is a process, right?
It does take time, oftentimes more time than you would expect.
So you don't have a process.
You're just, I don't know, you're doing yourself a disservice.
Right.
Shooting from the hip and disorganized and you're not able to shepherd a group of potential capital partners, whatever, whatever ilk, through a process.
You, you do want to let your counterparties know that you are running a process.
One, they're not the only game in town too.
This is not just stretching out for infinity.
Right.
There are things to adhere to here.
Omer (12:41.760)
So you actually wrote about an eight stage process to think about when raising capital.
So why don't we go through that?
Because I think there's some useful guidance there for, for a lot of founders who, I see this in terms of people kind of know what to do, but there's, there's often a lack of process.
And so they do look like they're running around a little bit like headless chickens.
Let's talk this through because I think it's going to be helpful for a lot of people.
So eight steps, let's just go through them quickly.
Brian Parks (13:12.260)
Yep.
So first one's discover, just basically researching and building your list.
Right.
So this is the prep work you can do that we talked about earlier before you go to market, throwing up air quotes.
And it's really important to do a lot of capital providers out there, again of different types, angel venture, private equity lenders, banks, Family offices, all different sorts of folks and invest in all sorts of different types of things for various reasons and with various expectations.
It is your job as the one conducting the capital raise to figure that stuff out, which doesn't just happen.
So it's an exercise of studying and working to understand.
Okay, I'm not looking to have a list of a thousand.
I'm looking to have a list of maybe 50 though or maybe it's fewer that I can reach out to in a relevant way and in a referenceable way, obviously.
Concept of getting warm intros really cultivate and curate a list is really the first place to start.
And so if you.
And a spreadsheet's totally fine.
I use a spreadsheet.
We have CRM like don't over engineer it and we'll get to stuff like that later on.
Omer (14:16.320)
Okay, great.
So step one, discover, step two is equal acquire.
Brian Parks (14:21.520)
Yeah, so you're outreaching now.
So hopefully you've done done your homework and now you're in a spot to go out and outreach with some confidence.
Right.
And some like not fluff and something that's very clear when you're reaching out to someone as to why, who you are and how you got there.
So this can be templatized emails which written a short ebook on this which we can give the link to afterwards that literally has some screenshots of things I've used.
If you're going to be sending out a lot of these emails, templatize it.
Build system into your process.
Ask for warm intros.
Of course, if you're asking for warm intro, it's always helpful to say, oh, here's a forwardable email, have that ready.
It's not that hard to do.
And as you write them, you refine your thinking.
And as people receive the forwardable email, they have questions around them which further refine your thinking and make your messaging better.
So I mean you're basically doing outbound.
You are doing outbound.
Omer (15:10.370)
Okay, so that's step two.
Step three, activate and engage.
Brian Parks (15:15.490)
Yeah, this is where you get annoying the dog with a bone.
Right.
Follow up, follow up, follow up again in your spreadsheet, CRM, whatever you have, this is where you're really this in the next stage, yes or no?
I've got a spreadsheet.
I'm going to use some conditional formatting and I'm column of status.
And if it's yes in the ether or no, yes is green, no is red, yellow is in the ether.
I want green and red.
I want to minimize the amount that I have in yellow.
So this is what you're doing here, right?
Get a reply to your email.
Can you share them some information?
They didn't ask for it.
Can you get them to have an ask of you?
Can you get a meeting in motion?
Can you get them to tell you to screw off?
That's what you're doing here.
It's a funnel.
You reached out to 50 or 100.
Now you're trying to activate some portion of those and then you're ultimately trying to get results from some portion of those.
Omer (16:00.840)
And I think this is the part that a lot of people struggle with because, for, for, you know, some of the reasons we talked about earlier.
But yeah, I'd go back to that.
That idea of like you just said is like keep going until you get a yes or a no.
And you can avoid being annoying by actually providing some value in those follow up emails or, or sharing useful information or asking for something very practical that can be done in a few minutes.
So there are a lot of different ways that, that you can do this, but if you, if you believe in your idea, you also gotta have the persistence to follow through.
Brian Parks (16:32.780)
Sure.
Right.
And I think it's also where you're saying, hey, this is important to me in my business.
This isn't just some like casual effort.
Back to that word casual that I'm conducting.
Like this is a core thing to my business at this point in time.
So treat it as such counterparty.
As a counterparty.
How's it going to be important to me if I don't think it's important to you?
You.
Omer (16:55.260)
Okay, great.
So we covered two steps there.
So three was like the activate, engage and the follow ups.
And then step four is the gather results, which is what we talked about.
Get a red or a green, we don't want yellows.
Brian Parks (17:06.380)
Yeah, that's right.
And the result generally in capital raise is a, it's something tangible, a term sheet, let's just say.
So at the end of that, gather results, you want some term sheets, right?
Something that you can share with advisors, digest with your team, your CFO, whomever, and then use to select which is the next thing.
Pick your horse.
So you've gone through this whole thing, now it's time to select one and hopefully not mess that up.
So I mean it's really as simple as that, right?
Select the offer that you want to go the partner, the offer.
You can be having multiple negotiations, but don't let that phase drag out forever because you'll exhaust people.
You're probably Trying to over optimize after a certain point and people can just walk.
Folks will walk away, they may lose excitement, they may think, oh my gosh, this is this painful to work with this person at this point.
How's it going to be when we're actually partnered up?
Negotiating is fine, but at some point you got to sign.
Omer (17:54.850)
So here's a question I had from a founder a couple of weeks ago who, who was in a pretty good situation that they had multiple investors interested and they had, they had term sheets, I think from what I understand.
And they, the question really was like, I've got different offers and how do I get everybody, all these investors on the same page, on the same term, so on.
And maybe we can talk about that a bit later.
But the question for me was, aside from the who do you want to work with, who's the best fit for you here?
So when you're thinking about picking the horse, my question for you is like, how important is the offer and how important is the investor fit?
Brian Parks (18:33.550)
Yeah, great question.
To me, to me and to Bigfoot, investor fit is very important.
To some folks who just money is green and fine.
I just want money.
It's not as important.
So you have to understand, is this transactional or is it something more than that?
Yeah, I tend to think it's very important because you're, unless it's really short term capital, you're getting into bed with someone for a period of time.
And if it's an equity investor, it can be perpetuity in effect.
With us it's probably a couple, few years, but that's a long time.
And you want to be necessarily working with someone who you don't like personally, you don't believe can bring any value, understands what you're up to or has been in your seat.
There's a lot of consideration there beyond just what's on the piece of paper.
From a economics or term standpoint, you
Omer (19:14.950)
pick them because the deal was a little better, the offer was a little better, but now you're stuck with them.
Brian Parks (19:19.630)
Yeah.
And look, and that's.
That can happen.
Right.
Like it's fine.
I mean, if someone may really like me, you may really believe we can do something for your company, but at the end of the day, we don't always win.
And if we can go so far and if someone goes wildly farther than us, and from an economic standpoint, you want that.
I get it.
Let me just add one thing there, Omer, actually beyond the fit is I think transparency helps a lot throughout this process.
I think if you're receiving term sheets, don't necessarily just go into some.
Don't go AWOL for two weeks and leave whoever gave you those term sheets just hanging out there.
Even if you're doing work in the back end, running models, analyzing them, what have you.
Engage that group, be transparent without maybe under some confidentiality with certain folks, respect that.
But put it out there and show people, show me, show me whomever, and then we can really collaborate which further builds kind of relationship and trust.
At the end of the day we may or may not get there and that's okay.
But I think make it collaborative and be transparent.
Omer (20:20.100)
Yeah, good advice.
Okay, step six is dominate diligence.
Brian Parks (20:24.100)
Yeah, I was saying earlier, I never want to be.
There's a lot of skepticism that can be brought to any business and operator that you haven't been around that long.
Oh, you're young, oh, you don't really have the team, whatever.
There's a lot of reasons, excuses that capital providers will make because they're at the end of the day scaredy cats, scared of losing money and making bad investments.
You should dominate diligence that's fully within your control to show, wow, they have their shit together, they can produce anything that we ask them to produce in high quality in a reasonable amount of time.
And of course push back on unreasonable, never ending requests.
Be like, hey, I don't have time to just have a business run, not just respond to bespoke requests from you potential capital partner.
But this is just where.
And this can be years of prep, right?
We started Bigfoot five years ago and we've raised money along the way.
But I firmly believe that you should be trying to build systems, process systems of record data what have you into your business from the get go such that you're positioned to dominate when you decide that it is time to run a process like this.
Omer (21:24.770)
Okay, and then step seven and eight, can we talk about those together?
As I guess is like seven is document and then eight is close and fund.
Brian Parks (21:33.560)
Yeah, totally.
The one thing about diligence, I mean it's a process that a lot of people don't know about.
Okay, we signed a term sheet, we're done.
Generally, oftentimes not the case, there is some diligence that varies after that.
So that can be surprisingly daunting.
It can be a first time experience.
So I'm not going to say it's easy, but having your stuff together that helps you satisfy those requests is the way to go.
Document, close, fund.
I mean these can also be all first time experiences.
So have some counsel.
Have, have.
Like this is where having good counsel very important because deals die in docs, which is super frustrating for everyone.
So I think having counsel that's done financing transactions of various sorts before and knows what is market, for instance, knows what to push on softly, that they may get, may not care about getting and knows what to push on hard.
That's really important because you probably don't necessarily know your counterparty as the investor has done a lot of these types of transactions.
You want an attorney that also has, because you probably haven't done as many.
So, so that's important to really try to get through that process, that part of the process efficiently to get to that closed fund.
Closed fund's easy.
Then you've, you've got three docs you're signing and you're getting wired money and then the relationship kicks off.
Thereafter it goes to the next phase.
Omer (22:44.670)
Okay, great.
All right, so that gives us an eight step process that.
Okay, if you're going to start fundraising, you don't need to spend, you know, equal amounts of time in each of these eight steps, but at least think about what the end to end process looks like.
Have a plan for what you're going to do at each step or where you feel some of the gaps or the weaknesses for you may be and how you can be better prepared there.
And then once that process is in place, then it's about going out there and working that.
And that leads us onto the third mistake you talk about, which is going after the wrong audience.
Brian Parks (23:17.940)
Yeah.
Which kind of ties back into step one ultimately of the process, which has, at least in my view, eight phases.
So if you mess up and don't prepare for phase one, you're probably not going to be great through the rest of the process.
So a lot of money out there, different formats, different objectives, very broad.
Right.
So you can't just say, oh, I'm going to go raise money.
Okay.
I'm going to go find people that have money.
You have to really be surgical and target in.
Again, it's outbound, so be smart about your outbound.
Right.
Don't just do dumb.
Hey, we're gonna send a thousand emails.
Type, type outbound and check that box.
Okay, now we sent a lot of emails.
Great.
That's not the way to go.
So I said, you know, I say be a lion.
Lions hunt, but they also sleep a lot.
They're pretty dependent upon getting big deals to survive and they, you know, fail.
They have a pretty high failure rate in their hunts and they're frigging lions.
Like so that just comes back.
They know what they hunt, they know when they hunt, they know how they hunt, and they have a process for how they hunt and they still fail a lot.
So I think, I say act like a lion, take that approach.
If you don't, you're probably going to not be successful, exhaust yourself, give up.
I think it's easy to give up in the first few phases of that process.
So don't delude yourself and think you're doing a good job when you're not commit to doing a good job.
And that's really kind of the crux of that.
Let's say you're a $2 million arrangement SaaS company projecting to get to 5 million in the next couple of years.
Those are the types of companies we like.
I should be on your list.
Let's talk.
And if we do have a conversation, I'm like, who else are you talking to?
Oh, we're talking to private equity funds and okay, which ones are you talking to?
Or show me your list.
If I look at that and I see PE funds that invest in manufacturing companies.
What are you doing?
Are you talking to.
Oh, I know someone who works there.
He's a VP there.
They're thinking about getting into software.
Okay, well, it looks like they invest in companies that have like 10 million bucks in EBITDA.
Are you profitable?
I'm guessing you don't have $10 million in EBITDA if you're $2 million in revenue.
Yeah.
And there's various, we're talking to banks like, do you have venture backing?
No.
You have.
Are you cash flow positive?
No.
You're going to sign a personal guarantee?
What's that?
So I don't know.
I mean, I'm happy to educate people, but I think there's a lot of self education that can be done, even if it's your first time.
Omer (25:27.640)
Yeah.
So, I mean, that's an interesting example.
And aside from the obvious issue of somebody like that wasting a lot of their own time going after investment avenues that, that are probably a really bad fit for them and are unlikely to play out, why is it also an issue for other investors like you when you hear that they're doing that?
Brian Parks (25:49.270)
It's fine not to know everything and make mistakes, but I think it can compromise confidence.
It just shows lack of experience.
It shows that you haven't done your prep.
Again, you don't have to know everything.
And maybe you have investors on your list where it's like, okay, they shouldn't have been on there.
Fine, remove them.
I mean that's really it, right?
It's like, man, this person is really just not.
Doesn't have a clue sometimes is what you can leave that call thinking.
So I can either try to help them have a clue or I can focus on the other people that have a clue and have more.
We're going to actually be more helpful.
I'm not going to build your list for you and give you some thoughts and a few names, but you're going to, I think, point yourself in productive paths.
That's what I tend to do.
We're going to actually help and lean in and add value.
Omer (26:30.760)
Yeah, it's really that building confidence, credibility and then also not wasting your own time going after stuff that just isn't a good fit.
Brian Parks (26:38.000)
Right.
It's building an ideal capital provider profile.
If you want to call it another ICP.
Like yeah, you develop ICPs as you're in market with your product and sales efforts.
I mean it's a similar concept.
Omer (26:50.200)
Okay, so the fourth mistake is having unrealistic expectations or over optimizing about that.
Brian Parks (26:57.700)
Yeah.
For me this is really around two things.
Expectations around what?
Expectations around how long this is going to take.
Oh, it's not going to be that hard.
My Buddy just raised 10 million bucks and it took him like two weeks.
Okay, well great for your body and maybe that'll happen for you.
But I think you want to come into it prepared that that's not necessarily going to be the case.
And I equate it to.
Otherwise you're going to be disappointed and you may give up.
So come knowing that you're going to have to commit to some.
So don't be unreasonable in the commitment expectation is one, there's a lot of hype out there these days.
Valuations are really lofty and that can be okay.
But I think what's happened is a lot of those valuation expectations as well have filtered down to companies that okay, we're 10 to 25x top line.
Okay, doing 1.5 in ARR.
Maybe not.
Or even on the debt side.
Well, my mortgage is 3%.
This loan to my company that's burning cash and subscale at revenue may or may not.
Maybe bootstrap should be the same.
Okay.
No, not really.
Here's why.
And that's a fine conversation to have as well time and then the what you're going to get out of it from a terms standpoint are the two main things to speak to there.
I think the over optimizing Comes down to needling every single point and beating it to death.
At some point you take a deal.
Of course you try to get the best you can get and negotiate.
But I think that wears people out.
I know it does.
And at some point it comes back to, man, if this is the case, and I've probably been, this guy should negotiate hard and try to get the best you can at the term sheet stage.
Because that's the time for it.
It's less so the time for it after that.
When you're in diligence to final docs, that kind of leaves a bad taste in people's mouths mutually.
If the operator's doing it or if the capital provider's doing it.
Kind of like, wait a second, it's not what I, it's not what I thought we were doing here that we signed up for so that, you know that can just be a bad thing to do to try to over optimize for every single thing.
It's probably not the right way to go.
So pick what really matters.
Pick what matters for you from an economic standpoint.
Work with your counsel to pick what matters in the documentation.
Sure.
Get as much as you can, but don't go round after round after round after round after round.
Omer (28:58.580)
Okay.
And then finally, the fifth mistake is not removing friction.
Brian Parks (29:02.580)
Yeah.
I think this, it's somewhat synonymous with over optimizing.
And I think a lot of people that run software companies are engineers and.
Oh my gosh.
Whatever.
Let me, let me think about how I.
What data room do I need?
What.
Okay, I'm gonna use Docsend, those types of things.
How do you get information to people?
Don't overcomplicate that.
Use drive, send it via email, whatever.
Okay, I wanna see your deck.
I'll go through Docsend.
Now I gotta give you my email.
Like that's, that's just fr.
Right, just attach it to an email, please.
Oh, NDA.
Okay, yeah, I understand NDAs.
And let's not overly negotiate that we sign a lot of NDAs.
Here's our form.
MNDA.
Right, sure.
Let me know if anything.
But it's pretty market and it's been signed by hundreds of companies at this point, vetted by many lawyers.
Like, let's just, let's go.
Right, so those are unnecessary type friction and just waste of time.
And I can't tell you how many messages I see.
I went through techstars with a previous company of mine that I see in Slack, a data room.
Should I use.
Okay, should I use.
It's just like it doesn't really matter.
Like put it in a.
We use Google, put it in Google Drive, right?
Everyone diligence processes.
Raise millions and millions of dollars using Google Drive and zip files.
Like it's fine.
So it's got information flow, friction.
Then there's kind of friction around, around your round.
Part of that can be how you size your round.
There's like such thing as tween, you know, a tweener round size.
I think that's become readily apparent to me at least.
Are you raising a million dollars?
Are you raising $7 million?
And it's even, who are you talking to these days?
There's a lot of VCs that don't want to write less than a 5, $10 million check.
And we'll try to force that on companies.
That happens a lot.
There's a lot of angel groups that can write $500,000 checks.
So if you're raising a $2 million round, it can put you in a tweener phase and that can compromise.
Well, I'm talking to these VCs who want to say I should raise a $7 million round.
And I'm talking to these angels who say it should be a $1 million round.
What do you think it should be?
And make a case for that, a clear case which will help your target.
And then there's just structural things like don't overcomplicate your structure.
Is it safe?
Is it a convertible?
Is it a price round?
Why is it one of those?
And understand that certain investors have their own sensitivities to structure.
So if you get an investor excited and committed, maybe show some flex on structure.
Maybe they hate oats, maybe they hate safes for whatever reason, if they're going to put a couple million bucks into your company, okay, maybe show some flex there.
Don't let that be the reason it doesn't happen.
So, you know, it's just things like that to.
Again, you're selling.
And so I think removing friction from any sales process, making it easy for people to get information, make decisions and say yes is important.
Omer (31:26.930)
Okay, awesome.
So just to recap the five mistakes we, we talked about, and you described this as like five sure fire ways to fumble through.
Number one is conducting the casual raise.
Two is shooting from the hip.
Three, going after the wrong audience.
Four, having unrealistic expectations or over optimizing.
And then five, not removing friction and just keep things simple and moving.
So that's great.
You also mentioned that people could go and download a guide with more information and kind of examples of how to do outreach emails and things like that.
How can people get hold of that?
Brian Parks (32:01.010)
Yeah, it's on our.
It's on our blog.
So it's bigfootcap.com/blog.
It's currently sitting up there at the top.
I think it's a living green thing.
We'll keep adding some chapters too, as we, as we keep doing this stuff.
Omer (32:12.530)
Okay, sounds good.
So if people want to learn more, as you just said, they can also go, just go to bigfootcap.com learn more about Bigfoot.
And if folks want to get in touch with you, what's the best way for them to do that?
Brian Parks (32:23.730)
Bparksigfootgap.com or click a button on our website that says let's talk.
And that goes to me.
So pretty easy.
I don't really do a whole lot on Twitter, so me a LinkedIn message.
Email me up on my calendar.
Omer (32:37.110)
Sweet.
Okay, well, I'm just.
Let's just wrap up with the lightning rounds, so seven quick fire questions for you.
Ready to roll?
Brian Parks (32:43.510)
Let's do it.
Omer (32:44.550)
All right.
What's the best piece of business advice you've ever received?
Brian Parks (32:47.990)
I think for me, and what's played into my own career is be authentic.
Don't try to be someone you're not, which I think a lot of people feel pressure to.
And I know I have previously done that and not been happy or successful.
So I think as I've aged a little bit, probably gained some confidence and experience.
I think being authentic and true to yourself and portraying that to others is a benefit in business.
Omer (33:08.200)
What book would you recommend to our audience and why?
Brian Parks (33:11.080)
Can I do a couple?
Sure.
They're not business books.
I hope that's okay.
One is nonfiction.
It's a very good biography by Ron Chernow of Grant, Ulysses S. Grant, who was general that turned into a president.
So I devoured it.
It was just amazing storytelling set in the Civil War period.
So you get a lot of details around the Civil War, into his kind of presidency while talking about his flaws.
So it's a really good character and time period piece that I really enjoyed.
On the fiction front, a wildly hilarious book I've always loved and read multiple times is the Confederacy of Dunces.
So if anyone's ever read that, it's hilarious.
The protagonist is one of the most absurd people I've ever come across, and it's set in New Orleans, which is an awesome city.
Omer (33:53.740)
Two very unique recommendations.
What's one attribute or characteristic in your mind of a successful entrepreneur?
Brian Parks (34:00.780)
To me, it's a bit of a chameleon.
And when I say that I mean you're not in a bad because I think they're going to have a negative connotation.
But I think it's your adaptable basically you're able to adapt to different situations again in an authentic way.
So I think part of the commitment you blend in, penetrate different audiences across the business, capital selling what have you, building a team and adjust even if you're not an extreme extrovert or whatever.
So I think it's that adaptability.
Omer (34:26.060)
What's your favorite personal productivity tool or habit man?
Brian Parks (34:29.620)
I throw on Brain fm.
I don't know if anyone who listens uses that, but I recommend it.
It's like deep brainwave music, getting the brain going.
So I put it on Focus Infinity and Crank.
Omer (34:40.500)
Yeah, I've used that before.
It's pretty good.
What's a new or crazy business idea you'd love to pursue if you had the extra time, the M.O.
Brian Parks (34:46.900)
i'll tell you the most recent one that I'm probably not going to pursue but I still think it's a good idea.
I call it poor to play.
So my wife and I have two kids under the age of two and a half.
We occasionally dream about actually getting out and going to a brewery or something of that nature.
And we don't have any family in town.
So port a play is a concept that basically has a pop up playground.
Think like a food truck at a brewery that is, you know, operated by 10, 99 contractors or what have you that you can put your kids in for an hour or two for 20 bucks and know that they're there in a contained environment and they can play.
And that's the idea that makes sense.
Omer (35:18.870)
It does, yeah.
I think sometimes just like the simple ideas are the best.
Brian Parks (35:22.710)
It's low capex.
It's like hey brewery, do you want parents to spend more time here and buy two, three beers instead of one because your kids are going crazy but for to play.
Omer (35:32.390)
There you go.
So Brian's not going to work on that.
So if you want to run with that idea and you're listening to this, go for it.
Brian Parks (35:37.670)
Yeah.
Omer (35:38.230)
What's an interesting or fun fact about you that most people don't know?
Brian Parks (35:41.670)
I was the youngest black belt in Memphis in taekwondo back in like the 80s.
I was like 6 or 7 like I've written up in the paper.
And then I quit like two years later because I was burned out, which I, which in hindsight of course I wish I hadn't done.
But I think it was pretty cool that I was the youngest in a fairly sizable city.
Omer (35:59.350)
Nice.
And finally, what's one of your most important passions outside of your work?
Brian Parks (36:03.990)
Soccer.
I love to sport soccer.
I'd love to play soccer.
Pre pandemic.
I haven't played in a while, unfortunately.
Crystal Palace Football Club in the Premier League.
If you don't have a team, root for them.
South London, gritty, not oligarchy type money.
So.
Crystal palace, baby.
Nice.
Omer (36:19.990)
Yeah, definitely a gritty part of London.
Brian Parks (36:23.600)
Yeah.
Omer (36:24.080)
Cool.
Brian Parks (36:24.880)
All right, great.
Omer (36:25.520)
Well, Brian, thank you for.
For joining me and going through those.
Those mistakes and helping us sort of map out a process that founders can use when they're thinking about fundraising.
If people want to go and grab the guide or you want to learn more about Bigfoot Capital, just go to bigfootcap.com so thanks again and, yeah, I wish you and the team the best of success.
Brian Parks (36:44.720)
Awesome.
Thanks so much, Omer.
Enjoyed it.
Thanks for having me.
Omer (36:47.160)
Cheers.
