The SaaS Podcast

How Not To Raise Capital for Your SaaS Startup – with Brian Parks [305]

How Not To Raise Capital for Your SaaS Startup

Brian Parks is the founder and managing partner of Bigfoot Capital, a company that specializes in lending growth capital to B2B software companies.

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 $30M 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 5 mistakes that startup founders make when it comes to fundraising, how you can avoid making those same mistakes, and we'll share some actionable steps to help you raise capital with more confidence.

I hope you enjoy it.

Transcript

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[00:00:00] Omer: Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan and this is a show where I interview proven founders and industry experts who shared their stories, strategies, and insights to help you build, launch and grow your SaaS business.

In this episode, I talked 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. It 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 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.

[00:01:30] Brian: Thanks for having me.

[00:01:31] Omer: So, tell us about Bigfoot Capital. What do you do? Who do you help? What's the business you're in.

[00:01:36] Brian: We're in a very simple business. We have, we provide capital to B2B software companies, predominantly SaaS company 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, I'm the greatest equity for a company.

I started in other companies I was involved with, knew a bunch of folks who have done the same. And then that was the Genesis was, well, I think there should be another way to fund these companies than just equity angel or venture, or you have no option, but bootstraps. That was the thesis. I'm not going to say we came up with a thesis, the only people out in the world to do it, but we started executing it in 2017 and then having a great time doing it ever since. We 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, or just growing the company and in a sustainable format. So that's what we do, non-dilutive capital the B2B software.

[00:02:32] Omer: What type of B2B companies do you look at? What's the main criteria that you're interested in.

[00:02:38] Brian: 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, or transaction-oriented, even some tech-enabled services, businesses, but for us, it's from a fundamentals or quantitative standpoint, three buckets. Then we think about revenue, scale and revenue quality for us, we'll go as a really a million, million and a half ARR up to 10.

Our sweet spot is generally two, two and a half to six. 500 to two and a half million dollars into those companies and rose rounds. I, as I think of them, not drip-feeding, you know, small amounts of capital. So, revenue scale, revenue quality, the operating metrics and efficiency really mattered to us. And then it's really, how do we align with where they're trying to get?

We meet them where they are. Are they at the right stage? We provided them with enough capital and a reasonable format for where they're trying to go next and their growth age, over the next couple of years. So that's what it's really all about. It's somewhat sector agnostic and we fund enterprise software companies that's deoriented, verticalized, horizontal, all different sorts of product applications in the markets really across the country. So pretty broad.

[00:03:47] Omer: 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?

[00:04:12] Brian: Yeah, I mean, it's based on my own experience, right?

So, we've raised money as I mentioned that for Bigfoot, you have to have money to put into companies and it's not, unfortunately, all mine. So, if they, I started writing this concept. Actually, I did this content back in probably like 2017 for a MicroComp Talk. And then I refreshed it after I raised, you know, $30 million for Bigfoot in 2020 and 2021, actually 2019. And the 2021 took about 15 months. And you know, some, my experiences there, my experiences prior to that raising money for Brandfolder, a company, I started back in the day about a decade ago. And then, so those are my experiences. And then it's really 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 for muscle rubbers. So that's a, it's a kind of correlation of my experience then directly and then indirectly through the conversations.

[00:05:04] Omer: Alright. So, the first mistake is what you call conducting the casual raise. So, tell me what you mean by that, by that?

[00:05:12] Brian: Yeah. So, I have a not very good saying casualization is not capitalization. And what I mean by that is you're either raising or you're not. Raising capital is a full-blown effort that can take some time. And it depends on what kind of cap 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, ready for it, I say basically put it out, put it out, put it to the side don't let it distract you and your team. Cause 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.

[00:06:00] Omer: Yeah. So, so one, 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, what you're talking about here?

[00:06:21] Brian: 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, it's a 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 how you raise a 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 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, wherever 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 learn before you do learn to prep before you do?

[00:07:33] Omer: Yeah. So, what are some of the hallmarks that you see of founders who sort of are casually thinking about fundraising?

[00:07:41] Brian: So, there's three that jumped into my mind, and this is my viewpoint of the, 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 that you haven't been doing your homework and anything that manifests in the fact that like you don't have organized materials, they ask you for something, you can't provide it, or it takes way too long.

I think my goal always, when I'm raising money, which I have to do for Bigfoot, some regularity is to be the most prepared, quickest to respond person that, that my counterparty interacts with. I probably have many people to them coming to them for money. There's no reason I shouldn't be the best prepared and fast.

I may not have the best business. I may not have the most experience. I may not, may not have whatever, but I should always have the best preparation. So, and I think a lot of that comes from my investment banking background 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. A common thing time kills deals, right time also erodes trust and confidence. So just be fast. I never want to be the one. And 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 or no, get them to take the next step. And you really have to focus, be organized and hustle to make that happen. You can't just be passive and okay yeah you may be asking me that and maybe I'll get it to you. Oh, I got pulled in this other direction. Okay. Is this actually important for you? Is this how you treat the partners and relationships in your company holistically. Okay. Now I'm doubting your operational actions, right? I think the last one is that's being slept.

Last one is just too passive. If we've started to build some sort of relationship at the very earliest stages, maybe 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.

[00:09:59] Omer: What do you mean by that, like put you to work.

[00:10:01] Brian: Ask me to look at a model. You asked me to look at it that infinite amounts of time, but I've got five to 10, 15 minutes, what have you. I look at something specific in scope.

Maybe the, after we hop off the 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?

[00:10:24] Omer: Yeah. Yeah, totally. So, one of the things you said was also about being in the driver's seat and make sure that you're, you're pushing towards an outcome.

And that reminded me of something that the founder had once said to me was like, you keep following up until you get a yes or no, but I think people are still reluctant to do that because they're going to just come across as annoying with investors. So now we're talking to investors, like how do you perceive that when people are constantly sending you follow-ups.

[00:10:51] Brian: 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 yes or no to both. Both to you know, again, people in groups I'm trying to raise money from, and to companies, I'm trying to get capital into. It's just kind of like, Hey, are we doing this? Are we not doing this? Like, are we taking the next step? Are you interested? Okay. It's six months out. Is there anything I can do for you? 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 that I still have fears about this. Oh my gosh. I'm sending out too many emails are we know to our lists. It's like, no, no, no people can unsubscribe. Anyone can tell me, hey dude, like you're pushing too hard. People will tell you that and you actually ended up getting stuff done.

[00:11:40] Omer: Yeah, that's good stuff. Okay. So the second mistake is when you say go shooting from the hip. What's that all about?

[00:11:48] Brian: About not having a process. So, I think it's a, you gotta have a process. I mean, again, this applies to a bunch of stuff beyond raising capital, but I think 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 from the hip and disorganized, and you're not able to shepherd a group of potential capital partners, whatever, whatever else through a process. And you do want to let your counterparties know that you are running a process.

One, they're not the only game in town. Two, this is not just stretching out for infinity. Right? There are things to adhere too.

[00:12:36] Omer: 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.

[00:13:06] Brian: So first one is 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 in air quotes, and it's really important to do a lot of capital providers out there, again have different types, right? Angel venture, private equity, lenders, banks, and family offices, all different sorts of books 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 at the list of maybe 50. So maybe it's fewer that I can reach out to in a relevant way and in a referenceable way, obviously the concept of getting warm intros really cultivate and curate a list is really the first place to start.

And so, if you're in a spreadsheet's totally fine. I use a spreadsheet. We have CRM, like don't, over-engineer, it won't fit this stuff like that later on.

[00:14:10] Omer: Okay. Great. So, step one, discover step two is, you call acquire.

[00:14:15] Brian: 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, there is 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 this short eBook on this, which we can give the link to afterwards that literally have some screenshots of things I've used.

You're going to be sending out a lot of these emails, templatize their system into your process. Ask for warm intros. Of course, if you're asking for a warm intro, it's always helping. Oh, here's a formidable email. Have that ready? It's not that hard. And as you write them, you refine your thinking and as people receive the form of email and questions around them, which further refine your thinking and make the messaging better. So, I mean, you're basically doing, you are doing.

[00:15:04] Omer: Okay, so that's step two, step three, activate and engage.

[00:15:09] Brian: 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 best the in next stage. Yes or no. So I've got a spreadsheet of needed some conditional formatting and a column of status.

And if it's yes. In the either or no, yes is green. No is red. Yellow is in the neither. I want green and red when to minimize the amount that I have in yellow. So this is what you're doing here. Right? Get a reply of whether yes or no. Can you share them some information, but they didn't ask? Can you get them to have an ask of you? Can you get a meeting in motion? Can you get them to tell you it's a screw-off, right? It's that's what you're doing here. It's a really, it's a funnel, right? You reached out to 50 or a hundred. Now you're trying to activate some portion of those in the you're ultimately trying to get results from some portion of that.

[00:15:54] Omer: And I think this is the part that, a lot of people struggle with because for 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 no. And you can avoid being annoying by actually providing some value in those follow-up emails or sharing useful information or asking for something very practical.

That it 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 have the persistence to follow through.

[00:16:26] Brian: Sure. Right. 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.

[00:16:49] Omer: Okay, great. So become two steps there's 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. You don't want yellows.

[00:17:00] Brian: Yeah, that's right. And the result, particularly in capital raise is a it's something tangible in term sheet. Let's just say so about the end of that guy, the result you want some term sheets, right? Something that you can share with advisors digest with the team, your CFO, whomever, and then use to select, which is the next thing.

Pick your horse to gone through this whole thing. Now it's time to select one and hopefully not mess that up. I mean, it's really as simple as that, right? It's like 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 we can just walk. Folks will walk away, and they lose excitement and 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.

[00:17:48] Omer: 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 or the same term, so on.

And maybe we can talk about that a bit later, but the question for me was aside from the terms, 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 how important is the offer and how important is the investor fit.

[00:18:27] Brian: Yeah, great question to me, to me and, and to Bigfoot investor fit is very important to some folks who just money is green and buying. I just want money. It's not as important to understand is this transactional or is it something more than that? Again, I tend to think it's very important unless it's really, short-term capital or you're getting into bed with someone for a period of time. And if it's an equity investor, it can be perpetuity and effect.

With us it's probably a couple of few years that's a long time. And one of the 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.

[00:19:08] Omer: You pick them because the deal was a little better. It was a little better, but now you're stuck with them.

[00:19:14] Brian: Yeah, and that can happen, right? Like, it's fine. I mean, if someone really liked me and they, like, you may really believe we can do something for your company. But, yeah, then today we don't always win. And if we can go so far and if someone goes wildly farther than us from an economic standpoint.

Do you want that? Or I get it. Let me just add one thing. There are actually beyond the fit is I think transparency helps a lot throughout this process. So, I think if you're receiving term sheets, don't necessarily just go into some, they'll go AWOL for two weeks so that, you know, and leave whoever gave you those term sheets, just hanging out there.

Even if you're doing work in the backend running models, analyzing, and what have you, engage that group, be transparent without it may be under some confidentiality in certain folks like respect that, but put it out there and show people, show me, show whomever, and then we can really collaborate, which further builds kind of relationship and trust that the end of the day we may or may not get there. And that's okay. But I think they get collaborative and be transparent.

[00:20:13] Omer: Yeah, good advice. Okay. Step six is a dominate diligence.

[00:20:17] Brian: Yes. Yep. I was saying earlier, never want to be. There's a lot of skepticism and that can be brought to any business and operators. I haven't been around that long now. You're young. You don't really have the team and you don't have whatever.

There's a lot of reasons, excuses that capital providers will make. Cause they're at the end of the day, scaredy cats and scared of losing money and making bad investments. You should dominate diligence fully within your control to show. Wow, they have, they had their shit together and they can produce anything that we ask them to produce.

And in high quality, in a reasonable amount of time, of course, push back on unreasonable never-ending requests and be like, hey, like I don't have time to just have a business to run, not just respond to the spoke request from you, essential 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. 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.

[00:21:18] Omer: Okay. And then a step seven and eight. We can, we can talk about those together as I guess is like seven is document and then eight is close and fund.

[00:21:28] Brian: The one thing about diligence means is process and a lot of people don't know about, okay, we signed the term sheet we're done generally. Oftentimes not the case.

There is some diligence that buries after that, so that can be surprising, can be daunting. It can be a first-time experience. So, I'm not gonna 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 counseling very important because that feels dye 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 so, so that's important to really try to get through that process, that part of the process efficiently to get to that close fund. Close funds is easy. Then you've got through docs you're signing and you're getting wired money. And then the relationship fix off thereafter.

[00:22:36] Omer: 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 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, maybe, 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, that leads us onto the third mistake you talk about, which is going after the wrong audience.

[00:23:10] Brian: Yeah. It just kind of ties back into step one, ultimately, of the process, 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, of the process.

So, a lot of money out there. Different formats, different objectives. Very broad. Right? You can just say, oh, I'm gonna go raise money. Okay. I'm gonna go like 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, Hey, we're instant, a thousand emails type outbound, and check that box.

Okay. Now we send a lot of emails. Great. That's not the way to go. So, I said, yeah, I said be a lion lions hunt, but they also sleep a lot. They're pretty dependent upon getting big deals to survive. Yeah, fail pretty high failure rate in their hunts and their 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. That and they still fail a lot. So, they say, act like a lion take that approach, right? If you don't. You're probably gonna not be successful, exhaust yourself, give up. I think that's, it's easy to give up and 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 right.

Commit to doing a good job. And that's really kind of the crux of that. Let's say you're a $2 million ARR SaaS company. Objecting to get to $5 million in the next couple of years. Okay. Those are the types of companies we like, like I should be on your list. Let's talk if we do have a conversation, I'm like, who else are you talking to?

And say, oh, we're talking to private equity funds and oh, 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 the software.

Okay. Well, it looks like they invest in companies that have. $10 million bucks in EBITDA. They are profitable. I'm guessing you don't have $10 million in EBITDA, you're $2 million in revenue. And there's various, oh, we're talking to bang. It's like, okay, do you have venture backing? Now? You have, are you cash flow positive?

Now you gonna 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.

[00:25:19] Omer: Yeah. So, I mean, that's an interesting example. And aside from the obvious issue, Somebody, like that wasting a lot of their own time going after investment avenues, 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?

[00:25:41] Brian: It's fine not to know everything and make mistakes, but I think it can compromise confidence. It just shows a 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, oh, 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 gonna indulge your list or you and give you some thoughts and a few names, but you know, you're gonna, 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. It's really that.

[00:26:23] Omer: Building confidence, credibility, and then also not wasting your own time going after stuff that just, is it a good fit?

[00:26:29] Brian: Right. It's building an ideal capital provider profile. If you want to call it another ICP, like you develop ICPs as you're in a market with your product and sales efforts. I mean, it's a similar concept.

[00:26:42] Omer: Okay. So, the fourth mistake is having unrealistic expectations or over-optimizing. Let's talk about that.

[00:26:49] Brian: 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. Great. For your buddy. And maybe that'll happen for you, but I think you want to come into it, prepare that does not necessarily either case, and I equated otherwise, you're going to be disappointed, and you may give up. So calm knowing that you're going to have to commit to something.

So don't be on a reasonable. And the commitment expectation is one, because there's a lot of hype out there. These days, evaluations are really lofty. They in that can be okay, but it doesn't. I think what's happened is a lot of those valuation expectations as well, filtered down to companies that were 10 to 25 X top line.

Okay. Million, five, in ARR. Maybe, maybe not right. Or even on the depth side. Oh, my mortgage is 30%. This loan to my company that's burning cash and kind of subscale of 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 what you're going to get out of it from a terms standpoint are the two main things that speak to there. If the over-optimizing comes down to needling every single point and beating it to death. At some point, you just, 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, I've probably done 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. That kind of leaves a bad taste in people's mouth mutually, if the operator's doing it, or if the capital providers doing it, kind of like, wait a second. That's not what I thought we were doing here that was signed up for.

So that, yeah, that can just be a bad thing to, to try to over-optimize for every single thing. It's probably not the way to take what really matters for you from an economic standpoint, work with your council 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.

[00:28:49] Omer: Okay. And then finally the fifth mistake is not removing friction.

[00:28:53] Brian: 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. Let me, let me think about how I, what data room do I need.

How do you get information to people? Don't over-complicate that. Use drive, whatever. Okay. I want to see your deck. I'll go through docs and now I've got to give you, my email. Like that's, that's just friction, right? Just attach it to. Please. Oh, NDA. Okay. Yeah, I understand. NDAs what's not overly negotiate that we sign a lot of NDAs.

Here's our form NDA, right? Sure. Let me know if anything, but it's pretty market and then signed by hundreds, hundreds of companies at this point, but by many orders, like, let's just say, let's go right. So, that those are just, those are unnecessary type of friction and just waste of time. And I can't tell you how many messages I see.

I went through Techstars with the previous company of mine, and I see in Slack, data room show you is okay. Show you. It's just like, it doesn't really matter. Put it in a, we use Google, put it in Google drive, right? I've run diligence processes, raised millions of millions of dollars using Google drive and zip files.

Ah, so there's that 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 a tweener round size, that's become readily apparent to me at least. Okay. You raising a million dollars, raising $7 million. That's even here who are you talking to these days is a lot of VCs that don't want to write less than $5, $10 million check.

And we'll try to force that on companies, right? That happens a lot. There's a lot of angel groups that can write a hundred thousand dollars checks. So if you're raising a $2 million round, it can put you in a tweener phase. I can compromise while I'm talking to these VCs who want to say, I should raise $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 you.

And then there's a structural thing, don't over your structure and just say, is it a convertible? Is it a price? Why is it one of those and understand that certain investors have their insensitivities to structure? So, if you get an investor excited and committed and maybe show some flex on structure, maybe they hate, maybe they hate safes.

For whatever reason, if they're going to put a couple of million bucks into your company, okay. Maybe show some flex there. Don't let that be the reason it doesn't happen. So it's just things like that. 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,

[00:31:13] Omer: Okay. Awesome. So just to recap, the five mistakes 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 for having unrealistic expectations or over-optimizing. And then five, not removing friction, just keep things simple and moving.

So that's great. You also mentioned that people could go and download a guide with more information. It's kind of example of how to do outreach emails and things like that. How can people get hold of that?

[00:31:47] Brian: Yeah, it's on our it's on our blogs. It's bigfootcap.com/blog. Currently sitting up there at the top. I think it's a living green thing. We'll keep adding some chapters to, as we, as we keep doing this.

[00:31:59] Omer: Okay. So 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.

[00:32:10] Brian: bparks [at] bigfootcap [dot] 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 to me, a LinkedIn message, email me up on my calendar.

[00:32:23] Omer: So, okay, well, I'm just, let's just wrap up with the lightning round. So seven quick-fire questions for you. Ready to roll?

[00:32:30] Brian: Let's do it.

[00:32:31] Omer: Alright. What's the best piece of business advice you've ever received?

[00:32:34] Brian: I think for me and what played into my own fears 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, is a benefit in business.

[00:32:54] Omer: What book would you recommend to our audience and why?

[00:32:58] Brian: Can I do a couple? They're not, they're not business books. If that's okay.

One is nonfiction. It's a very good biography by Ron Chernow, a Grant, Ulysses S. Grant, general that turned into a president. So, I devoured it. It was just amazing. Storytelling sat in the civil work 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 in a wildly hilarious book. I've always loved to read multiple times is the Confederacy of Dunces, cyber read that, it's hilarious. The protagonist is one of the most that certain people I've ever come across and it's set in New Orleans, which is an awesome city.

[00:33:40] Omer: Yeah, two very unique recommendations. What's one attribute or characteristic in your mind of a successful entrepreneur?

[00:33:47] Brian: 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, you're 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, and adjust, even if you're not an extreme extrovert or whatever. So, I think it's that adaptability.

[00:34:12] Omer: What's your favorite personal productivity tool or habit?

[00:34:15] Brian: Man, I throw on Brain FM. And if anyone listens, uses that, and I recommend it. It's like deep brainwave music getting the brain going. So I put it on focus, infinity and crank.

[00:34:27] Omer: Yeah, I I've used that before. It's pretty good. What's a new, crazy business idea to see if you had the extra time?

[00:34:33] Brian: The most, I'll tell you the most recent one, probably not going to pursue, but I still think it's a good idea. I call it for to play. And 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 the brewery or something of that nature. And we don't have any family in town.

So, for to play is a concept that basically has a pop-up playground think like food truck at a brewery that is, you know, operated by 1099 contractors or what have you. They 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. Does that make sense?

[00:35:05] Omer: It does, yeah. Yeah. I think sometimes just like the simple ideas of the best.

[00:35:09] Brian: 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 that's a kids are fucking crazy, but for to play.

[00:35:18] Omer: 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. What's an interesting little fun fact about you that most people don't know?

[00:35:28] Brian: I was the youngest black belt in Memphis in TaeKwonDo back in like the eighties, it was like six or seven. I got written up in the paper and I quit like two years later. Cause I was burnt out. Which of, in hindsight of course I wish I hadn't done, but I think it was pretty cool that I was the youngest, fairly sizable city.

[00:35:45] Omer: Nice, and finally what's one of your most important passions outside of your work?

[00:35:50] Brian: Soccer. I love to sports soccer and love to play soccer. With pandemic, haven't played in a while, unfortunately, crystal palace football club in the premier league. If you don't have a team, a route for them, South London ready. Oh, I got type money. So, it's a palace baby.

[00:36:05] Omer: Nice. Yeah, definitely a gritty part of London. Cool. Alright, great. Well, Brian, thank you 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 are going to grab the guide or you want to learn more about Bigfoot capital, just go to bigfootcap.com. So, thanks again and I wish you and the team, the best of success.

[00:36:31] Brian: Awesome. Thanks so much Omer. Enjoyed it, thanks for having me.

[00:36:33] Omer: Cheers.

Book Recommendation

The Show Notes

Bigfoot Capital: Website | LinkedIn | Twitter
eBook: How NOT to Raise Capital
Brian Parks: LinkedIn | Twitter
Omer Khan: LinkedIn | Twitter