Hello, everybody. I am back. And we are going to have an absolutely amazing next session about how to construct an equitable cap table when we talk a lot internally about a TechCrunch plus is how diverse the venture capital world has become how global that means that founders these days really can select from whom they take money from and also from whom they may actually enrich with their work. So picking your cap table is no small matter and we're gonna have a great session about that right now. We have Ashley from coalition operators, Robbie from Cowboy Ventures and Richie from the FinTech Phenix and both Bobby and Ritchie will be in the TechCrunch plus lounge afterwards for more questions. Please welcome the crew and your moderator Rebecca Szkutak.
Oh, I forgot to spray. I forgot to say who founder chooses to back their company is an incredibly important decision. They want to find a group that is both equitable aligns with their values and also will be beneficial to the growth of the actual startup. But of course, building an equitable cap table is easier said than done, especially in today's funding environment. Looking at stats from PitchBook funding in q2 of this year is down nearly 50% from q2 of 2022, which as we all know, was down from 2021. And yet building an equable cap table is still something that is just as important, even if it's a little bit harder for founders to sort of achieve that. So thinking about how do you build an equitable cap table? Starting with you, Robby, I know when we talked about this a couple of weeks ago, you mentioned who do you want to be making money for, as something founders should really be thinking about when they're talking with potential investors and looking to build out that cap table. So asking you to start, why does it matter? Why should founders care about this? Why should startups think about this when fundraising is just so hard as it is?
As of now? Great question. And I want to start by just kind of level setting on what is a cap table, what does it represent? So cap table represents all of the people who have equity interest in your company. And historically, that group has been pretty homogenous on the investor side. And on the investor side that's really talking about the funds that are backing you but also a lot of companies will have a number of angel investors that also back them and ultimately when startups are successful, everybody who is on the cap table, I will benefit from it because they have ownership in the company. And one of the things that prompted me to want to build modern angels, which we'll talk a little bit more about later. It's a network of diverse operators and female non binary operator angels is I saw cap tables that really successful companies that are very homogenous. And what that means is that the people who are benefiting from the startup ecosystem are people who are not from diverse backgrounds. So all of the benefits of what Silicon Valley offers ultimately ends up going to a group that doesn't look very diverse or different.
And sort of going off of that for a moment definitely makes sense to think about sort of which investors are going to make money but for the actual founders for startups themselves. Why does this also matter for them? Maybe if you want kick that off, Ashley
Yeah, that's gonna say and Richie is the perfect candidate to talk about this because he is in the founder seat and has been really intentional about this be I think Robbie talked about sort of the ecosystem impact of diverse cap tables right that people who win and win with you are going to go and put that wealth to work in the startup industry. That's one of the best things about the tech ecosystem is that people who make money here tend to put it back in. And if that's a more diverse set of people, I think we can believe it's going to they're going to invest in a more diverse set of companies, they're going to Mass a more diverse set of fund managers. And so there's this really amazing flywheel. effect. But before we can even get to like the ecosystem might impact. You have to have a successful startup. And so I think like the most important thing is to start with what is going to be most beneficial to a founder. So especially in the early stages, and especially in this economy, where you're being asked about much more efficiently with smaller teams, I cap tables and opportunities to build an incredible bench of people around you and people that you wouldn't be able to hire directly. And so having a diverse, diverse cap table in that context means having access to a diverse range of skills that are going to be super impactful for you as you grow, having access to diverse talent networks, as you build your team, having the signal of people who have really strong reputations and categories and with audiences that you care about. And so having a strong cap table makes you just that much more likely to make it to your next funding round to achieve product market fit to reach profitability. And so you can think of it as like an extended team of people who are there to support you, and people who you wouldn't be able to work with in a traditional employment structure
in which you you are living this today. So how did you think about building your cap table and what was your approach like? Yeah,
one of the ways that we've always thought about investors is really sort of like tools and toolkit. There's no single investor who's going to be a unicorn. Some people focus on early stage, some people late stage, some were focused on FinTech operations, design. And so we've always thought about organizing each of those investors to be bring something very unique to the table. And so when we thought about how we could expand that and really multiply that it was really tapping into a number of the things that Ashley was mentioning, how can we expand that network, not just at that VC level, but really at that operator level? And so oftentimes, when you're starting early stage, you're thinking about what are the sort of angel investors that are out there that can really give you sort of an unfair advantage. And so we started bringing in folks who didn't look like the typical sort of VC, but who did bring a unique skill set. We're in the FinTech space. So bringing in folks from visa, we had a number of really great investors who worked for visa lat am based out of Miami actually ended up opening a number of sort of commercial opportunities for us. And so that was something that was really important for us and something that we were very thoughtful about. At the end of the day, there's no VC who's gonna make your company there are VCs who can make your company but they can open up these new connections for you. And I think in an event like this, it's very clear that these things do add up and they do matter.
And something I talked about a bit in the intro is no surprise to anyone or secret funding has been harder to come by in the last especially two years. And of course, you can find founders in that scenario where it's like maybe they want to be intentional about building the cap table. They want to make sure it's equitable, but maybe they're not getting funding opportunities from those individuals. And it's like, do you take funding? Or do you focus more on this? There's got to be some sort of a balancing a balanced impact right now, especially in the market conditions we're in. And so I'm curious how you guys think about that sort of striking the balance companies maybe really need money, or sort of not maybe getting the responses that they wanted, but this is something they want to do they want to be intentional or as intentional as they can be. How can they find that balance?
So I can start on this one. I would actually put some of this on us on the VCs, if it's a VC background, because typically the way I would say from like precede onwards the rounds are structured is you'll have a lead institutional venture fund, and then you'll have angels and maybe other smaller funds that come and join. And so like from a founder perspective, especially if the VCs that you're working with, like your lead partners, your like investment team from that group, if they're not from diverse background, and also not just from a, like makeup perspective, but their experiences, maybe they're their career VCs, they don't have a specific operating experience you're looking for. They should have networks and they're all folks here that can help build those networks of diverse folks who should be on and can be very valuable on those cap tables. So I would say that in today's environment, it like there's kind of two routes that you can take when you want to add especially diverse angels to your cap tables, like one is building out your own network and the other is really looking to folks especially your VCs that can help introduce those folks. So I I would actually kind of not take the full onus on yourself as a founder but really ask your your primary capital provider like whoever that institution is to help.
Yeah, I mean, I would absolutely second that and I think like the demand side of this equation is there like most founders, given the opportunity would love to build diverse cap tables filled with people who can be uniquely impactful to them as they build their businesses. So there's a reason why and we haven't gotten into all the things that we're doing to try to help this but like we're all focused on the supply side of things and that matching problem, because the demand is there. But fundraising is an incredibly opaque process. If you're a founder, especially a first time founder starting out, it's very hard to know who the angels are, especially if they're not like super active. or promoting themselves on the app that used to be known as Twitter. And on the angel side, it's hard to know what fundraisers are in process. And so this is this is a tough problem to solve at an individual level, which is why we need solutions that are more systemic. At Coalition. We have two Venture Products we have an early stage fund that writes non late checks so we can come in alongside firms like cowboy and really bring operational expertise is our core value prop versus being a board member or we're like the ones to primarily capitalize your business. We've also built out this operator network when we partner with larger VC firms. So we partner with Thrive capital and General Catalyst to do exactly what Robbie was talking about. We've even created a new model that removes the friction of capital from the equation because there's so many incredible operators who have exactly the right expertise to bring two founders as they build their businesses, but they might not have had a big liquidity event. They might not have a lot of capital to put to work. And so we've partnered with larger VC firms where they shared their economics and we go and find the dream operators for the founders of AIPAC and bring them into those deals and then to the coalition network. So I think there's really an opportunity to build like a routing system of sorts to really match the best operators with startups where their expertise is uniquely valuable in a way that both brings more people into this part. of the early startup ecosystem and creates real wealth creation opportunities, impact opportunities, track record building, and also unlocks a ton of under activated expertise for founders in the process. And Robbie, maybe you want to talk about modern angels a little bit because there's sort of a similarity there.
Yeah, yeah. So one of the things that we wanted to do with monitoring does is create a community of investors who are angel investors that are female, non binary, that are interested in investing and could give us data around what their expertise is, where they'd want to invest and how they'd want to work with founders very specifically. So for example, we have heads of sales on there who want to invest in b2b companies. And the thing that they would commit to as founders is they can help interview and find their first sales hire to, to where what you were talking about earlier, very specific things that they can help with. And we have all that data in a database for founders and for VCs to look at and say okay, I really want awesome go to market help, and it's all organized for them, and they can actually find the specific help that they need. But on top of that, it ends up being an awesome group of female non binary angel investors. So it's two I really liked this analogy of a router. That's what we kind of aim to be is we want to provide this network of folks that are looking names on guys that you can really like easily understand where they spike as far as expertise and what they're interested in and what their check sizes and kind of do this matching to make it much easier for founders to build out the cap tables that they want to.
Yeah, and like especially for angels who aren't like professional like doing that as their main thing. So many of us this was my like gateway drug into venture capitalist angel investing and so much of it was about the learning and getting to work with early stage founders and if you have like a bigger growth stage job at the same time, it's so fun to work with companies and the earlier phases. You can be really helpful you can like give a founder a playbook so that they don't have to go and like learn that thing themselves. And so on the angel side as well. The the curation piece is so important because if you do that matching, right, they're gonna invest not just for capital, and by the way, the capital probably isn't a lot. You're probably not bringing them onto your cap table purely for that dollar amount, but their time, their energy, their expertise, and that's what can be really valuable especially early on when when you haven't like built out your leadership team. And you're not gonna be able to like hire those people.
I think the idea that diversity and and being able to fundraise in today's market being sort of odds is sort of a false choice. I think when you look at a founder and how they go out to each individual sort of fundraising round they typically you're trying to place the there Anker li trying to get that first term sheet that'll probably allocate anywhere between 50 to 75% of the round. Then from there, they're thinking about how do they fill out the rest of that round? And I think that's the point where people can really be very cognizant about who they're bringing in. You have a few different organizations here that are really helping to really simplify that. And so oftentimes, when we talk to founders who want to increase the diversity of their cap table, they don't know how to do it, and they don't want to go and create more friction. We were just talking about this a few minutes ago. VCs will often talk about, hey, we're gonna make this a super painless process. No fundraise is painless. There's always friction there's always paperwork there's always legal work that goes involved. And so one of the things that we did with the cap table coalition, it's an organization really who's on a mission to increase the diversity of venture capital is that we actually have informed SPV is filled with over 800 Black Latinx and women investors who can put capital into these rounds. And so we basically ask that these startups make a commitment that they at least save 10% of that investment round for these types of investors. We will put together the whole the webinar for the pitch, we do all of the organization of the SPV we even chase down the checks and so really, it's about just giving us that opportunity to bring in these people and get that investment done.
And looking at your startup to for a second because I know you mentioned a little earlier you have executives from visa and sort of some of those other types of backers that are not as traditional, how did you meet those people and sort of how did you get connected with that? Yeah.
For me, a lot of the sort of diverse network that I have really just comes from my background, to be honest. So parents are both undocumented immigrants who came here from Mexico, and was lucky enough to build some really strong networks in the black and Latino community, as I sort of grew throughout this, this process. I've been in San Francisco now for about 10 years. In the engineering side, specifically in payments. Before that prior life, I was in the world of management, consulting and investment banking. And it's not an exaggeration to say this is the most homogenous culture that I've been a part of, not Wall Street, not management consulting. And so I was really lucky to build some strong connections with people who really wanted to support me people who helped make introductions into various VCs, angels, corporate relationships, and that's really that sort of village and community that helped us get past that seed round. From there. Once you start to get that traction, obviously, a lot more people kind of come out and want to be able to support that sort of cause. And so understanding that sort of influence and power and sort of amplification of what we're trying to build through that community. We wanted to really figure out how can we put that into an organization in turn a little bit more of that art into a science and that was really where this organization came from? was really a way for us to sort of pay that back.
Definitely. Definitely. And I know we mentioned Robin, you mentioned as well, actually that VCs can play a big role in helping their startups sort of work to fill out rounds in a way that does sort of advance the diversity on the cap table. But not all VCs are going to do that. And so how can founders think about building their own networks? Maybe when they're not fundraising to sort of set themselves up for success when they do hit that point if maybe they think they might not? Get as much help from their current backers?
Yeah, I can start on this one. So I do want to push back and say that VCs will a they should have networks of diverse angels, and if they don't founder should challenge them on that of hey, I really want advisors that can help me with direct sales. Or with like, plg or whatever it is. And I would love those folks to be diverse and like kind of shame on VCs if they don't have those networks built out because so much of our job is network based, but for the founder side of things. I mean, this kind of the infrastructure that all three of us are setting up in our own ways is trying to make it much easier for founders and VCs to meet these operators that are angel investing. But at the end of the day, like ends up being who you decide to spend time with, who decided to get advice from if you kind of look at the circle of your advisors as a founder, and it looks like a pretty homogenous group. And it could be from a bunch of different aspects. Like for example, if if you worked at a big tech company before and you have all these amazing advisors from there, but they're all like white then that's probably like a signal to you that you should build networks, build friends build community outside of that. And I think it's, it's like if you want to do that there are tools and people and networks to tap into. There are so many amazing events for diverse engineers versus operators in the Bay Area and like our networks are very much based on those operators that are also angel investing. So I think it's like if you want to do it, the how is what we're trying to solve and that like we are here for you found and you're looking to build those networks and communities this this is what we are kind of working towards.
Yeah, I so agree. I don't think we should like VCs off the hook here. Most VC firms have incredible networks. I think there's a little bit of laziness and making sort of an introduction to the same set of angels. I think it also comes from maybe a miss a misunderstanding or interpretation of what is founder friendly if you have a group of angels who like almost always say yes, those feel like really nice interest to make right that feels great. You're leading around like you're lining up the group of investors. But here's the challenge. If that same group of investors is being introduced to to multiple rounds, you're fishing in the same pool as a lot of other founders. And you might be getting that capital, but the amount of time and expertise and energy you're gonna get from those people I think it's good to be eyes wide open about and again, and this economy like building a cap table period is impressive, but I think it is really worth pushing back and being really thoughtful about like, what job are you hiring each person to do for you on your cap table and and beyond the lead Jack like it's not capital as much as it is network skills, experience, all of those things. I also think other founders are an incredible resource, right? So if you're a founder in your building, you've probably built a community of founders around you. And so one, some of those founders might want to Angel invest. They probably won't be enormous checks, obviously, if there hasn't been liquidity yet, actually within the coalition network 20% of the people within that are founders themselves and founders are phenomenal advisors to you, especially if they're a couple steps ahead. Not just in terms of, you know, looking around corners and sort of anticipating future challenges, but also from an emotional support perspective, right. They understand how volatile the founder journey can't can be. And then also asking those founders who the best angels on your cap table like Who have you loved working with and you're probably going to get some names that you've never heard of before, right? Because there's sometimes a disconnect between the people are really good at promoting themselves and the people who are really great behind the scenes. And in the trenches. So um, so yeah, so other other founders you know, you're gonna get you're gonna get like real real recommendations from people who who've had that experience directly and Richie, I don't know if that was your experience at all. As you were building Phoenix's cap table
Yeah, as we kind of preface meaning you kind of went back to the earliest sort of fundraise that we had. And so we've raised about $135 million over three rounds. And the earliest rounds were not easy. And I think especially as a first time founder, one of the things that you feel during that period, one outside of just hey, I just got to survive to the next stage is a weird dynamic in in venture capital, where you don't want to necessarily bite the hand that feeds you. You don't want to push too much on the VC. Yes, it's your company. And yes, you have control over the cap table. But during those very high pressure situations, negotiations, he doesn't feel like that. And so at the seed round you know, we were able to close a round and luckily, just by chance, it ended up being pretty diverse. But it when it came to the series a we had a pretty contentious and competitive round. And I remember just being sort of in the middle between a few VC firms everybody trying to get their specific ownership and allocation targets met. And I had a young VC. He was a friend from college, who was trying to make his way in the industry. He's black, and he helped me at the seed round, he helped me the series A he introduced me to the lead checks, and he came to me and he said, Hey, can you let me put in $10,000 into this route, and there's a $17 million dollar round two people were putting minimum checks, million dollars and I was like, I don't know that I can even have that conversation with this lead when they're duking it out over this. I can't make space I can't think about, you know, giving this person this opportunity. I can't think about the diversity of the cap table right now because I don't want to ruin this chance that I have a few weeks later, one of the VCs comes in and says, Hey, can you make a million dollars from my friend from college? And it was really eye opening in that moment that this is an old boys club that there is part of this game that is a little bit raked, where they are trying to pressure in certain situations in optimizing for themselves, so we ended up making space for that $10,000 Check. Few months later, my friend got a job at one of the top VC firms. And a big part of this and this is something that actually has been talking about a lot is how do you build that track record? And so building the track record when you can't get access to these top deals, really keeps people outside? It keeps people locked out of these types of opportunities. And I think it's really important for founders, when they are in these positions to really look deeply and say, hey, what can I do to help? Right? I think its founders oftentimes we say, hey, once we have this big exit, we can think about all of this sort of nonprofit work or the other good that we can do, but you really do have an opportunity for very little effort to create some incredible opportunity for investors and other individuals in this ecosystem.
Yeah, and I love that story. Because I feel that is something a lot of founders can probably relate to. And I'm curious how you talked to these VCs who were pressuring you to either put space on the cap table for someone they knew as opposed to someone you're interested in and kind of how were you able to get past that with these investors and still sort of close around that look very similar to what you set out to?
Yeah, so when we created the cap table coalition, luckily, to be honest, it was the middle of the Black plays matters sort of movement, and I think a lot of VCs were going out in tweeting Black Lives Matter. And if you looked at their teams and he looked at their cap table, it probably told you a very different story. But at that moment, I mean, people understood that this was something that they needed to pay attention to it and make available and so it wasn't much of a fight there. I think since that, we've seen a lot of founders who have built up that confidence to have those conversations and there's very little pushback. I think that it's just really the the anxiety of having these conversations that I'd rather not have it at all that people kind of shy away from and it's funny because founders usually have a lot of conviction and they're very driven in in, sometimes very myopic in terms of how they execute. But this is one of those dynamics that the boardroom, the investors can be an awkward one that they try to avoid.
Yeah, definitely. Definitely. It's something I'm curious about, because I know you mentioned the spread you wanted to bring on was writing a $10,000 check. And of course, you guys have mentioned a few times on this panel already that getting an investor on your cap table is definitely not always just about the capital, how much it is and sort of what it looks like. But what are the expectations settings? If you do have around a founder has closed a successful funding round. They have a lead investor who put a lot of money in they have some other smaller angels, some other smaller players that they wanted on the cap table to both make it equitable, but for specific reasons, skills that they had. But what are the expectations settings for those founders of what they can expect from some of these smaller stakes in a way to not sort of add any friction to that relationship or expect too much?
Yeah, so I want to go back to something Reggie said earlier where I think for most angels, there's a very specific reason why you want them involved. So there's a there's an area that they know really well something that they spike and somebody that you know you're gonna go to them for advice, so actually ends up being much, much less about the cheque size, and much more about who they are and how they're going to help. Anecdotally the angels that have been most helpful in cowboy companies have had zero correlation with the cheque size that they wrote there are some angels have put 5000 or $10,000 checks in and they've been some of the most helpful angels and then conversely, there are angels that are super angels putting in 50 or 100k, but that this is like something they're doing on the side, they have no time for the founders and so they're hardly involved. So I think it's really important for founders upfront before they bring angels in to really understand what that like working relationship or expectation is going to be. Because that will also inform whether or not it makes sense to make a lot of room for them a little bit of room for them or room for them at all. I think the most effective angels that I've seen, have almost productize themselves, where they're like, Look, these are this is what you can expect from me every month you get an hour of my time and then when you're hiring your first VP of engineering, I will send you candidates, like interview that like those people, so they have a very clear kind of what you can come to me for and that really helps from a founder perspective. Also if they're going to their VC saying hey, can you make room for this person? I think they're going to be really helpful in hiring X role and like this is what we can expect from them. And I I would like to think that my fellow VCs would be very like open if they saw someone or people who are going to Angel invest who could be very valuable to that company, that they'd be willing to make room for them the thought that's how we approach our rounds. A cowboy.
Yeah, we spend a lot of time on this coalition, especially on the operator network side, where we're sort of doing that matchmaking and sourcing and vetting people and just like huge believers in the value of expectation setting when we talk to founders about what kind of expertise they want on their cap table, what they're looking for. We also asked them, you know, what has your relationship been like with advisors and angels in the past and there are so many people who sort of took on a bunch of angels so kind of ventured advisors didn't quite know what they needed and expectations that really haven't heard from those people sense. And so I think this sort of upfront discussion of how you want to work together is great and also like being respectful that like you know, if you bring operators and you have these big day jobs, you they're not like a part time member of your team, right? They're not going to necessarily be able to get in and do 10 hours of work a week. So so on both sides that expectation setting is really important, but we talk about things like what is sort of capacity per month. What are your communication preferences? Are you okay with like a Slack channel? Do you want to do zoom calls? Can we tax can we get added to the investor update so that that angel has like ongoing context for what's happening in the business, etc. And so I think that that piece is really important. I would also say on on the angel side, especially if you're writing these smaller checks, which is how I started. The first rule is do no harm, right? Like I think it's important to like know your place on the cap table. And if you can be helpful to that business. Fantastic, but I think it's also really important to be respectful to the founder. And you know, if they're crazy things going on in the business, not freak out. Understand that this is a this is sort of a risky asset class that you're putting your money to work in, and you're there to learn and you're there to support, but also making sure you're not adding to the founders load as they're figuring out, you know, various challenges in the business.
I think we spend a lot of time talking about, you know, how to select the angels and what sort of value that they can all bring in. I think there's absolutely a strategy. I think one thing that may be controversial that we don't talk about enough is that there is value in creating a diverse capital cap table for the sake of just diversity. And I think when you really think about why that is, we are probably experiencing some of the greatest wealth concentration as a result of the the investments that are happening today. So if you think about Instacart is going public today, any of us can go and buy a share of stock of Instacart today, once it's public, if you want to get the highest amount of upside you'd have to get in the earliest days. So I think I read today something like Sequoia invested $8 million, and they made $1 billion off that one investment, most of their value. Creation is super early on. And very few people get access to those types of deals. Who gets access to those types of deals, the top 20 firms and those top 20 firms maybe have something like 10 GPS. So there's basically 200 People here in Silicon Valley who don't just concentrate the bulk of investment they also capture the vast majority of economics when these companies end up going public. And if you look at those two energies, I'm pretty sure they don't look like us. I'm pretty sure they're not a very diverse group. There's a lot of stats that show that when you look at private equity and venture capital, there's probably less than 4% of investors are black and Latinx. I'm sure that the the percentage for women is incredibly low as well. And that's for all investors. Those GPS if he doesn't know that GPUs are those are the general partners where they're, they're the ones who typically are capturing all of that upside. So even if you're an investor, as an analyst, you're not going to make a lot of money off of Instacart maybe you get a little bit of a carry. And so I think when we think about what type of profound implications that has the residual and ripple effects of that, those are things that we should be very thoughtful of anything again, as founders make room for a more diverse cap table because that does and we'll have some pretty big implications going forward.
Yeah, absolutely. So just to add, I feel like the why now is especially profound on that point. If you listen to VCs talk a lot people are like, oh, yeah, tough right now, but the 2023 and 2024 and 2025 vintages are going to be amazing, right? Like we're going through this contraction period. But for the companies that do make it, they're able to attract better talent, there's less competition, and so there's a lot of optimism. The businesses that are being built today are going to have you know, massively successful exits and we're at the same time though, as we go through this contraction period, there's this kind of a trend towards more homogeneity, right, I think we need to be really intentional right now about not making diversity like zorp phenomenon. And so, if you believe that I think that now is absolutely the time to focus, maybe even more so and they're really heavy and bubbly times. And, you know, especially as venture does go through a contraction period, this is absolutely the time to experiment with new models, right and question assumptions about everything, including how cap tables come together and who should be on them. So I feel like the why now is really profound at the ecosystem level. At the founder level, it's really clear cash is expensive right now. So put your equity to work for you. And at the operator level, if you are an operator at a growth stage company, I think none of us are under the illusion anymore that everything is up into the right and so building a portfolio and your career is a great way to de risk your startup jobs. So like there's never been a better time to focus on this. And that makes me really optimistic about like sort of impacts we can see from this period in five 710 years, because of course, those are the time horizons in venture.
Yeah, quick reminder that we do have we have a few minutes left, but reminder, if you do have a question. Definitely had a ton of those mics. If you think I can't see you. Definitely just wave at me and make sure I don't miss you. But one thing I'm curious about is we've talked a lot about small checks and sort of bringing investors that can write can provide value beyond the monetary value, but at the same time, cap tables, they can get sprawling. They can be too many people that can be that too many cooks in the kitchen effect, and especially someone looking to bring on the smaller angels bring on this diverse more equitable cap table through having a lot of smaller checks. How can you find that balance to avoid not having just too many voices in the room and just too many people involved at the same time.
mean that you actively work
UW very thoughtful about it. But I think the important distinction is the difference between voices in the room and your board and board observers and investors. There's a lot of investors who you can theoretically help but either are gonna have data access rights, or not, you know, expecting monthly calls and if you do have monthly calls with all of those investors, it's not going to scale and I think that's where you're gonna have to make the hard cut in the line is just be very open with those investors that hey, you know, appreciate investment and probably be more proactively reaching out to you then have me spend my time reporting out to you because that's not going to drive the business forward. And so then in terms of thinking about the board, I think that that's something that you have to be very deliberate about in the investment process. We have a large board. We have two board members, but for board observers and I think one thing that people don't think about maybe those board members don't have a vote, but they do have a voice and they do drive the conversation in very big ways. And so those are things that until you've done it, and you've made a mistake, you're kind of stuck with it. And so investor relationships are like marriages that you can't get out of bed till the very end. But, you know, going back to the board observer piece, we have been very thoughtful about how we construct that board. And even if we do have only two board seats, we have thought about gender diversity, racial diversity, ethnic diversity and something that we take a lot of pride in. I talked a little bit about the sort of like early stage implications of these companies that as they mature, well, a lot of the people who will be on the board when they do go public can be folks from those early board seats as well. And so I do think that that's something that that folks should take the time to think of as well.
And on the on the cap table side, there are a number of instruments that are quite easy to use that will create kind of one line item like for a number of investors that are kind of self organized. So there are ways to make it so that your cap table itself does not become just, you know, a ton of different individuals. But I think regardless, you should be really thoughtful about the angels you bring on so hopefully that number doesn't get too high. Anyways.
Is that a question from the audience?
Want to thank you for the precede level startups. What's the best way to find like Angel investors and funds are focused on the precede level like what are the resources I can use?
And the question from the audience is for precede founders, what are the resources they can use to find these angel investors? And funds and funds?
Yeah, so I can start there's a number of really good resources online to like find different lists of VCs and angels. You can also go to like CrunchBase to see for other companies that are in your industry who are their precede early stage investors pitch books good for that, too. I as far as our network, so modern angels, it's just a community of 300 female non binary operators that I help run. It's just modern angels. You can find it just by looking it up. And we have ways for early stage founders to cold pitch to the group. Talk about kind of like the allocation that you have. There's a lot of investing activity that goes through that. But I would say from from the fund side of things, looking at funds to invest in similar companies. And usually data sources like CrunchBase or pitch book are pretty good for that.
Yeah, I would say at the precede there are a lot of multistage funds you wouldn't want to waste your time on pre see tends to be like a smaller universe of institutional investors. So VC firms focused on that. And yeah, there are a director I think like NSX has a directory and then also like talking to other precede founders. But yeah, there are some great, great pre seed funds out there. And I would say at the angel level, most angels tend to be a little bit more stage agnostic. They want to be early but precede seed, maybe even series i It's actually much more about sort of the category or the type of company so even if you see someone who's invested in like a series, a stage business, but in sort of an adjacent category, that person's probably more likely than someone who's invested in a in a precede company in a wildly wildly different industry.
Cool. I think we have time for one last Oh, do we have a question? Go ahead.
Thank you for doing this. Hey, Bob, how do you go to begin to put a value on networking? What kind of questions would you ask? What are you looking for? How would you how would you go about it?
So the question from the audience was, what value would you put on networking and sort of what would you be looking for, and spending time on
the network of the VC or an angel that the value of the partner on the cap table
Yeah, gotcha. Valuing, valuing or evaluating just to be clear, valuing it. It's an interesting question because I have a number of investors who like either a FinTech focused or a startup focus or just have like a really deep VC bench of friends. The VC funds. What I found to be like very successful is really asking other founders and other VCs who may be the stage afterwards. So for example, our lead seed investor was Homebrew and asked other seed stage investors what they thought about them and then they asked series A investors and as soon as you said their name, the series A investors eyes lit up. And so that is a great sign, right? And so every single investment investor intro that came from that VC, they need to be a long drawn out, Hey, here's why you need to meet Phoenix. Here's why you need to meet Richie, it was just Sacha wants you to speak to this person. And then you got that meeting. I think those are the types of valuable, valuable network that you're really looking for. Not someone who has 1000s of people who are following them on LinkedIn, it's those close trusted connections that will really open up doors. No one's going to be able to sell a deal for you. No one's gonna go off and raise the money on your behalf. But as long as they can get that hint, that warm intro in for you. That's really what you're looking for. And so whether it's for venture capital for a specific industry contact that's I think, what you want to like really, really spend your time on on evaluating and then that value is pretty tremendous.
Yeah, I think it comes down to what you need the network for. And so you can actually learn a lot during the investment process, because as you talk to other founders that are also from that firm, and you see who followed on from rounds with them, that can be really helpful indication of okay, they have a good network of other investors, typically and processes will make interest to potential customers so you can assess okay, do they know my customer profile? Can they help me there? And you can like I think talking to other founders is probably the best way to test how strong their network is. Because I can give you indications of who they've introduced and how helpful they've been. Yeah,
I've seen investors in rounds, especially in competitive rounds, where maybe there's a few firms duking it out to lead a deal, oftentimes a big part of how someone shows their value is making introductions in the context of the fundraise. So here are three potential customer introductions, here are some angel introductions, etc. And so sometimes you can get like a real time feel for the value of that network. And so if you're, you're lucky enough to be in that position, put people to work. In the context of the fundraise and, and sort of get them to show you their value ahead of ahead of making that decision.
And unfortunately, I know we have a couple more questions from the audience, but Robbie and Richie will be in the TC plus lounge after this for people who do have more questions, but we are out of time. So help join me in thanking our panelists for today.
Thank you all very, very much. All right, everybody. We're heading into a lunch and networking period of time. So if you're looking for something to do one, eat some food and also the space stage is going. There are breakout sessions and also roundtables. Check the app has a lot of stuff going on. There's something for absolutely everybody. And we're back on this stage at 115 to talk about how to turn that idea into a startup I'll see you guys then. Thank you
