Speaker 1: I'm with Lucas and this is black Tech, Green money.
Speaker 1: My Easter League is an angel investor and startup advisor
Speaker 1: working at the intersection of venture investing, startups, and social impact.
Speaker 1: Her work aims to build a more equitable future through
Speaker 1: strong businesses, new models for investment, and supporting founders that
Speaker 1: are frequently undervalued. Startups are going through a lot these days,
Speaker 1: and commitments to back and support black companies, black founders,
Speaker 1: and black startups, so all sharp increases in twenty twenty
Speaker 1: and twenty twenty one. I asked my issue of the
Speaker 1: window of opportunity I existed just a short time ago.
Speaker 1: It's still open.
Speaker 2: I think a lot of entrepreneurs and emerging find managers
Speaker 2: are asking whether or not they're going to take a week.
Speaker 2: I think it depends on who you talk to. There's
Speaker 2: a few things happening right now in the fundraising climate
Speaker 2: that make it challenging britt large. A lot of it's
Speaker 2: like the financial uncertainty, what's happening in the US economy
Speaker 2: and the US kony tends to drive globally what folks
Speaker 2: are thinking about in terms of startup and tech investments.
Speaker 2: There's a change, though Aude I think we saw it
Speaker 2: really when Elon Musk over Twitter, which seems like a
Speaker 2: cultural moment. How does that directly connect to how investments
Speaker 2: are being made. I think that a lot of folks
Speaker 2: were uncomfortable with the commitments, the social justice commitments that
Speaker 2: were made around sort of following the untimely passing of
Speaker 2: George Floyd, and they are leveraging market conditions as a
Speaker 2: reason to retreat from some of those commitments. We can't
Speaker 2: do this because there's not enough of X. No one
Speaker 2: was really asking people to make car bouts for black
Speaker 2: and brown entrepreneurs if you believe in them, if you
Speaker 2: believe in the track record or the evidence that's sort
Speaker 2: of played itself out in the US economy. Black and
Speaker 2: brown people tend to create their own businesses at overwhelming rates,
Speaker 2: sort of outstriping their white counterparts, and their businesses could
Speaker 2: happen to be quite successful. They weren't asking for car abouts.
Speaker 2: They were just asking to consider my investment as for
Speaker 2: what it is, which is something that's a high quality
Speaker 2: that justice a very specific market need. You might not understand,
Speaker 2: but millions and millions of people sort of understand. Because
Speaker 2: I'm building against the issues that I know, despite not
Speaker 2: asking for a car about that's how excuses are being
Speaker 2: made now to retreat to old behaviors. Start, I should
Speaker 2: say some investors, not all, but a good number of
Speaker 2: them have not ever really been daring in terms of
Speaker 2: where they've put their money. Venture capital as a general
Speaker 2: matter does not encourage people to be daring in terms
Speaker 2: of where they put their money. Just sort of pattern
Speaker 2: matching exists for a real reason. It's rewarded the industry,
Speaker 2: and I think there's a lot of that behavior that's
Speaker 2: returned in large part because, like I said, to the
Speaker 2: macroeconomic conditions and then examples of leadership that are giving
Speaker 2: people cover or for changing their behavior. I would even
Speaker 2: add that. And almost immediately after some of the commitments
Speaker 2: were made, we saw the founder of base Camp. We
Speaker 2: saw a ton of founders who decided that they were
Speaker 2: going to take politics out of their businesses. Sort of
Speaker 2: another way to suggest that we're not making those types
Speaker 2: of commitments. Meritocracies the thing that matters the most. Also,
Speaker 2: no one's debating that, but so sort of there have been,
Speaker 2: I should say, immediately after George Floyd. But even now
Speaker 2: they're more and more excuses for people to go back
Speaker 2: to their old behaviors, so it's changed.
Speaker 1: And so you touched on a couple of these points,
Speaker 1: and I wanted to isolate them with this question, like
Speaker 1: what long term effects related to the commitments made or
Speaker 1: the initiatives after COVID and George Floyd can be found?
Speaker 1: Are there any positive things that can be you know,
Speaker 1: realized out of those communities?
Speaker 2: Think so? I think so. I mean it's sort of
Speaker 2: like human behavior tends to operate in a bell curve, right,
Speaker 2: and so in the early days, it's like, oh, something's happening,
Speaker 2: should we make commitment. There's a spike in commitments, and
Speaker 2: then there's a reaction to that spike. I think as
Speaker 2: a result, in twenty twenty, we saw a ton of
Speaker 2: people who had the courage to step out in really
Speaker 2: big ways and raise rounds. And whether or not founders
Speaker 2: got investment because of the societal moment we were in
Speaker 2: or just because people are finally paying attention. I think
Speaker 2: there are a lot of great companies that come out
Speaker 2: of that and have really incredible rounds as a result
Speaker 2: of it. I think that the challenge for everyone, and
Speaker 2: I think a lot of skeptics at the time are
Speaker 2: asking how long would this commitment stick? I think that
Speaker 2: that's where the pessimism comes in. That said, you know,
Speaker 2: I think that we'll see that batch of companies that
Speaker 2: raise money in twenty twenty, twenty twenty one, who is
Speaker 2: a really big year. Things start to get dicey towards
Speaker 2: the end of twenty twenty one. We'll see how they
Speaker 2: make out the next five years. I think that that's
Speaker 2: when the really prove themselves out. But how valuable those
Speaker 2: early commitments actually were.
Speaker 1: You've spent a lot of time working with corporations and helping,
Speaker 1: you know, provide bridges for startups to work with big corporations.
Speaker 1: And how do corporations treat carvos? You know, I think
Speaker 1: about a lot of state and government you know carvos
Speaker 1: where it maybe a state will designate twenty percent of
Speaker 1: its dollars have to be spent with you know, a
Speaker 1: minority owned company or some companies will have prime vendors
Speaker 1: and sub vendors, and you got to work with the
Speaker 1: prime if you want to get you know, in it
Speaker 1: at all. So how do corporateations typically work in this regard?
Speaker 2: I think actually for whatever reason, perhaps because they're publicly
Speaker 2: traded and they're for publicly accountable, they're doing a bit better,
Speaker 2: but a lot of corporate leaders don't see it as
Speaker 2: a car about. You've got folks that are coming in
Speaker 2: and really want to align their investments with their consumer base,
Speaker 2: which trends right to groups that tend to be underrepresented
Speaker 2: in the venture world. I think that those that are
Speaker 2: successful navigating corporate innovation teams, the sort of purchase managers
Speaker 2: and corporations are faring a bit better than those in
Speaker 2: the private markets. And that really might be about the
Speaker 2: length of a commitment a company is used to making,
Speaker 2: or the folks that are sponsoring the work within.
Speaker 1: What are better ways corporations should think about how to
Speaker 1: engage with minority own founders, because a lot of the
Speaker 1: times it gets put on like, you know what, we
Speaker 1: may not have a capacity to do business, and yeah.
Speaker 2: You know, that's a really tough one. I think that
Speaker 2: you know, some companies have done interesting things like ramp ups.
Speaker 2: They've partnered, you know, sort of sort of partnered people
Speaker 2: that they want to do business with with smaller chunks
Speaker 2: of the business and then grow with them. And we've
Speaker 2: moved them from early entrants into their ecosystem to preferred partners.
Speaker 2: I think that folks that are planning for the long
Speaker 2: term do really well. There's a really interesting effort by
Speaker 2: Aerial Capital out of Chicago. This is John Rodgers and others.
Speaker 2: They're focusing on investing in companies that I believe it's
Speaker 2: like a ten million ar are black owning companies at
Speaker 2: ten million ARAR and boosting them up. And the powerful
Speaker 2: thing about their initiative is that Aerial Capital does a
Speaker 2: lot of work with some of these larger corporations, and
Speaker 2: their ability to pull in mid cap or sort of
Speaker 2: slightly larger than mid cap black owned companies to do
Speaker 2: their work is a great opportunity that early day of
Speaker 2: like small business, interacting with the big company is difficult
Speaker 2: for everyone. They don't speak the same language. I think
Speaker 2: that what companies that are trying to be successful at
Speaker 2: it are doing is really creating more intermediaries or opportunities
Speaker 2: that smaller companies can grow their way into, taking advantage of,
Speaker 2: and then partnering with larger entities that are calling them
Speaker 2: to see sort of MidCap or higher MidCap companies that
Speaker 2: can service them directly because they are there. I think
Speaker 2: that people talk about black businesses and these really small
Speaker 2: things all the time, and that's not true. There are
Speaker 2: really really incredible companies that have you know, global contracts
Speaker 2: and have been around for decades that deserve do.
Speaker 1: And so it's no surprise that anybody listening to this
Speaker 1: that we're having, you know, a real strong conversation about
Speaker 1: banking in the United States and the implications of bank
Speaker 1: collapse and over leveraging and all these different things. What
Speaker 1: lasting implications might it have for startups when a bank collapses.
Speaker 2: Yeah, I mean, if we think about what we just
Speaker 2: went through with SVB specifically, which I paid really close
Speaker 2: attention to, I think the challenge for the market and
Speaker 2: that's this fight background. It is hard when you're a
Speaker 2: small business interacting with the banking, with the standard banking
Speaker 2: system and the power of a partner in the case
Speaker 2: of SVB that really understands funky cash flow, really understands
Speaker 2: the early elements of an idea and how to sort
Speaker 2: of reconcile whether or not that deserves an investment that's
Speaker 2: not simply about that's not simple adventure, right, A short
Speaker 2: term bridge loan or a line of credit or all
Speaker 2: these other things. Absence of that deep understanding of the
Speaker 2: ecosystem is going to be a problem for a long time,
Speaker 2: I think. I mean fundamentally, you know, there are a
Speaker 2: lot of big banks that try really hard and have
Speaker 2: a plethora of programs. Chase is really a great example
Speaker 2: of that that's targeting small businesses. But in innovation, when
Speaker 2: you're starting with just you and another person an idea,
Speaker 2: you know, your first or second purchase order, that's not
Speaker 2: enough for banks to really make a bet on you.
Speaker 2: You really needed up someone that can that knows what
Speaker 2: they're looking at. And so in the absence of that,
Speaker 2: I think we're seeing some of the challenges right now. Typically,
Speaker 2: when the venture market is a little bit slower in
Speaker 2: terms of deal flow, and it depends on the sector
Speaker 2: that you're in, it's a little bit slower, you can
Speaker 2: go to the private markets for you know, credit, but
Speaker 2: because as a general matter, people are concerned about the
Speaker 2: US economy, it's harder to get credit or as a
Speaker 2: general matter, and so what would have been easier. I
Speaker 2: found it easier for some businesses that I've worked with
Speaker 2: as recently as last year to talk to a banker
Speaker 2: about giving us a line of credit to float us
Speaker 2: in the short fall. We had you know, really great revenue,
Speaker 2: but we're really trying to extend our runway a little
Speaker 2: bit or just have something in the back pocket in
Speaker 2: case we came up against a challenge that that partnership
Speaker 2: is not there. The longer it takes a founder to
Speaker 2: go into the market to find capital to meet their
Speaker 2: need is more time they are away from solving a
Speaker 2: problem for the customer that they sought to address. So
Speaker 2: it's a it's not just that there's the absence of
Speaker 2: somebody that understands the harder it is to find capital,
Speaker 2: the harder it is to grow a company really successfully.
Speaker 2: And so I think that for a while we're going
Speaker 2: to see will be sort of tough times for smaller
Speaker 2: companies that are on a growth path. That said, I
Speaker 2: think there's a lot of opportunity. I think that the
Speaker 2: tools to grow a strong business are becoming more and
Speaker 2: more available and more and more dynamic. There's a way
Speaker 2: to get through, but you can't tool your way or
Speaker 2: mention your way into success. Capital is involved in that,
Speaker 2: and absent a partner that understands that, it's just going
Speaker 2: to be a little bit harder for a while.
Speaker 1: You know, one of the things I saw pervade. My
Speaker 1: Twitter timeline when SVB collapsed was that it was propping
Speaker 1: up and banks in general and VC in general were
Speaker 1: propping up startups that actually didn't know how to make money,
Speaker 1: and so people were saying, you know, we got to
Speaker 1: focus on actually getting dollars in the door versus just
Speaker 1: venture capital angel dollars and et cetera. And I wonder
Speaker 1: what your take is on that. Do we have enough
Speaker 1: of our startups actually trying to sell something? You know?
Speaker 2: I think that there just like all these places, right
Speaker 2: they say there are levels to this. There are some
Speaker 2: people who were really getting by by raising capital as
Speaker 2: a way to pay to do payroll, right. I don't know,
Speaker 2: I know some of them. I don't know a lot
Speaker 2: of those people. Everybody I know that started business needs
Speaker 2: to cut a check today, like someone is paying them,
Speaker 2: they're putting in the bank, they're pushing that money out. Yeah,
Speaker 2: I mean, listen, I think that venture and I love
Speaker 2: the space, even though it sort of creates heartache, you know,
Speaker 2: it's it's a really interesting industry to be in the
Speaker 2: fact that that could be the case. There's a there's
Speaker 2: a period where it was about innovation that real innovations.
Speaker 2: Inventing the internet, you know, it takes time, right, and
Speaker 2: so it's okay for you to go round after round
Speaker 2: to get capital to be able to hire the people
Speaker 2: to do the thing you need to do for the
Speaker 2: major breakthrough. But the last few years sort of the
Speaker 2: railroad tracks of innovation are already there, right, but the
Speaker 2: mindset was outdated, and so you had a lot of
Speaker 2: people that were you know, had grocery come companies. I
Speaker 2: don't I don't know if I should day something some
Speaker 2: of them, but like you know, well, well yeah, go
Speaker 2: puff is a great big example, right, who are sort
Speaker 2: of burning cash, right, and it's like, well, this is groceries.
Speaker 2: You have a product, give it to a person, they
Speaker 2: give you money fair exchange, and they still weren't sort
Speaker 2: of making ends meet. Sort of got the old idea
Speaker 2: of of sort of patient I shouldn't say patient capital,
Speaker 2: of like letting venture capital be the cash flow mechanism
Speaker 2: for companies and then having companies be surprised when the
Speaker 2: music stops. I think existed for certain people. I think
Speaker 2: for others who just didn't. The last few businesses that
Speaker 2: I built don't operate that way, right, Like, you know,
Speaker 2: they can hit seven or eight million ar R without
Speaker 2: ever talking to a venture capitalist, And even in those
Speaker 2: instances with healthy revenue and years of experience and a
Speaker 2: solid book of business have trouble getting lines of credit
Speaker 2: from banks. I think that, like the music stop for
Speaker 2: a certain group of people, it will impact some. I'm
Speaker 2: mostly concerned about the biotech indust I'm hoping that investors
Speaker 2: I don't spend a ton of time there, spend some
Speaker 2: time there. I'm hoping that investors sort of sort of
Speaker 2: don't look at the challenges that the industry has had.
Speaker 2: In the same way, biotex is a long lead thing.
Speaker 2: It needs cash for a long time before it even improves,
Speaker 2: whether or not it can bring something to market. So listen,
Speaker 2: I think for every person it's going to be different.
Speaker 2: My hope is that it's not in some sectors and
Speaker 2: for others the music to serve to stop.
Speaker 1: Yeahh And so let's imagine, because you just talked about
Speaker 1: some things about venture capital have to change. Let's imagine
Speaker 1: venture capital is a patient going to the hospital, right,
Speaker 1: and he's got a broken leg, broken finger, and it's
Speaker 1: bleeding out. Lots of problems, lots of problems, some more
Speaker 1: severe than others. We know a lot of things could
Speaker 1: be broken about VC. What's the part that's bleeding out
Speaker 1: that's like, yo, we got to fix this before we
Speaker 1: focus on the leg and the broken finger.
Speaker 2: That is a great question. I think the most urgent challenge,
Speaker 2: or the thing that comes to mind most immediately, is
Speaker 2: risk aversion. So it's like venture capitalists, yeah, I do.
Speaker 2: I mean it's like it's like everything's falling. Perhaps you
Speaker 2: should be, you should operate more in a more safe manner,
Speaker 2: But I'm hoping that sort of comfort risk tolerance. I
Speaker 2: should say i'd risk first, but risk tolerance, essentially I hope,
Speaker 2: is something that the industry fixed fastest. The way I
Speaker 2: will break this down is that you know what you
Speaker 2: are rewarded in venture capital, not necessarily by companies that
Speaker 2: go the full distance. You're most immediately rewarded by whoever
Speaker 2: picks up that company in a following round. So as
Speaker 2: a result, when you write your first check, it doesn't
Speaker 2: matter how much you have conviction that one found. You
Speaker 2: are always thinking about when they leave my office, when
Speaker 2: this round is done, well, the next group of investors
Speaker 2: that they have to convince say yes, And as a result,
Speaker 2: you can imagine when you think about the industry and
Speaker 2: the makeup. Folks get real really tight about the definition
Speaker 2: of a founder that would do really really well in
Speaker 2: that environment, and you hear it all the time in
Speaker 2: investment committee meetings. People get really really excited. But the
Speaker 2: thing that stops them is like, I don't know how
Speaker 2: this founder will do when they go out to raise
Speaker 2: additional capital. And that is where I feel like that
Speaker 2: that is the that is the bleeding out part of
Speaker 2: venture that I think stops it from going as far
Speaker 2: as it could go.
Speaker 1: Right.
Speaker 2: I think there's a there's another there isn't If if
Speaker 2: we were more risk tolerant, we were more comfortable with
Speaker 2: the fact that and we knew that our colleagues are
Speaker 2: more comfortable with taking risks on what they what they
Speaker 2: on what could be great, and what a good company
Speaker 2: looks like. Look at the bones of the idea and
Speaker 2: be more risk tolerant to the individual. I think that'll
Speaker 2: help us go further, because at the end of the day,
Speaker 2: no matter how much capital you raised, you have to
Speaker 2: deploy it, and you have to deploy into companies that
Speaker 2: can actually have delivered to a customer, that can grow successfully.
Speaker 2: Add infinitum right dot dot dot right. And I think
Speaker 2: that the real challenge for us is a lack of
Speaker 2: imagination and an inability to take on significant take on
Speaker 2: risk beyond what we think our colleagues might be interested
Speaker 2: in in order to sort of, you know, make a
Speaker 2: big bet. I think that's the biggest challenge we can invite.
Speaker 2: We won't invite more people into our industry, The deal
Speaker 2: phil will get tighter, the range of a founder that
Speaker 2: gets funding will get smaller. The more we're sort of
Speaker 2: confined by who we think our friends will like in
Speaker 2: the next round, as opposed to the validity of the
Speaker 2: idea itself.
Speaker 1: Oh that's good. You talked about some of the things
Speaker 1: that Silicon Valley Bank filled the gap in, you know,
Speaker 1: with regard and they understood how financing works for a
Speaker 1: lot of startups. Who fills that void now?
Speaker 2: I don't really know. I think that remains to be seen.
Speaker 2: I think it's an exciting opportunity for anyone that wants
Speaker 2: to make a market. It takes some time. I would
Speaker 2: ask myself, like, where the people who are at Silicon
Speaker 2: Valley Bank, what are they doing now? What do they
Speaker 2: want to do? It would be interesting if a part
Speaker 2: of a group of them started something new during the
Speaker 2: crisis itself. Rex did a lot to fill the gap.
Speaker 2: It's a little bit different because, as far as I understand,
Speaker 2: REX is like a fintech company, it's not sort of
Speaker 2: a proper, proper bank. I think that you know, they
Speaker 2: do know the startup ecosystem exceptionally well. It was a
Speaker 2: really good moment for them to bring in new customers.
Speaker 2: We talked a lot about startups, but it doesn't just
Speaker 2: expect startups. It expects fund managers, which are startups themselves, right,
Speaker 2: they're businesses themselves. It will be interesting. I think it's
Speaker 2: a really great opportunity for folks that want to pick
Speaker 2: it up because there's a real gap in the market.
Speaker 2: Even Brexit. It's best the more products that it spins
Speaker 2: out in the absence of SPB, it won't be enough.
Speaker 2: There's in a single institution that should cover all of
Speaker 2: the bases there and I'm excited to see who fills
Speaker 2: the void.
Speaker 1: So we've talked a lot about, you know, the actual
Speaker 1: banking relationship, but with one of the other things that
Speaker 1: we're hearing a lot about is interest rates and its
Speaker 1: impact on how people spend their dollars. How much discussion
Speaker 1: their income people may have, But what is what should
Speaker 1: a startup be thinking about maybe having three raised money
Speaker 1: or having raised money? What do startups? What should startups
Speaker 1: here when they hear interest rates going through the roof?
Speaker 2: Yeah, so you know, I'm not an economist, but I'll
Speaker 2: do my best here. My sense of it is that,
Speaker 2: you know, lower interest rates sort of laws would be
Speaker 2: flushed with cash. They're more dynamic and where they place it.
Speaker 2: Higher interest rates gets people to being really specific about
Speaker 2: where they place their capital. I saw a post recently
Speaker 2: Jenny Fielding, who runs the fund. I think they're calling
Speaker 2: themselves everywhere Adventures now is selling founders that you know
Speaker 2: act as if this last round is the last capital
Speaker 2: to raise. I don't know enough to say if it
Speaker 2: should be that dire, but it's fair right, it should
Speaker 2: be really intentional about where you put a dollar. You
Speaker 2: only can spend it once and we don't know what
Speaker 2: you know what future rounds will look like, if there
Speaker 2: will be the same size as they once were. In
Speaker 2: large part after SVB, there was like a pause when
Speaker 2: people went back to business. Things seemed to be fine.
Speaker 2: People had access to the capitol, but there is more
Speaker 2: and more churn and chatter about the size of rounds
Speaker 2: being a lot smaller than one they once expected. So
Speaker 2: if you're building an expensive company like logistics or grocery stores,
Speaker 2: for example, and you sort of mapped out how much
Speaker 2: more might need to raise at each step, you might
Speaker 2: find yourself in a higher position than before. So just
Speaker 2: be aware. I think this is mostly advised.
Speaker 1: We've got a pretty interesting financial climate on our hands
Speaker 1: and raise it up in facing is high bank's abilities
Speaker 1: in question. Even crypto is struggling to recover. None of
Speaker 1: this discounts the fact that many startups still need venti
Speaker 1: capital and many are out actively fundraising. So how do
Speaker 1: vcs behave differently when you consider all these factors? May
Speaker 1: should speaks on it.
Speaker 2: I think they become more conservative, like we all do
Speaker 2: with our money. You know, at the end of the day,
Speaker 2: everyone has a loss. Venture capitalists their LPs are looking
Speaker 2: at them in terms of the returns they can generate.
Speaker 2: People get more conservative. I think that folks will do that.
Speaker 2: I think that the venture capitalists that do really, really well,
Speaker 2: we'll get really really specific in their thesis, hyper focus
Speaker 2: in an area so that they make choices that they
Speaker 2: really can believe in, and when they make risks, they
Speaker 2: have strong conviction about why they're making them. And actually
Speaker 2: that's a lesson to us all. Where you put your
Speaker 2: money should be in the places that you think matter
Speaker 2: the most, and double down in the areas that you
Speaker 2: think are really important. If saving for retirement is really important,
Speaker 2: this is the time that's been all of your time.
Speaker 2: Really understanding a bit about where you're putting your money
Speaker 2: in that regard, it'll help you make the right choices
Speaker 2: in the moment. So I think that the same thing.
Speaker 2: The way to think about bunch of capitalists is the
Speaker 2: way we all are. Everyone has a boss, they're held
Speaker 2: accountable too. They've taken capital from other people the responsibilities
Speaker 2: to deploy it with return, And I think that the
Speaker 2: folks that do well will be open to risk in
Speaker 2: their very specific sectors that they know really well.
Speaker 1: Is I've talked to a few different founders who recently
Speaker 1: owned this podcast who were super successful in raising money
Speaker 1: during COVID when we didn't even know what the world
Speaker 1: would look like coming right COVID. It's crazy, yeah, And
Speaker 1: I wonder with this current climate, is it still a
Speaker 1: good time to raise so how do I know if
Speaker 1: this is a good time to raise.
Speaker 2: You don't have a choice, right, like? You really, there
Speaker 2: isn't a perfect time for anything. I think the COVID
Speaker 2: moment surprised a lot of us. You know, the world
Speaker 2: is ending, and yet it's easy to get capital. The
Speaker 2: world is ending, and ten people just want a house.
Speaker 2: This is a really wild moment, you really. I mean,
Speaker 2: if you're a founder and you're building a company, I
Speaker 2: think that let's see what are the risks of you
Speaker 2: beginning to put feelers out there starting to raise money.
Speaker 2: If you're unsuccessful, you stop the race, get feedback, make
Speaker 2: an adjustment, figure out what's wrong. If you are successful,
Speaker 2: no love lost. Right. If you're not as successful as
Speaker 2: you thought, you have capital, and then what do you do? Right? Like,
Speaker 2: I think that you know, we can try to pick
Speaker 2: our moments in the best moment to do this. If
Speaker 2: the next level of your business requires capital, the best
Speaker 2: thing you can do is move in that direction, right,
Speaker 2: And the only thing failure will teach you is how
Speaker 2: to do better next time. I don't think that there's
Speaker 2: any any way to hesitate or resist there as a
Speaker 2: general matter. If you're thinking about maybe I shouldn't raise at all.
Speaker 2: Maybe I should tweak something in my business. I think
Speaker 2: it just really goes back to the things you learned
Speaker 2: back in the day with your mom or your dad,
Speaker 2: which is really like, you know, spend money what you have,
Speaker 2: try to keep as much reserves as you possibly can,
Speaker 2: and try to be smart about the choices you need
Speaker 2: to make over communicate with your team who are in
Speaker 2: this with you and are equally nervous because their jobs
Speaker 2: are connected to the choices that you're making. But I
Speaker 2: don't think there's a really there's no really way, as
Speaker 2: they say, to time the market. Got to do what
Speaker 2: you can to do.
Speaker 1: Yeah, yeah, And I've heard it said, or maybe I
Speaker 1: said it myself. I don't even know if you said this,
Speaker 1: but I mean, it's always a good time for good companies.
Speaker 1: Like good companies don't necessarily have to think about what
Speaker 1: the market looks like. And I wonder if that apprehension,
Speaker 1: or the potential apprehension to consider the time, does that
Speaker 1: tell you more about the founder that maybe they're not
Speaker 1: as confident or maybe or what does it tell you? Yeah?
Speaker 2: I mean you mean if a founder delays grazing, now,
Speaker 2: what does that tell you? Yes, yes, it could tell.
Speaker 2: It could be a lot of things. I remember, there
Speaker 2: are moments where you know, we're building a business and
Speaker 2: our CFO, there's a fractional CFO worked with lots of
Speaker 2: other companies, just it was a good time to raise money.
Speaker 2: We had money. We just wanted a little bit more leverage.
Speaker 2: Discourage us for raising money because our priority at the time,
Speaker 2: you only can spend one minute, one time, one way,
Speaker 2: needed to be the fundamentals of our business. Right it
Speaker 2: was going to make or break this in the long term.
Speaker 2: And sure, we knew exactly who to ask for money
Speaker 2: and we're probably going to get it, and we decided
Speaker 2: not to. So sometimes founders decide not to raise because
Speaker 2: they prioritize something else that they think is more significant
Speaker 2: in their long term success. Doesn't tell you much of anything.
Speaker 2: There are some founders that you know, I have moments
Speaker 2: where I talk a good game and then when it
Speaker 2: comes time to do it, I'm nervous about it. Like
Speaker 2: there are some founders that are people periods who aren't
Speaker 2: going to hesitate because of confidence. I think that that's
Speaker 2: not a problem, that's not a character flaw, that's not
Speaker 2: a suggestion that they're not good at their their their job,
Speaker 2: or their business. It's a scary time, right, and fear
Speaker 2: can be a great motivator if they're connected with the
Speaker 2: right person. So I don't really I talk to founders.
Speaker 2: I try to be as open and as helpful as possible,
Speaker 2: and so you don't have to come to me as
Speaker 2: a perfect founder. We can talk our way through it.
Speaker 2: It doesn't really tell you much. Accept that they're human
Speaker 2: and they're reading the tea leaves and they're being realistic about,
Speaker 2: you know, whether or not there's a good use of
Speaker 2: or investment of their time.
Speaker 1: And so I want to ask you about because you've
Speaker 1: spent a lot of time again working with big companies
Speaker 1: and helping them build those bridges with startups. I was
Speaker 1: reading this list that Michael Seibel from y Combator had
Speaker 1: put out, and it was a pocket guide for essential
Speaker 1: YC advice and this will one line this yeah yeah,
Speaker 1: and this one line piqued my interest and it said
Speaker 1: avoid big company corporate development ceries. They only waste time. Yeah,
Speaker 1: And it got me thinking about something I do. I
Speaker 1: have a marketing company outside of this, and I've been
Speaker 1: thinking about I don't even respond to corporate or governmental
Speaker 1: RFPs because they take so much time to respond to
Speaker 1: them and tip the resources put in, the investment put
Speaker 1: in is not worth the reward.
Speaker 2: Yeah, the reward.
Speaker 1: So I wonder what your thoughts are on this idea.
Speaker 2: With everything, it depends I respect Michael, I know your
Speaker 2: experience is real. You're a master entrepreneur yourself, and I've
Speaker 2: seen it. It depends. What if I told you that
Speaker 2: the decision maker in there was like my best friend
Speaker 2: of twenty years, so right not do it? It just
Speaker 2: really depends correct people. Here's the thing all everyone will
Speaker 2: waste your time if you let them. Number one, number two,
Speaker 2: lots of people together operating, because a group will definitely
Speaker 2: waste your time if you let them, and that's the
Speaker 2: case of companies. I think it depends on what you're
Speaker 2: going to get. Say you and I were building a
Speaker 2: business for five years of marketing business and we decide
Speaker 2: that we're gonna get put into this. We're going to
Speaker 2: put into the RFP. We've met three people that we
Speaker 2: think could influence the decision at Nike, for example, and
Speaker 2: we're doing it because it's probably going to be a
Speaker 2: loss leader. It's going to take a lot of work,
Speaker 2: we're going to service this business for three months because
Speaker 2: the long tail, the ability to be able to say
Speaker 2: that we had Nike as a client, it's going to
Speaker 2: crue to our benefit in the long term. We're not
Speaker 2: gonna make this our whole business. If we've been running
Speaker 2: a business for a while, we can make that choice.
Speaker 2: I know a founder who was a really incredible marketer,
Speaker 2: has an innovative way of doing it. She's most of
Speaker 2: her team is part time. She's got Disney as a client,
Speaker 2: she has Vogue as a client occasionally. You know, there
Speaker 2: are times when a business can be a lot more
Speaker 2: trouble than it's worth. But in part par for the course,
Speaker 2: she's gotten to meet the m and a teams of
Speaker 2: these of these years. So it's just it really is
Speaker 2: about what the life cycle of the business. Where I
Speaker 2: think Michael's right is that starting a business where you
Speaker 2: know you're gonna have a few clients and that's gonna
Speaker 2: be the thing that you chase, that's probably problematic unless
Speaker 2: you came from that industry. This is the same playbook
Speaker 2: for any B to B business and have the relationships
Speaker 2: to get you in the door over with your hurdles faster.
Speaker 2: It really depends. It's wise advice because they can take
Speaker 2: a lot of time, but strategically they can be worth it.
Speaker 2: It's the same reason why you know you might join
Speaker 2: a board, right and not an unpaid board. It's like,
Speaker 2: actually everyone want here. I'm going to probably raise money
Speaker 2: from in a few years, so that's you know, like
Speaker 2: it's like you're making an investment that doesn't really show
Speaker 2: out right away, but could be a long term, long
Speaker 2: term to be powerful. Ultimately, though, I will say to
Speaker 2: our corporate friends, they know they have challenges interacting with
Speaker 2: an innovative and small businesses. They know they need our innovation.
Speaker 2: They have teams thinking about it every day. It's probably
Speaker 2: part of the problem. They know that this is a
Speaker 2: thing that they want to get better at who're not there,
Speaker 2: and they admit it. And I think that that's just
Speaker 2: sort of everybody's got their problems.
Speaker 1: And to that end, go let's go one level deeper.
Speaker 1: What is some of the pre work that not enough
Speaker 1: of us do to make sure that when we do respond,
Speaker 1: we have a better we're better positioned to win those deals.
Speaker 2: Yeah, I think the enterprise clients as a general matter,
Speaker 2: are different than everyday consumers. They despite knowing that you're
Speaker 2: a young company, will expect a lot of you. Typically
Speaker 2: they're going to ask you for insurance requirements that you
Speaker 2: might maybe be ready for professional liability insurance. Ask your
Speaker 2: founder friends. There's probably a great recommendation they can make
Speaker 2: for you can get a cheap and quick These insurance
Speaker 2: people are use getting these calls last minute for small
Speaker 2: businesses because it happens a lot. Yeah, yeah, right, it's
Speaker 2: always it's always a surprise. It's always a surprise, and
Speaker 2: someone's tragically text messaging someone to get it's fine. You know.
Speaker 2: I think that understanding that when you're doing an enterprise
Speaker 2: client or working with them, you've actually got two jobs.
Speaker 2: There's delivery of the work and then there's sort of
Speaker 2: delivery of the client, like managing them and helping them
Speaker 2: be success in your story. I don't think it's specific
Speaker 2: to us. I think that the more you have exposure
Speaker 2: to servicing enterprise clients, or the more you can find
Speaker 2: people in your network you have experience doing it, the
Speaker 2: easier it is to figure them out and navigate them.
Speaker 2: As long as you've got a strong website, a clear
Speaker 2: path to issue invoices on time, and you know how
Speaker 2: to and you figure out how to manage your client
Speaker 2: through milestones in your contract, You're going to be fine.
Speaker 2: There are little sort of tips and tricks will ask
Speaker 2: you when you sign up, but all those things, some
Speaker 2: of them you can kind of flow through. They don't
Speaker 2: really care. You're surprised.
Speaker 1: Yeah, And for those companies who are working through their
Speaker 1: internal challenges to onboard startups and particularly black founders. I
Speaker 1: mentioned earlier that too often we get put into we
Speaker 1: don't have the capacity sort of you know, bucket, what
Speaker 1: are because you've done this work, what are some of
Speaker 1: the strongest cases you've found that are effective in helping
Speaker 1: big companies see startups as potential partners versus risks.
Speaker 2: Yeah, almost always. The opportunity lies in some innovation that
Speaker 2: the big company cannot pull off on its own. And
Speaker 2: even the most innovative companies, the advantage that a small
Speaker 2: company has that big company does not is that based
Speaker 2: on your height search of the customer. So say the
Speaker 2: customer is like this height, and you're this tall, and
Speaker 2: the big companies that tall, you're just so much closer
Speaker 2: to the sensitivities of a customer. The sensitivity is the
Speaker 2: market that they don't feel because they're too massive. There
Speaker 2: are insights you can bring that it would take their
Speaker 2: best team weeks and weeks to do desk research to
Speaker 2: figure out because you're living the reality and every day,
Speaker 2: and so I would kind of flip it a little bit.
Speaker 2: I would say to small and medium businesses to assert
Speaker 2: your superpower, which is really the you are eating what
Speaker 2: you kill and as a result, you know where the
Speaker 2: fish are right and they're sort of and you've really
Speaker 2: got to assert that and connect it. The other thing
Speaker 2: I would suggest, which I see a few companies do this,
Speaker 2: particularly in marketing, less in some of the more durable
Speaker 2: like hardware businesses do. But it is possible team up
Speaker 2: with someone in the business that you admire to go
Speaker 2: after the big business. So if you get a feedback
Speaker 2: about capacity, right, you know, well, your marketing business can
Speaker 2: be paired with on the other person you know on
Speaker 2: the market who might be a competimate. Like you guys
Speaker 2: are good friends, they're kind of in your space. You
Speaker 2: respect what they do, but you're running two different businesses.
Speaker 2: There's a lot of relationships like that. Come together and
Speaker 2: go after the business together and figure out how you
Speaker 2: guys are going to manage it. Through, especially if the
Speaker 2: contract could be something that, as I said, is a
Speaker 2: long term of value as you market your services to
Speaker 2: the clients you've been serving to, even other larger organizations.
Speaker 1: Stas Black Tech Green Money is a production of Blavity,
Speaker 1: Afrotech and the Black Effect Podcast Network and iHeart Media
Speaker 1: and it's produced by Morgan Debond and me Well Lucas,
Speaker 1: with addition of production support by Sarah Ergon and Rose
Speaker 1: mc lucas. Special thank you to Michael Davis I Vanessa Serrano.
Speaker 1: Learn more about my guests and other tech disruptors and
Speaker 1: innovators at afrotech dot com. Enjoining Black Tech Green Money
Speaker 1: shot us to somebody go get your money, Peace and love,