How to Construct an Equitable Cap Table

Hello Everybody I am back and we are going to Have an absolutely amazing next session About how to construct an equitable cap Table one thing we talk a lot internally About at Tech wrench 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 going to have a great Session about that right now we have Ashley from Coalition operators Robbie From cowboy adventures and Richie from The fintech finix and both Robbie and Richie will be in the tech brunch plus Lounge afterwards for more questions Please welcome the crew and your Moderator Rebecca Scoutek oh I forgot to a spr I Forgot to Say who a 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 acheve That so thinking about how do you build An equitable cap table starting with you Robbie I know when we talked about this A couple 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 Awesome 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 homogeneous 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 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 of female non-binary Operator Angels is I saw cap tables of Really successful companies that looked Very homogeneous and what that means is That the people who are benefiting from The startup ecosystem are people who are Not from diverse background so all of The benefits of what Silicon Valley Offers ultimately ends up going to a a Group that doesn't look very diverse or Different Mhm 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 the startups themselves why Does this also matter for Them maybe if you want to kick that off Ashley yeah I was going to say and Richie is the perfect person to talk About this because he is in the founder Seat and has been really intentional About this but yeah I think Robbie Talked about sort of the the ecosystem Impact of diverse cap tables right the People who win and whenn with you um 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 that's they're going to invest In a more diverse set of companies They're going to invest in a more Diverse set of fund managers and so There's this really amazing fly wheel Effect um but before we can even get to Like the ecosystem wide impact you have To have a successful startup and so I Think like the most important thing is To start with um 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 to build um much more Efficiently with smaller teams a cap Table is an opportunity to build an Incredible bench of people around you um And people that you wouldn't be able to Hire directly and so um having a device Diverse tap 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 um having Access to diverse Talent networks as you Build your team um 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 um uh 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 and Richie you are living this Dayto day so how did you think about Building your cap table and what was Your approach like yeah uh one of the Ways that we've always thought about Investors is really sort of like tools And toolkit uh there's no single Investor who's going to be a unicorn Some people focus on early stage some People late stage some who are focused On fintech uh operations uh 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 uh how we could Expand that and really multiply that it Was really tapping into a number of the Things that Ashley was mentioning how Could we expand that network uh not just At that VC level but really at that Operator level and so often times 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 uh and so we started bringing In folks uh who didn't look like the Typical sort of VC uh but who did bring A unique skill set um we're in the Fintech space uh so bringing in folks

From Visa uh we had a number of really Great investors uh who uh worked for Visa lap am uh based out of Miami and Actually ended up opening a number of Sort of commercial opportunities for us Uh and so that was something that was Really important for us and something That we were very thoughtful about uh at The end of the day there's no VC who's Going to make your company there are VCS Who can break 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 balance 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 onus on On the VCS if it's a VC backround Because typically the way I would say From like preed 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 um like investment team from that Group if they're not from diverse Backgrounds and also not just from a Like makeup perspective but their Experiences maybe their their career VCS They don't have specific operating Experience you're looking for they Should have networks and there are all Folks here that can help build those Networks um 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 Um 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 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 um uh and on the angel Side it's hard to know what fundraises Are in process and so this is this is is A tough problem to solve at an Individual level which is why we need um Solutions that are more systemic um at Coalition we have two Venture products We have an early stage fund that writes

Non-lead checks so we can come in Alongside firms like cowboy and really Bring operational expertise as our core Value prop versus being a board member Or we're like the ones to primarily Capitalize your business um we've also Built out this operator Network um where 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 to 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 share their economics and we Go and find the dream operators for the Founders that they back um and bring Them into those deals and into the Coalition Network so I think there's Really an opportunity to build like a Routing system of sorts um to really Match um 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 a similarity there Yeah yeah so one of the things that we Wanted to do with modern Angels is Create a community of investors who are Angel Investors that are female Non-binary that are interested in Investing um 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 with Founders Is they can help interview and find Their first sales hire to um to what Richie was talking about earlier very Specific things that they could help With and we have all of 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 to I I really like 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 to Angel invest That you can really like easily Understand where they Spike as far as Expertise and what they're interested in And what their check size is and kind of Do this matching to make it much easier For Founders to build up 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 and this was my Like gateway drug into Venture Capital Was Angel and investing and so much of It was about the learning and getting to Work with early stage Founders and and If you have like a bigger growth stage Job at the same time it's so fun to work With companies in 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 um because if you do that Matching right they're going to invest Not just their capital and by the 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 going to

Be able to like hire those people I Think uh the idea that diversity and uh Being able to fund raise in today's Market being it sort of odds is sort of A false uh Choice um I think when you Look at a founder and how they go out to Each uh individual sort of fundraising Round they typically are trying to place Their their anchor lead 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 uh 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 uh VCS will often Talk about hey we're going to make this A super painless process no fund raise Is painless there's always friction There's always paperwork there's always Legal uh work that goes involved uh and So one of the things that we did uh 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 inform Spvs filled with over 800 uh 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 uh investment uh round for these Types of investors we will put together The whole uh um 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 uh to bring in these People and get that investment Done and looking at your startup too 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 them yeah uh for me a lot Of the sort of diverse Network that I Have really just comes from my Background to be honest um so parents Are both uh undoc immigrants who came Here from Mexico um and uh was lucky Enough to build some really strong Networks in the black and Latino Community uh as I sort of grew Throughout this uh this process uh I've Been in San Francisco now for about 10 Years um in the engineering side uh Specifically in payments U but before

That prior life I was in the world of of Management consulting and in Investment Banking and it's not an exaggeration to Say this is the most homogeneous 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 of people who really wanted To support me people who helped make Introductions into various uh VCS Angels Uh corporate relationships uh and that's Really that sort of village and Community that helped us get past that Seed round um from there once you start To get that traction obviously a lot of More people kind of come out and want to Be able to support uh that sort of cause And so understanding that sort of Influence and power uh and uh sort of Amplification of what we were trying to Build through that Community we wanted To really figure out how could we put That into an organization and 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 Robbie and you mentioned as Well Ashley 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 I do want to push back and say that VCS well a they should have networks of Diverse angels and if they don't Founders 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 from the Founder side of things I mean this this Is 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 at are Angel Investing but at The end of the day like it ends up being Who you decide to spend time with who You decide to get advice from if you Kind of look at the circle of your Advisers as a founder and it looks like A pretty homogeneous group and that 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 men 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 like if you want to Do that there are tools and people and Networks to tap into there's so many Amazing events for diverse Engineers Diverse operators in the Bay Area and Like our networks are very much based on Those operators that are also Angel Investing so I I think it's like if you Want to do it the how is what we're Trying to solve and they're like we are Here for you if you're a founder and You're looking to build those networks Or communities this this is what we are Kind of working towards yeah I I I so Agree I don't think we should let VC's Off the hook here um 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 I think it also comes from um Maybe a Mis 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 intros to make Right that feels great you're leading Around like you're lining up the the Group of investors but here's the Challenge um if that same group of

Investors is being introduced to to Multiple rounds um you're fishing in the Same pool as a lot of other Founders and You might be getting that Capital um but The amount of time and expertise and Energy you're going to get from those People I think it's good to be Eyes Wide Open about and again in this economy Like building a cap table period um it Is impressive but I think it is really Worth pushing back and and being really Thoughtful about like what job are you Hiring each person to do for you on your Cap table um and and Beyond the lead Check like it's it's not Capital as much As it is Network skills experience um All of those things um I also think Other Founders are an incredible Resource right so if you're a Founder um 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 um 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 um not just in terms Of you know looking around corners and Sort of anticipating future challenges But also from an an emotional support Perspective right they understand how

Volatile the founder Journey can can be And then also asking those founders who Are 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 who 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 Going to get um you're going to get like Real um 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 PH is cap table yeah as we kind of Prepped for this meeting I kind of went Back to the earli sort of fund raise That we had and so we've raised uh about $135 million over three rounds and the Earliest rounds were not easy and I Think especially as a firsttime 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 uh Is um a weird dynamic in in inventure 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 press situations

Negotiations it doesn't feel like that And so at the seed round uh you know we Were able to close around and and Luckily just by chance it ended up being You know pretty diverse um but when it Came to the series a we had a pretty Contentious and competitive uh round uh And I remember just being sort of in the Middle between a few VC firms everybody Trying to get their specific ownership And allocation uh targets met uh and I Had a young VC um he was a friend from College um who was trying to make his Way in the industry he's black and uh he Helped me at the seed round he helped me At the Ser a he introduced me to the Lead checks and he came to me and he Said hey can you let me put in $110,000 Into this round and it was A7 million Round and people were putting minimum Checks million dollars in 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 uh a few Weeks later one of the VCS comes in and Says hey can you make a million dollars For my friend from college and it was Really eye openening in that moment that This is an old boys club that there is

Part of this game that is a little bit Rigged where they are trying to pressure In certain situations um and optimizing For themselves so we ended up making Space for that $10,000 check a 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 Ashley's Been talking about a lot is how do you Build that track record and so 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 as Founders oftentimes we say Hey once we have this big exit we can Think about all of the 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 uh 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 were interested In and kind of how did were you able to

Get past that with these investors and Still sort of close around that looked Very similar to what you set out to yeah So when we created the the cap Coalition Uh luckily to be honest it was in the Middle of the black lives matter sort of Movement and I think a lot of VCS were Going out in tweeting black lives matter Uh and if you looked at their teams and You looked at their cap table it Probably told you a very different story Uh but at that moment I think people Understood that this was something that That they needed to pay attention to and Make uh available and so it wasn't much Of a fight there I think since that uh We've seen a lot of Founders who have Built up that confidence to have those Conversations and there's very little uh Push back uh 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 you know 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 uh an awkward one that They try to avoid yeah definitely Definitely and something I'm curious About is because I know you mentioned This friend 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 capital table is Definitely not always just about the Capital how much it is and sort of what It looks like but what are the Expectation settings if you do have a Round 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 expectation settings For those founders of what they can Expect from some of these smaller stakes In a way to not sort of any friction to That relationship or expect too much Yeah so I I want to go back to something Richie 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 in Something that you know you're going to Go to them for advice so it actually Ends up being much much less about the Check size and much more about who they Are and how they're going to help I Anecdotally the angels that have been Most helpful in cowboy companies have uh It's had zero correlation with the check

Size that they wrote there are some Angels that have put $5,000 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 um I think The most effective angels that I've seen Have almost productized 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 BP of Engineering I will send you candidates And 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 XR 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 were going to Angel invest Who could be very valuable to that Company that they'd be willing to make Room for them think that that's how we Approach our rounds at Cowboy yeah we Spend a a lot of time on this at at Coalition especially on the operator Network side um where we're sort of do That matchmaking and sourcing and Vetting people and just like huge Believers in the value of expectation Setting when we talk to Founders about Um what kind of expertise they want on Their cap table what they're looking for We also ask them you know what has your Relationship been like with advisers and Angels in the past and there are so many People who sort of took on a bunch of Angels took on advented advisors didn't Quite know what they needed didn't Expectation set and really have heard From those people since and so I think This sort of um upfront discussion of How you want to work together is great And also like being respectful that like You know if you're bringing operators And who have these big day jobs 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 um 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 text um uh can we Get added to the investor update so that That angel has like ongoing context um For what's happening in the business um 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 tracks which is How I started um 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 there are 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 um but also making sure You're not adding to the founders load As they're figuring out um you know Various challenges in the Business I think uh we we spent a lot of Time talking about you know how to Select the angels and what sort of value That they can all bring and I think that Is absolutely a strategy I think one Thing that may be controversial that we Don't talk about enough is that there is

Value in uh creating a diverse Capital Cap table for the sake of just diversity And I think when you really think about Um why that is uh we are probably Experiencing some of the greatest wealth Uh concentration as a result of the the Investments that are happening today so If you think about uh instacart it's Going public today any of us can go and Buy a share of stock of instacart today Once it's public uh if you want to get The highest amount of upside you have to Get in the earliest days so I think I Read today something like Sequoia Invested $8 million and they made1 Billion off that one investment most of That value creation is super early on And very few people get access to those Types of deals um 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 uh investment they also capture The vast majority of the economics when These companies end up going public and If you look at those 200 GPS I'm pretty Sure they don't look like us uh I'm Pretty sure they're not a very diverse Group uh 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 uh I'm sure the the the Percentage for women is is incredibly Low as well uh and that's for all Investors those GPS if you guys don't Know what the GPS are those are the General Partners who are there 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 of Instaart maybe you get a little bit of Carry and so I think when we think about What type of profound implications that Has the residual and ripple effects uh Of that those are things that we should Be very thoughtful of and I think again As Founders make room for a more diverse Cap table because that does and will Have some pretty big implications going Forward yeah absolutely also just to add I feel like the why now is especially Profound on that point um if you listen To VC's talk a lot people are like oh Yeah it's 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 um For the companies that do make it um 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 are going to Have you know massively successful exits And where at the same time though as we

Go through this contraction period There's there's kind of a trend towards More homogenity right I think we need to Be really intentional right now about Not making diversity like a zerp Phenomenon um and so um if you believe That I think that now is absolutely the Time to focus maybe even more so in the Real headyy and bubbly times um and 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 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 um 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 and to the Right and so building a portfolio uh in Your career is a great way to drisk your Startup job so like there's never been a Better time to focus on this um and and That makes me really optimistic about Like sort of the impacts we can see from This period in five seven 10 years Because of course those are the time Horizons at inventure yeah quick Reminder that we do have we have a few

Minutes left but reminder if you have a Question definitely head up to one of Those mics if you think I can't see you Definitely just wave at me to 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 there can be too many people There can be that too many cooks in the Kitchen effect and especially someone Looking to bring on these 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 I mean Richie You you've actively worked to solve this Uh you definitely have to be very Thoughtful about it but I think the Important distinction is the difference Between voices in the room in your board And board observers and investors There's a lot of investors who you can Theoretically help but either aren't Going to have data access rights are not You know expecting monthly calls and 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 kind of Have to make the the hard cut in the

Line is just be very open with those Investors that hey you know I appreciate Investment you I'll probably be more Proactively reaching out to you than Have me spend my time reporting out to You because that's not going to drive The business forward uh and so then in Terms of thinking about the board uh I Think that that's something that you Have to be you very deliberate about in The investment process um uh we have a Large board uh we we have two board Members but four board observers and I Think one thing that people don't think About is 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 uh those are things that Until you've done it and you've made a Mistake you're kind of stuck with it uh And so investor relationships are uh Like marriages that you can't get out of You're with them till the very end um But I think like you know going back to The board Observer uh piece uh we have Been very thoughtful about how we Construct that board and even if we do Have only two board seats um we have Thought about gender diversity uh 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 that as they mature well

A lot of the people who will be on the Board when they do go public can be uh Folks from um 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 MH and on The on the cap table side there are a Number of instruments that are quite Easy to use at 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 uh one to hey thank you uh for The preed level startups what's the best Way to find um like Angel invest and Funds who are focus on the preed level Like what other resources I can use and The question from the audience is for Preed Founders what are the resources They can use to find these Angel Investors yeah and funds yeah 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 crunch Base to see for other companies that are In your industry who are their preed

Early stage invest pitchbook is good for That too um I as far as our Network so Modern Angels which is a community of 300 female non-binary operators that I Help run it's just modern Angels you Could find it just by looking it up and We have ways for early stage Founders to Cold pitch to the group um 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 fun side of things looking At funds that have invested in similar Companies um and usually data sources Like crunch basee or pitchbook are Pretty good for that yeah I would say at The preed um there are a lot of uh Multi-stage funds you wouldn't want to Waste your time on precede tends to be Like a a smaller Universe of Institutional investors so VC firms Focused on that um and and yeah there Are directory I think like nfx has a Directory um and then also like talking To other preed Founders um but yeah There are some great great precede funds Out there um and uh I would say at the Angel level most Angels tend to be a Little bit more stage agnostic they want To be early but preed seed maybe even Series a 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 preed company in a wildly wildly Different Industry thank you thank you Cole and I Think we have time for one last oh do we Have a question go ahead hey thank you Uh for doing this hey uh how do you go To begin to uh put a value on networking What kind of questions would you ask What are you looking for um 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 so I I was just say the network of The the VC or and the Angel the the value of the partner on The cap Table yeah gotcha valuing valuing or Evaluating just to be clear Val valuing Uh it it it's an interesting question Because I have a number of investors who Like either are fintech focused or Startup focused or just have like a Really deep VC bench of friends um the VC friends uh 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 home brw uh and I Asked other seed stage uh investors what

They thought about them and then I 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 invest uh Investor intro that came from that VC um Didn't need to be a long like drawn out Hey here's why you need to meet phix Here's how why you need to meet Richie It was just sachcha wants you to speak To this person and then you got that Meeting I think those are the types of Value valuable networks that you're Really looking for not someone who has Thousands of people who are following Them on 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 going to Go off and raise the money on your Behalf but as long as they can get that That warm intro in for you that's what You're looking for and so whether it's For venture capital for specific Industry uh contact that's I think what You want to like really really spend Your time on on evaluating and then that Value is is pretty tremendous yeah I 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 a really helpful Indication of okay they have a good Network of other investors typically in Processes we'll make make intros 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 they can give You indications of who they've Introduced and how helpful they've been Yeah um I I've seen uh investors in Rounds especially in competitive rounds Where maybe there's um uh a few firms Duking it out to lead a deal often times A big part of of how someone shows their Value is making introdu in the context Of the fund raise so here are three Potential customer introductions here Are some Angel introductions Etc and so Sometimes you can get like a 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 uh In the context of the fundraise and and Sort of um get them to show you their Value um ahead of ahead of making that Decision perfect 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

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