Lessons - How to Secure Funding When Everyone Else Gets Rejected | Tim Guleri - Legendary VC & Tech Founder

In this lessons episode, discover how venture investors can avoid founder misalignment by doing deep personal due diligence before writing a check. Learn why surrounding first-time CEOs with strong co-founders and advisors helps guide growth. Learn how ego and peer advice can mislead new founders and learn why filtering feedback and building intuition through experience is key to long-term success. In a situation like that, is there something that you could do to or that you try and do to help the founder CEO see a line on the same vision like real line? From every person that I've spoken to who does venture investing, the individual is the most important component. The market can shift, but the individual is the X factor. If that person goes rogue, you're done. Let's talk to investors in the audience. They put money into an early-stage company. What can you do in that case? Is there strategy, is there tactic, or is that right off? Yeah, I think so. The first thing is that do as much work as you possibly can for you write the check. I really mean this with all the, this is why I'm not a fan of these party rounds that happen over the weekend and I breathe out in a 300k check and then nobody shows up for work. There's no ownership to the project. The founders raised 4 million bucks, but everybody's put in 200k. Then there's nobody to challenge your ideas or give you new ones and it's a very lonely place to be. If I was advising entrepreneurs, I would say don't do that. Investors, which is a question you asked, I think I now have a much more rigorous process on understanding the individual behind the CEO. What is this person all about? Doing blind references and other calls. Now, what are the benefits we have as a 40-year plus bench capital firm? We have one call away for almost any entrepreneur to find out what are they all about because we've got such a massive network. On this year, UFO, one of these kids from college that doesn't have a history in the valley. If you've done 5, 7, 10 years of work in the valley, we know one person that will give you. I do a lot of work in advance. I also spend a lot of time with them sort of off-cycle, taking them off a dinner or go for a walk before we'd write the check. This is ready to unpack the person down in the person. I think having said all that still goes wrong because people are people. The answer to that is for the listeners, their investors, surround them with a highly skilled set of either co-founders or advisors early on. Because CEOs tend to learn about osmosis the best of them. They have a learning mindset. A great example of this is one of my favorite CEOs. My admin ready is running now, a very, very large company and investment. This company is based in Philly. It's a company called Phenom and the HR tech space and just a rocket ship company, profitable while all the other competitors have burnt and Scott incinerated hundreds of billion dollars of cash here in the valley. This guy's kind of raised less money than the ARR that he's putting on to on his top in every year right now, just a phenomenal company. The big, big thing that I respect about my is that he's surrounded himself with. He's only seeking out that next great idea from the next great person. The job of the early stage entrepreneur is giving capital, doing all your work for you write the check as much as you can, but still thinks it's still going wrong and then surrounding the CEO with what I call experts or people that can really get them sort of additional ideas, once you've identified what their soft spot might be. One of the early stage CEOs happens to be this phenomenal founder from PayPal, technical guy, had to learn, go to market on the job. Right, so I've like inserted like this guy to his company, I've invested in that, you know, worked at a very, very great company on the GTM side called Act Dynamics and that person is now advising Sir Ash who's the two in question that's company I've done called Sadi on GTM. So again, that's a great sort of a fit and he's learning a lot from them and I think that brings on the risk of these founders going off the trip. I think that's very wise. I also think that it's sometimes uncomfortable for a first time founder to ask for help and understanding there's like a mental block there for them to put, you know, put them in that a little bit of a position of I'm sort of saying I don't know what I don't know and please like I want the advice, but I think there's an either involved in that too that a lot of people have a tough time asking for help. So if you're putting those people around them, you're just it's just a very great environment that's going to allow that person to thrive. The other thing and you remind me of something's covering you said that. The other thing I've kind of noticed is that these founders talk to other peers and you know get go to go to advice and you know lock into that advice which might be different, maybe a few degrees sometimes completely opposite to the way I would advise them on that particular point. So I've been thinking about that because, you know, one of my CEOs does a lot of this where you go and talk to another CEO's 28 and try to get advice from fundraising or timing of fundraising and so and so forth and I'm like that is not that guy at personal gal is not giving you the right advice right. So the point here is not that don't talk to your peers you should but filter what you're getting based on the experience that somebody has right because it's more likely I'm not saying I'm always right. It's more likely that somebody just going on a pack that has a perspective and does this professionally. It probably gives you a better advice than then your buddy you have is a bear with right. Yeah. And sometimes I've actually found this a lot and I think that it's also very damaging. So if somebody achieves some early success and they haven't been in the game long enough to understand that their early success is not the the way that they achieve their early success is not the only way to achieve success. They become almost like there's like a religious conviction about how they achieve success and that's the only way to do it and that's the only advice they give and they speak with such conviction and such charisma that you know that they're receiving the recipient of that advice starts to believe that yeah that must be the only way to do it or that must be the only way to operate through this specific and they're only like you know they're 25 26 and they're giving they're giving this advice that serve them well for the first you know four years of their life but they don't realize that multiple things can be true at the same time and that what work in one industry or one instance it doesn't always carry over and this is bias towards this you know they're there's short lived experience and I think that's also damaging and that you probably get that from here the balancing comment is right that's not a yeah age thing or an experience thing right because I think that I met 22 year old that are that are very very insightful and there were different set of experiences so I think the point I think we're both trying to make is as a as a first-time founder understand the source put a filter on top of it okay figure out you know based on a lot of life is all about having a gut instincts right so when you've had enough reps you just know right and so they need to get enough reps and you know if you're if you're taking feedback from founders go talk to 10 not one if you're trying to take get feedback on a particular point from like 10 year VCs or whatever talk to fight not one right and then you balance it and you'll get the right and then I'll comply all on intuition so just just kind of having one conversation over a cocktail doesn't make a strategy thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one