The Between 2 Term Sheets (B2TS) podcast brings listeners behind closed doors into conversations between investors that typically stay private. Produced by Alacrity Canada, B2TS features intimate conversations with some of the most prominent investors, founders, venture builders, and accelerators across North America’s thriving technology scene.
From an FBI hostage negotiator, to a VP at Georgian Partners, to a founder of a successful drop shipping company – season two of Between 2 Term Sheets was full of amazing conversations. We’ve gone back and compiled a roundup of some of our favourite lessons and insights.
Episode 1 – Tariq Haddadin, program manager at Techstars
“The most important thing companies and founders need to rely heavily on, is themselves. What are they bringing to the table? What is their background? What is in their toolbox? Why are they the best team to do it, and why are they positioned for success? You don’t all have to be Ivy League school graduates, but you have to have the right work ethic. You have to have the right hustle to do this. We often say that fundraising is a full-time job. It really is, and people need to get to know their investors and build that relationship much like they would build a relationship with a client and enterprise.”
“I see incredible similarities between the cycle of closing an enterprise sale and the cycle of closing an investor or capital deal. You start with a very wide pipeline and then they have to lean on your strong suit to have those conversations that drive that kind of momentum forward. The thing that I would caution against, is overselling yourself or overselling the company. Because while that might get you the next seeding, ultimately when the people dig a bit deeper into the company instead of the founder, things will come up. So honestly is always the best policy when it comes to raising capital; because we do tend to dig and look deeper into the company.”
Episode 2 – Chris Voss, FBI hostage negotiator, CEO of The Black Swan Group Ltd, & author
“There’s a concept in hostage negotiation called ‘proof of life’. […] The exact same idea applies to business. There’s a person on the other side of the table – are they looking for a deal? Are they going to make the deal with you? In every negotiation, there’s a favourite and a fool. You got to know upfront which one you are, the favourite or the fool. You also got to know if they’re just on an information-gathering exercise where they’re gonna take your information, your knowledge, and then never make a deal with you. So we coach people right up front to be politely and differentially skeptical of whether or not there will be a deal. It’s a game-changing move. Immediately, it stops people from wasting time. The other thing it does is it refines what your value proposition is.”
“Let the other side go first. There’s some classic advice out there from Stephen R. Covey called ‘Seek First to Understand, Then to be Understood’, and what we tell people is to seek first to show understanding. Get the other side talking. Show them that you understand. It’s amazing what a position that puts you in – you make your points only after the other side feels like they’ve been heard all the way out.”
Episode 3 – Vinny Pujji, senior investment associate at Insight Partners
“In many ways, I think the ‘okay’ investors think about themselves, think about their markup, and think about the next round; and you can’t blame them. But that ethos creates a culture that’s addicted to capital, and what I hate to see are founder CEOs that do well, and have a great exit, and own only 5% of their company at exit. It’s worth founders thinking outside of the box a little, “What can I change to change the cash flow dynamics of my business?”, and “Why am I worried about the cash flow dynamics?”. Maybe it means they’re going to raise less, or maybe they need to educate themselves a little bit more about revolving credit facilities or any kind of other – I’ll call it cheaper – types of capital.”
“If you don’t find yourself jiving with a person and personality, you should be doing back channel references before you take anyone’s money. You want to know that that person is going to be a good cheerleader, and that when one or two quarters go poorly they’re not going to become disinterested or punitive or anything like that. This is the hardest journey anyone could take and you’re already crazy for starting a business, so you need to do it with the right people, and you want to be compensated for it.”
Episode 5 – Jay Rhind, partner at Rhino Ventures
“Be thoughtful about why you’re raising money. Think about what that ideal partner for you brings to the table. I really encourage entrepreneurs to conduct two-way diligence. So when a fund is doing diligence on your business, turn it back on them and ask for referrals from founders that are in their portfolio. Try to do as much background research on the firm, as well as the partner that you’re going to be working with closely, as much as possible. This is a long-term relationship. Most venture funds will hold a company for anywhere from five to eight years – or even longer in a lot of cases. So just make sure you’re doing that kind of two-way diligence with your partner.”
Episode 6 – Neha Khera, partner at 500 Startups
“My advice to founders when I meet them is to always just really be cognisant of the terms and the individuals that they’re raising from. Not to get too excited by the hype of what evaluations can mean for the company. Because at the end of the day, I think fundraising is often celebrated a bit more than it should be. Raising capital is very indicative of potential success of a company, but it’s definitely not the end all and the be all. You’ve got to build the company. I think entrepreneurs get a little bit too caught up in the fundraising side, and everything that comes with that.”
Episode 7 – Saba Mohebpour, CEO at Spocket
“The biggest lesson that I’ve learned is to not think about funding. You have to put 100% of your focus and time on the business. At the time that I started Spocket, I was working 4 different jobs. That’s how I was able to hire a co-op student to build the first beta version of Spocket. I didn’t know about investors out there. I certainly wasn’t looking for one. I put 100% of my focus on building my business, and after three months – I was able to raise a great amount of money. So my suggestion would be to not think that if you don’t have funds, if there’s VC’s not backing you up, you won’t be able to build a business. At least for a couple months, you have to put 100% of your focus on building your business and growing it.”
Episode 8 – Margaret Wu, VP at Georgian Partners
“I was actually on a panel at a conference yesterday and the title of the panel was, ‘How to Make VC’s Take Notice’, and I also spoke with about a hundred CEO’s. Listening to their elevator pitch I would say that for me – and I think many investors – one of the key things that you can lead with, in a discussion, is simply what traction you currently have. I think CEO’s need to remember that investors are listening to pitches all the time and we most likely have met 10, 20 companies that either have a product similar to yours or are adjacent to yours. We’re going to understand the market and the product faster than the average individual. So leading with either recent bookings you’ve made or exactly how many customers you have/had really acts as a proxy for helping us understand that you’ve got a great product. You found product market fit and you have the team to take it to the market. Lead with traction.”
Episode 9 – Jason Kryski, CEO at Strawhouse & Owen Matthews, founder, CEO, serial investor, and chairman of Alacrity Canada
JK: “Just a quick plug for founder mental health. This shit’s hard and a lot of times when you’re running a company you’re kind of in it alone. You can’t really talk to your employees. Sometimes your family and/or your friends don’t understand and it can be a lot of pressure put on you, and you need to be able to find ways to manage and cope with that. Talk to the people you need to talk to, take up meditation, something. Have some sort of practice around checking in with yourself and ensuring that you’re good because you’re the person that needs to get it done.”
OM: “Understand that it’s not a well-worn path. You’re breaking new ground by definition and therefore it’s fraught with failure and failure is normal and it’s okay. Failure is learning so you can continue to success. So if failure is normal, don’t beat yourself up about it. You can’t expect overnight success just because you hear about other people who have happened to have had that.”
JK: “Don’t beat yourself up, and be kind to yourself. Or else, if you focus on those failures, and you focus on how you messed up, you’re just going to build this negative loop that you’re going to have a hard time coming out of.”
about alacrity canada
Alacrity Canada is a venture builder that supports driven entrepreneurs. We help create thriving companies & connect them to our global network of expert investors & mentors.
To explore more of our content, visit the Alacrity Canada Blog page where you’ll see Alacrity’s podcast on early-stage tech investment Between 2 Term Sheets, and our cleantech podcast series, Cleantech Talks. Follow us: @alacritycanada on LinkedIn, Facebook, Twitter and Instagram for the latest in tech news, and information about upcoming events.