We recently raised an additional $1M in pre-seed funding for our start-up. It only took 30,000 emails and 176 video call pitches... and hundreds of hours of follow-up writing, document preparation and negotiation to complete in less than three months.
We did this during a global pandemic and one of the worst economic downturns of the past century. When we set out to raise this round, we were not sure how we would do it. We only knew we must succeed if we were to survive and grow.
Rapidly re-prioritizing amid Covid-19
When Covid-19 began spreading from China to Northern Italy, my co-founder and I knew it was only a matter of time before California started experiencing the pandemic firsthand. We figured we were fourteen days behind the global spread. We started preparing an update for our investors and advisors.
At that point in the business, we were about halfway towards our goal of completing eighteen months of recorded live learning and development sessions for business professionals. We had created a unique educational-neuroscience based live learning session specifically geared towards teaching an intimate group of people a new skill rapidly.
By video recording the session in 360, we were also growing a proprietary data set around human learning and the emotions and states of mind people experience when transmitting and learning new information. This data would be the ground truth for our human comprehension AI. As happens in life, and in start-ups, things change, and change quite rapidly.
Dating is hard, especially with investors. Money can't buy love, but it does buy you a place on the cap table.
We quickly re-prioritized our technology build, reallocated what resources we had, re-negotiated partnerships, pending contracts, employment agreements and every other business function to align to our new focus. We then re-designed our pitch deck, and started seeding the market through an aggressive cold email campaign. At Sesh, we ‘do what works’ (as long as it's legal and ethical.)
Pitching while parenting
I thought we would have a decent chance at booking meetings. Our message was timely (video meetings suck wouldn’t it be better if you can see what people were feeling), our solution needed (video meetings suck wouldn’t it be better if you can see what people were feeling) and our audience captive (everyone at home stuck in sucky video meetings.) Getting meetings was in fact easy. We almost had too many meetings. With every email blast we were booking 3-5 meetings per day.
The hard part was managing my time and balancing all these meetings with my new responsibilities as a full-time parent of two rambunctious toddlers, a husband to a wife also working full-time, and still being a CEO of a fast moving technology company that was now fully distributed.
I tried to be my best for all roles and occasions, but I was constantly failing and doing a sub-par job at everything. My only saving grace was the world was now collectively failing, and feeling a deep swell of empathy for all manners of challenges and tribulations.
Encountering every investor archetype
In the end though, no amount of empathy will convince an investor to part with their hard earned money, especially when it seems the world is ending. It was definitely a lot more difficult than I expected. I experienced every iteration of the investor meeting you could imagine:
...the seemingly-very-interested-never-hear-from-them-again investor
... the only-interested-in-telling-you-how-amazing-they-are investor
- the I-know-better-than- you-and-let-me-tell-you-why investor
...the incredulous, how-did-you-get-my-contact-info investor
...the drag-you-through-six-rounds-of-diligence-and-then-ghost-you investor
...the schedule-a-video-call-and-then-not-turn-on-the-video investor (even after asking them to turn it on)
...the investor-group-who-makes-you-pay-for-diligence-and-then-pitch-a-bunch-of -uninterested-doctors-and-accountants-who-pretend-to-be-tech-investors-on-the-weekend-investors
...and finally the considerate, thoughtful, attentive and give-you-good-feedback-even-if-they-don't-plan-to-invest investors.
The good news is, there are more of the last group than any other group of investors and it was in that group that we finally found our investors. Again, it only took 176 meetings to find the five we needed to complete our round.
Pitch, reject, iterate - repeat
In the beginning my pitch was - to be kind to myself - terrible. I've been pitching and fundraising for years, and in fact, ran an accelerator program for early stage startups and coached dozens of entrepreneurs how to pitch.
Taking your own medicine is much more difficult when the pressure is on to find funding or declare bankruptcy. I made most of the classic mistakes. Speaking in too much technical jargon, burying the lead, overselling the traction, and not having a clear value proposition identified. But hey, this is a startup, if I had all those answers I would have a ton of customers and wouldn't need outside investment.
In truth, the pre-seed stage is sometimes the most exciting, but also the hardest stage in which to raise money. You're in the testing phase, which feels like you're stuck in molasses and hardly making the kind of progress investors want to hear about. If you get the testing right however, when you launch your go-to-market, your trajectory and growth will be phenomenal, and you’ll have more leverage in future fundraising negotiations.
What it takes to get funded
What’s ultimately needed is confidence and resilience. Resilience in the face of daunting and continuous rejection. And the kind of confidence that comes from knowing you will most likely be rejected, but also knowing that you will learn from your failure, and ultimately what you are selling is worth 1000x what anyone at this point is willing to pay. It’s like doing the thing you're scared shitless of doing, and then gaining courage after doing it.
You pitch knowing you will be rejected and gain the insights and confidence after the pitch, especially when they say ‘no.' Eventually, if you keep refining, learning, tweaking, progressing, building, honing and practicing, you hear ‘yes.’ And then ‘yes,’ and ‘yes,’ and ‘yes’ again.
When it rains it pours. And in the end, you only want investors who bring real value to your company. Folks you can lean on for advice, connections, insights, and trusted feedback. You’re interviewing them as much as they are you. Dating is hard, especially with investors. Money can't buy love, but it does buy you a place on the cap table.
The best advice I can give to my fellow entrepreneurs out there raising money is the old cliche, ‘don't give up.’ In truth, if you’re an entrepreneur, there is no alternative.