How do you raise a large debt facility alongside venture capital?

welcome back to episode 27 of fundraising demystified today we have Paul CMOS co-founder and CEO of Summer a fintech property management platform that enables investors to acquire and manage vacation rentals in a new way they've closed over 80 million in funding and on this episode Paul walks us through what it's like building a company where he had no industry experience by hiring experts to fill the gaps how he secured both equity and a Deb facil by running a structured fundraising process and how he differentiates himself with better unit economics against his competitors as reminder if you're not already subscribed and you want to get updates when we release new podcast or our newsletter be sure to join. thunder. BC again join. thunder. DC let's go ahead and get started with the show hey everyone welcome back today we have Paul on the show with us today thanks for joining us Paul thank you for having me Jason Paul is the founder and CEO of Summer and they have gone out to raise over $80 million so Paul I'm so excited to hear about your story your journey and how you've gotten to where you are today would you mind just giving a little bit of color about your background and what led you to starting summer for the audience yeah before I I got started on summer I had a variety of roles which I think all kind of you know played a role in in the entrepreneurial journey in terms of getting there started recting more formal Finance the credit world uh you know sort of underpins uh I still think back to some of those lessons when I'm you know negotiating debt facilities and talking to lenders right now and I think being able to you know speak that language a little bit certainly been helpful on the journey and know what it's like to go into those offices and talk to those types of people moved over to management consulting strategy and operations work m&a work after that um and you know a lot to to bring forth from that experience that I think led me into into what I'm doing now as a Founder but then most relevantly that world uh being m&a led me to Airbnb so I was at Airbnb for a number of years initially through an acquisition they were doing helped them lead that that acquisition bring that company in figure out what to do with it uh and then I stuck around after that uh and actually let a product team there building out cigar basing products for a number of years and Sh operations work as well inside there um and sort of had the core idea come to me while I was there um so one of the things I noticed um and you know anyone who's used everyb andd probably figured this out maybe out shattering information but the quality hosts do very well on the platform people who can drive you know whatever the moniker is and every's changed it a lot there a super host there's Airbnb plus there's now it's guest choice I believe Brian just came out with a month ago it's the new moniker they're calling it I'm a guest Choice as well yeah summer homes are guest Choice Homes that's great you know whatever we had verified at one point stays on Airbnb so like you they're they're hitting at the core principle right the core principle is quality stays consistent fstar reviews professional photography the Amic ities you expect will perform better than someone taking a home throwing some Ikea furniture in putting up a couple like grany iPhone pictures and maybe there's some questionable reviews right like I've got kids yeah you you understand where you're coming from like you don't want to anything to go wrong so you want to book that and you can pay charge a premium for that and therefore you know get a premium as well those homes are both more than others thing I noticed about you know when at Airbnb was we could not onboard enough of that Supply ass you know airbnb's the marketplace and supply and demand there's a lot of demand for it but there's not enough Supply and why is there not enough Supply so I started to think through this and unpack this um the individual owners a lot of times of these properties the ones who currently own them or who want to own them are sometimes very ill equipped for actually running in Outsource what at the end of the day is Outsource Hospitality uh distributed Hospitality operation right how are you creating a uh experience on the ground that is Ain to staying in a hotel right um and I don't think people stay in short orals to stay in a hotel clearly like you're making that decision you know you're not getting the Courtyard Marriott uh but you're you're getting a short-term rental but you know I think too many people get lost in the the shuffle and they're not thinking cons first about that of like well if I'm requiring someone to take out the trash I did all these jokes online take out the trash bag the bag this do this clean this and have all these things you gota oops you got to jump through five locks you know what kind of experience are you really driving people get annoyed about that at the end of the day they're consumers and and not everyone is is is a consumer facing mindset um so started to think through like well you know these customers who are buying these homes have a need to get more out of them or buy them new and figure out how to remove the risk in this process because people can make money doing it but it's very risky and it's timec consuming and people just don't understand the data that goes into all that so the idea for Su really came from that and we increase the amount of Supply in a lot of the short-term Ral marketplaces Airbnb REO Etc and our own platform We R out directly linearizing the process we will run homes through data and underw writing 200 understand actually what they're going to make not like boost up numbers and something way out of left field like we can run it through and say this sell in this block will generate this much you know Jason whether you already own the home or want to buy the home here's what we can do to maximize that we will finance that purchase for you if you want to buy it new or we can Finance improvements you'd like to make to your current property and then lastly we will manage the home price the home generate the yield but do it with a trusted brand in front of it summer homes uh that is well known to renters and owners alike as a quality owner operator of of these assets that cares for them like their own and we find the feedback loops on that are very strong in building a network that resonates with consumers no I'm glad you kind of walked through and gave us the the the overview of Summer and also just walking through the background of just how relevant your background was to starting this and especially having the insights at Airbnb and being able to see the supply and demand problem that was there um did you ever have your own property prior to to doing this yourself or did you know jump into it it's crazy actually uh no I I I did not uh I did not own or operate a short-term rental officially um you know I i' been adjacent to it for many years at Airbnb i' looked at the numbers i' do a lot of owners themselves and you know I was I wore a bunet of different hats at Airbnb but my last hat I wore was on the product team obviously you know one of the big jobs of any product person in any business is consumer focused right you're you're understanding who you're building your product for you're understanding the customers right and times that Airbnb who are the CH customers in the marketplace it's your supply and demand it's your hosts and your guests right and I had the fortune of being able to work on both ends of the product and you're talking to hosts constantly and one of the things that Brian always emphasizes is how important hosts are you walk through the halls of airb me and you see pictures of actual hosts to remind you like this is you know here's Jason and he has a property here and he lists on Airbnb and here there he is I some great black and white photo but and it's true and and you you can't help but remember you're doing this for for Jason and other people out there to list their homes and put on this platform and create that brokering of of supply and demand but you're getting to know their pain points you're understanding what that problem is and trying to solve that for them I think you know Airbnb is traditionally why I jumped on this opportunity was you know Airbnb is a Marketplace and they'd like to remain a Marketplace so you know keeping things that are both operational and financial for them at an arms length I think is very important and that's you know an opportunity for us here to obviously use something both on those angles but also through the technology yeah and um I think you guys done it a little bit differently than some others and you know I'm really curious to learn you know one the shows about fundraising but I do want to just kind of get down to like you know the the model behind it because you guys raised a sizable debt facility to make this a reality and you know whereas most people are maybe just over glorified property managers you actually are financing the this side of the deal and so I'm curious that like how you guys did that and why you chose to go down the financing round taking on that that risk along with the homeowner yeah that's a it's a good question um you know I think the initial thought was we wanted to try to help more people become owners and operators of these homes themselves or owners of these homes and be able to get that experience of owning a vacation home and do it in a way that made sense right that was sort of the Crux of the original idea I was putting out there and you know I think one of the things we realized is as we were doing this was hey we're running we're building this this model top of funnel this algorithm top of funnel that's proving to be really accurate and finding the right homes and sort of informing our investment decisions here on you know how can we help you Jason if you're someone new who wants to buy a vacation I'm like you're coming into this Market you're driving I'm sitting here in New York City you're driving upstate Lon Valley you're driving to the Hampton and you're looking at homes and you're wondering is this home good or is this home good or you know I kind of want to do this and and getting those people there's a lot of people in this tiering you know what we call sort of like the mass aor the middle middle upper class like what's interesting about that group is they have the funds typically they have the money to actually transact and buy a decent home it may not be like a mega mansion but it's a decent home a lot of people would love to stay in it's actually those are the the homes that perform best via short-term metal they're not the mega manions they're typically like just the really nice properties right but what's interesting about that customer is they have a higher risk tolerance despite having the money because that money that they have or the asset that they've already bought represents an outsized portion of their household savings or them and their spouse or maybe just them so they're more thoughtful about it and they want to make sure they're not a a stupid decision or a decision that's going to put them in a hole and I think that was the Insight that I stumbled into was hey there's a lot of people who already own these homes who are looking for sort of more yield out of them right we could help them out and tell you where to invest in you know what to do and say like improve this improve that we can help you finance that and then on the other side we have this model called gradual ownership which if we if we find at home that we're that confident in and it all starts with that that technology like I mentioned I realized that we're building this technology to make our own investment decisions uh we can afford to take the risk because the risk isn't really there if this is as accurate as we built it to be and so far it has been where we are able to say this home is going to predict this much I'm that confident in it Jason I'm not just going to tell you it's going to predict this much I'm actually going to buy it for you let you rent to own it for up to two years and let like I'll show you myself I will rent it how when you're not there I will show to you what we get on it it's going to match up with what I told you it will and then you know at that point you're buying it back hopefully buying it back from us as der risk as it can come because you're seeing we excellent management that we put forth the five star reviews we're getting the yields that we're getting on the property all in that intern period I'm comfortable taking that risk because I I'm that comfortable in the numbers funnel underw writing so I think it was a initially a creative wedge to both differentiate oursel from the the rest of the ecosystem out there of you know sort of just straight property managers just taking whatever they can get and like trying to you know squeeze them for all their worth but also a way to create more Tam in this Marketplace and create more owners in this e system that makes sense and get them Mar of a risk free way no and that's good context and you know when it's you hav't you know being the fundraising space and and seeing lots of companies come by I think you have a good model but inherently still like heavily dependent on real estate when going out raising capital A lot of VCS see these models linear growth real estate where's where's the tech why you raising so yeah yeah so you know what was your fundraising experience like in the early days and you know when you kind of got your first initial round kind of walk us through what your strategy was how you know was it cash right off the get-go easy as can be or was it a you know crazy journey to kind of find find your fit there yeah well I mean we raised our first round of institutional Capital our seed round at the end of 21 so certainly um you know was a different world uh for a lot of people right in in a lot of ways it's funny I look back at it now and I have mixed feelings really because you know I I I hate it because I think obviously a lot of valuations and expectations were just inflated for a lot of people not just our company companies throughout prop Tech fintech the entire ecosystem really um you know probably everything was overvalued which I think sets up companies poorly down the line especially companies that took a lot of capital in those in those environments right we were fortunate enough to really only take one round in that you know crazy environment so there's a lot of time to sort of rightsize things to more you know achievable valuations let's say as you track your company and grow it that I didn't really understand before I came in and started understanding the fundraise game and you know you get presented with a term sheet in 2021 your evaluation is this and you're that's amazing right like I'm worth this money I did it right but you realize that really quickly you got a long journey Ahad of you and there's no guarantee of an exit and you you you've got to prove that valuation right every time you get a term sheet you're now getting notched up a bit and you're notched up a bit and you're notched up a bit and if you're not actually justifying what you're valued at on paper in private markets like that will bite you eventually whether it's now or six years from now I think you see that throughout the entire ecosystem right so um I think that was the the negative I think the blessing from it honestly when I look back is you know and a lot of people have told me this like wow you had you know sort of like perfect founder market fit for the idea you were going after right um you worked at aird andb you had product experience you had strategy operations work before that you had Finance work before that like that's literally what it takes to get something off the ground of course like you know VCS are going to be interested in talking to someone like you and and that was correct but I I tell people all the time you know had I tried to start this business this year I don't know if I could have even done it because I think there is an initial Quantum of capital that it takes to get something like this off the ground um and that unfortunately is just not here without some type of traction or evidence uh in like 2022 2023 and and I think in 2024 so I think I needed the initial uh environment to get that injection but then you know I'm glad it was able to get into where we are today I think because it's a it's a more healthy environment provide you can fundraise yeah and I think that's very insightful for your you know being able to reflect and acknowledge that because I think that you know is true for a lot of different businesses but you were smart enough to realize it and pay yourself accordingly uh where I feel like a lot of other companies took that money and lit it out virus fast they could thinking there was going to be tce as much a few months later it's tough though I I I have a lot of sympathy for some of those founders I I do I think especially the firsttime ones right um you know and I can empathize with this being a first-time founder myself you know you think that I think it's a journey for a lot of Founders to have high conviction and high confidence and I think a lot of Founders don't want to admit it but most people have and most people in any Walk of Life you know when they're doing something new they're stepping into a new role there's a bit of imposter syndrome you know uh yeah you're running a company all of a sudden you're the CEO of a company and you've got some money but you've got a big name investor telling you to do X Y and Z or you've got you know Sequoya is not on my cap table so I just throw the name out but they're big like Sequoya is telling you to do whatever or softbank's telling you to do whatever right like you're you're saying to yourself wow that's so and so or these people know what they're talking about and um you know not to say that they don't know what they're talking about but they have different objectives than you right I think you realize that as you as you grow as a Founders you grow as a CEO their objectives are different and doesn't mean they're wrong or bad but you have to understand that you have to understand why they're telling you to spend the money what they want out of that and what their their end result that they want for your company is versus what you might want for your own company so I think it it was very easy for a lot of folks to just get that money and and some on streams with that of like we have to go spend it so yeah I feel fortunate that none of that happened with me but I have a lot of empathy I think it it gets kind of blown up in the media like founder X pulled in all this money and blew it yesterday I'm like there's a lot of people around the table that condoned that uh from blowing of a hund million dollars it wasn't just that person sure it was ultimately their call but like you know you don't know what was going on in the boardroom or behind the scenes with some of this stuff yeah it's a good way to put it uh you know there it wasn't like it was a a runaway founder that had no oversight there might be a couple of those stories out there that we've heard the last few years but you know I I don't want to judge everyone off of that let's put it that way but yeah there's some someone you're scratching your heads that won't name names you're like oh that did they have any diligence on that what was going on there yeah so so are you you leverage the timing you get a sizable seed ra1 million you know massive and and then but you come out I guess when did you close your series a we closed our series a uh over the summer so we recently announced it um about a month ago uh primarily because when we first closed uh we got a lot of bounceback for reporters over the summer saying hey uh out of office don't talk to me right now I was like oh you know what uh when I started digging with a couple of folks uh in September and you know got a small add-on or two and then you know was like well I got to get this announcement out there before the end of the year it's been sitting over me so fortunate enough to close it over the summer and going pick up a little bit more along the way and uh yeah recently got it out so it closed an $18 million seed or series a I should say yeah um this time I had coad's involved which is interesting but um you know it's certainly a different ecosystem to raise in than than 20121 night and day in a lot of ways super fast in 2021 I think it took us yeah I want to say from the time we started to the time we actually have money wired maybe two months 2021 um I think we went out there in early October and we were closed with our seed by Thanksgiving and right around the early early part of December and um we you know had multiple term sheets uh you know fortunately and uh it was a very different environment and then the series a rolls around and I think it's a if a Founder hasn't gared through it already they will and it's a you know I tell everyone I talk to it's a very different world out there the biggest piece of advice I give to people is like you know make sure you give yourself time it's not impossible but it is absolutely harder and the tables have turned where you know in 2021 there was so much Capital to go around DS were looking for places to stuff it right they needed to deploy their own Capital uh and and now it's the opposite way they don't need to deploy anything for anything they're kind of safeguarding it and they've got 10 companies they're looking at really only enough out to do two or three Deals so you know it's possible to get a deal done but they're going to be very picky and choosy about who they invested why they're investing and they're going to make sure that diligence takes as long as they want to to take so give yourself the extra time I say give people I tell people give yourself add take whatever you think it's going to take you and and add three months on at least because that's what you can expect out there right now I would completely agree that's exactly what I'm seeing in the market and once you actually finally get down the funel with VC's and you get a term sheet it's you think you're done it's like no no there's a lot more to go just the beginning honestly like it's it's great it's a checkpoint but like until the money is that that is something I'm sure a lot of other Founders have learned too until the money is in your bank account you are not done and Things Can Happen along the way and i' I've SE I've either had it happen or I've heard of other people and I'm I'm sure you can test as well oh yeah I've I've had term sheets pulled you know couple weeks after being issued when granted pandemic is March 2020 when I had a term sheet pull from us like series a term sheet like we're we did it yeah was like no goodbye all done never never came back did you know that most Founders waste days of their lives chasing the wrong investors well as a Founder you know your time is your most valuable resource don't waste it on the investors that aren't going to write you a check here at Thunder we built a free tool that identifies exactly which VCS are worth your time to pursue we score your company against 3500 VCS and family offices that have been vetted and are actively writing checks into companies like yours get your AI recommended list of investors that will look like this absolutely free by creating a free 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VC now let's get back to the show all right so Le million see you go on and you get the a done but why did you choose your strategy around the a so you raised 18 million in equity you also secured a $50 million debt facility what I want to understand is what was your strategy on deciding on those two vehicles and the amount of those I well you know stepping back for a second it it really you know I remember honestly we I I sat down Lally August of 20 we're sitting here at the end of 23 I sat down in August of 22 and said to myself like hey we we should go out and fundraise like I think we should start getting things in order because I don't like where the world is heading right now uh I'm seeing the storm clouds already starting to form this like summer 22 if you can remember like wasn't complete Doom and Gloom but interest rates were shooting up really fast and I'm saying to myself this doesn't look good um I don't know how long this is going to last but I want to make sure we batten down the hatches and you know make it all the way true I should try to go back out and see if we can get something done we've got enough initial traction we've got initial product Market fit let me go do that you know I brought that at first to um the board and and some of the Insiders and said hey look um here's what I'm thinking this is the fall of 22 like I'd like to go out and do this I'm going to go out and do this so you're all aware I'm going go out fundraising a would love your all support in that process no expectation goer than that right just support I think is all you can expect from your insiders whether they put money in or not at that point I had the fortune of one of our insiders actually saying hey well before you go out there and you know talk to everyone maybe you were interested in Bea again from your seed um and they dug in and you know they liked what they saw and presented uh trim sheet towards the end of 2022 um which traditionally looking back again um if if founder hasn't realize this yet uh don't start fundraising right now this like December November and December is probably the worst time of a calendar year outside of you know the summer to raise from DC's like there are windows of the year you want to be ready for and I I I think you know again something where now uh you want to be ready to go on Labor Day with your fundraise uh and you want to be ready to go on January 2nd with your fundraise right uh you want to have it wrapped by Fourth of July and you want to have it wrapped by Thanksgiving in both of those Seasons uh don't raise in the Fourth of July the labor day and they rais in the November December Windows um so I figured that out really quickly uh Hey a lot of lot of quick uh diligence but then like you know I'm busy with this or holidays or let's check back in in Jan like okay this is going to take a little bit longer than I than I initially anticipated sort of Ste back literally a calendar year ago today rearchitecturing to really hit the ground running in January with a with a much more aggressive approach to getting it done but the impetus to raise really just came from Hey I want to grow the business I think we're doing something compelling here I got that Val validation from insiders and obviously some Outsiders because it was an outside and an inside round Le round um which was great um and I want to make sure we've got the money to carry us through that growth responsibly over the next you know call it two three four years um in a way that you know I don't know how long the indry environment is going to be how long you know this this studo reception we're in or whatever you want to call it is going to be I I hope and think it's probably 224 um and I think hopefully clear St in 25 yeah I'm I'm in a similar camp in terms of where we see things going macro economically but when it came to that strategy you know so it sounds like you had some internal discussions and then kind of really you know button down the the pitch in the story in January uh so it really came down to like how much time you'll have with that capital and as far as like Milestones is this is this like is this profitability round is this the growth round like what what what do you doing with business do you think you're going to go back out for another sizeable race do you think you need to yeah I think you know I I also learned I think there's something to be said for being an opportunistic right I had this I had this very naive mindset as well when I first raised the seed back in 21 like uh I probably looking back I probably could have picked up a few extra million dollars after I closed the round and announced um back in the end of 21 um from people who were just heard about it like hey I missed you and I really like what you're doing here can I you know can we do something can we dig in I kind of had this like Evergreen mentality of like oh there that'll always be there I I just you know closed around pretty quickly and like I'm sure there will always be more Capital whenever I'm ready for it to go out to Market and a lot of Founders have that mentality before the last few years you know I I I probably should have been opportunistic about picking up a little bit here to a little bit there I don't think a lot of people regret that if they do and you know I think so the do certainly open on my I don't think we're aggressively going out and S raising anything in the near-term future given you know what we were able to do but opportunistically with the right kinds of Partners uh for sure and I'm open to digging in and taking on some more I don't think we're going to need a giant plug of capital um to to to grow the business I think the idea from this fund raise was responsible growth but also uh hopefully focus on profitability um I think we've got a couple plans in the works to to get there um you know whether we do or don't we'll see but I think that's definitely the goal in interally I I'm trying to run the business assuming I don't raise any more money what happens in a world where you know real estate crashes and no one ever wants to write any checks and anything looking remotely adjacent to homes or or fin Tech or anything like that right um you know I think I think season founder mentality expect the worst and prepare for that and be surprised pleasantly if it doesn't go that way but you know you're ready for whatever can go wrong yeah no I would agree with that then um you know when it comes to your business like this ear like there are other players in the space that have gone on raise Venture Capital you know some notable ones that you know unicorn status this type of thing but feel like your business is a little bit different what was like you know given that given your adjacent you know Focus to to real estate and how you know how did you decide who to go to to raise capital and how did you get introduced to them and kind of like how are you differentiating yourself from those other players as well as you know being able to kind of get more more of a venture-backed you know outcome yeah that's a good question I'll talk about the latter part first and then I'll talk about who I went out to and why I think our differentiator here and what I've really tried to lean into is like look are there is there a component of our business like you can point to various pieces of our business and say that looks like this company that looks like this company that looks like this company I think something that you know I content I had to contend with in the fundraising process was that to some extent like a lot of investors that have or Founders that have gone through the process proc where hear investors talk about what's your comp right how do you comp to this company how do you comp to that company and a lot of people don't get that before they go through the process like investors are looking to take a look at you and your company and say themselves okay this it's pattern recognition pattern matching it's like this thing looks like that thing that thing trades at this on public markets and they did that within this amount of time with this amount of capital okay so here's how that thing this thing is going to go right they want to try to create the guaranteed outcome in their head head or at least extrapolate it so you know they can say themselves well I I did the work and that's what it looked like unfortunately I think the best companies out there are the ones who don't have an exact comp by Nature it's a is somewhat of a fallacy to just say that like I'm going to invest in this thing that looks like that thing because you want to be investing in the things that are new and differentiated in some way and inherently don't look like the thing that's already out there right where they look a little bit different and that takes a level of sophistication I think from a venture capitalist that you know and again not naming names but isn't at every F and isn't with every VC some of them want something that's just more simple divide this by this and go off that and that's that I think other folks try to do something a little bit differentiated and try to create the differentiated returns and I think those are typically the investors you should try to seek out as a Founder early or rather than later because whether they invest or not they're going to give you good feedback on your business because they're going to be thoughtful about it and they're going to be inherently wanted do the work quick that was a quick aside that I think is is is relevant for a lot of Founders to understand but you know we try to differentiate ourselves mainly around a few areas one is brand I think when you look at the space in the proptech um you know this community this area thing Tech anything you L like deep blues and sea greens and like like psychology in that right they're like trusted colors like banking colors right there's a reason that JP Morgan Chase and all these companies have like dark blue as their color right like it just like ology behind that there aren't really great consumer facing brands in this space when you look around other than Airbnb maybe and I think that's part of my DNA that I brought to the table I was like look I saw what airb andd was able to do like why are they different than booking or vbo like they they lean into the brand they lean into the story and Brian's a master Storyteller he is a master at getting people to believe in the broader vision of this platform at the end of the day like you strip away to story and everything it's a home sharing platform right like but Brian's been able to build a brand around that and I thought that to be derogatory in anyway way like it's masterful and and and how he's thinking about growing it these product watches he's doing right but it's a it's something I always took away from my experience there about how important a consumer facing brand is and I think there's a lack of that in the space so when you think about I thought about leaning into my differentiators as a way to Target investors so I have a consumer facing brand I'm trying to build here I should go talk to investors who value consumer facing Brands right whether they like prop Tech or not is somewhat irrelevant some of them did some of them didn't right they're like hey like consumer basing Brands but I don't like things that are in real estate or real estate adjacent love what you guys are doing give me some more proof points we'll go from there some did invest in they were just like I love the cons basing brand let's go uh separately from that I think there's obviously a fin Tech component to what we do right like there's this you know we're buying some of these assets we're holding them you're ready to own them we're that that is a financing mechanism that I think appeals to fintech investors and folks who very much understand cost of capital debt debt Capital all of that and being able ble to differentiate ourselves from other players in the property management space or anything like that who aren't doing anything like that was important for those investors right so then you're you're kind of going out targeting those folks and saying look I've got something very differentiated we're not this we're this and then lastly I think the technology piece like top of the final like Hey we're doing this thing around like underwriting technology Etc and you've got folks who are interested in that so I think I always tried to take that approach when I went out to my list of folks to fundraise he said look who are the people who are subject matter experts and investors in these pockets and go off and attack them attack is probably too strong of a word but go after them and try to get the intros and try to get in front of them and show them what we're doing and they will work backwards and understand how I'm different than everything else out there by combining these things together versus some of the more generalist funds I think that the generalist funds probably are a little bit more risk averse in the sense that they they don't necessarily have an expertise in one thing so therefore they are looking for the thing that um is easy to underwrite right and easy to understand and just say like okay this makes sense I get it the subject matter experts I found because they they have conviction they know their space very well can spot the thing that looks different in a good way a little easier I think it's really important that you would genified how you had to take your your business you didn't change your business you just told a different narrative to the different investors that had different thesis and I think that's so important for Founders to think about they come in and they're like they work on that 92nd elevator pit bch over and over over realiz like other side investors are trying to put you into a box that they understand Y and if you don't give them the information that they need to put you in their little box that helps them compute you know the opportunity then they just feel like you're too early or you're you know exactly you're not a fit uh and they give you these generic rejections it's so important Jason there's one thing I I I I also have to say off of that because you're you're spot on um someone I I can't take credit for this someone told me this they're like you one of the things I stepped back and did last year before I went out in January and and and really pushed my thumb rais was I actually wrote I wrote an investor memo I put my product hat on and I tried to have empathy for my customer in this case my customer was Venture Capital right what do they want if I were sitting in their shoes what would I want I'd want someone if IID think this thing looks different and it's hard and inherently I'm a person who like most people don't want to do the hard thing and put the hard work in to do the easy thing right I I should try to make their lives easy and do their basically do their job for them because it's that it's that important to me to get this Capital so I'm going to write my own investor memo answering all of their questions that they would be thinking through and putting together on their end for their investment committees knowing the process knowing what they're looking for just like you said and I got a template from one of my inside investors like hey how you structure these i' I'm not a VC I've never written one it was a great exercise honestly like seph I'd encourage everyone who's thinking about funders to go out there and do that because you will look at your business through a new lens and be able to go out and say look oh they're thinking about this way this way this way and here's how here's what they're looking for if I can just serve this to them very easily it makes it so much better of a process and they'll want to dig in with you more yeah and and that's essentially you're rning a sales process you know you're selling to a customer in your case you're trying to get someone to give you their money and you're giving them the opportunity the deal and that money will be up more over time it's a it's still a transaction that um I think a lot of Founders realiz you know Founders that run a process successfully ultimately look back and say I ran a sales process yep 100% you're a salesperson for yourself and your business exactly yeah it's one thing to kind of you talked about the the VC side you know and how you approach them but you know when it came to deciding on how you know raising that $50 million Deb facility you know what type of you know who did you go to how did you structure that it's a world that a lot of Founders don't really have a lot of exposure to they they think I can raise VC but in your case you know it's a little bit different because it asset backs um opportunity but how did you approach that who did you go to and kind of how did you structure it that is a that is a great question I I think um your first point that you made is very true most Founders don't have an experience in that a lot of Founders maybe they have fersing experience from VCS maybe they don't which is still a big a big thing but definitely not debt Capital unless you're coming from that world unless you work in structure Finance you work in traditional Finance it's a very hard world to wrap your head around and even you know you Jason I know you've got a bit of a background in it as well um even the little things of just knowing what it's like to be in a bank literally working in a bank being in a bank engaging with those people how they dress how they talk what they're looking for right like that's that was much easier for me to sort of like almost like wear that skin when you're walking into that place like they're expecting you to be a Founder right they they know that you're not a banker but you know like a good salesperson you want to speak the language of your customer and in this case these people people talk differently and act differently and have different objectives and mindsets than PCS do and you know propco Equity does or family offices do right like so I think for me early on it was a recognition of hey look I can speak that language um and I know enough to be dangerous but I'm certainly not the 20-y year you know sort of subject matter expert at Deb capital A raising that that I've got enough of that in my background but I can speak the language I know what I'm talking about but I know enough that like I would say when you look back at this a lot of companies that raised bigger debt facilities whether it's in prop Tech or you know fintech or other types of spaces out there what a lot of Founders don't realize is actually there's a lot of like hidden terms and hidden things hidden is is is maybe you know too Insidious but they're just terms that you don't understand as a Founder because you're not coming from that world right what are the covenants that you're that you're signing up for uh you know what's the level of liquidity that you need to maintain in your business to continue to have that facility before they're going to call time and just take everything from you right like you can run yourself out of business by signing up for the wrong things and not knowing what you're signing up for very quickly and very easily and that didn't happen five years ago because money was abundant and free flowing but you've seen a couple businesses the last few years learn that the hard way and I never wanted to be that business so one of the things I did early on was find a Capital markets adviser someone who had significant experience in the space in this case this person you know is a managing director for you know 20 some on years at JP Morgan uh so uh he had left and was looking to advise early stage Founders and he was connected to him through one of my investors and um you know had a bu great relationship he you know helped advise me helped me see around the corners redo these agreements you know we St through them loed through them what does this mean what does this mean you're you're you're trying to learn effectively Capital markets in you know two month three mon process and he ended up coming on fulltime and he's now my CFO so you know shout out to Jim he's been great uh but you know I I joke with people a lot of times I'm like you have to assess yourself if you don't have that thing it's like hiring in in your own business if you're not an engineer then you should go out and find a rockstar head of engineering if you have a business that deals in De facilities you don't have that background to the level of depth that I think a lot of people really need to sign up for those and have high degree of convictions and you still find someone who does right in this case I did um and I think that was uh it's advice I've given other Founders who have done this and they've all said the same thing you absolutely need someone like that who can you what you're getting involved in and help you see around some of those Corners because you could sell you can talk about your business you can you're you know a lot of Founders are smart they're charismatic they're confident uh they know enough to be dangerous like I said but they don't know every - gritty detail and I think when you're raising that there's a lot of things that can go wrong no and I think it's that's something you know one when i r and Ms and stff like that in the companies and and or chose to work with companies I think it's something what you just kind of said there was like no when to bring bring in the expert know when to bring in the right people to solve a very big problem yeah and uh in this case you know it sounds like you you followed that to the tea and I think that's something that's really important as a leader and a Founder to recognize and execute on and you know because I at least I follow this tendency sometimes R businesses where I was like oh I gotta figure it out myself you know but sometimes it's you know sometimes is you know like if you got if you raised money and you're you're growing you're scaling you have resources you get those resources to deoy them on better people smarter people that have the experience so you know kind of skip the learning curve if you can uh when you can you know as we kind of you know come come to a conclusion on on the show here you what's some advice that you have for Founders that are out there that are either considering raising capital or Bing to raise Capital yeah well I mentioned one uh you know start earlier than you think and so especially in this market uh it's it's going to be longer probably than you think it will uh if it happens at all you know second I think have empathy we talked a little bit about that like you know some something from writing my own investment memo try to think about you know what are the objectives you're trying to accomplish and what are their objectives again you're running a sales process you want to make this thing as nearest as possible for your Venture folks that you're talking to and what are they looking for how are they viewing this I think another one is you know move fast cast a wide net I think a lot of people uh that I've talked to are very methodical with it and and I think there's nothing wrong with having a methodology doesn't mean you're disorganized but you know they'll go one by one by one by one I I started doing that at one point and then I realized like what am I really doing I I should be having multiple conversations and parallel pathing things at the same time and you know there's no harm in having multiple conversations open with multiple players at once and you could sort of I took it from going through wave Sol us you can't have 50 open conversations certainly but like you know maybe you push out 10 and you know five get back to you and then you're digging in with three of them right and then like two weeks later you're pushing out 10 more right like you're kind of moving on this rolling uh push of of outbounds that you're trying to get out there so I think um don't be afraid to move aggressively and quickly but you know run a structured process then I think you know um two more quick ones I'd say are one um you know don't take it personally Founders are are deeply driven people inherently uh that's what attracts you to doing this job there's little gratification in it at least early on uh if it goes the right maybe there's some down the line but you're kind of slaving away on this sting and it's your life and you're you see it for all the roses that it's going to be one day it can be deeply personal and feel rejecting to get rejections and have people say no there are a lot of things and I've had people tell me this after I've run processes with them or even you know other investors who invested or didn't invest and say look like there's there's so many reasons why Founders can get rejected you know maybe we we just did a deal in the space that was unannounced uh a month ago before we met that person we might like their company but we're not going to invest in the company that's adjacent to that other one but we haven't announced yet so we have to say no maybe we don't have the dry powder people think we have out there right now so and we don't want the market to know that we don't have more dry powder doing us so we're gonna say no right you know there there there are so many reasons that are out of your control someone partner could have woken up on the wrong side of the bed that day and and you know squash something even though a couple of our Junior folks really like it right like there's there's internal politics they're their own be they run their own processes uh the best thing you can do is just ask for feedback if if they're able to provide it and if not you know thank you very much for your time don't have the the the reactions the crazy things like you this is a long game you never know where things are gonna come back around and I think the last thing I found extremely extremely valuable Sam Alin has a great talk on this so one of the things he looks for in in Founders is tenacity and just like you will get beat down you'll have your face shoved in the dirt uh you'll feel like everything's just ringing down on you very this intervals in in this journey especially in fundraising process especially in this environment um I just kept telling myself like I'm not going to I'm gonna get it done I'm gonna get it done I'm gonna keep talking to people until we get it done I'm gonna get out there I'm gonna keep recalibrating things I'm gonna keep getting it right and we will get it done there's no there's no other option we're going to get it done and almost like you have to have this this this MRA and this confidence around it and you have to almost prop yourself up in a lot of ways because it's it it's lonely and it it can be able ejecting but if you have that grit and that tenacity you will F you will find a way to to figure out how to fund your business whether it's your Venture money or something else um and you'll know when maybe it's not the right time to do it and maybe you have to recalibrate stuff back so there's my part of thoughts for folks I appreciate it but also you gave me a little bit of PTSD on so my I still have it I remember these moment I don't don't remember I don't want to remember that yeah no I apprciate you hearing those insights for for the founders that you have enjoyed your your chat with me what's the best way for them to to learn more about you and summer yeah I'm on um you know most large social media uh I'm not on Tik Tok uh so you can't find me doing any dances there but you can find me Paul citus uh on on you know LinkedIn X Etc and then uh you can check out summer if you're interested in either owning a vacation home or getting more out of your current home or just staying in a great home as well uh we got a lot of great throughout the country love to host you um so check us out at www.umr.com and across all of our social media handles at start summering love that I want a summer especially now as I look at rain outside my door I'm like summer summer is a state of mind summer is a state of mind right we love winter sports so it's like be totally fine going up in the mountain but rain rain rain and cold it's got to be snowing and cold that's that's my yeah yeah um well appreciate you being on the so Paul and uh you know your insight's been super valuable and I help Founders are able to walk away some some nuggets of information here thank you very much for having me Jason all right have a good one thank you too thanks for listening to the show today we hope you learned something valuable and if you did be sure to let us know in the comments or by 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