How did he raise $11M when VCs weren't writing checks?

my favorite piece of advice, which I tell everybody, is raise the round when you feel the best about the business. It's not 500k ARR, it's not a million ARR. You can ask one person who had a half million ARR and another person who needed a 100k ARR. There's not one special bullet number. It's when you feel the best about the business and you have a really clear idea of how much you want to raise and what you want to use it for. That is the key. Welcome to Fundraising Demystified, the podcast where we uncover the untold stories of successful founders who have raised venture capital to bring their visions to life. Join me, Jason Kirby, your host, as we dive into the hidden truths of the fundraising game. We'll explore different strategies, tactics, lessons learned from these entrepreneurs who have figured out how to win the fundraising game in their own way. Whether you're a budding entrepreneur, just getting started, or an established founder looking to scale your business, this podcast equips you with the knowledge and inspiration to conquer the fundraising landscape. Welcome to episode one. I'm Jason Kirby, your host of Fundraising Demystified, and I'm excited to introduce our podcast with our first founder, and actually a first-time founder who's raised this $11 million Series A. We're welcoming Jeff Beck to the show, CEO and co-founder of Answers Now, and a platform that enables support for autism. And they've done an amazing job expanding and growing their market and picking up tremendous traction. We're excited to share his story and more importantly, the tips and tricks that led to him having an oversubscribed Series A and a ton of fundraising tips that you'll want to listen to when it comes to diligencing the VCs that you potentially might have invest in your round, among many other tips when it comes to building relationships with VCs, especially as a first-time founder that didn't have a history of, you know, fundraising before. So, we're very excited to introduce our very first episode of the podcast with Jeff Beck, and we'll go ahead and get started. Hey Jeff, welcome to the podcast. We're so happy to have you. Happy to learn more about your background and AnswersNow. It'd be great if you can tell the audience a little bit more about, you know, your background, how you got started, and kind of what the origin story is of AnswersNow. Sure. So, my background is as a licensed clinical social worker. So, I spent the early part of my career as an in-home and outpatient therapist. Uh I then spent some some time in community-based services, and then in value-based care. And uh across all those experiences, I saw two prevailing challenges. One is just access to quality therapy, and um that the that the therapy that was being delivered was incredibly expensive for either the individual or the parent. And so, this was 2016, 2017, you know, the advent of the Talkspaces and BetterHelps of the world. And it seemed like um in the special needs space, in our diverse space, there could be some value to connecting families and parents and individuals with autism to directly to a master's level clinician. So, uh at AnswersNow, that is what we do. We connect families to their own personal master's level clinician called a board-certified behavior analyst over a proprietary platform that we built specifically designed for the needs of of this type of learner and and parent. So, uh that's what we do, and that's quick kind of quick 30 seconds on how it all started. No, I appreciate that. And if you could kind of give a little bit more background, because yeah, I think this the story is amazing. You're you're helping kids with autism and, you know, helping them with a solution that can immediately impact them. Kind of give us a little bit more about the types of customers you support, and kind of how your business model works as well. Yeah, so in the very early days, 2018, 2019, there was really we used like HIPAA-compliant Slack, and parents would, you know, hit our Stripe, and they'd sign up for a month, and we'd connect them with a clinician. And we started to see some pretty awesome, you know, quality outcomes. For example, with win I remember my co-founder and I were pretty pretty blown away. Like we didn't know if we'd be able to help these kiddos. We had a 12-year-old who was afraid of automatic flushing toilets. So, he's a like sensory issue for a 12-year-old with autism. That's pretty common. So, he was afraid to go out in public cuz he didn't know what kind of toilet they had. And if you don't know what kind of toilet they have, you can't go to the bathroom. And so, makes total sense. And within a couple of weeks, one of our clinicians, who I didn't even know, was able to walk the mom through a couple of techniques over the course of a couple weeks that she could do 20 minutes a day. And within a few weeks, like he wasn't afraid of these toilets. We're like, "Holy smokes. Like you can certainly serve this population without ever seeing them in person." Which was thought to be impossible. Uh so, then we initially went to payers in 2018, 2019. We're like, "Hey, we can save you a lot of a lot of money cuz we can take some of your less severe learners and and improve their outcomes. And you don't have to pay $100,000 a year, which is kind of the status quo for ABA services." And every payer told us there's no way you can help these kids without seeing them in person. Uh they're not going to they're not going to be able to improve and and slammed the doors. Then roughly March of 2020, they were like, "Hey, what is it? How does this thing work again?" Um and so, that was obviously a huge huge tailwind for us. Um and we um went through the arduous process of getting in network with payers. Uh it's it's a long road. So, it sounds like, you know, COVID was an acceleration for your business. And you know, bringing the reality is that yes, it is possible to service these kids and especially cuz there's no alternative in this current state of the world. And that kind of helped accelerate your business despite, you know, the drag that it is working with payers and large corporations and and whatnot. Um so, something I think you know, what our our audience likes to listen to and and hear about is is kind of what's what's been the fundraising journey. So, you kind of had uh the initial product with Stripe and kind of making things work. And you know, now you kind of have some velocity, you've raised a a successful Series A. You know, kind of share with us, you know, the the fundraising journey from like kind of start to finish and what were some of the highlights? Yep. So, we went through a local I'm in Richmond, Virginia. We went through a local accelerator, grant-funded, no equity. We went through that accelerator, we raised $200,000 in pre-seed. I'm very adamant about being pre-seed because there were no friends and there was no family. Right? It was just folks that I met in the in the in like in the ecosystem to scrap together five to $25,000 checks. And six months later, we went through Techstars. So, that was kind of the second tranche of what I call our pre-seed. Brought the total pre-seed round to just under a million. We did that on a on a cap on a note. They are, you know, without geeking out about the legal structures of notes now, maybe another podcast, but there's so much I wish I'd known when we went through that process four or five years ago about how to structure a cap on a note and a discount and liquidation preferences. And we were able to clean a lot of it up in the Series A, but in the very early stages when you're trying to cobble together some money and I didn't know the difference between a convertible car and convertible debt at the time. We just kind of threw it all together. So, that was where my fundraising journey started. We then So, that was 20 like 2019. We were very scrappy. We burned no more than 50 grand in a month through that year into 2020. And then as the pandemic hit, we raised a very small bridge because we thought we could get insurance reimbursement. We proved that at the end of 2020, so the beginning of '21, we raised a a priced seed round. So, we raised just under 3 million in a priced seed. Under the belief that we could not only um get reimbursed by by insurance companies, but that we could scale this, right? And and open a bunch of states and take on a bunch of new clients. Um some things went uh according to plan, some did not. It took us uh much longer to get in network with many of the payers. Um there were fits and starts with our second state. Uh we finally started to see some traction um towards the end of the year. So, we raised another very small, I think it was a $500,000 bridge. Um in the beginning of '22 um and then ended up uh this just really took off through through '22 um for a variety of reasons, which I'm happy to get into, and then closed the A at the end of last year. Nice. That is, you know, quite the journey, and I know you kind of glanced over the convertible note structure. Um but, I think, you know, having also had some similar mistakes in my first, you know, couple companies in a similar regard, you know, be interesting to kind of maybe unpack that a little bit more and kind of what would you wish you would have done uh as opposed to Yeah. what happened. It's It's very hard I try to remember. So, with our series A, we were really fortunate had a ton of interest, and I had to say no to a lot of investors. It all It's It's hard to put myself back in the place where you feel like you're outside of a Walmart with a hat, like, "Please invest in us." where you just will take any term you can get, right? So, it a little bit of this It is hindsight. Um but, there was a mechanism that we we learned about during Techstars where it's kind of a cap on a cap. Like, depending on how big your company gets, right? You can have a cap on the on how much upside um that that note can provide to an investor, which we did in our second tranche, which I think is really smart and very fair. Otherwise, the investor is kind of rooting against you, or you're rooting against yourself from getting too big, right? Cuz you don't want a $100 million valuation with a with a $5 million cap on your note, because they're going to take so much of the company. so there's like a cap on a cap, which I think is a really interesting and um meaningful resource to use in a convertible debt note to make it fair for both parties. No, that's fair to I mean, I'm glad you shared that. And I've heard some other stories where, you know, often people think of SAFEs as like kind of the go-to and kind of prior to SAFEs becoming standardized, there was the traditional convertible note Yeah. you know, some founders don't realize that it's convertible and that there's a deadline on Yeah. convertible notes and that Yeah. kind of that deadline if you didn't close out the note through an equity round, like you might be, you know, have to pay that money and then have to have a renegotiation with your investors to kind of make them whole, especially if you don't have, I would say, friendlies as your Yeah. So, ours converted into equity at maturity. And I've I've I'm I believe we wanted our first tranche, that 250k tranche, to convert at um maturity because of the way it was structured instead of a priced financing. So, I think we actually punted on our next financing a few months so that we could convert those notes. Um so, I mean, this is just you know, the the ins and outs of of fundraising and financing your organization and it's it's interesting. I mean, it's there's loopholes and things you have to be aware of and um I'm glad some of those those note days are behind us. The SAFE is clean. The SAFE The SAFE can be very clean. I think where people get tripped up and even on the notes, right? Or the pre-pre-post, right? So, when people are looking at ownership, when it converts and what Where's the SAFE convert and how, you know, I would encourage folks to to become savvy on how to have that conversation with an investor um cuz it can it can really matter in terms of ownership. No, I I would agree 100% and then um it looked like you said you also had a bridge between kind of the seed and series A. Yeah. What was that experience like and kind of what was the the market feedback when you were going to market for that? Yeah, so we had a couple of insiders that were on our cap table who were really bullish on what we were doing and we wanted to make sure we didn't get into a situation where we would go to raise the series A and only have 6 months of runway left, right? That's they're going to bleed you out and you're not going to get a great deal even if you find a good firm. So they you know, we kind of came together like all right, what's the amount we want to raise to make sure if someone we do go to market for the A we're well capitalized and what's a number that makes a lot of sense. So that is the one time we did a SAFE with a cap. No discount, there's just a cap on a SAFE and um uh it was super clean. It was basically like a one-page document. It's all internals except for one external and that was a conversation because he didn't come to the table. He he was a value add and and honestly is one of the main reasons we raised our series A so I'm very glad we did it. But we did have one investor who can has continued to be this kind of investor where they pushed back. So this is after the market had had sunk. It was like April, May, June, some after the crash. After we had raised the bridge and and one more investor came in and said I want the same terms as your bridge from four or five months ago. Um and I really liked him. I thought he would be a great add and we had one investor that was like I think we should relook at, you know, I was like I'm not adding a 10% premium on the SAFE for this one person. Yeah. In a collapsing economy during a war, like let's just get him in, right? Everybody agreed except for one person and I'm really really glad that we did. So we closed like we closed the first part of that bridge towards January, February and then Inky came in in April or May. Um it was a little over a million dollars. And so it sounds like you were pretty strategic in making sure you're well capitalized to be able to hit certain milestones to successfully raise a series A. So kind of walk me through the the capital raise and just like running the business, having to hit milestones, grow the business, and then going out to market for your series A. Kind of like, what was that experience from, you know, kind of realizing, okay, we're now series A ready? What was the process from there? God, I wish it was I wish it was really clean science, right? Because I I remember um we had a founder con for one of our seed investors, like a conference for the founders. Uh and I was finding anybody I could find who'd raise an A. And they're like, "Tell me about your timeline. Tell me about your how you did this, how you did that." That was in July. And I got one my favorite piece of advice, which I tell everybody, is raise the round when you feel the best about the business. It's not 500k MRR, it's not a million ARR. You can ask one person who had a half million ARR and another person who needed a 100k ARR. There's not one special bullet number. It's when you feel the best about the business. And you have a really clear idea of how much you want to raise and what you want to use it for. That is the key. And so, we um the business really took off in the first half of the year. Um I started to re-engage a few friendly investors in the third quarter, late August, early September. I had a list of about 25 who I'd either talked to before or somebody had said I needed to talk to them when I raised my series A. And so, I either asked for that introduction or I reached back out. Said, "Hey, this is where the business is. I just want to learn if you if you think it's an interesting you know, kind of interesting story, where we are and where we want to be in a year." And pretty quickly I could tell five or six of the firms were like, "We want you to meet a partner. We want you like that just you know, like there it's um you just know." I know I think it's Paul Graham or somebody who says, "It's like sex. Like you know when it's happening, right? You know when something's, you know, something's going on here." And so, it's true, right? Like it just um Um, we reached out to those 20-something friendlies and more than half of them were like, "Give a data room. We want to meet you in a We want you to meet our partners and and you know, what are you thinking in terms of numbers?" And so, um I don't know and I've heard this can be atypical. I can I've heard it it can be typical. Our first conversation was was late August and our term sheets all came in in the like the beginning of October. So, it went pretty quickly when we went to market. No, that's fantastic. And I think you you say something here that you kind of hit on very, very wisely of yourself here is like go to market when you feel the best about the business. Uh VCs can kind of sniff out, you know, kind of like false confidence and like the projection of success but not really like you know, in success. And uh if you feel genuinely good about the state of your business, you just have a different energy about yourself when you come to the table that gives the the VCs potentially like FOMO vibes if they don't take this seriously. And they're like, "Okay, this this guy's got some something going for him. Let's let's dive a little bit deeper. Let's, you know, unpack this." And it helps, you know, if your business is in a great position. Um Yep. Yep. It's often too many times founders raise money because they need money, not because they're worth the money and or you know, in a position to to really demonstrate a sexy story. Yep. Um and they're you know, kind of as you kind of said uh begging on the out front of Walmart for for change as opposed to you know, coming in with a lot more confidence and into the room with the right people. So, that's that's incredibly insightful feedback and it's goes to show I got you know, I got to I'll ask you this question like what made you feel you got to that point in your business? Like what what was it about your operating or your sales or whatever it was that that led you to that confidence? We had to pick and choose what to do well because of money and time and team. So, we have, you know, we have new clients coming in We're two-sided marketplace. We've got new clients coming in. We've got new clinicians coming in. We've got a technology that's you know, handling more and more folks. We're We've got more insurance providers and more payers that we're tracking. Um you know, we've got revenue cycle management. So, when you when you are 10xing and 20xing year-over-year billables and AR, like that starts to grow. And so, there are so it's a very complex business and we you know, we had six, seven, eight full-time folks at the time of the A. And I like looked at a series A investor. I was like, once I get this money, I can open a number of states. I can rinse and repeat the way we went to market. And I can shore up this and shore up that and this is where we're going to be in 3 years and this is the conservative estimate and this is the the moonshot. That's what you're investing in. So, we just had plans for how we wanted to use the money. And it wasn't run you know, it wasn't runway. Right? While that's important, um we we knew our business really well. We knew where we made a margin. We knew how we made a margin. We knew what our lifetime value, cap lifetime value is now and what it will be at scale within reason. So, the more you know about the business and the more you can teach the investor about your business, um the more likely they are to perk up because you're showing that you're going to you have a plan for their money. Um And so, that was that was my goal initially was to show up and have a plan for the money. Um and and uh it ultimately worked out. That is So, it's one thing that like a lot of founders say like they have their use of funds slides. It's like 30% marketing, 40% Yeah, it's just like That's right. You know, what you're communicating here is like here are the milestones that we're going to hit. Like here's the growth trajectory. Here's like the we've And again, like kind of we're proving out a piece of your business. And then it's like copy paste. You know, like not always that easy, but it's like you know, it's like okay, we've we've figured out a system. We've proven something here." And when you talk about how quickly your your fund raise went, you basically kind of spoke you know, spread the word around, had a couple conversations, and then people threw themselves at you. That's a clear sign that you're on the right track from both a product standpoint, you know, uh proving out your model. And when you do that as a business and you focus on that as your business, it's just so much easier to raise capital um than it is you know, if you're struggling on any of those fronts. Not what every founder wants to hear as they, you know, struggle to kind of get to certain places, but you know, the it is possible. And Yeah, I mean, what we did Jason, I mean, multiple we went internally and said, "Look, well, you know, you're going to get a little bit of a deal or you'll get you'll get a discount on the next round." That's what we did with the SAFE. And we were like, "You you've seen us. We sent out a monthly update. You know, we meet with our board quarterly. You know our business. You know there's there there. This is here. But we don't want to go out and raise a Series A when we have to raise money. Let's put a little bit of capital into the business. Give us a few more months. Uh I'll never forget sitting in our board meeting in August and we went we went to market just a few weeks later. And both of my board members were like, "I'm not quite sure if you're ready yet." And I'm bullish, Ron. Like, this thing's taking off. We've got a wait list. Like, this is And you know, that's when I talked to a founder and I was like, "Just go have some conversations with your friendlies. You're clearly excited about where the business is right now." And you know, I don't I'm sure we'll get into some detail around how the A itself went, but I'm I'm really glad I did it when I when I did it because we found a partner who really understood what we were doing and we're excited about it. I definitely want to unpack the A a little bit more, but I also want to acknowledge the fact that like previous to this company, did you have any entrepreneurial effort, you know, like you know, entrepreneurial background starting a business like I never even have lemonade stand. Like, I know the stories like I sold baseball cards and CDs and I didn't have none of it, right? It was just I and I was something that came in my late 20s. I found myself drawn to the how I built this and the Reed Hoffmans and you know, the zero to ones and shoe dogs and um the more I spent you know, more time I spent in in the the kind of field of mental health. Uh again, it was this is before it was it had a huge this is 2015 2016. This is before it really got thrust into the mainstream from the VC perspective. I just felt like fundamentally that technology could improve the way that these families access care. Um so it all just kind of aligned. But yeah, no no previous real entrepreneurial experience. Yeah, it's it's it's very rare to find a you know, social worker go into you know, raising tens of millions of dollars as a entrepreneur. Um so it's a it's inspiring to kind of see that. So I just wanted to kind of acknowledge that. you. I find that to be a you know, pretty interesting aspect to your background. I feel you also articulate yourself. You know, you've been through the ringer. Yeah, it hasn't been You didn't start this business yesterday. So you know, That's right. You've you've you've taken some punches I'm sure, but That's right. Let's go ahead and and jump into kind of the the structure of the series A. So it's like you you know, from prior to the term sheet, you know, did you get multiple term sheet? Kind of kind of walk us through that that process. Yeah. Yeah, so we we started to have conversations like I said late August early September. Uh and you know, and it was you know, I I don't know if I describe it like you know, put it in the ether and it happens, right? But my thing was like I want this done before Thanksgiving. Um I our business has seasonality in December, right? Families go on vacation, our clinicians are going on vacation. It's it's not it's always going to be our lowest month. I was up front with that with investors, but I did not want I did not want to be trying to move towards closing January when we got a 10% dip in growth after month over month growth for whatever month however many months, right? So I was like this is going to be done by Thanksgiving. I'm going to you know, I really did take my eyes off the business. You kind of have to or my CTO, Maury, was terrific at kind of playing the operator role and trying to keep all the plates spinning while I spent, you know, 80 to 90% of my time focusing on the fundraise. Uh, you know, and that's pulling updated data and updating the deck and and flights or or zooms or um, you know, it it is I had over 100 presentations. I don't want to seem like, you know, I talked to 20 people, I got 10 term sheets. That's family wasn't it. Um, and then they start to talk, right? Investors start to talk to investors and I get an, you know, from Andreessen to NEA and then, oh, I know that person. You are you also already talked to this person and that's kind of how it happens, right? So, that was September. Um, and I had um, three firms fly to Richmond to meet with me in person. I flew out to meet two in person. Um, I think in total I had eight meetings with partners, which is kind of like the final boss in in my in my mind for this the series A. Um, and we ended up with three term sheets. So, um, I thought we'd end up with eight, seven, eight and we ended up with three. Um, which I was super excited about. One One interesting piece was I had a few who I met with a number of times that I really liked and this is just me kind of reading between the lines and putting on my therapist hat. There's a little bit of like, you got term sheets in this environment? We've all agreed to sit on our hands and wait for all the companies to run out of money and come back into us with crappy valuations. Like, how did you get three term sheets? This is ridiculous. We've all agreed to not do any term sheets. Um, I had a couple of funds that were like, I need like four more weeks. And uh, there was a it was a five-day I got the I got one term sheet on a Monday, the first one on Monday and it you they gave us five days. The other two trickled in during that week. And then I had a number of funds kind of elbowing for more time. And you know, we said no. And we we stuck I wanted to get the relationship off I I mean, I know that you can you can negotiate these things, but I really like the firm that that and you know, brought us our first term sheet, which was Left Lane. I like the team a lot. And so I didn't want to screw around. What it wasn't continues to be a pretty tough environment. So I didn't didn't want to play games either. I was I was really excited. I couldn't think of a reason why I would go with somebody else. They knew the industry. I will say I met with them a few times throughout the course of the year. And um I felt really good about it because they understood our industry. They knew all of our competitors. They understood our business model. They get what we're trying to do. So I think that I'm an N of one, right? But I've had a few Series B conversations with investors, right? And if I find myself telling them what the letters ABA mean, I just don't think it's going to happen, right? Left Lane had conviction that there is a bet to be won in the space and they wanted to back the winner and they believe that's us. Um and so that you know, my job's half done at that point, right? It's like I give them the numbers. I show them I know what I'm talking about. They meet the team and they're terrific. I give them the plan and and then we move forward, right? It's not me convincing them that first step that like there's a big opportunity here. Yeah. I just I personally feel like that would be really tough if you're trying to convince your Series A investor, independent of your company, that there's a big opportunity in the space that you're in, right? So again, that's my perception and that's my experience. I felt like we had a little bit of a shortcut. And the three funds who flew to meet me, all three of them are two one is EdTech, one is HealthTech, and then Left Lane. So they they all three really understood what we were doing, so um I think that helps. And and uh you know, from the point of getting that term sheet um to the point of close, like what was that process like? So, the conviction you know, getting that conviction early and being able to to blind, you know, with the partner, but with um Yeah. It was interesting. I mean, so we we were we were oversubscribed. So, there was a little bit of renegotiating on the terms. We ended up raising on a little bit of a higher valuation than initially agreed upon and raising a little bit more money than initially agreed upon. And we worked together on that, right? Well, how do we want to Let's not just bring in more money. And then how are we going to use the funds? What makes sense here? And uh it was to get a strategic in that we were really excited about that had a minimum threshold. So, you know, the partnership just out of the gate, right? Post term sheet where we're already working together on, you know, well, we could get we could punt and tell them to do a safe, right? We could close this, do a safe. Just having those conversations about how we want to run the business from a financial perspective. So, that was kind of a good just out of the gate, let's work together. Um to answer your question directly, it was about 30 days to close. Um even my own legal team was like, "Do you really need to move like this fast?" And I'm like, "Is there any reason we don't?" Like, you know, and it was a ton. I will tell you Jason that post term sheet to close was just as much work as getting to that term sheet, right? I mean, it is. Um and we had to be really transparent, you know, our revenue cycle management we're in health care, it's not spectacular, right? We didn't have anybody in it. They we were outsourcing it. We were doing the best that we could. We're obviously growing like a weed. And they brought in, you know, auditors to audit our books and see it. And we were very transparent. We were like, "Hey, this is something that's on the road map for Q1." I'm comfortable talking about it now cuz it's now behind us and we have it very much and it's it's it's locked down. It was not locked down in September, right? And so, um I I you know, we just were as transparent and honest about where we were with different pieces of the business. Um and and that helped it it went pretty smoothly. I mean, it was there's a lot of legal stuff that we had to clean up and notes and missing signatures and and back dates that we couldn't use because our legal team wanted to be really really clean. And it was a pretty expensive legal bill and it's one of my least favorite parts of the job. Um but but uh yeah, it took about took about 30 30 days. So, I think we got the term sheet in the middle of October. Um and then uh closed the the first week of of December. 45 days. The timing of that is one there's so many questions around timing cuz one it's like the bottom of the market when it comes to Bottom. We were at the very bottom. Yeah. Like there was like trickling in a few deals here and there and then you were one of those and an accelerated deal like uh and that just goes to your level of execution, the problem that you're solving and um you know, something you brought up earlier about the market size, convincing the investor of the market size and how you kind of immediately could qualify a VC whether or not they were going to be a fit if they couldn't understand your market or not cuz Yeah. this is valuable feedback for for a lot of founders. If you're if you're chasing investor trying to say we're going to be huge, the market's huge and they're still asking questions about it Yeah. you can probably write that investor off as far as writing a check because they'll find still ask you questions, they might still engage with you, they might spin your wheels, but if you can't get conviction around the market, like you're just not you're not in a good place. So, it's wise of you to kind of recognize that early on and kind of cherry pick the people to pursue um with that in mind cuz I think that's an incredibly important note to to be conscious of. I always ask about what they like about our competition. I mean, so this is back to the social work 101, right? I ask the investor as many questions as I can get, right? And the season ones pepper you. And I usually be like, you clearly know what you're doing. You've got a million questions. Can I just sneak a couple in really quickly? And they they honestly respect that, right? They're used to zoom zoom zoom. I'm going to hit you with my 10 15 questions. I'm going to jot them down, move to the next, right? And so I found it really meaningful to be like, what did you like who who have you seen in the space, right? That's a question I always ask. Who have you seen in the space, whether it's broader pediatric mental health, whatever it is. What do you like about them? What do you not like about them, right? And anything that they said they liked about them, I would amplify the things that we do that mirror the thing that they like, right? And then if they said, oh, we don't like that, you know, it's an in-person blah blah blah, so it doesn't scale. That's the beauty about our model, right? Is we're 100% virtual. We we could literally serve every learner. There is not one we are serving kids on mountaintops and out in rural Georgia and everything in between. And and and you can just sense the little like, okay, I'm kind they they lean in, right? Just tell them a little tell me more about how you are how you you know, and so I think try as best you can if this is like advice-giving corner to ask them as many questions as you can to try to understand what motivates them. It's the Dale Carnegie It's all the books that you read, but it's really important to understand why they are on the other side of that call with you right now, right? That that helped immensely in navigating uh who I thought had the real potential to write term sheet. And and you control the dialogue so well those questions. And I give this is if this is the key takeaway from the you know, this conversation is asking that question like, who have you seen in this space and what did you like and not like about them? That is such a profoundly impactful question to ask in that meeting to really one test their you know, have they really done any They may just be ignored. Like, the colors, the brand is really you know, like you just Yeah, sorry, Jason. I didn't mean to cut you off, but you're exactly right. Like Yeah, so I think that's something that uh if if a founder takes anything from this, add that to your question list in your next capital raise. And also you notice body language like body language is a huge signal. Uh obviously it's not as easy as you know the virtual conversation as it is in person. Uh but it's something that when I pitched you know my first couple company you know my first company was like you know nothing you know we were we thought we were the greatest thing ever but it wasn't you know good market fit or whatever. And you can just see the body like you can see like the VC just kind of like yeah. Yep. Okay. Yep. All right. Yep. You know and you you tell yourself like I don't know I'm awesome like that you know like you just you ignore the body language when in reality you should be you know trying to like what you do you lure them in like get them to lean in. If you see VC leaning in engaging you have much more positive signal to kind of pursue as opposed to you know any kind of negative body language or lack of questions or engagement. If you just pitched and you walked out it's not going anywhere. Nine times out of 10 the only way to reverse that lean back is to ask them a question. Yeah. It's the only way you have to get them to talk to you. It's very counter intuitive but the smarter they feel and the more interested they It's how do they feel especially in that initial call. Um cuz you also have to be likable right cuz you're going to spend a ton of time together. There's no escaping that. They have to like you you have to have common interest but that's going to be in call two or call three. Like the first call hurdle is you just need that one lean in. Where they're like you know I'm going to talk to other folks in the team and like I'm going to socialize this and usually that's BS but sometimes it's real right and you'll know I don't want to advocate for don't send follow-ups but like if you meet a VC twice and they're like I'm going to talk to you and I'll get back to you and they're not not back to you you can go watch he's Just Not That Into You and that's all you need to know about whether or not they're going to be getting back to you or not. You're just You're just going to know. Yeah, exactly. It doesn't hurt to follow up, but yeah, if you continue to follow up and hear crickets or you just kind of get "Oh, we'll get back to you." It's It's dead. And Yeah. you know, add them maybe to your investor update list for a year or two, but you know, move on. Stop Stop hoping that they're going to write you a check. I can't tell you how many founders I've spoken to. "Oh, yeah, we've got about 2 million in soft circle." I was like, "Mhm, that's a pretty soft circle." Yeah, when I told one of my board members, "We have 40 people in the data room." He's like, "Okay, that's cool." You know, he was just like, "I don't know what it is. It doesn't mean anything. You know, I'm glad you're happy, but doesn't matter. Like, they're just That's just for fun for them. They're bored. They're not making any deals. They're just you know." So, it's It just It was grounding, right? Where he's like, "None of None of it matters until that contract's in your hands and then then we'll talk business." But, yeah, I mean, they'll waste your time all the livelong day, right? Can you get me this? Can you do that? Where's that contract? Did you do the SOC 2? Did you get this? Um can you add this person to your data room? Will you be at health? You know, like, "We'd love to grab coffee." They're going to do that all day long. It's their job, right? So, um we try to be really focused on let's get from A to B as quickly as possible. That's a That's an impressive story and you know, just everything you overcame and just the market that everyone else was in. You know, pretty discouraged and you know, especially I mean, companies raised capital. We were dealing with just like crickets of Yeah. VCs not even knowing if they have a capital call that's going to get, you know, the capital's actually get called. Like, it it was it was pretty chaotic. So, the fact that you found the right investors that, you know, and also not waiting, you know, like, not trying to create that bidding, you know, cuz you could lost it, you know, and you're right, you know, going into nailing that timing of before Christmas cuz basically two weeks before Christmas you know, not In most cases, like, you got the the sheet in October, which was clutch cuz going into Thanksgiving to Christmas is just dead zone. Like people will work Oh, we used that. You know, we used that. Like we guys, we want this done before December 1st, right? Like you want it done, we want it done. I don't care what lawyers say. No one wants to go into December. That certainly helped expedite things. The time it was a really good time to to do it. Cuz they didn't want to go into Yeah, no no one want like a VCs usually take those like full four or five weeks off and and don't do very much unless they have a deal to get done and then they just work on that one thing. Yeah. Um which is which is You said something Jason that I want to make sure I touch on before I forget. Um the it seems very obvious, but make sure they have money. Like I know it sounds obvious, but I will tell you there probably a half a dozen to a dozen calls where I was like, "What what fund are you investing out of? How many deals do you have left to do this year?" And some of them said zero, right? They're like, "We're in the middle of, you know, raising the first tranche in the next fund." Right? I just cross them off. I'm like, "That's out." Like they're they have no money to invest. They're just going to they're just going to wait and wait and wait. So it seems super obvious, but make sure the VC has money before you go through a really deep process with them. And and specifically net new capital investment. So like VCs always have like the reserves if they have a previous fund. That's not for you. It's not for you. Yeah, it's not for you. Yeah. Yeah. That's for the companies they've already invested in and so That's right. This is come up on every single podcast we've done. You know? They every uh uh founders basically being in sharing this exact same advice, which I I see as a huge issue is just like, "When was your last deal?" Yeah. How many deals do you have in the pipe? Um and that's such an important qualifying question, which in most cases can be answered just by going on a Crunchbase or other platforms and just being able to quickly identify, are they doing deals? Yes. And so that's something we do at Thunder. We calculate investor velocity. You know, what's what's their actual velocity of deal making and which of them are new versus existing. Uh we're taking those into consideration because it's not worth chasing VCs that don't have checks to write. I'm biased, but I'm going to plug Left Lane. I mean, I know they're super active. They're an awesome fund. I'm I've got to imagine they're on your list and folks doing doing a ton of deals and and they're a great to work with. Now, I'm sure they're going to love hearing that. Yeah. Going to plug them for them. So, we talked a lot about the good stuff. You know, you you had a great success story. Um What were some of the What sucked? What Yeah, what's what sucked? Yeah, I mean, it's it's super nerve-wracking. I mean, it was I I wear a Whoop and I I don't think my resting heart rate came below like 80 during those 2 weeks of October where I wasn't sure, you know, it's you really have to go all in. Like, it's an open and closed, right? You can't just string it on and string it on and hope and maybe it's here and maybe like I was like, it's either going to happen or it's not and if it doesn't, we had a backup plan, right? Back to the internals. We need another million bucks. Let's get this to 2 million, 3 million, 4 million, 5 million. Like, then we'll go back out, right? So, um we had a backup plan. I think the one of the bumpiest pieces was we had the term sheet and then we had another term sheet and that we wanted to try and get both of them. And the second one was more of a strategic investor. And um there wasn't enough money for our pro rata was going to suck up too much in the round. We didn't want to over raise. The terms were terrific with Left Lane. Um and we had to go to a lot of folks who had pro rata and uh especially early investors and say, "Hey, we just we're not going to be able to get you any of your pro rata." And then we had to go to some funds and say and individual investors and say, and they legally have pro rata, right? They say, "We can only, you know, we really can probably only get you like 30% 40% of your pro-rata." And everybody said that's incredible. That's awesome that you've raised a Series A in this environment. We could not be Absolutely, where do we sign? That's terrific. We'll take whatever you'll give us. Um except for one who um was really, really frustrated about it and gave, you know, gave us the runaround. And even in an email said like, "This is course for legal action." You know, this is And And that was really disheartening, right? Because you're you're working long hours and you're grinding away. You finally get a piece of paper that says your company can live for a couple more years and odds say that you get past that Series A stage and you're far more likely to survive than I mean, you know, I've been doing this for 4 years, right? Just trying to survive for 5 years and got the cease and desist and then there's this person who's like kind of threatening legal action. In the end it it it um they got full pro-rata. Uh and other people were not super pumped about it, but we had a difficult decision to make and um yeah, it was a it was an uncomfortable period for sure. Um and you know, I I lean back on my background as a clinician and try to understand their motives behind it and I think uh looking back I I could have done a better job of setting the table around why this was happening and why we wanted this this other investor to be a part of it because then people started to feel like, "Well, why are they more important than me when I, you know, I've been around longer than them?" That's uh So, I understand the two sides of the argument, but it was it was a pretty bumpy week or two where it went from like, "This is slam dunk. Everything's amazing." to like, "Holy smokes, this is really going to get this is really going to get die on the vine because of this this thing here." So, uh we were able to get around it. It was It was really It was probably the most uncomfortable moment. I think the other one was you get to know people really, really well. I mean, I I met with some folks 10 times where I was like, "This person's going to be on my cap table. This is They're going to lead it. It's going to be amazing. I'm going to go see them in San Francisco." And this is And then for them to be like, "Yeah, we just can't quite get there." It's like, "What the f- How is that possible, right?" And so, like, that does happen, right? It wasn't like you know, we met left lane and we got engaged a week later. Like, we we met with a lot of people for a number of meetings and I thought like, "This is awesome. This is clearly a fit." You know, they did all the lean in stuff. We did the partner stuff. We did it all. Everything said green light. And then at the last minute, they're like, "Yeah, we just can't get there." So, I think, you know, and um yeah. Yeah. Uh the unfortunate reality is is like you you you can't I was I used to say, you can't you can't spend the money till you got the bunny. And you know, a lot of founders get excited that oh, we had such great meetings. They keep meeting with us. It's all you know, there's just there's so much behind the scenes on how VCs work and a lot of just human nature stuff that ends up blowing up deals more than anything. Um or certain existing relationships or someone has like a blackball right, you know, basically like blackball you and like write you off, you know, cuz for whatever reason. Uh I was talking to another founder where, you know, a personal experience with their mother made them not decide to move forward. It's just like Yeah. We're going to make you money. Yeah. What does this have to do with anything? I know for one of us that we we're meeting with a fund that primarily does ad tech. And the whole time they're like, "We're so excited to get into healthcare. You know, we can see an ad tech angle for you." And I think at the end of the day, they just actually weren't ready for healthcare, you know? And so, even they themselves are found you know, like they don't They think they do and then they don't. So, I you know, I I do my It's easy for me to like, "I don't take it personally." because we closed a series A. But look, if my company was floundering right now and I you know, I might feel have a different feeling towards it. And so, you kind of brought up something a while back and I want to kind of circle back to it. You you kind of mentioned you kind of had to deputize your CTO to take over the operations cuz you really had to go all in on this fundraise. Yeah. You know, how did you manage your time? You know, how did like what was that experience to kind of be able to solely focus on on fundraising? I wouldn't say solely because at the time I had twin 6-month-olds and a 4-year-old. So, it wasn't just fundraising. It was caring for those kiddos, too. So, um the day typically was I'd wake up. I'd sleep in as much as I possibly could. So, like I was not getting up and getting in an ice bath, right? I would sleep until my 4-year-old came in in my room because every other night my wife and I would switch getting up in the middle of the night with the twins to feed them. So, I would get every ounce of sleep I could get and then take him to school and, you know, work and then work ends at 5:00. Like you've got two parents, three kids, you can do the math. Work ended at 5:00, spent 2 hours with the kids, and then I would spend from 7:00 to 9:00 p.m. That was like my email prospect time, right? That was heads down, throw on an episode of Succession, and and email for 2 hours, right? And that worked, right? That worked for me. And then I, you know, I made it a rule if I was going to travel, I only traveled once a month. And so, you know, I'm in Richmond. Fortunately, there's a direct flight to San Francisco, so I would go out to San Francisco, go for 2 days. I actually took my family one time. All of us went out to San Francisco. Um And 6-month-olds, you took them to San Francisco? That's a handful. Yeah, I can find I can find the photo. There's a photo of all of us at the Golden Gate Bridge, and I can tell you in that moment we are not as happy as we look in that photo. Uh but we did it, you know, we did it. We went out there and, you know, Left Lane's in New York, which is a 45-minute flight. So, I mean, it's awesome. I can I've got family in New York. I've I've got friends in New York, so I can go up for a day or two and come back and uh it can it can happen it can be really quick. So, you know, the vast I've tried to carve out half of my time during work hours to do investor pitches. Like from 12:00 to 5:00 it was like I'm going to meet with investors. And so, in the morning I would get like an update from Mori as to how things were going and where I was needed in the business to make sure that really it was drive growth. Like do I need to meet with anybody to pitch on like a a referral source or do I need to talk to a payer? Um you know, that was that was and then he was managing the team. Right? If anybody needed anything on the team side, um he was doing all of that and then our we had a part-time COO who was really eating all the crow from like a billing's perspective and getting me all the numbers that I needed for investors and running the pivot tables and that kind of stuff. So, I'm really grateful that you know, the team knew, right? They knew um come August that this this is what the that we were striving towards um and you know, I'd try to give them updates on how things were going. Um but that was that was how I split the day. Try to do the business in the morning, the investor meetings in the afternoon and then the kind of prospecting heads down at night. So, you know, from what I can take from that is structure and just sticking to your structure and also team. Like being able to trust your team to execute while you go take on this other task is is an incredibly important aspect of what you've highlighted here. And it also just shows that you have a good team, which is something also that, you know, makes it easy to fundraise. You know, if they can handle the business without you, uh um you know, that that's a that's a positive signaling to to the VCs as well. So, that And things will drop. You know, like things are going to drop. You're not going to get every customer. You're not going to like, you know, you're going to mess up a billing cycle. Like things are going to drop. And so, that's why I try to communicate with the team. Like hey, these next 60 days just bear with us. As I I feel really good about where we are as a business. Uh I'm very confident we're going to find a financial to here. Um but it's going to be hard for everybody everyone's kind of sharing in a bit. Yeah, no, it's a it's a great story and yeah, if we can you know, wrap up here what you know, you've already shared a ton of good nuggets here in terms of information that founders can take away and try to apply to their own business, but if you if you can kind of share either one main point or a couple tips to to founders that are seeking to go raise in this coming market, what would you what would you say? Um, I so there's people are of two minds when finding a series A lead. It's it's either relationship building like you send them a quarterly or even a monthly update of we said we're going to do this and then you do it. We said we're going to do this and then you do it. Obviously you got to do the thing you said you're going to do. I said that's key. You can't not do it because they're not going to hear you. Yeah, they're not going to love that. Or you just kind of do stealth, right? You don't send them anything and then kaboom, like here we are. I've never met you and look how awesome our business is and let's are you in or out, right? I'm the former. That like that's just who I am. I'm a relationship builder. That's my background. Um, I found that worked really well for us. You know, the two the first two term sheets that came in were two like we had been meeting with Leftlane for over a year on and off. Um, and then the other one we'd been meeting we had been met three years ago and I had been chatting with them on and off for every six months. So, that's me, right? That's but know which one you are, right? If you're the the big presentation person out of stealth or if you're the relationship builder because if you're the relationship builder it's a process. It's going to take time and um, I think that that was the thing that was really the my biggest takeaway in the whole the whole process was finding finding folks who are interested about the interested in the business and then giving them updates and nuggets over time to continue to peak the interest and um, and uh, and build on that relationship and and hopefully it ends up in a in a partnership. I think that's fantastic advice to to leave with founders and I completely agree. I think there are those two paths and the relationship one, I think a lot of founders get antsy, they don't want to they don't want to put in that time or they need the money now and it it basically removes their ability to to execute on that front. So, it's with those all those VCs you meet as a founder, you know, pick the ones that you thought were interesting, were interested in you and kind of keep them up to date and those will be your opportunities down the road when the time comes. So, so it's cuz you always get the too early, you know, "Oh, you guys are too early. You guys are too early." And it's like, "Okay, well, it you know, test them on that. You follow up when you're not early anymore and see how they respond." Yeah. Yeah. Nothing gets an investor interested in your business like saying you're not fundraising. So, send them those quarterly updates and say, like, "Hey, this is where we are. We you know, we may raise at the end of this year, but we may not cuz things are going so well that we may not need to raise." Like, you know, put that as a disclaimer thing in your email even. Yeah, I mean, it like, it's it's silly, but I actually think it does play a part. Yeah, as long as it's coming from an authentic place, I agree. You know, I think it's some founders try to gamify it and try to play those cards, but it's inauthentic, so it just doesn't roll off the tongue the same. So, Um yes. Yes. Yes, that's the key. It's part of our strategy when we coach founders on, you know, these are your two paths. Like, it's always better to play the long game and you know, manage a successful company to the point where you kind of have that, as you talked about, success and momentum in the business and your fundraising time cuts dramatically, you know, if you kind of maintain those relationships and you focus on the business, uh it becomes much, much easier to raise capital. Uh so, as you when you don't need the money, that's when the money comes, uh unfortunately. Yeah. Um well, I really appreciate the the time today. I think we really got to some amazing information to kind of share with with other founders up and inspire them. If um if any of the founders wanted to learn more either about Answers Now or follow you, what what would you tell them to go? Yeah, just email me. Jeff@getanswersnow.com Easy enough. Well, really appreciate the time today, Jeff. This has been incredibly insightful and look forward to kind of following your journey some more and see what what comes next. Thanks, Jason. Appreciate it. Awesome.