Founder of 33 Capital, Stacey Feinberg talking about common pitch deck mistakes and raising money during COVID-19.

This is Fundraising Radio and today our guest speaker is Stacey Feinberg president at thirty three capital L.L.C. and managing director at Golden Seeds and in this episode we will talk about Golden Seeds - how does it work? We'll also talk about Stacy's personal investment preferences, the mistakes that she sees on the pitch decks and the recommendations that she can give to founders right now.

So I've had many life is not a straight line and I tried to tell that to people that you'll be shocked when you get older, when you look back and see how many different careers and different things you didn't actually you'll be happier.

If you didn't have a straight line and you get to try as many things as possible when you're young, your opportunity cost are at their lowest. So why not?

So, I've been in it's time reporter, a sports agent created, feel to sports marketing, and then put it into finance. I'm married.

Someone went to Harvard Business School, and then got into the public markets and.

Had our own hedge fund for about ten years in the best of times and quite frankly Constantine, I remember are saying to him what did we really do? What are you talking about? I say, you know, what do we make a corporate or can point to a chair and architect point to a building?

What do we, he said, are you kidding? Me look at our lifestyle and we made jobs and we create value and, you know, we're really just making rich people richer. Well, what's wrong with that? Okay.

So, if nothing was wrong with that, except but never thought, never felt authentic to me, and I never felt and I'm not a stuff person. Things don't jump drive me.

I'm an experiential person, and I felt that someday I was gonna be able to utilize these funds somehow. Then I was lucky enough to to make a difference and to do something at the grassroots level fast forward.

We close our hedge fund, which actually ended up dissolving our marriage as often happens. And so it was pretty simple. We divided all of our assets.

And now I had my opportunity, but I had been out of the work world, you know, for a few years, because I had been my own hedge fund, but I hadn't been out there to see what other opportunities there weren't. And I was very active in my kids school and all those things at the same time.

So I sometimes call it reinventing mommy because there's a lot of mommies who are working at the cafeterias and going on field trips who have and and had incredible careers.

And had to make a choice to leave those, or to limit those in order to raise the children.

And so I started reaching out to a lot of these women saying, you know, how do you get back in what kind of things make you feel fulfilled if you did get back in what would you do? What would you do different?

And I decided that I wanted to get in the grassroots level of something anything I wanted to be a part of making dreams come true.

And get things off the ground, not buying them in the morning, and selling them in the afternoon, like the markets.

So, I, I taught myself to become an angel investor, and it started off smaller checks as I learned because I had no idea what I was doing was very different than private equity or any other things I've been doing. But it was so much more fulfilling.

And then I noticed that women or minorities were getting less than four percent of those funds. So I was able to further narrow my investing thesis to concentrate on those that were under represented.

And now I have about twenty four companies in my portfolio.
I started thirty three capital,
and I'm proud to say that I have a female founder at the home of all of them as well as I go on, like,
help teach other women who have a,
have some means,
you don't have to,
you know,
have tons of zeros at the end of your check,
if you have anything and you'd like to help participate,

I teach you how to become a funder.
So I work with founders and funders and that way I'm covering.

Both sides to help level the playing field night. So I know I actually just interviewed another person from Golden seats. I'm not sure which chapter she's from, but I think she's the managing director as well.

I just forgot which chapter is she anyways, she said that golden seeds invest basically exclusively in female led companies does thirty three capital do the same thing to focus exclusively on females or is it different?

Well, I I know I have some investments with them and I invested in peloton in two thousand and fifteen dot com.

I've got I've got companies over, so I'm not proud of that turned out to be a capital loss unfortunately, but those are funded by men, but for the most part, I try very hard.

It has to be a a quite unusual situation for it to not have a woman at the home, or at least to have twenty five percent equity in the company. I mean, head of market and just doesn't do it for me. That's that's awesome.

Well, I'll notice that a company will do they'll put a woman in there for sales and marketing that's that's not what I'm looking for. So, Golden seeds. So, you know, it's not just female investors.

We have a lot of men as part of golden see to our fellow managing directors that were former heads of large companies, but they again want to level the playing field and focus there.

Their finances on female entrepreneurs, right? Right, right, right. So, as a found as a present of thirty three capital, would you like to invest in terms of the fields?

Are you industriagnostic or are you focusing on specific industry? I'm industry agnostic. I mean, and because I'm self funded, I mean, I've got cannabis, I've got expensive cannabis.

I don't have any Bitcoin or crypto, because I can't understand it block chain if I can't explain it to myself, I can't write a check for it. And I'm always the first one in meeting to say dumb this down.

Would you please I don't know what you're talking about, and I need to be able to explain it to, you know, my colleague. So I would take agnostic. But what do I look for? Of course, we all have enterprise SAS models.

We love I love anything. God, the word disruptive. I'm embarrassed even saying if it disruptive democratizing things like that. But as I get pickier and the code crisis had made us all get pickier.

I really try to focus on two things have to have not the nice to have. And it's very clear, which are which there are so many nice to haves out there. There's not a lot of have to have.

So,
when I see,

I have to have I jump on it that's number one number two if it's something that pulls at my heart strings and,

you know,

you know,

if I put my philanthropic CAD on it,

I would have,

I would have written a donation to them anyways,

sometimes I will go with a company like that,

because their product it's so wonderful.

And so it was such a great social impact. If it comes to fruition that if it doesn't, I'm okay with losing my money. And if it does.

I'll be so proud that that's the greatest, you know, IRA I could imagine. That's true. And you said, you're focusing now on master, how can you to find that much to have?

I must have something is that it changes the way that we operate it changes the things that we do. It's not a me to an add on. Oh, we're similar to it's something that didn't exist before.

I have one now that I'm about to invest in that. You know, it's called giving and they are essentially the legal zoom or Spotify or Shopify for creating a five a one C, three.

More than ever people want to create five a one C three is they want to create charities. I had no idea the hurdles you had to go to to become a charity and I was trying to create a family foundation for myself and fifty thousand dollars in six months into it.

I said, cried uncle and said, forget it. I'll just do a donor advisory fund, and now I discovered giving and for, like, forty dollars in in an hour. I will be a five a one C, three up and running. I will be a family foundation to me that I have to have.

There are so many people out there that would create charities at the burden. The hurdles weren't so high. Right that's that's a good point. And that's really I didn't even know that he does all the work.

He went to every attorney general and every Iris office in all fifty states. So it was a talk about having a mode. That's impressive to me.

And that also is one of those things that I say to myself, while if I can help, not only create charities, but have charities that are already existing, be able to sustain longer because they only charge five percent match and be able to run your charity.

And five percent administrative charities out there that, you know, give away five percent, because their expenses is so high. This is this really solves a huge problems.

So, for me, that this is one of those perfect situations where I think it's extraordinarily disruptive, easy to use and.

Will do good for the world, right? That's a very interesting investment. So you mentioned something else, which is investors got PT now during they spent them again. It's true.

What's your recommendation to those volunteers for seeking for funding right now? And see all those investors who suddenly became extremely what's recommendation to them. Sure. Well, first of all, you know, look, real estate is location.

Location, location, venture capital is evaluation evaluation evaluation. We really want to know that. That determines how many shares we get for our check.

So, if you try to come in at those crazy inflated evaluations that we were seeing, particularly on the Post's Pre, covet, you're not even going to get a meeting. Because a lot of us have rightfully so asked to have them renegotiated and they have.

And basically, we just get issued more shares, but the days of Pre Rev. I have a great idea. So I have a value of six million dollars is gone. Yeah. You know, you're you're you have a great idea.

It's worth it's worth the grid. It's worth nothing forgive me and to be worth six million, you've gotta have some traction and you have to have an MVP minimum viable product and I'd like to see a little revenue. So yeah. Things things are changing.

And also.

One of the most interesting things I learned,

as I'm getting so tired of only getting deal flow from the coasts from the San Francisco outlay in New York and when I would get out and about I hear from women I do a lot of a speaking engagement summits and is incredible women and say Louis and Nashville and places

that we aren't,
but thanks to zoom and WebEx and all these wonderful ways.

Now, doing virtual meetings. They have access to us. We have access to them. Nobody has to leave their home office and it's it's gonna make the pie so much bigger.

It's gonna be very exciting because a lot of these women I don't have to save up to fly to or something that San Francisco or an event in New York City. They can do it on these webinars that we're having now quite frequently.

Right, right, exactly. And that's true. I'm personally I have nothing against the coast do flow, but it's fine, but let's talk about this. Exactly. Deal flow work. How do you source your deals?

Where do you find those fields while Tripoli? The best deal flows come from. So I'm not just the in my own fund. I'm also an L. P.

in the number of female funds, and I do that because again, I want to put my money where my mouth is and I want to support other women that that are raising funds.

I'm going about six funds run by women, and now we share deal flow and I often will do a Co, invest alongside them with with certain deal. So, in that case, the due diligence has already done for me. It's a little bit vetted. Sometimes.

I'll come in a little bit later along with them. I've had great deal flow, sitting next to somebody on an airplane back when we used to fly on airplanes.

I, I think when I get something from somebody that is serious as since. akoya is taking three hundred or, you know, three hundred, fifty million, but they'll let us have three million. What do you say?

And what I say is if it's that great Cory is gonna keep all three hundred and fifty million. Like, thank you, but, you know, that doesn't make sense to me. Now, if it's a situation where, oh, my God, they have no women on the cap table.

And so they're carving out a niche then that piques my interest. But I often wonder or sometimes, you know, somebody's giving me a little bit. Why are they giving me?

I learned that with over quite frankly,

and it was a loss,

but I get great stuff from going to pitches visiting incubators and accelerators,

you know,

being on panels and golden seats.

Great access to golden. And also the angels I found given through the angels.

Nice that sounds like a Pre reach to flow and I personally, like, go into those demo days as well. A lot of them are really great.

Some of them are really not great, but, you know, it's just try and you'll find the best ones eventually. So, if you and if you can go remotely now, now, you know, why not right now it's exactly what does it cost you?

Well, you know, actually, I missed that part where I actually had to go to the office of an accelerator and sit there and listen to those features in person and eat some pizza so much. It's horrible. Anyways, let's not get this other.

I'll get it set here. So, you mentioned that, you know, you're interested in philanthropy and you have multiple funds, but there are different ways of raising money for founders.

And what are they major alternative sources of capital, besides Angel, investments and venture capital. Sure.

Well, I always say to people, please wait, as long as you can before you take outside money, you know, PM try to first. Of course, you bootstrap which means that you bug your friends and family until they're no longer your friends.

I guess they're still your family, but you push push, push you maxed out every credit card. You get more credit cards and then, let's say you're a med tech or pharma company apply for an a grant.

You'd be surprised how many there are if you are small business, you go, you know, get getting an SBA loan. They're actually easier now than they ever have ironically, to apply for a small business loan.

Then there's also you can look up. There's lots of local incubators and accelerators. That might be in your town and you can go and visit them and see if they would have access to investors for you.

And if you're in alumni of schools, that has an incubator and accelerator. It's not just for students as an alumni of a school. You can go and utilize their resources. You know, the UC system has one of the best extraordinary.

I meant to over USC, and also, and I see a lot of alumni there taking advantage of that. Which is terrific.

Leslie, before you do the say, of course, you want to look for angels and you can go through the ACA, which is the angel capital association on the member of that. And that's a way to find our angels.

So, just like, you know, I've done, I've done often tanks, which is like, the suite version of a shark tank. Angels are kinda like the sweeter version of venture capital.

So, you know, you're doing the same thing that you're it's a little is definitely an experience. And then it prepares you for that.

The rest of the way. That's nice. I've never heard of foot. Dolphin tank. Sounds sounds pretty funny. Yeah, that'd be just a way for those who don't know what as B is. It's a small business administration.

Great resource. I'm personally a big fan of as B. they do a lot of support for startups, even though it's a government program, they have a lot of smart people.

So now, let's talk a little bit about your personal investment preferences in terms of what you'd like to see when you're reviewing the deal. So, what do you think are the three must have points on the beach deck? Oh, that's easy.

I, we always say problem Tam, people. Let me explain problem. What problem are you solving? What is the painful problem that has to be addressed, Tam, total addressable market?

If this problem is only for your neighborhood, you can go find a cellphone, but if your problem is global, it could even be bigger than anybody realizes.

You just have to show me how big it is,

and then you only need the larger the Tim is larger the total addressable market is the less percentage you need to actually become profitable and people so the team,

I guess you could take if you want problems team,

but.

No matter how great your ideas you have to have an incredible team and I listen to accompany last week. I will not name them. They were geniuses it was the worst presentation and all I kept thinking is, neither of you should be presenting this.

Neither. You are explaining this, and they were bouncing off each other from, like, worse and worse or highly stopped it. And there were a lot of people watching. I couldn't help myself.

I said,
listen,
you guys are wizards your Zuckerberg,
you need a Sandberg with all due respect wizards our genius as they have these great ideas, but they're not always the best that presenting their business or really even understanding it.

They need executers. They need people that can then go and, you know, like Bill Gates with Steve bomber, you know, you've got the genius with it. I'll call it and then you do the person it knows how to market it. Sell it get it out there, raise the money.

And so that that's something that's extremely important is.

To make sure that you're the best team, but if it's going to be presented, make sure that the best person is presenting on your behalf. Same happened to me multiple times.

I think that the worst presentation I saw was guys that I really liked a lot and it's actually it was a female led company. So just and the presentation was horrible. The people were really smart.

I think the, the Russian top Russian University, and assigns MIT.

I probably my expectations were just too high for them, and there was a language barrier, et cetera, but when we jumped off the call my partner with constancy, what was that was not happy so, yeah. Make sure your pitch is good.

We say, you know, practice, practice, practice. I mean, I had another pitch last week the woman, I couldn't understand her. The language barrier was just horrible and I didn't I don't even understand what she did. It was a ai driven. I kept begging hard to dumb.

It down for me, and she couldn't, because she's not much smarter than me. And finally, I said to her, what do you do?

And then she started explaining that she's head of robotics and this and MIT, and she works for NASA. She was a genius. We couldn't understand the word she was saying.

So, again, you know, God, get yourself a great team mate, get yourself somebody who will be able to. So.

What you have so what? You've great. Exactly. Exactly. That's a great advice. And actually, let me ask you a full question. Where do you find those teammate? So, what's your advice on flying a, your team mate or probably even the CO founder is there?

I think, I think a lot of the women's, there's a lot of women's groups out there now, a lot there. Hi, Alice and there's just so many different options for women.

But also, those accelerators, the incubators, the women summits, the forums, if you get out there trust me and you say, hey, I have a job, I need a great coder. She needs to be a woman she needs to have four years experience.

You know, anybody yeah, I mean, they're gonna get bombarded with female quarters. I mean, we all are a really great asset to each other. We just have to ask for it. And that's why I always say one thing about women.

I find men very competitive. I'm well, women are competitive. We're also extremely collaborative and I feel that and I'm very proud personally that I never waste someone's time.

So, if they come pitched to me, I may not write them a check, but they won't leave empty handed. I'll say, you know, what here's someone, I think, could help you with this, or there's somebody should call or whatever it is it can be advice.

It can be a contact, whatever it is it something to make them better. And so,

you know,
I think that you'd have to ask for it,
you can go on LinkedIn again,
you lots of these different women's groups and angel associations,
but if you put it out there that you need somebody,
there's that's not a hard thing to get answered right and as we talk,
by the way women founders network is a fabulous resource here in California than Los Angeles.

I'm on the board and that's another great source when the challenges. Yep. I haven't even heard of that one. So, check it out and that we talked about pitch deck a little bit. Now, it's time to talk about the mistakes that you see, during the presentation.

So, one of the three most common mistakes that you see during the presentation, and that does not have to be beach only it might be the way people talk or the way people enter the room. Wherever comes to your mind. Okay.

So, I'm gonna make this analogous to a book or movie if I'm not strong and loud in the first ten pages or the first, ten minutes of the movie. There's a good chance. I'm gonna leave. I'll put the book down.

And that's how I feel about a pitch come out of the gate and wow. Me don't save it for the end. Don't have the most important part be at the last slide because we may not be paying attention by the last line. We may not be paying attention by the middle mid slide.

So, start off strong and come out confident especially for women. For some reason. We're always taught to be lady, like and don't be don't be egotistical. And and what that translates into. It's okay to be confident.

When you're a man, but it's not maybe like, if you're woman, that's baloney. Confidence is sexy. Confidence Springs capital, walk into that room with confidence. There's a difference between being cocky and confident and confident its capital.

So, if you walk in shy and timid, and, you know, almost like, you don't deserve to be there, you know, that's not that doesn't build confidence in me. So your confidence will build confidence in me.

So,

I guess now,

while me from the beginning,

get my attention,

right away,

show me why you guys are special and the only ones that can probably do this and then show me why you're product special and the differentiation between you and any competitors and the note that you've

created so that there's a high barrier to entry.

Those are very important. So I don't want to have to ask those things. I want those to be already.

Express to me. Perfect. That's cool. You're wonderful. So we're one last little thing that may sound silly.

I'm from the East Coast,

and maybe that's why I've gone to so many pitch events here in California,

especially at the universities,

even though even though they're alumni,

and they show up in,

like,

surfing shorts and flip and I'll say listen,

you didn't have to wear a custom made suit,

but it'd be nice if I wasn't looking at your legs and your toes and they laugh because I think I'm kidding and I say,

listen,
I'm a bank.

If you look for a mortgage, would you be dressed like that when you met with the loan officer? They always say. Well, no, of course, I'd wear a button down shirt. I reflect. So then you need to ticket a little bit more. Seriously. Yeah.

The guys who have a ton of money up in Silicon Valley have the luxury of being able to wear Hawaiian shirts and flip flops, but you're looking for money. So you need to be just a little bit different and professionally, and that's a pet peeve of mine.

Right and that's same here. Absolutely same thing, you know, being a couple of minutes late, not being pressed properly and all those small things.

I think they're really turned down the whole, the whole thing, especially when it goes about the money it's really about.

A lot of is about emotion, so to take care of those small details, and we're moving on to the last question, which is call to action. What's the one thing that you want the listener to do as soon as this episode is over?

So, there's a fabulous book called the fundable startup by Fred Haney it is for founders and it's for funders. It covers both sides of the equation. I, I, my son just graduated Harvard.

He's the economics he's starting a business. I got him a copy.

I get copies for all of my founders,

and I'm also getting them for my fellow funders,

because it helps you to really understand what needs to be,

how you can be the most fundable company possible and what you should be looking for.

If you're a founder in these companies, and if you're if you're a founder, how you know how to put yourself in the best light, so go get a copy either online or through Amazon of the fundable startup by Fred Hany.

Perfect that's wonderful advice. And I'll definitely legal link to that book in the description of this episode and we'll wrap it up here. Thanks a lot Stacey for coming up and for sharing your experience in this field and specifically focusing on female founders.

I think that was a really, really helpful episode, and I'm really looking forward to reading that book, to be honest. Oh, great. And I have one last thing I'd like to say, because I do focus on women, minorities.

I have one other pet peeve, which is very hard, but I'm just gonna share it with you. Nobody wants to see their founders spending all their time raising money. I want you out changing the world. I want you out, reaching your milestones.

And every time I find out that you're still going and trying to get more money, it takes you your vision and your time away from what we want wanted you to do from the first place. So don't raise in small tranches.

And then we'll say I need five million, so I'm gonna raise ten million with a bunch of roads. Overviews women need ten million. They ask for five hundred thousand twenty times. I don't want to seem pushy.

No. Get what you need get it all at once if possible be confident about it. And then.

Put your nose to the grind, reach your milestones and get, you know, achieve what we want you to achieve and stop it with the fundraising. Perfect. That's great. Advice. Now, get over fundraising pretty quickly because foundries are not supposed to spend much time on fundraising.

That is true. Indeed. So thanks a lot. And we'll wrap it up here. Thanks a lot. Yeah, thank you. There's a pleasure. Thanks so much. Absolutely. Bye. Bye.