Episode 8February 20, 2024

How to Raise a Round in 2024 w/ Lee Silverstone (3x Founder)

About this episode

If you've been struggling to raise—you're not alone. Seed funding has been falling every quarter for the last 2 years. Rounds are smaller and take longer to raise.

So we decided to record an episode to help you. Here are all the mistakes, tips and tricks we’ve seen first-hand that actually work. We touch on things like

What the perfect raise looks like
Why Post-Money SAFEs are TERRIBLE for founders
The greatest power move that any founder can use when fundraising

If you’re raising or planning to raise anytime this year, in a macro environment that is not friendly, don’t miss this episode.

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Transcript

The full conversation.

Lee 0:00 That's the worst, the worst thing. It's like, go in, have a deck ready, present the deck, walk the person through it, control the conversation. This is a pitch. This is the, oh, let's just have a conversation. Is like, yeah, I terrible. Never do that. Horrible. Pablo 0:15 If you have an opportunity to tell your story exactly how you want to, why wouldn't you take it? Lee 0:21 I think it comes from this like, humility thing. People feel like it's like being humble or whatever, and it's like, no, you're, you're just shooting yourself in the foot . Terrible idea . Pablo 0:28 Welcome to the product Market Fit Show, brought to you by Mistral , a seat stage firm based in Canada. I'm Pablo, I'm a founder turned vc. My goal is to help early stage founders like you find product market fit. Lee , welcome to , uh, welcome to the show. Second time around. Lee 0:47 Second time. I'm happy to be back. I'm a vet veteran now. Pablo 0:50 Yeah, we'll see if, if you improved or , or got way worse. I don't know . <laugh> , you , it's like the second date, like you don't know. You've already said everything and there's actually nothing left to say anyway . <laugh> . Yeah. Lee 0:58 Yeah. Usually , usually worse. I never have a good second showing <laugh> . 2024 VC Investment Data Pablo 1:03 So look, you know, I was looking at the data that Crunchbase came out with like, you know, kind of the , the January 20, 24 data and uh, it's not pretty out there. Just so make some highlights. I'm looking at this chart that obviously all of you can't see, but bottom line, you know, if you look at Angel and seed funding by month, January, 2022, so two years ago, about four and a half billion dollars raised globally just in Angel and Seed. That was down to like 2.5 billion last January and down to about 2.1 billion this January. So we're on this Beautiful, Lee 1:35 So still going in the wrong Pablo 1:36 Direction. That's right on this beautiful <laugh>, we're on this beautiful downwards trend. The nice thing is it is like the , the decrease is slowing. The , the rate of of churn is slowing, right? But , uh, but no, it's not pretty out there. <laugh> . Um, and so Figur to makes sense to do like a fundraising episode because at the end of the day, regardless of macro, people do have to raise, and I will say this, like as much as it's not pretty, there's still $2 billion that are raised at Seed and Angels. So people are raising money, right? And uh, and so that's what we'll be doing today. How Lee 2:07 Different do you think this process is now, given that there probably isn't that much FOMO for VCs? Like angels definitely like almost zero because there's no rules on them for when they have to deploy capital for you guys. Like there's structure to when you have to deploy capital, there's rules to your fund. Pablo 2:25 No, I think it's, I mean, for sure the FOMO is gone. Like it's way worse. And I think everything's just going to, like, the rounds are smaller. Uh, the rounds take longer. There's just like less appetite for risk. Those are realities. But at the end of the day, like whatever the macro, you want to put every single thing in your pocket and like dial up your odds as much as you can, right? Yeah . And these little things about , dude, like one other thing we did when we were raising a gym track, and this was for sure not premeditated, it was totally by happenstance, but it was awesome. Lee 2:56 I don't think anything I've ever done in my life is premeditated. Pablo 2:59 That's legit <laugh>. That's legit. But I don't know if you remember, we raised like, it's almost these concentric circles when I look back, right? Like we started with people that knew us super well, right? So like literally friends and family, like friends and family, right? Like parents like whatever, right? And we raised like they like 50 K, right? And by the way, we actually thought at the time we only needed like a hundred thousand dollars . So we told them we just need a hundred thousand dollars . We believe that, right? <laugh> And Lee 3:27 Yeah . Was that really? I don't remember that. That's crazy. Okay, dude, Pablo 3:31 I remember maybe it wasn't a hundred, it was 200, but I remember writing it on that whiteboard that we took, you know, on top of the car or like 200 K, like with 200 K we could do everything, dude. Like it was infinite amount of money. The thing is, when you have, I think it's especially true for angels, it's harder for VCs. 'cause VCs will want you to like say, this is how much I'm raising. And like more or less committed that maybe always describe a little bit, but with angels, you , you can be like, okay, I actually think two 50 K gets me to a certain milestone, right? And I think this is very true for first time founders especially, you need that threshold of what you're raising to be like, feel achievable. Like you're pitching someone for 20 5K and you want a million dollars. They're like, okay, call me when you're like at 800,000 and I'll let you know, like, I'm not gonna move the needle. But if you're raising two 50 k, all of a sudden they're 10% of that. Like you're just way closer by definition. And we did that, you know what I Lee 4:20 Mean? And that's like this kind of like smart structuring thing that you can do that. I guess you're right. At the time we had no idea that we were doing it. But it's like, and I mean it's kind of why there's like priests, like friends and family ran pre-seed seed , right? Like you can use that terminology to chunk up around where you're like, look, to get to in internally as a founder you're like, I wanna get to a million dollars in a RR . What I need to get there is a million dollars of capital into the business, but I'm gonna chunk it up into a two 50 k raise, a 500 k raise, and a million dollar raise. Pablo 4:51 But it's, what happened, we , we went from 200 to like 500 to seven 50 . I'll tell you something though . We Creating FOMO Pablo 4:56 were talking about how to dry FOMO in this, in this , uh, in this market. I'll tell you one story of just, I, I just consider this like, it very, it , it might seem like small, but I just found it was such a power move that , uh, somehow never seen before. So look, normally when I do these pitch meetings, like somebody's raising around end of the, one of my final questions is just like, okay, and like, where are you at in this fundraise? Right? And I'm just trying to like, obviously just get as much information as possible. And so some of the classic answers are like, oh, well actually I just started this fundraise like last week, you know, one of the first meetings. I'm like, okay, cool. Lee 5:31 Which is not, which is never true. Probably they've prob they've probably been doing it for like two months. <laugh>. Pablo 5:36 Maybe it's better than the alternative. But the reality for me is all I know is, okay, cool, I've got a lot of time, I got got time. There's no phone because you just start, you just starting . So either you're lying to me and it's actually been two months and I have even more time <laugh> or you're either way, right? Uh, the other one is like, they actually know say, okay, no, like it's been, you know, it's been four weeks. Like they're pretty honest about it, which is like kind of the worst part. 'cause like that's what you said marginally better, which I've heard often is like, oh yeah, we started three weeks ago. Like, we actually have like five investors in the day room and we expect like two term sheets by next week. Which is like, okay, but it's a bunch of nothingness, right? Like, I have no idea <laugh> . Like, you know, it means absolutely nothing means nothing. Yeah. Because like, who knows if it's, if it's real or not, right? And then this one guy comes and he pitches me and I say to him, you know, okay, cool, where are you at in this fundraiser? And he is like, well, like, actually I already have a term sheet. Um, and I'm like, well then what are you doing? Like why are you , why are you raising? He's like, well, it's actually like, is a term sheet for my existing investors. And like they're, they're willing to lead it. Like they'll do a 3 million round, like they'll put in $2 million at these terms. It's like , but like, you know, I , I also know the value of like working with many different VCs and getting access to a bunch of different networks. So I thought like I'd go out and and talk to some select investors that like, I think could be really helpful and just like see what's out there. Lee 6:50 Yeah , I want to invest in this guy's company. I don't even know what it is. Just awesome. Pablo 6:54 <laugh>, that's a power move. First of all, it could be a complete lie. And I'm sure like, you know, because this is another power move is like telling me that like, you wanna work with me specifically even though like you just, you don't even know my name, but like, that's great <laugh>. That just, that works. Lee 7:09 I love , I love how honest you are about the like people like kissing your. It Pablo 7:13 Works, it just works, right? It's like, oh, it's only select VCs. And then I get to go back to my team and be like, guys, it's only select VCs. You know, like just this telephone game you let me play. But in this case, like I have no way to validate this. Like I can't, I mean, if I called their investor and said, are you really gonna lead this? I'm sure they'll say they will like, and maybe they will and maybe they won't. And I have no idea. All I know is by definition this round is a hundred percent happening and I'm either part of it or not, right? Like <laugh> and so Lee 7:42 Yeah. Yeah. Oh yeah. That's such a good, that's a good way of putting it is it's happening or not. Exactly. It's happening. Exactly . Regardless or not if I'm on the Pablo 7:50 Bus, the ship is sailing such a power move. Lee 7:52 Yeah. Yeah. That's such a good framework. Yeah, yeah, yeah. Wow. Yeah. And that's actually, maybe that's actually maybe the framework for all people who wanna raise, right? Is that you're trying to build this story of like, this company is raising money regardless of you or not Pablo 8:06 A hundred percent Lee 8:07 You can choose to come in or not. It's you are you, you writing a check or not is not the deciding factor on this thing is gonna happen or not. Pablo 8:14 I think that's totally true. Even if you go back to like kind of these concentric circles or like bigger and bigger rounds, it's like that's what's happening. It's like when the rounds are almost filled, you're like, well this is happening no matter if I join or if I don't join. That's exactly what's happening in this case. Like this is, this round is getting done Now that's not gonna, like if I'm not interested in the company or whatever, like that's not gonna make me just invest. But if I'm already interested, that can definitely get me to drop other things, put this one the top of the pile and figure out whether I'm gonna invest or not because there's no time it's happening . You know what I mean? Like all this, that's the momentum you wanna build Lee 8:46 And like to take it back , like take it up to like a macro high level, which is where this conversation started where you're talking about the , the the , the reduction in the amount of capital that's flowing. This idea of this company's raising money regardless of you come in or not, when there's tons of free flowing money that's in the back of everyone's mind, right? Is that this company is gonna raise money regardless. What has happened now is because there's less capital to build that story of, oh man, regardless if I read a check or not , this company is gonna go raise. That's now the challenge for founders, right? You don't have this extrinsic thing of like, oh yeah, I'm gonna go have 10 VC meetings and one of them's gonna write a check. It's like in VC's minds or investors' Minds , um, these guys are gonna go have 10 meetings and no one's gonna write a check, right? Anybody Pablo 9:29 Can do this as long as you have like this , it can be your first round. But like if you have us as a VC and you're raising the next round or anybody as an investor and you're raising the next round, like that's a pretty easy ask to your investors, Hey like can you help me drive FOMO by just like, you know, kind of saying that, you know, and maybe it's not even that much of a lie. 'cause by the way, if you don't raise, you will probably back me anyways. Like, unless you really don't like me. So I think that's just something everybody can use. What Lee 9:53 About first time founders? Advice for First Time Founders Lee 9:55 What about first time founders? How do first time founders build that like, you know, build that we're gonna go raise regardless of you ? I mean for us at Gym Track as first time founders for sure was 500 startups, like getting into an accelerator. That for us was for sure the like impetus or the driving factor behind it. What else have you seen from like first time founders? Pablo 10:16 I think it's that, right? Like it's, it is back to that framework. Like you have to have enough like built like in terms of relationships that you can actually like make that credible. And I think like as one of the, one of the tips I think like first time founders like getting into an accelerator, it it like if obviously if you can go to yc yc, if you can go to 500, 500 if you can't go to texts , like, but basically going down the list. Yeah . Like Lee 10:38 Were you just rank , were you just ranking all the accelerators in in your, in your list? You were just Pablo 10:42 A hundred percent. Yeah. Yeah. I <laugh> is that, I think that's for if you have an idea, like handler's obviously a good one. If you don't have an idea, there's a bunch of others that are pretty good if you don't have an idea. And then there's the ones where you actually have an idea and at the end of the day it's like a , it's like a badge, right? It's like if you go to Harvard, you have that Harvard badge, like people just take you more seriously. You go to yc, like that just happens. And , and I've seen time and time again like these companies get into YC and all of a sudden like their price went up by two x and like it's just so much easier for them to raise it just, it's a real thing. So that's another way that, but you have to find a way to build this army of relationships. Uh, I think as a first time founder, like, you know, I don't know what else you could actually realistically do to drive FOMO Lee 11:22 Besides build an actual business, you know? Yeah , sure . That's like it <laugh>. Pablo 11:27 Oh right . That part <laugh> Lee 11:28 At the core of it is like, you know, that's, that's the part that, and I think that's like a trap that a lot of first time founders fall into is like fundraising is so foreign to people and it's so challenging and it's its own beast to take on. But like, like you said at the beginning, it's the 10%, it's the cream on the top, right? It's the everything else underneath is like the important part. Pre- and Post- Money Safes Pablo 11:51 So let me , uh, let me tell you another one and this one, 'cause we were just talking about yc. So YC uh, obviously is like the , the poster child when it comes to like just seed stage in general, but like also setting standards, right? And so what happened with YC is, and I don't know if you if you know this, but I think I , I'm sure a lot of founders haven't realized this. YC started off they made the safe popular, right? Like before YC there was noticing and the original safe was a pre-money safe . Like that was actually the original instrument that YC put out. They realized that pre-money safes are actually terrible for investors because bottom line is you get diluted by other safes and there's nothing you can do to stop a founder to just keep continuously raise safes on saves. So at some point they flipped it and they went to a post money save . And because it's yc, no founders ask questions. And if YC says post money saves is the standard, well then post money saves are the standard. And not only are the standard, they must be great for founders. Like this is the assumption, like if you're doing a post money safe , you're a cool vc, right? Let me tell you something, there's nothing more diluted for a founder than a post-money safe <laugh> . It's, and I love post money safes . I shouldn't be saying this, I really shouldn't be saying this because I will turn every preference to a post money safe as I can't post money safes basically have , and I'll walk you through an example, but like they basically have baked in anti dilutive rights, like without having to fight for any of this stuff. You can't get diluted by safes, you can't get diluted by ESOPs, you can't get diluted by anything until the safe converts. It's incredible. And so I'll walk you through an example 'cause I've seen this, I've seen founders effectively stack post money saves on post money saves and the impact is huge and they don't realize it. Like they just literally don't realize it. So let me walk you through two , right? Like one of them is, and we'll make it super simple, right? So imagine you start off solo founder, you own a hundred percent of a company, right? You go and you raise one on 5 million as a post money safe . Okay? So you sold 20% of your business, right? Then you go and you add a 10% esop 'cause you need to hire people. So you put 10% on option pool, cool. Then time goes by, you need more money and you go and you raise another post money safe . This time you know, things have gotten better. So you raise like two on 10, right? You sell another 20% because these are post money safes . The first investor didn't get diluted by that option. Pool didn't get diluted by that second investor. So if you actually look at your ownership, you've given 10% to the option pool, 20% to pre-seed investor, 20% to seed investor, that's 50% and you now own 50%. That's how much you've gone diluted right? Now imagine you did this exact same fund raise cycle, but you just did it on pre round . Like that's the only difference, right? And so you said, okay, you start off, you raise one on five on a pre round, you give 20%. When you add that 10% esop at some point that dilutes that first investor too. So you don't take a hundred percent of the hit, then you go and later on you raise two on 10 and that dilutes the ESOP and dilutes the first investor, not just you. When it's all said and done, instead of 50% you have 58%, like you just got eight more percentage points for free because it's not like you change the terms, you have to negotiate, you have to raise less money. None of that stuff literally for free. You got 8% more points. And this is only two stack saves . So when you do three or four of these saves, you get destroyed. And the craziest thing is, if I were to fight for anti dilutive rights on a term sheet, people would tell me I'm a shark, right? But if I offer them a post money save , they think I'm the coolest VC in the world. So like they <laugh> like, I dunno how IC made this happen. But it's incredible and it's , it is not good for founders. Lee 15:21 So what are founders supposed to do though? Because that , that seems to be the flavor du jour . Like, you know, regardless of what you do, I think most people will point back to, well this is what a YC is doing, so why isn't it what you're doing? Pablo 15:36 I'd say , I'll say this, like if you're, if you're, I think it's simple. Like if you're raising from angels, do a pre-money safe . And I don't think like 90% angels will, will fight you on the difference, right? And then if you're raising from VCs, I don't know any VC that isn't happy doing a pre round, like a priced round almost. Most , most VCs are happy to just do a price round, do a priced round by the way, like most times we don't do a priced round. 'cause the founder's the one that's like, oh, priced round's more complicated. Like we'd rather just do safe. I like great. Lee 16:02 That is for the most part, founders are just like, they're not finance people Pablo 16:08 For sure. They're not. No, of course Lee 16:10 They're just confused and they've heard other people say, oh yeah, I'd rather just do it safe. It's easier that way. Pablo 16:16 A hundred percent, a hundred and before pretty money safes actually were super advantageous to founders. So great. Lee 16:22 It made sense. Things Pablo 16:23 A flip man. So like, anyways, that's just my <laugh> my 2 cents is like if you're a founder, opt for premo safe if you can, or a pre around . It's funny man, I , I like half regret because I'm telling you, I was talking to my partners the other like two weeks ago and I'm like, guys, like we should only do post money safes . Like, we're so dumb for doing anything other than post money saves. It's Lee 16:43 Insane. But I think that like sharky and , and look like I , I'm not saying you guys are sharky or VCs are sharky in general, but like that sharky term world has come back. QuickFire Don'ts Pablo 16:54 So let me , um, maybe like to end, I've got like a few quick fire like mistakes and tips. Maybe I'll like, I'll I'll list some of those and just get your reaction on 'em . We think they're legit know , legit or whatever. Classic mistake number one. And it's like truly just fully avoidable mistake. I don't even know why people do it. But anyways , uh, just saying too much. So for example , uh, and I always ask, but like I would say 70% of founders know better and 30% still don't saying too much. So like how much are you raising? 3 million? Okay, cool. What terms? Lee 17:24 Let the VC come up with the price, see if it matches yours. Why would you put your , why would you put the line in the sand first? Pablo 17:29 Exactly. Like either the price is too low, in which case I just, you know , you got a worse offer for me. The price is too high and I'm like , um, I'm not interested anymore. <laugh> , uh, yeah, none of those things are gonna help you Mistake number two. Actually I'm curious what you think about this one and it's again, is in the context. I don't think this applies to angels, but just in the context of VCs not being ready to pitch, like to truly pitch a story kind of founders sometimes get on , this happens to me 25% of the time. It's like, okay, cool, da da da . Um, and then I'm like, okay, well what do you wanna do? Like do you wanna have a conversation or do you have like a deck you wanna go through and they're like, oh, let's just have a conversation. Lee 18:02 Terrible. Terrible. Worst. Oh the worst. That's the worst, the worst thing. It's like go in, have a deck ready, present the deck, walk the person through it, control the conversation. This is a pitch. This is the, oh, let's just have a conversation is like, yeah, the , I terrible. Never do that. Horrible. Pablo 18:21 If you have an opportunity to tell your story exactly how you want to, why wouldn't you take it? Lee 18:27 I think it comes from this like humility thing. People feel like it's like being humble or whatever, and it's like, no, you're, you're just shooting yourself in the foot . Terrible idea. Pablo 18:34 Mistake number three, setting timelines, right? So founders will come in and be like, yeah, so I'm staring , raising around and we're gonna close in four weeks. <laugh> . Lee 18:42 Yeah. Terrible idea. <laugh> , they're awful, right? But they're real. Like they're real. I'm not making these up . They're awful but they're real. And so many people do them. So many people do them with which is this like, yeah, we're closing on this date. No , no , no . It's like, do you even have a term sheet yet? Like, do you even have a lead? Like no, you're not gonna close on this date. And oh by the way, even if you do have a lead , you're probably not gonna close on that day 'cause things are gonna take longer than you think. Just like don't put lines in the sand. It makes you look stupid. Pablo 19:09 It makes you look because at the end of the day, it's like, from my perspective, hearing that I'm like, you are not in control of that. So like I don't believe that you're gonna raise in four weeks and then when you don't raise in four weeks and you're still raising , you lost all credibility. So it's just a lose lose . Lee 19:25 Yeah. A hundred percent. Huge mistake. Never put a date on it unless there actually is a close date, in which case cool , but Pablo 19:31 Yes , of course . Yeah, of course. And that means you have a lead and all these sort of things and that's like a real thing. Yes, exactly. Um, okay, final mistake. This is actually, this is a tougher one, which is like the false start, but I have seen this happen many times. Company wants to raise a seed, wants to raise an A, isn't really there. And they could probably figure it out with a handful of conversations, but they decide to press the gas on it. They have like 50 conversations end up with nothing. And the problem is, and I don't think many founders realize this, you burn those leads, you burn them. Lee 20:03 Uh, I think hu huge mistake , uh, you're better off waiting until you are ready a hundred percent of the time. I agree. Like, and this is maybe a a a a bad analogy, but it's like you <laugh> you and the earlier the , in the beginning of the call you said is like, are we gonna do better on this one than they did the first one? Or is the second date gonna be better than the first? It's like if you have a bad first date, there's a bad first showing. Like, oh , it's so hard to come back from that. Right? And so I think you're so much better off waiting , uh, if, if you can, I mean the reality is some people can't wait, they gotta go. But you're gonna probably get worse terms . You gotta Pablo 20:38 Be Yeah, well like that, you know, oftentimes it's like I wanna raise an a, you're not there. Maybe you need to raise a bridge round , right? I wanna raise a c you're not there. Maybe you need to raise a bridge round . Right? But my point is like, like it's, it's , the thing is, what I think oftentimes founders that haven't gone through the process, don't realize is the first time you, you get an intro to an investor or you reach out to an investor, what you have on your side is innate curiosity from the investor's perspective. It's like, here's a company I don't know of. I haven't met them unless I'm sure I'm not gonna invest. Maybe I should at least take a 30 minute meeting and see what they're about. And especially true, if you get a warm intro, you meet that company and you pass, now you just lost that. Right? Lee 21:15 And the other thing too, I would say, and this is a mistake I've made before, is you get these intros to VCs with really big names. You're not ready to go meet with that fund, but you're like excited by the name of the fund and walking into the meeting you're like, why am I doing this? I'm, I'm not ready <laugh> I know , I know they're gonna ask questions that are not good , that I'm not gonna have good answers for. And you should be very intellectually honest with yourself about if you should be going into that room or not. And I, and I think people don't do that enough 'cause they get excited about the brand name. Pablo 21:45 Boom. So QuickFire Dos Pablo 21:46 those are the mistakes. Kay , here's a handful of tips. Tip number one. Founder intros are the best intros. Agree or disagree? Lee 21:55 Disagree. I don't know if, I don't know if they're the best intros. I think founder intros are the best intros. If the founder who's introing you has had an exit for that fund and now they're also like an angel investor or something like that. I think if the founder is like a current founder in the fund, you don't know what the relationship is with that fund or not. I would say actually my favorite intros to funds are LPs, Pablo 22:18 LPs. LPs. That's a good one. But harder to find. No, Lee 22:21 Yeah , for sure. Harder to find. Yeah . I don't even know if you're an LP or not, but some, a lot of angel investors are LPs , uh, and a lot of like founders who have had exits are LPs. I actually think that's the better intro than founders. Pablo 22:32 I think that's true and you can get it. I guess my point is, as a founder thinking of raising, one thing that I don't think is tapped enough is like, it's pretty easy to get another founder who's like a notch above you to give you 30 minutes, like for true advice. And that founder guarantees knows some VCs. Do you know what I mean? So I I find that that's like an untapped, not as, could be more tapped. I mean, people use it, but Lee 22:53 I think it's, I think it's good. It is better than asking <laugh> like another VC for an intro to a VC fund. Don't do that. Yes , exactly . Uh , like don't ask Pablo for an intro to another Canadian VC fund. They're gonna be like, well, Pablo's not investing. Like what ? Why , why is he just , Pablo 23:08 That's a tough one, man. I get that often. Like, you know, pass and it's like, okay, like do you know any other VCs you should Lee 23:13 Talk to ? No, no, no, no. The opposite. If , if , if , if I came to you and I asked you to invest in my business and you passed , I'd be like, don't ever tell anyone. Don't ever intro me to a vc. Don't ever tell a VC that you and I talk. You don't even know me, bro. You don't even know who I am . Pablo 23:27 Okay , here's a tip and I think you're gonna hate it because it's so cliche, but there's some reality to it. And I just wanna get your reaction raising from a position of strength. What's your initial reaction when you hear that? Lee 23:38 Uh, I, I think like, you know , uh, yeah, I think it's. <laugh> Pablo 23:42 <laugh> Lee 23:43 What business is ever in a position of strength? <laugh> . Like you ne you never are. You ne there's always skeletons in the closet. There's always like, you know, storytelling and whatever and all this stuff going on. Like no company is in a position of power ever. If you were in a position of power, like you probably wouldn't need to fundraise that. That's the reality. Like, and I , I don't know, I don't really like it. The the reality is, is like I think you should raise from a position of having a good story heading in the right direction. But this idea of position of power is like crazy. Pablo 24:14 I'll tell you where, where I think it can apply, but it , it's for , it's, you know, privileged situations, <laugh> , but because you have to be getting inbound to even fall into this. But I have seen this, okay , I've seen it and I've seen it as a difference, especially between first time founders who I think haven't gone through enough cycles to know how fundraising, how hard fundraising could be versus multi-time founders who know that they're not really in control of things. And so I've had situations where I go out to a founder and, and , and I've seen them receive these from others, right? And they don't need to fundraise like they've maybe just raised in the last few months, right? But then they have some inbound interest. And I have seen a difference where first time founders will take , tell those VCs, look, we just raised , like we're just not raising right now. You know , uh, let's chat in a few months or in a few quarters where I can know , Lee 25:01 Right ? And then the business isn't going well in a few <laugh> and Pablo 25:03 The business doesn't do as well. Yeah . The macro changes that VC does, two other deals forgets about you versus what I have seen is multi-time founders kind of go back to that and say like, yeah, I know. Like I'm not really raising, like, happy to have a chat. They take the chat and then they just use it to get stupid terms and still raise that money <laugh> . You know what I mean? Lee 25:23 Yeah. I, so, okay, so that position of power. Yeah, for sure. If you've just raised money and then someone comes to you and they're like, Hey, I want to have a conversation. A hundred percent. I'm taking that conversation. I'm like, okay, so let's talk, because I'm not gonna tell you what I would raise on again, I'm not gonna tell you what the terms would be . And if you are like, dude, I'll do whatever I can to get into this company and I'll basically preempt your series A, like, why would I say no to that? So, okay, if you're in that position of power, I agree. It's, it's probably a good idea. I <laugh> , I, I changed my mind. I like it. You've converted. Okay, Pablo 25:54 And then the final tip, we kind of went through this one, but, but it's not, you know what, it's not as common as I, as I think it could be is early days increasing the amount you're raising over time. So when you're raising that first you think you need a million and we're talking like mainly an angel round , maybe some pres VCs start off with two 50 k, get close, then raise it to 500, get close, then raise it to a million. Thoughts on that? Lee 26:17 Absolutely love it. Uh, would do it every time. Will do it every time. <laugh> great strategy. Doing it right now. Yeah , doing it currently. Uh, no, I think like it makes sense. And I think also too, like there is a part of, of storytelling, but I also think there's a part of genuineness to it, which is like, here's how far we can get with two 50. Here's how far we can get with 500, here's how far we can get with a million. They're all good places for the business to net out. There's all different strategies for them. You'll create different strategies around them. But once you've raised the two 50, why not say, I'm gonna go now, raise 500. Once you've raised the 500, why not say, Hey, I'm gonna go raise a million. Don't let it distract you from the business, but kind of always be, always be raised. Pablo 26:54 If you listen to this episode and the show and you like it, I have a huge favorite to ask for you. Well, it's actually a really small favor , but it has huge impact. 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