The Future Of Venture Funding

Jason Kirby
Founder and CEO of Thunder.VC
1hr 53min
March 7, 2024
About the Show

"I thrive in chaos. Especially those very complex, convoluted situations. In times like those, I can get everyone on track towards one goal."

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Jason Kirby is the Founder of Thunder.VC, an AI-powered investment bank that helps startups navigate the fundraising process. Previously, he was the Co-Founder and President of Liquid Sky, a cloud gaming company acquired by Walmart in 2018, and the President and COO of Generation Esports, an esports platform for schools that raised $11 million in funding.

Throughout the interview, Kirby shares valuable insights and lessons learned, such as the importance of setting deal terms before diving into due diligence, focusing on customer acquisition instead of fundraising, and the challenges of managing investor expectations. He also discusses his experience thriving in chaos and his ability to align teams towards a common goal.

Kirby's story is one of resilience, adaptability, and perseverance in the face of numerous challenges and setbacks. He emphasizes the value of learning from failure, building strong relationships, and staying committed to one's vision. His journey from photographer to successful tech founder and investor is an inspiration for aspiring entrepreneurs.

This episode is a must-listen for anyone interested in the world of startups, fundraising, and entrepreneurship. Kirby's firsthand accounts of navigating acquisitions, pivoting business models, and managing team dynamics provide invaluable lessons for founders, MBA students, and managers alike. His story serves as a reminder that success often comes from embracing chaos, learning from failure, and never giving up.

Episode Resources: 

Thunder.VC: https://web.thunder.vc/
Jason Kirby's Twitter: https://twitter.com/jasonkirby
Jason Kirby's LinkedIn: https://www.linkedin.com/in/jasonrkirby/
Rich Dad Poor Dad by Robert Kiyosaki (Book): Amazon Link
Jason Kirby's podcast: Fundraising Demystified

Key Moments

Raising Capital 101: 5 Tips for Fundraising, from Seed to Exit

Securing funding is a crucial part of any startup founder's journey. Just ask Jason Kirby, a serial entrepreneur who has navigated the fundraising gauntlet across multiple ventures, from early-stage startups to acquisitions by major players like Walmart. In this article, we distill some of Jason's hard-earned wisdom into five key tips for successfully raising capital at every stage of your startup's growth:

Tip #1: Bootstrap First, Raise Later

Bootstrapping is crucial for early-stage startups because it allows founders to validate their idea, gain traction, and prove their business model before seeking external funding. By focusing on generating revenue and acquiring customers from the get-go, startups can demonstrate their value proposition and market fit to potential investors. This not only increases the likelihood of securing funding but also puts founders in a better negotiating position when it comes to terms and valuation.

In the early days of building Togally, a photographer marketplace, Jason spent too much time trying to pitch investors and not enough time focusing on bootstrapping the business. "We were so discouraged because we spent so much of our time trying to sell investors that we should have been prioritizing customers," he reflects. His advice? Concentrate on building your prototype and generating some revenue or user growth before seeking outside funding. Not only will this help you craft a more compelling pitch, but it will also give you more leverage in negotiating terms with investors.

Putting it into practice:

Start by identifying your minimum viable product (MVP) and the key metrics you need to hit to prove your concept. Focus on generating revenue or signing up users, even if it's on a small scale. Use free or low-cost tools like Google Forms, Typeform, or Landen to create landing pages and capture leads. Tap into your personal savings, crowdfunding, or friends and family for your initial funding needs. Once you have some traction, you'll be in a much stronger position to approach investors.

Tip #2: Leverage Your Network

Leveraging your personal and professional network is one of the most effective ways to secure early-stage funding for your startup. Investors are more likely to take a chance on a founder who comes recommended by someone they know and trust. By tapping into your existing relationships and building new ones within the startup ecosystem, you can gain access to valuable introductions, advice, and ultimately, investment opportunities.

When Jason first got involved with Generation Esports, he was able to bring on some initial investors based on personal connections. Tap into your own network of colleagues, mentors, and friends to find potential investors who already know and trust you. Even if they don't invest directly, they may be able to introduce you to others who will.

Putting it into practice:

Make a list of everyone in your network who might be a potential investor or know someone who is. This could include former bosses, colleagues, classmates, or even family members. Reach out to them individually with a personalized message, sharing your startup's story and asking for their advice or connections. Attend industry events, join online communities, and participate in startup pitch competitions to expand your network and get in front of more potential investors.

"It was one of the early believers who had brought me in, and it was his investors that would say, 'Hey, let's put money in this company if Jason comes in.'"

Tip #3: Craft a Compelling Narrative With The Perfect Pitch

A compelling narrative and a polished pitch deck are essential for capturing the attention and imagination of potential investors. In a world where investors are bombarded with countless pitches every day, having a clear, concise, and engaging story can make all the difference. A well-crafted narrative not only communicates your startup's value proposition and market opportunity but also establishes an emotional connection with investors, making them more likely to buy into your vision.

As Jason pitched Generation Esports to larger investors like Samsung and Altos Ventures, he focused on telling a powerful story about the company's potential impact. When seeking funding, it's essential to craft a compelling narrative that showcases your vision, your market opportunity, and why your team is uniquely qualified to execute.

For first-time founders especially, a well-crafted pitch deck is crucial. Your pitch deck should succinctly convey your startup's story, problem, solution, traction, market size, competition, business model, and funding needs. Keep it visual, use data to back up your claims, and practice your delivery until it's polished.

Putting it into practice:

Start by outlining your startup's key narrative elements: the problem you're solving, your unique value proposition, your ideal customer, and your vision for the future. Use storytelling techniques to make your pitch more engaging and memorable. Keep your pitch deck to 10-15 slides max, and make sure each slide conveys one key message. Use tools like Canva, Beautiful.ai or Pitch to create professional-looking designs. Practice your pitch in front of colleagues, mentors, and even strangers to get feedback and refine your delivery.

Tip #4: Negotiate Terms Wisely

Negotiating favorable terms is just as important as securing the funding itself. The terms of your investment deal can have a significant impact on your startup's future growth, exit options, and overall success. By understanding the key terms and being prepared to negotiate, founders can protect their interests, maintain control over their company, and ensure a fair outcome for all parties involved.

Jason learned the hard way the importance of agreeing to clear terms with investors before getting too deep into due diligence. To avoid getting burned, make sure you negotiate key terms upfront, such as valuation, board seats, liquidation preferences, and breakup fees. Don't be afraid to push back on terms that seem unfair or overly onerous.

Putting it into practice:

Before entering into negotiations with investors, make sure you have a clear understanding of the key terms and what's standard for your industry and stage. Research deal terms on sites like Crunchbase, PitchBook, or VC blogs. Consult with a startup lawyer to help you navigate the legal aspects of term sheets and financing agreements. Be willing to walk away from a deal if the terms are not in your best interest - remember, a bad deal can be worse than no deal at all.

"The deal wasn't dead yet, and we didn't get the breakup fee, and then we went back to our existing investors...they twisted the knife pretty hard on those terms."

Tip #5: Figure Out if Venture Funding is Right for You

While venture capital can be a powerful catalyst for growth, it's not the right choice for every startup. Founders must carefully consider their business model, market opportunity, and long-term goals before deciding to pursue VC funding. By weighing the pros and cons of different funding options and understanding the expectations and demands of VC investors, founders can make an informed decision that aligns with their vision and sets their startup up for success.

Venture capital can be a great way to scale your startup quickly, but it's not the right fit for every business. Before pursuing VC funding, make sure your startup has the potential for the kind of outsized returns that VCs expect. You should also be prepared to give up some control and autonomy in exchange for capital.

If you do decide to go the VC route, do your homework to find the right investors for your startup. Jason's VC firm, Thunder, offers a free investor search tool that matches startups with compatible VCs based on stage, sector, and other criteria. They also provide educational content and advisory services to help founders navigate the fundraising process.

Putting it into practice:

Evaluate your startup's growth potential and capital needs to determine if VC funding makes sense. If you have a high-growth, tech-enabled business model that requires significant upfront investment, VC may be a good fit. But if you have a more modest growth trajectory or can bootstrap your way to profitability, you may be better off with other funding options like revenue-based financing, grants, or loans.

If you do decide to pursue VC, start by creating a list of target investors based on their investment history, sector focus, and stage preference. Tools like Thunder.VC, Signal, and Crunchbase can help with this process. Once you have your list, prioritize the investors who are the best fit and start reaching out through warm introductions or personalized cold emails. Make sure you have a compelling pitch and a clear ask before taking any meetings.

Raising capital is a complex and often lengthy process, but with the right strategies and mindset, it is navigable. By bootstrapping first, leveraging your network, crafting a compelling narrative, negotiating wisely, and figuring out if VC is right for you, you'll be well-equipped to secure the funding your startup needs to grow and thrive. As Jason's journey demonstrates, persistence and resilience are key - even in the face of rejection, setbacks, and market challenges, keep pushing forward and believing in your vision. With determination and savvy, you can successfully raise capital from seed to exit and beyond.

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