Startup Investment: Who are your “Friends and Family” (and do they have to be rich)?
The terms “friends and family investors” and “friends and family round” get thrown around a LOT when you’re an early stage startup. Which may leave you wondering if you’re disadvantaged in raising money because Scrooge McDuck isn’t your uncle. In this episode, we talk about what “friends and family” really means, the opportunity of using the network you already have (and what you may not know about the value in that network), and what else besides money is valuable that you can also seek to raise from people around you. And if you ARE the rich uncle, we’d like to talk.
In today’s episode, we are discussing startup investments and what it means when people say you should do a “friends and family” round.
“Friends and family” doesn’t always necessarily mean those immediately around you, although that is a good place to start. Even if your immediate friends and family aren’t investors who have lots of money, chances are they may know someone who is. The phrase “friends and family” refers to anyone that isn’t a formal investment vehicle, like a firm or institution. It’s all about using your network to build relationships so that you can get introduced to those who have the means to invest in your company. Investment isn’t about begging for money, but about community, skill building and connection. You’ll get better at telling your story every time you pitch, which is exactly the skill you need to raise money.
Cynthia reframes “friends and family” to mean conversations with people in your life that give you an opportunity to tell your story and find out who they know and what they may be able to provide for you. The backbone of a startup isn’t limited only to money. Time, expert knowledge, support, community, and advice are equally important in a successful startup.
We also discuss the “why”, which is the force driving you to get up every day and work towards this goal. Ultimately, every decision you make for your company is in service of this “why”. Why does it matter to you that this thing you are creating exists in the world? Where do the people you hope to serve fit into your “why”? Entrepreneurs are encouraged to write down their own answers to these questions. Cynthia elaborates on a few instances when she has turned down the opportunity to make more money or grow her companies because the offer didn’t align with the why. Understanding your purpose will make a difference in your ability to keep going even when the going is tough.
Be sure to like, share, and subscribe to Precursa: The Startup Journey on your favorite podcasting platform and tune in for the next episode!
Email us (firstname.lastname@example.org) with any questions or comments. Check out our website (https://www.precursa.com) for more information on getting your startup rolling.
Straight to you from Denver, Colorado, this is Precursa: The Startup Journey. We share the ins and outs of building a tech startup from inception to launch to revenue and beyond. If you’ve ever wondered what building a startup from scratch really looks like, you’re in the right place. With full transparency and honesty, we reveal it all about Precursa on our ride from idea to exit: the wins, the lessons learned, and the unexpected twists and turns.
Hello everyone. Welcome back. This is Precursa: The Startup Journey. I am your host. I realized I never tell you who I am. I’m your host, Cynthia Del’Aria, I am the CEO and one of the co-founders of Precursa, in addition to many, many other companies over the years. And this is where we get real. We get super real. So what we’re getting real about this week is, we talked about it a little bit, well we talked about it a little bit every week, because you know, if you meet a startup, that’s not raising money, I can show you a startup that’s slowly dying. So we’re in fundraising mode and had some really great conversations this week. What’s funny is that the conversations that actually turned into traction with fundraising are rarely the ones that you think will. And so what I mean by that is, I had a really great conversation with a guy who runs a company that is trying to fit the space that VCs don’t really fill right. Helping companies that don’t want to do crazy growth. You know, that aren’t trying to push themselves to a 10 X return in five years with an exit and blah, blah, blah, and, and don’t want an investor breathing down their neck for that help those companies get from post startup or post revenue to middle market, you know, 10 million brilliant guy. I love what he’s doing. And there was an opportunity potentially there for us to be a good fit. Now we’re a little early for them, so I think at some point we might be a great fit for them, but ultimately it wasn’t a conversation that turned into a funding conversation. On the other hand, I was on the phone with a friend of mine yesterday, and she works in private equity, but she’s also in the process of building an acupuncture studio. She’s now got two locations. She’s someone who is also a serial entrepreneur, but more in like the retail space. She owned a Chick-fil-A in Southern California for a few years. And I was just talking to her about what we’re doing. And I was like, Hey, do you, do you know anybody? Like she goes, yeah, send me your deck. She’s like, I might even put a little bit in. And I was like, I totally wasn’t even thinking about that when we, when we got on the phone, I just miss you, and you’re my friend. So what I want to talk about today is what does it mean when people say you should do a friends and family round? What are considered friends and family? Because one of the things that I’ve heard from entrepreneurs that I’ve worked with before is they’ll say something like, you know, people will say, then we need to raise a friends and family round, that’s how you get to that’s how you get money pre-revenue, right. There’s very few institutional groups that are going to give you money. If you’re pre-revenue, it’d be so incredibly expensive. You’d give away like 80% of your company to do it. And they always say, well, I don’t know anyone rich. That’s not what we’re talking about here. So let’s dive in and say, and kind of talk about what are we doing and how could that translate into what you might be doing and what friends and family money really means. So if you have friends and family who do investing or who believe in you and they have 50 or a hundred thousand dollars that they’re willing to give you, that’s probably the most direct interpretation, right? Meaning people in your life who know what you’re up to, maybe your dad or your mom, or an uncle or an aunt, or, you know, a cousin, if you don’t have that, I don’t either. So it’s okay. All right. That’s just the very like first place people go when we say friends and family. Now there’s also friends in your life. So people who maybe you’ve done business with them before, maybe you haven’t. Maybe, you know, you’ve known them your whole life, or maybe they’re new in your life. But friends who may be interested in investing. Now, those two groups can be the most awkward to have investment conversations with. But here’s the thing I want you to remember: every opportunity to talk about what you’re doing and to talk about what you’re building and to give, it hones and refines your story, right? It helps you hone and refine your pitch and your why. We’re going to talk about the why here in a little bit, but don’t view friends and family conversations as a failure if the person you’re talking to doesn’t have any money or the person you’re talking to, doesn’t want to invest. In fact, you should approach every investment conversation this way, which is it’s an opportunity to build a relationship, tell what you’re doing. And then at the end, is this something you’d be interested in? Yes or no. If it’s a no, okay, great, do you know anyone I should be talking to? Because here’s the thing you’re never more than one or two conversations separated from someone who’s got money who’s looking for some, for things to invest in and who just may invest in you. Right? So this is, there’s a book out there. I’m a Dave Ramsey fan and Ken Coleman is one of his personalities. And he has a book called The Proximity Principle. And the whole premise of the proximity principle is that when you are attempting to do something, you know, in his world, it’s, I want a job in the video gaming industry.
Okay. Well, you got to get around people who are in the video gaming industry, you got to learn, what does that look like? And you’ve gotta be able to talk to people because it may not be what you think it is, but you won’t know until you get into it. So if you, if you go spend a bunch of time and money learning skills only to get into the gaming industry and then realize this sucks, when you could have shadowed a friend or somebody for a day, somebody who’s in your network somewhere for a day and realized that it was dumb or that you didn’t like it without spending that time and money, that would be the smarter way to do that. Right? So the, how we use the proximity principle for investing is you’re never more than a couple of relationships separate from the people who are going to want to invest in you. And so what you’re doing the same way as we do in user validation interviews at the end of user validation and the end of product solution validation at the end of user interviews, I always remind people to ask is now that we’ve had a conversation, is there anyone else that you can think of that you’d be willing to introduce me to, that this would be of interest to them or of value to them. And almost everyone I talk to has someone where they’re like, you know, this person has this problem. They complain about it all the time, you should talk to them. It’s the same with investors. It’s the same with just people in your life. And that’s the thing about friends and family. This is an investment source of people that are already in your life or one step removed from your life, and they’re not institutional investors. Now I have had friends and family rounds get filled by people who do institutional investing. So they’re part of a VC firm, or they’re part of a PE firm. They’re a qualified investor on a crowdfunding platform or whatever it is, but because of the relationship they have with you, or because somebody made a direct introduction that they trust, they’re willing to have a conversation and potentially invest in you outside of those formal vehicles. And so that, when we say friends and family, it’s anything that’s not a formal investment vehicle, meaning it’s not an institution, it’s not a firm, it’s not a group of people who have some sort of formalized agreement about how and who and when and where and what they’re going to invest in. Right? So it’s not that you have the friends right now, it’s that in your friends and family, they know people they’ll introduce you to who you can tell what you’re doing, and as you’re building those relationships, they will then point you to the right people or the people after them will point you to the right people. So friends and family investing is about using your network, talking about what you’re doing in an effort to suss out where can I find the people who are going to be interested in this, who will get on board and who will fund me? Okay.
So I want you to switch around your context because most people that I talk to say, well, I don’t have any rich, I don’t have a rich uncle, right? Like that’s, that’s always the thing I hear. Nobody’s got a rich Scrooge McDuck in their family, right? But that actually doesn’t matter because what I’m realizing, there are old connections that my mom had back in the eighties and early nineties, when she was building a business who she can reach out to and she has made some introductions, and there’s money to be had there. And those people remember me as a kid. And they’re more likely because of their connection to my mom and their connection to me and whatever, they’re more likely to be willing to not only take my, take my meeting, but if they’re not interested in investing or it’s something they don’t understand well enough to feel comfortable investing, they will know people, right? So you’re using your network to build relationships and to talk about what you’re doing, to find the people that you may already be connected to one degree of separation, two degrees of separation, you go a full six degrees, maybe you can get Kevin Bacon to invest in your startup. I don’t know, but you’re using your network. You’re using your relationships. You’re using your connections to get introductions to more people who will potentially be interested or potentially know other people who may be interested. So we talked a little bit last week. I, you know, I told you that I, I always am working with coaches, and one of my business coaches and I sort of like, she helped me hash out what is a pitch really? Right. And primarily it’s about relationship building. Secondarily, it’s about being clear about what you’re doing and clear about what you want. And then the third thing is being willing to negotiate or knowing what your lines are for negotiation. Does this person really fall into my ideal investor profile or not? And does the offer they’re making me or the negotiating they’re doing, does it work for me or not? Right. So I’m recapping that because I want to, in the same way, have you reframe friends and family rounds are about hitting the pavement, doing some work, but it’s not about sales. It’s about telling your story. It’s a modified version of the pitch, right? Like you, you know, they might start asking questions that go deeper into the pitch. And they may want you to formally pitch them at some point. But really in friends and family, you’re having conversations, you’re telling the story about why this matters, why this needs to belong in the world a little bit about your credibility, whether that’s the amount of work you’ve done to validate your market, to talk to people, to understand the problem, or whether that’s, you’ve done this several times before, and so you feel confident because of your track record. I still think you need the first piece, but essentially you’re, you’re learning how to tell the story and you’re getting better and better at it every time you do, which is exactly what you need to be able to do in order to be able to pitch and raise money. So stop thinking of it. If you’re thinking of it like sales or begging for money or asking for money, or, oh my God and people, I don’t have money, you’re doing it wrong. That’s not the goal here. The goal here is to tell the story and see what comes up for people and ask them, how do they think they might be able to help? Is there an introduction they could make? You never know. You may find every single skill that you thought you had to pay someone for on your team, you may find those people and they go, I’ll do your marketing and PR strategy and like oversee all that, if you give me a couple percentage points, great, you just saved yourself $60,000 over your first six months. There’s value in that. So understand that investment isn’t just about money either. It’s about skills. It’s about support. It’s about building a community around you that is holding, helping you hold the space for the thing you said you wanted to build and the thing you said you wanted to create. That’s power. There is a lot to be said for a level of community where you feel like every time people see you, they’re like what’s going on with your startup. And here’s why: that’s all you’re going to be thinking about for a long time. You’re going to be eating, breathing, sleeping, thinking, working, working more. When you’re on vacation, all you’re going to be doing is thinking about this business and this startup. If you’re not, this probably isn’t going to last very long for you, and it’s probably not going to go very far, because like we talked about a couple of weeks ago, entrepreneurship isn’t for the faint of heart, this is what’s required. So having a community that is interested in that journey and that asks you about that journey, so invaluable, you know, I’ve talked about my struggles with, I have very, very close friends who I love and adore who do not get what I’m doing and so they’re not inclined to ask about it. It doesn’t matter that it’s the thing that’s forefront in my mind all the time, and I would love the opportunity to talk about it. I don’t need to dominate an entire dinner with it, but I’d love it if one of them at dinner would say, so what’s going on with your startup? I know you’ve been fundraising, how’s that going? Is there anything I could do to help, but they’re not oriented that way. They’re in a different stage of life and they’re doing their own thing, right? So having people around you who are interested, who are calling you forward, who are pulling out of you, the thing that you said you want, or at least helping you, that is a support system.
And that is a form of investment as well. And that’s absolutely friends and family. So let’s reframe friends and family round to mean conversations with people that are already in my life that give me an opportunity to tell my story and to find out what they could provide to me, whether it’s money or time or expertise or mentorship or insight, or even just support. And who do they know that might be interested in any of those resources we just talked about. We have to get out of the mindset that money’s the most important thing, because if we make money, the most important thing, our investors are going to do that as well. And then we’re going to be pushed to grow or build or scale at a rate that doesn’t work for our company or that doesn’t actually move in the direction that we want our company to go. So let’s reframe friends and family to those things. It’s not about selling. It’s not about asking or begging for money. It’s about the opportunity to build the backing behind your startup, which includes money, but includes a lot of other things, too. Resources come in a lot of different formats. And this another thing that I learned from actually that same coach. We view it like I need money to do all the things. I need money so I can pay people right, to do X, Y, Z thing. I need money so that I can buy these services from vendors. I need money so that I can, I mean, just look at a good pro forma and you’ll see all the things that we think we need money for. What if you never raised a dollar for your startup, but you had everything you needed. What would that be like? It would be people giving of other resources, their time, their money, maybe not their money. They’re like, let’s, let’s set money aside. Their time, their expertise, their knowledge, their network, to get those things. Those are all invaluable resources that oftentimes take a back seat because we figure if we can just get the money, we can do it our own way. Look, I am a huge proponent of having control. Having a say, being the one who gets to run your destiny. Right. But what I’m saying is there are other ways to still have that power and that control to build the company you want to build, that don’t require money. So I want you to consider friends and family round, and you know, you may do several of these actually, but whenever we say friends and family, I want you thinking of this conversation. I don’t want you thinking, well, I don’t have a rich uncle or my dad never made any money or we grew up poor. And my family’s still poor, so I’m sol. No, you still need to be having conversations because there’s a lot more than financing that comes out of investment conversations. Okay? The guy who, who I talked to a couple of days ago that I told you about earlier, he is someone who’s interested in watching our journey now. He wants to know what’s going on. I’ll make sure that he gets the latest deck so that he has it on hand. I’ll make sure that I give him regular updates. Investor updates are not just about people who have given you money. They’re also about the people who are supporting you and the people who have said, keep me in the loop. Make a list of those people, because it’s more people than you think, which tells you the support and the backing that you have is actually much bigger than you think.
Okay? And so you have to start to reframe this again, this comes to a mindset thing. And I talk a lot about how important mindset is. And like I said, a couple, a couple episodes ago, we were all, all mindset the entire time. Right? But it is important because the more you can, these aren’t new concepts, right? The concept of friends and family or investors or pitching, like you’re going to do it no matter what, like that’s just the process. It’s not like we’re going to invent some new way. I mean, we think we’re inventing a new way, but, but you’re still going to have to talk to investors. And you’re still going to have to pitch your story and pitch your idea, pitch your company. You’re still gonna have to build a pro forma. Like I’m not telling you the execution pieces are the same. What I’m telling you is, and why this is a mindset conversation more than anything else is because the context, the framing of each of those execution tasks will make or break you. And this is what we’re talking about. We’re reframing what do we mean when we say we’re in our friend, we’re raising a friends and family round. What we mean is we’re talking to people in our lives already, getting referrals and introductions to people in their lives, and learning who is willing to help and can help us in ways that move the ball down the field. And that means considering all different forms of resources that are not just about money. So the more you can reframe that in your mind and the more you get good at recognizing those things, the better off you’re going to be and the better you’re going to do. Those are the companies that succeed because their founders or their CEO, or whoever’s, you know, usually the CEO is the one doing the pitching, realizes this is about any kind of resource, any kind of backing and building my community, building the community of people who are interested in and calling me forward to do the thing that I said I wanted to do or that I set out to create.
So now let’s talk about the why, and we talked a little bit about this. I mean, we’re always kind of talking about the why, right? Because you can’t tell a story about the building of a startup without talking about the why. It’s just not possible, because the why is the thing that drives. It’s the reason you get out of bed every day and say, I still want to be doing this thing because this has to exist, or this is the way it should be in the world. Right? And it’s easy to think that if your, why isn’t something super lofty or global social impact or feeding all the hungry children all over, like those are great whys, I’m not, I’m not saying they are. They, I mean, they’re, they’re very valid, but so is the why of whatever your, why is, you know. You’re going to find some people who resonate more with like impact investing and social impact investing and that kind of stuff. But you’re also going to find people resonate more with investing to make business easier like what Precursa does. Investing to make investments more valuable, you know, investing to help entrepreneurs. So these are all of our why, you know, we are building a company to help entrepreneurs be real, have a killer pitch, know all the ins and outs of everything they need to know and have the competitive advantage of, I did this process and this process gets result, it gets success. It gets wins, you know. So setting yourself above the crowd and getting that competitive advantage any way that you can and the whole system, the community, and Precursa the platform, the learning pieces, the feedback mechanisms, all the AI driven stuff, plus all the live coaching pieces, all of that is designed to give you the edge in every conversation you have that moves your business forward. Whether you know, it’s still in the idea phase, or whether you’re now working towards your launch, or whether your post-launch or post revenue or scaling or growing or in exit conversations. We are giving you the tools to help you continue to refine and set yourself apart from the pack. That’s a worthy goal as well. Maybe it has a social impact. I don’t know. What I know is I want fewer entrepreneurs. Like I want no one, in 10 years, I want no one to ever have to tell the story again, that they spent hundreds of thousands of dollars and years of their life building a company or building an idea. And they have nothing to show for it now. And they feel terrible and they feel like crap. That’s preventable. That’s what I’m setting out to do. How I do it, and all of the other pieces that come into play are all in service of that. That’s why the way we design our advertiser network is really important to me. They’re vetted from the beginning. Very, very highly vetted. Not just anyone can advertise on Precursa. We have to do some work to make sure that you treat entrepreneurs the way that we believe entrepreneurs should be treated, which is that we recognize you can’t charge an entrepreneur a hundred thousand dollars for an advertising campaign and get them no results. Like you have to work differently with them, right? And we want to know that you understand that journey and you value and see the potential in the journey and you’re willing to work like entrepreneurs need to work. So same with investors. We, you know, we’re building an investor network and we’re going to vet those investors. We’re going to make sure that they are actually qualified to be investors. But we also want to know that their mindset is they’re interested in angel investing. They’re interested in giving friends and family money. They’re interested in finding new deals that they may not have found otherwise. Right? All of that, all the reason that that matters, and if every decision that we make is in that same context, the context of our why, then we will never have to question whether or not we’re building the company we intended to build. Now, that doesn’t mean that there won’t be a time when we look, we turn around and go, wow, this was a totally different journey than what we thought, right? Because you have to be flexible. You have to know how to pivot. You have to listen to your market. You have to listen to what customers are asking you for. We know that, and so we’re willing to do that. But all of that will be in service of the why. So our, why isn’t, you know, we’re not going to build Precursa and get traction and get going and be making revenue and then decide, oh, we’re going to pivot and become a healthcare services company. Right. Our, why is our why and everything we do, whether it looks like we thought or not will be in service of that. So I’m saying this, because I want you to think about, I want you to do some work and write down, what is your why? Why does it matter to you that this thing exists in the world? And, you know, we’ve talked a lot about, what’s the problem you’re solving and who are you solving it for? Where do the people that you’re solving this problem for fit into your why? What is it about that group of people that matters to you? Because here’s what I can tell you. If all you’re doing is building a company to become a gazillionaire, you’re never going to get there because the why is actually not big enough. There will come a point where you’re like, I don’t know why I’m working this hard. I was just as happy at my $85,000 a year job, and actually more happy and I didn’t do nearly this much work. And I had more time with my friends and family and to take vacations, right. That why, not big enough, the why has to be bigger than all of the excuses that are going to fall into your path and cross your mind. And that you’re going to hear from other people who are doubting Thomases. Your why’s got to be bigger than that. And just being a gazillionaire ain’t gonna get that done. You know, I’ve never had a conversation with Jeff Bezos, but I’m certain if we did his why for Amazon as an online bookstore was probably pretty compelling. And whatever that is, his expansion into these other areas probably has something to do with that original why. If you would have asked him when he was selling books online, you know, if you were to say, well, one day you’re going to be the largest store for everything on the planet. You’re going to own a shipping and logistics portion of your company. And, oh, by the way, you’re going to own the majority infrastructure for the entire internet globally through your Amazon Web Services, he would have said, well, that, that’s crazy. How is a bookstore going to be that? But that’s the evolution of the why. It’s the core of the why doesn’t change what he’s trying to do all along. I mean, I’m going to make this up and we could probably figure out a way to get him on here and ask him. But I would bet that his why was people need better, easier, faster access to things that are important to them and for him, for whatever reason books wasn’t being handled, you know? And so that’s where he went first. Maybe he felt like it was hard for people to find good stuff to read, by the way, I’m a huge reader. I read at least three to five books a week, and it’s still hard to find stuff to read. So I’m not sure he really solved that problem. So maybe that wasn’t his why, but he’s essentially democratizing access to things that we wouldn’t have access to otherwise. That’s a great goal, right? He started with books. It was a niche that he could get into and that he could make work and it made sense for him. And then he expanded into other areas. So understand what I’m saying is, the why matters. Do some work, sit down, write the word, why at the top of a piece of paper, and then I want you to start thinking about why does this matter? What’s going to keep me going? If all of your answers are about the money you think you’re going to make, reconsider. Either reconsider that you haven’t actually dug into the why or reconsider the, that thing.
I’m not going to say you because you could have another idea that would totally get you lit up to go on this journey, but that may not be a good idea for you to pursue because the money is not going to come for a while. Like, I’m going to say the money’s not going to come for a long time because you’re going to constantly be fundraising to be able to build the business, to get that next dollar in revenue, to get that next user, to get that next set of traction. Your money is going to come much later. And it’s, it’s just going to be different than you think you don’t build a tech startup, and within a year you’re making half a million dollars a year, or you’re worth a couple million bucks or 10 million or a hundred million dollars. That’s just not how it works. It takes time. So I’m not going to rehash that, but I do want you to do this exercise because it is the most invaluable one in helping you understand and giving you something to communicate to people in a way where they know whether they want to be involved with you or not. It’s how you know if you’re hiring the right people, when you get to that point. It’s the thing that becomes part of your mission statement as a company, by which you can always true yourself up, because I promise you, there are times in every single company I’ve ever built, there have been things that have come along that are like, Ooh, we could make more money, if we do that. Let’s look into building that or adding that product or service. And if I look back at the why, it doesn’t fit. So I’ve told you, I am also a partner in a commercial airline, SaaS, a SaaS for a pilots and crew bidding for their schedules in commercial airlines. And there was a point at which someone came to us and it seemed like a natural fit with an idea. And we even spent like three or four months building some pieces of this new system to do this different thing related to how they schedule training at independent flight schools. And so we went down that path, but the reality was it wasn’t the why that we were in for. And when we realized that we realized, well, that’s why this feels so hard. And that’s why this keeps falling off because we went into it for the money, not because it actually fit our business model and not because it actually forwards what we’re actually up to, which is I’ll just tell you. So that company, the why, the reason that, that, that that matters is because technology in airlines is mostly built, and this is absolutely true for the bidding systems that, you know, these companies pay tens of millions of dollars for, or get packaged in with their planes or whatever, it’s built by engineers. There’s never been a pilot anywhere near this software that they use to bid for their schedules. Their schedule is the most important thing to a pilot, because ironically enough, pilots work their whole lives to build the skills and build the experience to be able to work at a commercial airline so that then they could get paid to work as little as possible. It sounds very antithetical, but it’s very much watch the pilot way of thinking, right? We love pilots. So we embrace that and we say, great. The problem with the software that the airlines have provided is that because engineers and pilots think totally differently, pilots don’t know how to use it. They think they do, and they get real sneaky and crafty and, you know, try and like game the system. But the reality is the system is stacked against them because a pilot wasn’t involved in the process. So what we did was we said, so, so the outcome of that, why that matters is that if a pilot doesn’t bid correctly, they get a crappy schedule and their seniority, which should be the most important thing in what kind of schedule they get, doesn’t even matter at that point, because they bid wrong. So we created a company that does pilot-to-bidding-system translation. We give pilots an interface and a way of designing their bid that makes sense to a pilot, and they look at it and go, yeah, that’s exactly what I wanted. I wanted these days off and I’m willing to wave to get this and whatever their criteria are. And then we have an, a system, our platform takes that and turns it into bidding system speak. And I can’t tell you the number of times pilots look at what it turns into and they go, that’s what that is. That’s how I bid for that? I would never have gotten there. Yeah. We know that’s why we exist, because we want pilots to spend less time bidding and we want them to have their seniority be the most important thing. Not that you know how to game the bidding system, anything that doesn’t exist inside of the why of making pilot and crews’ life easier and getting them better, paying schedules and schedules that let them have the life. They want to have anything that lives outside of that is not part of our business. And we shouldn’t be going after it. So understanding your why and understanding who you’re serving and why it matters and why you care about that group of people, that’s what’s going to keep you going long after you’ve realized there’s very little money in startups. Now, that’s not entirely true. You can build a really great company and, and look, I’ve had a lot of conversations recently with investors who are like trying to figure out a way of solving the problem where most investment into startups these days is they want a 10 X return in five years.
And if you’re not going for that, or if you’re not growing at that pace, or if you’re not planning on an exit, we’re not interested in investing in your lifestyle business that has a profit return, or we’re not interested in investing in a company that knows they’re going to take a little bit longer, you know, or a lot longer to grow because that’s what’s right for the company. There are a lot of investors or a lot of companies, or a lot of groups that are trying to solve that problem by providing different types of funding that speak to different goals in business. What I’m trying to say is there is money in startups. I’m when I said that, I’m kind of teasing you a little bit. Okay. But it doesn’t happen fast. And it doesn’t happen as early as you think it’s going to. And what your goal is should also be part of your why. So for Precursa, we want this to be prolific. We want it to proliferate everywhere. So we want someone like a Y Combinator or a Techstars or, or an 800 pound gorilla like Amazon or Google who’s interested in a shift in the way people build new technology and new startups, right? Like we want someone like that to come in, because that’s how this gets everywhere. But if you want to build a legacy business where you build something really cool and you love running it, and you want to be the CEO and doing the day-to-day stuff, and you want to pass it on to maybe your kids or nephews or nieces, or cousins, or a family friend, or you want to pass it down through your state or whatever, that is just as valuable. And that will make you good money too. Like I said, it takes longer than you think, but that will get the job done too. If you want to build a company that takes longer, maybe you’re not looking for an exit, but you want to be in the 10 to 20 million a year, you know, annual revenue range. Great. You may not qualify for traditional VC or PE investing, but there are a lot of groups out there that are trying to solve that problem. And it’s, it’s still all about the why. Okay. So I want you to do this work. I want you to dig into the why, I want you to understand, again, what’s the problem you’re solving? Who are you solving it for? Why do those matter? Why does it matter that this problem gets solved? What is the potential if the problem was solved, what then becomes available again? I’m not saying your why has to be super lofty. There’s a lot of people look at us and say, well, that’s not really lofty. It doesn’t fit into the terms of an impact fund where you’re stopping global warming or, pick anything from the news right now about social change. And I mean, just because we don’t fit into that definition does not mean our goal isn’t worthy, and it’s the same for you. But understanding that why and understanding that purpose will absolutely make a difference in your ability to keep going when the going gets tough. Okay. So next time I want to dive in more because I keep throwing out VC, which is venture capital. I keep throwing out PE, which is private equity. We’ve talked about angel, I’ve said the word seed round. I’ve said friends and family, which we talked about today. Next time I want to talk about what are the different types of funding, because this is a really interesting, it’s an interesting topic, especially for people who are looking to build startups or take an idea and turn it to a business because you want to understand where you fit and what you should be going after. You don’t want to be wasting your time going after something that’s not a fit for the size of company or the round that you’re in. And it can be really confusing, and there’s a lot of people who have exited their companies who know it now because they’ve exited and they had to, they had to go through all of these, all of these stages and phases, but understanding them and knowing them in the beginning will help you not bang your head against the wall for something that you have no control over. So that’s what we’re going to talk about next time. I want you to do the work, find your purpose, find your why, figure out why it matters to you that this be out there in the world, and then figure out a way to put that everywhere, to remind yourself and help call yourself forward and make that part of your story, make that part of your pitch. And friends and family is not just about asking your family and your friends for money. It’s about all the different resources, time, expertise, knowledge, yes also money, but input insight, mentorship, all of the resources that are available. How do you build the community that is backing your startup? And all of those people can potentially become part of it, whether they put in money or not. All right, so as always happy entrepreneuring.
I did get a question I’m going to answer real quick just because it just crossed my mind that, that I got it. I do sound stuffy. So here’s what happened. Back in the middle of April, I actually got COVID, and I had 10 days of like extreme body aches in just, it was, it was not good. And I have lost my sense of taste and smell. So the reason that I sound stuffy, it’s not actually stuffiness. It’s actually, what happens is the nerves are, are deadened or they’re not working correctly. And so what you don’t realize is there’s a lot of different involvement in places in your body when you’re talking or when you’re, you know, when you’re using your senses. Right? And so, whatever that is back there, that that is working on coming back, which it will come back. You know, they say six to anywhere from six to 12 months it could take to regain your sense of taste and smell. And it’s sort of a weird journey along the way, but it creates some interesting dynamics where not everything’s firing correctly. And so I, I probably will sound a little stuffy for a few more weeks here. And so anyway, to the listener who sent that question, thank you for caring about my wellbeing. I appreciate that. And I am fine. I, you know, I recovered, uh, the, the worst part about COVID for me was the body aches. I was never comfortable for probably the first seven days. Everything hurt, my fingertips hurt my teeth, hurt the tips of my ears hurt. All of it hurt. It was just body aches to the hilt. And if you’ve gotten the vaccine and had, you know, a reaction, you know, whether first or second shot, or if you got the J&J and you had a reaction, one of the biggest ones reported his body aches. And so that fits, we could get into a conversation about all of this, but interestingly enough, my COVID test was negative. So there you go. Take that for what it is. So I am, I am better. I am back in the saddle. The reason that I sound like this is because I don’t have taste or smell right now. And the impacts of that, you know, because that’s a nerve thing, the impacts of that, you know, in your nose and your throat and all that kind of stuff is kinda making me sound a little bit weird. So at some point we’ll realize I don’t sound weird anymore. And we’ll be like, Hey, how’s your taste and smell. All right, y’all so happy entrepreneuring. And as always, I will see you next time.
Thank you for listening to this episode of Precursa: The Startup Journey. If you have an idea for a startup and you want to explore the proven process of turning your idea into a viable business, check us out at precursa.com. Make sure to subscribe to this podcast wherever you listen to podcasts, so you never miss an episode. Until next time…