Where do you find an investor and what are they thinking and how to reach them and how do you pitch them and how do you impress them and how do you close the deal? These are some of the first questions that entrepreneurs ask themselves and not just early stage entrepreneurs because you continue to ask it over time. And that is why we are hosting this conversation today. My name is Jason Pfeiffer. I'm the editor-in-chief of Entrepreneur Magazine, and I don't have to go far to find an incredibly insightful investor with deep venture capitalist experience. And the reason for that is because at Entrepreneur, actually, we have our own fund. It's called Entrepreneur Ventures. And joining me right now is the managing partner of Entrepreneur Ventures, Jonathan Hung. Jonathan, you... have deep experience in this space, are incredibly thoughtful about what it takes for a company to succeed, and also about the investment landscape more generally. So here's what we're going to do. In just a second, I'm going to stop monologuing. I'd like to hear a little of your background, and then we're going to start talking about how investors evaluate companies, and then how to reach investors, how to develop the pitch, how to manage that conversation and so on. We'll also be taking questions from the people who are watching right now. And let me also say, Jonathan, before I let you talk, that this is brought to you not just by Entrepreneur, but by Level Up. Level Up is an incredible event that we are hosting in Las Vegas on August. Let me just make sure I got the dates right. August 22nd and 23rd. Jonathan is going to be there. I'm going to be there. Incredible speakers are going to be there. It is an amazing opportunity to be in the room with people that matter and people that know how to grow your business. We'll talk more about that in just a little bit. But right now, Jonathan, so great to have you here. First of all, welcome. Thank you, Jason. Great to see you. Great to see you. So let's start just with some quick background so people can appreciate the depth of experience that you bring to this conversation. So Jonathan, we know you're the managing partner at Entrepreneur Ventures, but take me in a little bit more as to where you come from and what kind of experience you bring to the venture capitalist landscape. Absolutely. Thank you, Jason. So, you know, I've been an angel investor since 2012. It's the same year I took over my family's contract manufacturing business. We stopped doing that in around 2021, right after COVID. But since 2012, gosh, I've invested over 125 different pre-seed to pre-IPO deals. I'm an LPN over 30 funds. I ran my own small micro VC fund called Unicorn Venture Partners as part of a family office called Truesdale Ventures, you know, who are deployed over 700 million. You know, so I've written check sizes anywhere from 25K up to like 5, 10 plus million. At the same time, you know, I've seen everything from consumer tech companies, the CPG, the, you know, enterprise. And it's always uniquely how everyone fundraises. Right. It's not that so simple. It's like, oh, yes, I know, you know, this person or that person. No, it takes a lot of effort and it takes a lot of I like to say, like, you know, I'm writing a book right now and I tell people you go on a lot of dates, you know, you don't know who you're going to get married with until you find the person you're going to marry. And, you know, they wire you the money. They sign all the agreements, just like in a marriage. It's not real, but you got to go on a lot of dates. All right. Well, let's talk about dating then. So you are seeing. Deals come through all the time. And I think it'd be really helpful for someone who wants to understand where a VC is coming from, where an investor is coming from, is to understand what you're looking at and how you see companies in this evaluative way where you're not just looking for a great company, but you're looking for a great investment. And I think that people don't always appreciate that those are two distinct things. Sometimes you can see a great company, you can say, "This is a wonderful company. This has a great chance of success," but it's not an investable company necessarily, or at least maybe not at your thesis or whatever stage that you or someone else is investing in. Let's start with the basics and then we can drill in. And like I said, anyone who's watching this right now, you have an opportunity to drop a question in the chat and I will bring it into the conversation. But Jonathan, take me to the start here. Someone reaches out to you. What are you looking for? At the end of the day, it depends on where you are on the spectrum, right? We do pre-seed seed investing. So we're really early. So I'll look at a company that's under 20 million valuation. When I was at Truesdell Ventures, we looked at everything that was route to IPO. So, but it's all the same. It's a process. You have to understand your audience. So when you look at entrepreneur, this is actually Ventures. It's on our website. We look at four key criteria and we judge this based on a point system. You know, it's just to get you to the IC. You know, both both our friends, you know, Bill Shaw and Ryan Shea, you know, they're part of the entrepreneur ventures team. We have to look at make sure that this is good enough to get reviewed by the investment committee. So what do we look at? Number one is team. Team is so important. Like, do they have the passion? Do they have the grit? Do they have the technical know-how or the product savvy of a certain thing that they're building? I mean, do they have relevant industry experience? You know, how does a founder handle diversity? We score that, you know, from a one to four. And then there's no like a range of two to three. There's no like, oh, it's not like a pizza, you know, ranking or it's like, hey, we're getting 0.8. So it's like, you know, a two team versus a three team versus a four team. And then number two, we look at the business. Actually, Jonathan, sorry, just before you move on to it. So let's just talk about team for a second. I want you to move through these, but I just want to have people appreciate why you're thinking about team and why you put it first. I hear that from a lot of investors. And the reason, as I understand it, but you tell me, the reason is because, look, you understand that the process product the company is going to evolve that is expected but the team is the anchor point and so in many ways you're not necessarily investing in a particular expression of a product knowing that that's going to change but you are investing in the team which is supposed to be the ground from which everything else is built do i understand that right No, absolutely. Because look, you're looking at companies at stages, right? When we look at pre-seed team and look, if you're Mark Zuckerberg and you're just your co-founders coming out of Harvard, that's one team. But look, you brought in another COO. You brought in a VP of sales. You brought in business development people. We're looking at you at a certain timeframe. in time and this is what the team looks like. Can I actually believe as an investor, I'm just trying to see, can you get to the next stage of funding? 'Cause when we rank our companies, we call it green, yellow, red, and I viciously rank them one to like 200, if we're investing up to 200 companies and I have to base really on the team. Is the team someone I'm willing to put more money into? uh right now this currency are they if they're a tech company do they right have the right cto if they have you know enterprise sas business do they have the right person who's going to do the sales and usually it's the ceo they don't have enough money to outsource it to somebody else who is a big business development person or a chief revenue officer they're the ceo and that means they're the chief everything officer so that's why it's so important when you look at the team that's the most important critical step first but it's not the only thing Right. Okay, that's great. So good breakdown of the team. So the team is the thing that you're looking at first and then keep going through that list. Yeah. And number two, we look at the business. Like, what are they selling? How are they selling it? Is it an attractive business, you know, unit economics? Is it scalable? Is there a likelihood that this is going to be a mass market, right? Is it something where, like, look, most venture capitalists don't like service business. I don't mind service business. right if you're being profitable you can get cash flow positive right away why wouldn't I invest in that kind of company right I mean is there a competitive differentiation I mean I always make this joke like look another cauliflower pizza if you're doing CBG that's not that great but if hey if it's backed by Taylor Swift and she's the face of it guess what that's probably gonna do a lot more sales than you think and so that does matter the business side of what is unique what is so much different about this and once again you score one to four That's what I think it matters when you look at the business side, because really, it's not just like, oh my God, I'm going after everything that's in AI right now. That's the hot word, right? Anything with AI, agentic. I mean, it's a funny thing. When you looked at Web3 back in 21 and 22, everyone was thinking it's going to be Web3 businesses killing it. You know what really killed it? Anderlecht. and a real start at that time. Look at right now, they just raised a 30 billion valuation. I mean, defense tech is up and you just don't know. Really, it's not about timing the market. It's finding the best business at any given point in time. It's interesting that you're ranking these one to four. So you're being really strategic. This isn't just some, oh, I like what that, I like that idea or I like that team. You're trying to Above all and I think this is really important for people to understand you are really trying to make a risk calculation, right? I mean ultimately at the end of the day, that's the thing that you're trying to do here That's the reason that you're putting numbers to things is because if you're going to reach out to an investor that you have to understand that that Investor is trying to make a risk calculation in their own minds about what is worth putting money into what is the chance of return on on that investment. And so that means that if you're going to be reaching out to an investor like you, like anybody else, then you need to understand how they're evaluating, what kinds of companies are they tending to look at? What markets do they understand and appreciate the most? And therefore, what is their risk calculation and how would they assess you as a risk worth taking? Am I right? Absolutely. Because when it gets down to it, right, I have four categories and I score one to four, but I'm trying to get one sigma confidence, right? Because every venture firm out there, every investor, I would hope, even if you're an angel investor, has some sort of criteria in how they make their decisions, right? My point of view is like, I just want to get one sigma confidence. One sigma confidence if you're a statistician knows that you got to get 68% and a half percent confidence, right? So out of this, you would think like, oh, I should just score 11 out of 16, 'cause that gets you that number. But I actually want, you know, a 12 out of 16, 3/4. I want 75%, 'cause Cs get degrees, right? It gives me a little bit more closer. I'm not gonna get Six Sigma confidence on any investment decision. We're not hedge funds, we're not private equity, we're not public markets, right? What we are is we're investing in the team and the business really early on. And so I need to get to one sigma confidence on this investment decision because I have to justify it to my LPs. Because if it's my money, it's way different. I can just make a decision. I've done that in the past where like, oh, based on this person, okay, let's just do it. You know, here's 25K, you know, and that's okay. But if you're actually looking for institutional money, where people have processes, you have to know that they're basically justifying this decision to the people who have given them money, where they're getting management fees off of to make that decision. And that's why it's so important to have a system in place that when you talk to a venture capitalist or anybody who runs an investment vehicle, talk to them, like, how are you looking at an investment for me to get to that next stage? Because here's the thing, i don't think you get married after the first date like one zoom meeting is not going to do it so how can i get to the next how do i get for our team at least we get two out of three of the investment people to say yes we're above a 12 out of 16 and then we go to the investment committee and it takes time everybody out there should ask like what is your thought process on your investment timeline how do you make these decisions And that's really important. You have to ask clarifying questions because if you don't ask, no one's going to know or tell you. We don't actually broadcast this out there. But when you get in front of the right investor, because something in your pitch deck, something in your 60 second, 30 second pitch caught our eye and our attention. That makes sense for us. Now we're here to learn more. Right. And so what you're teeing up there is going to be the second part of our conversation, which is what's in that pitch and how are you communicating it properly. But let's just make sure that we understand the full breadth of the things that you're evaluating. Jonathan, you're using these numbers like 12 out of 16, for example. So just to be clear, let me make sure I understand. What you're talking about is that you've got these qualifications and you're scoring things on a one to four. So we've talked about the team. you know, do they get one to four points on the team? Do the business, do they get one to four points? And so there are four categories for each and that gets us to 16, right? So what's the third category? The third category is the investment opportunity in the deal terms, right? We're not investing late stage deals. So we're looking for valuations that are a little lower. We're not heading a target ownership rate because we're writing a smaller check of 25 to 50,000. But we want to make sure that the cap table makes sense for us to join. Is there other people who invest it? Because we're the last check in at What we give you is not just a dollar amount. We also give you the attention of entrepreneur media. We get you Jason, right, to help maybe potentially promote this, right? Put us on a podcast here or a webinar there or write an article for you that could help you get more market, get more attention to your business, whether it's a CPG or a consumer tech or an enterprise tech business. So we look at the investment opportunity, right? And that it makes sense that, Hey, we have a certain type of confidence in getting in there because here's the thing. Most investors, what they care about is they have follow on capital. You're just getting the first check. What people really care about is what we do. All this ranking is all this stuff is we want to write more money into you. We want to invest more money because you invest in the winners. Our fund is different. We invest in 150 to 200 companies, other funds out there. 30 to 40. But the thing is, is that they'll invest in the first 30, but they leave 50% of their follow on up to 30 to 50% into the winners of the top decile of those 30 companies. So they want to invest in the gold, silver, and bronze companies because those are the ones we're going to return the fund. VC, unfortunately or not, is a power law game, right? And they're all indifferent to each other. They have to find the winner, and we want to bet on the winner. That's why it does matter when you get it, absolutely, in terms of the investment opportunity and the deal terms. Right. Okay. So... Yeah, so right. So we've got, we're looking at team, we're looking at the business itself, we're looking at the investment opportunity and deal terms, and finally we're looking at? The alignment. And what I call alignment is entrepreneur thesis alignment, right? Like how can we as a brand help you? And sometimes I use alignment like how can I, Jonathan Hung, help you, right? Because I have this experience in these three different industries. But cancer research, I can't help you with that. You know, we're Entrepreneur Magazine. We're not the New England Medical Journal. We can't help you get, you know, FDA approval. We can't get you to do clinical trials. So make sure that you're finding an investor that can help you grow. Look, if you're just looking for money, you're just looking for money. And that's looking for friends and family and angel guys. money. But if you're going to a VC firm, you have to know where their alignment is with your firm, because not all money is good money and certain money has to make sense for what you're doing because they have business contacts like, look, we have the top 500 franchises. I'm pretty sure if we had something to go after the small business owner, it would make sense for us entrepreneurial ventures to invest in you. Right. Right. And this reminds me of two things which I want to share and then we're going to get to. So how do we pitch the investor? Point number one is I remember talking to a founder of a CPG brand. So CPG, for those who don't know, consumer packaged goods. So that's anything that's sort of easily replaceable in the household you would think of. So buying snacks, drinks, cosmetics, and so on. I remember talking to a founder of a CPG brand who had originally thought of themselves as a kind of tech-enabled CPG brand because they had a really interesting e-commerce play. And so they were going after these tech investors and getting absolutely nowhere, just banging their heads against the wall. And then they finally realized, you know what, we can't be speaking to tech investors who don't feel like, to the point that you just made, Jonathan, who don't feel like they have anything to add to this company or that they even understand the market. The CPG and tech grow in completely different ways. There's just, if you're focused on tech, then you're not going to be all that interested in CPG. So they had to shift and find investors who really deeply understood the CPG space, understood exactly what they were doing, what that opportunity was. And that was when they started to get investment. And what that really comes down to is not just who do you think you can pitch to, but rather what investors are going to see that they can add value to you. And you have to understand not just what you're pitching, but how they're seeing it. And that's really critical. So that's point number one. And then number two, Jonathan, you just mentioned this, if you're just looking for money, that's a different story. I just want to read this out A question that came in from someone who's watching right now named Jason, who says this, "My business is self-funded with no loans or investors. We are two years old, but have run into monetary issues and are now looking for an influx of cash. My question is, how am I supposed to get an investor when our business isn't making a ton of money, but we need money to grow?" Jason, I feel for you that is a very challenging position to be in, also not an uncommon one at all. You have many people in the entrepreneurial world who feel you on that. But Jonathan, when you hear that, do you think that's a person who should be pitching venture capitalists? I mean, no, absolutely not. It makes more sense to go to high net worth individuals, family offices, people who have a passion for what you're doing, who understand. Like I tell people all the time, like my father didn't create a business that was a Fortune 500, but America's not built on Fortune 500 companies. It's built on the small, medium business owner. And you could go to a local bank, get a loan. You know, you find all these grants and opportunities from the government as well. That's what you have to look at. There's all these different doors and levers to look to go through a pool that makes sense for your business. I mean, it just depends on what you're looking for and who makes sense. Like venture capitalists, you see them in the news. Hey, they're raising all these rounds. But it's a different type of audience to go pitch for. It's more like growth equity. When it's this early, you really just have to find somebody who is your, and I like to call it your emergency contact, right? It's somebody in the business world where like they get you, they want to help. They can open other doors. Maybe it's not their money, their balance sheet, but they know somebody like, you know what? I know this person. Maybe you should talk to that person. And one thing leads to another. And then here's a door that opens that makes sense. Wow, I love what you're doing. Let's take a chance. Right. I mean, I think a challenge is, with, for example, the popularity of Shark Tank. I love Shark Tank. And in fact, we have an investor from Shark Tank at the event that I'm going to tell you about in a minute. Really exciting. But the challenge with Shark Tank is that it did create this impression that every kind of business requires a top tier investor and that if you want to build any kind of business, you need to somehow get in front of the likes of Robert Herjavec and that is the only way to build that business. And that's of course just fundamentally untrue. There are lots of sources of capital. You mentioned some great ones, family and friends rounds, banks, SBA loans. There are all sorts of sources of capital that aren't the kind of investors that Jonathan represents, who are people who are, only interested in very significant returns, right? You're only investing in companies that you think are going to be able to grow. And well, you know, Jonathan, you tell me just so people can appreciate it, like what kind of multiple of return are you ideally looking for? I mean, look, it's easy to say you want like 100x, 200x, but like 10x, right? That's a good scale. But honestly, it's when I look at these investments, like 5% of funds out there, five, all funds, whether it's our fund or Andreessen Horowitz or Sequoia, most funds, 5% of the time return 3x, which is really good, 3x. You know, half of funds don't even return principal. Think of that. Like you don't even get your money back. which is devastating. But the key of what you're doing is that it's all about the follow-up. It's all about finding the key outlier. What's in the news recently is Chime, right? It depends where you invest too. I mean, that's so important. You're looking for a manager of money who is willing to not only take on the risk, do all the work, diligence, but when to get your money out too. Like are there tender offers? hey, it's great if you're SpaceX and you're Elon Musk and there's people wanting to buy you in the private markets all the time, but most of the time, look, it's not like that. Sometimes you have to engineer the sale. We talk about companies that look, Unfortunately, they're doing great. They're doing like maybe 15 to 20 million annual recurring revenue. That's a great decent business, but that's not a venture return business. It's not going to be able to get you that unicorn valuation that's going to eventually exit out. So maybe you have to look at private equity. So that's why as investors, we're always networking with other GPs, other people who have other pools of capital to help find the exit, find the opportunities that can get you out of your investment. Right. So in other words, if you're reaching out to an investor and Jason, I want you to take this to heart, the person who had asked this question. If you're reaching out to an investor like Jonathan, Jonathan, you said very rightly, look, it's easy to say 100X, you want 100X return, but sometimes a 3X return is good. But either way, this is someone who has to see a very clear pathway to giving you an amount of money that they are going to get multiples back on, which means that you need to be able to show them exactly how your company is going to grow and be able to do that. And if not, then there are lots of other sources of capital that you should be looking at, whether those are bank loans or friends and family and so on. All right. So we're going to talk now about how to actually pitch a person like Jonathan. And I'm really excited, Jonathan, to hear what you have to say. But before we get to that, let me just unpack that thing that I just teased a second ago, which was being able to be in the room with someone from Shark Tank. So Jonathan and I are going to be in Las Vegas for Level Up on August 22nd and 23rd. What is Level Up? Level Up is an incredible conference that we are putting together at Entrepreneur. Who do we have at Level Up? We've got Robert from Shark Tank. We've got Marcus Limonis from, you know, he used to host CNBC's The Profit. Now he's got a new show coming out on Fox. really great guy. I've spent some time with Marcus. We've got John Taffer from Bar Rescue, another friend who I absolutely adore, incredibly insightful guy. We've got Kim Perel, who's built and sold like nine businesses or something ridiculous. Truly incredible people, and there are more names to come. So this is an opportunity to get into the room with high growth founders and investors and learn from them, not just on stage, but in conversation as well. Jonathan, you and I, like I said, are going to be there. People can come up to us. We will sit down. We will jam with you. That's the whole point of this. This isn't just about hearing people on stage, cool as that is, but it's about so much more. It's about making real connections. It's about truly helping helping your business, helping you grow. So we've got this slide up here where you can see some of these beautiful faces. There's Marcus, John, Robert, and Kim. And also, let me just direct you to this word in bold red, which is fundraise which is to say that if you use the code fundraise right now because you're watching this webinar just scan that QR code and you can get a VIP ticket at the general admission price there is a lot a lot going on at level up again that is August 22nd and 23rd come to the boiling hot Vegas in August. But you know what? I've been to Vegas in August and it's still a really great time. And most importantly, the thing that's going to be really hot is what's going on in the room, in the stage where we're going to be helping people grow their businesses. There's also information in the chat for how to do that. So, all right, now that we've told you about that, let's get back to it. Jonathan, how And I know this is a big question, but how does somebody, how does an entrepreneur pitch you in a way that is going to get your attention and is going to give you enough information to start saying yes? And there's different ways, right? But let's talk about your elevator pitch, right? I've been a judge on elevator pitch and I think these are the most compelling ones. And there's different when you're sending a pitch deck as well. Those are different strategies or a warm introduction versus a cold. But in other words, let's say we're at-- - And let's just, just to give some context here, right? So, "Elevator Pitch" is an entrepreneur show that you've been on, and it's great. It is people who have 60 seconds to pitch inside of an elevator. And if a panel of investors, which is included, Jonathan, likes what they hear, then they'll open the elevator and then they can hear more. But of course, this is TV. This is not usually the way that people are pitching investors. You don't usually have a tight 60 seconds. Instead, what are the more, What are the more actual ways that people are reaching out? Is it by email? Is it meeting you at a conference? What's generally happening? Yeah, it's really the networking effects, right? It's going to something like level up and talking to somebody and giving your pitch, right? It's like a hook. What is the hook? What are your, you got to grab my attention. It's something that, oh, I haven't considered or thought about, you know, what the problem is. And then you talk about the solution, how you are uniquely positioned to do it, what kind of market there is, and then really talk about what your traction has been. And here's the thing I think people forget is, a call to action. What are you looking for? It's easy to say like, oh, you want millions of dollars, but like, hey, I want X amount, let's say 100,000 in seed funding to do this and that. and whether it's to scale your team or to have more marketing efforts, I think that's the most important. At the end of the day, look, most of the time you have to cold email somebody. I get it, LinkedIn I think is a wonderful tool, but once again, you have to know your audience. Like some people hate getting prospected, just with a cold outreach, they won't even read it and you're not even gonna have like the 10 seconds that someone needs to even hear those things that I just mentioned. So what I think always the best way to get in front of somebody who you care about to get their attention to look at you is find a warm introduction somehow. Even if it's like, oh, this person has a first degree connection. Can you go ask them like, hey, do you mind introduce me to this person? I've done that myself. I've even had, and the funny thing is you think it's just founders. No, it's other investors. I had one of my GPs reach out to me like, hey, you're connected to this person. I actually saw that person at New York Tech League a couple weeks ago. Would you mind giving me an introduction to this person? And that's what it is. You keep the ball rolling. I think really what's important is if you don't ask for a better table, the answer is always no. So you have to go ask people in your network who trust you, who are willing to vouch for you to go to bat for you. By the way, Jonathan, you're using terms like GP and LP, so I just want to define that for everybody. The GP, general partner, you could think of as one of the people who run a fund, and then LP, limited partner, are the people who invest in the fund. If I'm an LP, I would give Jonathan money, and then he would invest my money, and then I'm expecting a return from him. Everybody's investing in everybody, and everybody's got a boss, basically, is the way you could think of it. So, Jonathan, all right, so find a warm intro or find a way to get in front of people, and then you got to start that conversation. I have had a lot of investors, I've had a lot of entrepreneurs reach out to me and show me their pitch deck and say, "What do you think?" And then they have all these questions. Is there too much information on it? What should I be leading with? Should I be leading with the story? Should I be leading with the opportunity? Should I be leading with the market size? Do you have any strong feelings on that, on how pitch decks should be structured? Yeah, I mean, I mean, I taught a class. I think they should be tight. You know, they should be maybe 10 slides. You know, you talk about the problem, the solution, the market, the business model. I think a lot of people don't think that's important, but you have a great idea. How are you going to make money? Talk about how you're going to get revenue. I think that's something that people don't truly understand or appreciate when they're writing their pitches. They think, oh, well, here's a problem. How I'm going to fix it. But how are you going to get paid to do it? And really, I think this is a key point, the traction. If you have some actual traction, that perks up my attention. That makes me do a double take. I think most of the times when people use Docsend, which is a company I invested in, that's the slide that most people put their focus and attention. It's like, oh, you have this much revenue already? These are your costs? This is what's going on? This is how sales are going? That's really important. And then towards the end, the team. We went back to our scoring system, right? The team has to matter. Like you are great, but nobody does it alone. I don't care if you're a fortune 500 CEO or a visionary founder like Elon Musk or Steve jobs, nobody does it alone. So you have to talk about your team just as much as yourself. And then lastly, and I think people forget, get the ask clear. Like you have to make sure what exactly you're looking at. And here's the thing. Maybe it's not money right away. Maybe it's partnerships. Maybe it's somebody, hey, can you introduce me to this person? Because that way I can get more traction. you know that's the thing it's not always asking for money that is helpful it's asking for advice hey would you mind spending time with me on this how i can make my pitch better what i should include so you would be comfortable sending it out to other investors i think that's more intriguing there should be like hey i need a million dollars for this yeah i want to double down on that thing that you just said about traction because i think that that is often misunderstood or underappreciated by a lot of investors by a lot of entrepreneurs which is to say that They sometimes think, and I totally understand it, I totally appreciate this, that the idea by itself wins or that the early execution of it wins. I've built this great product, don't you see? Or, you know, the service is so valuable and there's such a market for it. But nothing speaks as loud as traction, as being able to prove that the market is already appreciating what it is that you're doing. And I think incredibly importantly, that you're now drawing in data and you're starting to understand who you're you know, like what your ICP is, what your ideal customer profile is, like who are you targeting and are you reaching them and how? I'm reminded of a call that I just recently took with a young founder who's building this very ambitious AI thing. I would be vague about it, but anyway, he's starting and he's telling me and I'm thinking, yeah, yeah, yeah. All right. I've heard a million AI ideas and this sounds crazy and big. And then And then like five minutes into it, he starts listing off these giant companies that are now using his service. At which point I said, whoa, this is a totally different story. You should have led with that because as soon as you tell me that you've been validated by these very large companies, companies I've heard of that are now using your tool, I am now taking this much more seriously than I was before. So if you don't have that traction, Jonathan, What's your recommendation for what entrepreneurs should do? Should they be trying to bootstrap their way to some kind of proof points? And what are those proof points before they start taking this out to investors? Honestly, it's asking your most trusted advisors to give you the hard questions. I mean, and the common pitfalls. Well, it's like, well, if you can't answer those from your closest advisors, how are you ready to go pitch an investor because it's they're already coming at it as very pessimistic they're like i totally believe everyone thinks their company is amazing how they see it is totally different i totally agree that now that like you don't have to sell me on that i think sometimes people think like oh i need to tell you why i think this is great no no no i don't care why you think it's great i want you to tell why other people think it's great And then that's more convincing because you're already here. You have to believe in what you're doing. And I think that's the most important is getting your most trusted advisors to tell you what is missing. Right. And then you can't shy away from it. You have to go directly and say, this is what's wrong, but I know how to fix it. If I got this amount of capital or this amount of experience or this amount of help. to help you build because we always in human nature is to focus on the negative to focus on what's bad but if you could prove out how you can you know problem solve that is so much more opening to me to say oh well my money is going to this it's not that like i don't know what to do it's hey i need your help so i can fix this or make this better for my company to excel Jonathan, we've got just a few minutes left. I'm just going to tell folks that if you want to drop another question or two in, we've got the time for it, and I'm happy to bring it into the conversation. So if you're watching right now, then please share with us what's on your mind, and Jonathan can help you. But Jonathan, I'd love to hear a little more from you about what other mistakes you tend to see entrepreneurs make. So what you just said there, which I think was really useful, was how much they share, how much they believe in their company. And they should and they need to. But that's also table stakes. We better just assume that you believe in it. And so you need to be showing what other people are putting. proving out in their interest in your company. But what are some of the other mistakes that you see entrepreneurs make when they reach out to you? You know, it's the assumption that I know exactly what you're doing. I don't. So I think like if you can really break it down, you have to sell me on what I call the sizzle, right? That's how you get the first check. It's like, hey, wow, it's amazing. I get it. I totally understand this. This actually is perfect for something that I do. You see this all the time on Shark Tank. They're like, oh, I don't do this. I don't do that. And they pass because of that. But what if you don't pass? And you actually, so like, no, with your help here, we can get this done there. And I And I think that's what's really important is finding ways of like, hey, get out all the negativity right away. And also really think about, you know, the fundraising strategy of, well, look, let me come back to you. Like, tell me what's wrong right now and let me show I can follow up. I think a lot of people out there think like a no is not a no forever. you know like if someone i'm raising money right now i'm looking for limited partners too and if it's no right now that's totally fine but even like my joke out there is like look even more above it finally invested into apple he passed on it so many times right if there's just a different stage where you get a comfort level that investor is willing to participate and help grow and help your business scale i think that's most important is that look have the people follow up Later on when you can solve a problem, I had someone once tell me like, you know what, Jonathan, you have three dogs who like your dog food. It wasn't a dog food. He was just saying that about my consumer tech company. He's like, if you give me ten dogs like your dog food, then I'm more interested. And so we'll go back. Ask usually in a call, what more do you need to see for me to be able to get you more interested? I think that's a great question to ask all investors out there when you're a founder. That's great. Hey, sorry, I'm going to tell you what's going on behind the scenes, which is that I just got a message that there are a couple of new questions, but I can't find them. If someone can help me do that. Oh, I see. I was totally missing where the questions were. Guys, I don't know how to use this webinar platform nearly as well as I should. Let's get into some of this. Aperva asks this great question. How critical do you see traction for pre-seed investment. So, you know, I think a part of the question you're basically asking here is if we're at pre-seed, then we're very early days. So what does traction mean at an early stage of a startup? Jonathan, what do you think? it's not just revenue it's like oh i have a high paying job i'm quitting that to focus on this oh i got somebody who is leaving their job to do this that's traction it's not just having revenue you know it's not just having oh a sign all these sales maybe it's an loi maybe it's somebody's like oh i'm willing to you know Buy this amount of orders, this, if you show me this, right? That's traction too, right? Oh, it's just like, hey, you know, certain organizations said, like, if I raise a million here, then I'll give you another million there. You know, there's all these contingent things. That's traction too. There's all these different ways of showing traction early on. That's great. Hazy asks, can startups leverage press coverage for validation or proof points to potential investors? How important do you think press coverage is to an investor's perception of the business? I think it's huge. I mean, like, why there's marketing budgets. I mean, think about like, I don't want to give certain shadows, but like law firms who have those billboards, you know, those billboards aren't cheap. You know, billboards. I mean, people are spending hundreds of millions of dollars to sell cars like at Volkswagen. You know, so press coverage does matter because if you don't spend money, I mean, some of the biggest companies on the planet are Facebook and Google, right? I mean, they get a lot of ad revenue, right? Because people want to get their company, their story out there. I think one of our key advantages at Entrepreneur Ventures is we have a media company. we can get people's attention onto your company that no one said, because it's different. Hey, blogging to your own website or your LinkedIn. We're like, look, we have millions of subscribers. Jason has a lot of followers. Like if you put your microscope onto them, people will look, wow, I never thought of even this webinar. People are coming in and having this opportunity because of entrepreneur media. Now they see something different. Maybe one thing I said today or something you said, Jason will stand out and they'll relook at their business differently. Yeah. You know, Hazy, I'll just add on top of what Jonathan said there. People often ask me about press coverage and approaches to getting press. And what I always tell them is that you need to have a specific goal in mind for your press. Press is a tool like anything else. You don't raise money from Jonathan just because it feels good you shouldn't try to get press just because it feels good so you need to have a strategy of what that's for and they're there for what publications are going to be able to pay off on that goal of yours and I think that if someone were to be pitching if you're in let's just say the business space and you're pitching an entrepreneur or you know another business publication then one of the top reasons to do that is because you want to take a that article and then go show it to investors. I think that that's a very legitimate reason to try to pursue that kind of press. It doesn't by itself, of course, prove anything. But I think every investor like anybody else in the world is sort of looking to other uh signifiers of uh you know of of success or or of of others who might have done some of the work of evaluating whether or not your business is worth being taken seriously and so if i'm an investor like jonathan and i see that entrepreneur has written about a company i might think well okay well then the editors and writers over there like spent the time getting to know this brand and they thought it was worth their time and their readers time and therefore I might want to spend a little more time with it too. So I agree with Jonathan that it is really useful and it's not of course the only way to get that market validation but it is a good one. Brian asks, "Does Jonathan see a deck that is more than 10 pages to be too long? What about 14 pages?" Jonathan, what do you feel about page count on decks? Look, I said 10 because that's an arbitrary number I just came up with, but it's okay if each slide is important. I mean, that's the thing. It's like, oh, I mean, if I don't spend any time on it, if you could track it, see, talk to people. If nobody cares about it, then why would you have it in there? Right. Because like I said, we're not going to spend 30 minutes reviewing your pitch deck. It's just not going to happen. That's the thing that makes us all equal. Jason, myself, everyone here on the podcast, we have the same 24 hours in a day. You know, I'm not going to spend extra time because you have extra slides. I'm going to focus on the ones that I think are important. I think that's the key. of everything i think it's not it's not a deal breaker if you have more than 10 slides it's just they have to matter because you're going to go into more diligence don't forget the pitch deck is just to get you the meeting it doesn't get you any money it's just to get you the next follow-up meeting and we're going to go into more diligence that's what it is think about the pitch deck as a tool just to get you the meeting if it doesn't help me get the meeting why am i putting it in here You know, what it reminds me of is actually just the tenets of marketing, right? I mean, when we craft marketing for our companies, our first instinct is to try to jam every special thing about our brand into this marketing. But that doesn't work because that's too much. And that's not what people are looking for. And so what you need to do is simplify it down to the point where you're really in this. I'm going to borrow from Donald Miller's building a story brand where, you know, Donald Miller says, look, every consumer, every person is just looking for one of two things or both how to survive, how to thrive. So you just got to tell me how your company is going to help me survive or thrive. And that's the whole story. And then and then once you've hooked them and started that conversation, then you can tell them some of the other benefits later. But if it doesn't contain that, then it doesn't contain anything. And so I think that's a really useful point. Let's just do one or two more here. John had asked, and this was picking up, I think, Jonathan, on what you were saying earlier about getting warm intros to investors. What are your recommendations for networking for fundraising? Oh, networking. I mean, it's also really important to have your bullshit meter up. I'm sorry if I'm swearing, but it's really so important. You're going to spend time away from your family, away from your friends, or from your personal side to go to a networking event. Make sure you try to get the list of who's in the room. My always goal is like, oh, I don't need to meet 20 people. If I go out, I figure if I meet one person that's that matters, that will actually help me and my business succeed further, it was worth it. That's it. So make sure that, you know, you're not trying to do everything to everyone. If you're going to a networking event, find a couple of people. It's just like going to getting your MBA or going to college. You're not going to network with everybody in your class, even after four years. That's just impossible. You have to find people who truly believe in what you're doing and make sense, who are actually wanting to help. You You know, it's a difference between somebody who like, you know, gives you lip service and is like, oh, it's nice. Whereas like, well, there's someone really engaged. You can tell it's just like dating. I kid you not. I mean, my whole book is like that analogy because you're not going to be everything to everyone, but you're going to be something to somebody who actually cares about what you're doing. So find that one or two people that makes sense when you go out to network that you can have a follow on, have a call to action, like we said. Yeah. All right. If you have more questions, I stumbled on that one. If you have more questions for Jonathan, I am going to tell you exactly where he is going to be on August 22nd and August 23rd. It is in Las Vegas at Level Up. I will be there too. So will all of these people who you see and more, Robert from Shark Tank, Marcus Limones, John Taffer, Kim Perel, and more. It's going to be really incredible. If you use the code FUNCY, fundraise right now just pull out your phone scan that qr code that you see there and then at checkout use the code fundraise because you watched this webinar we're going to give you a vip ticket at the general admission price you can see what the vip ticket gives you it is tons of access it is right up front at the stage it's going to be really great jonathan i'm really looking forward to this uh let's just talk just for a second about what else is happening at level up so yes as i've already said you can meet me you can meet jonathan you can meet so many others um where there's going to be a lot of focus on investing is not an investment conference It just by itself, right? This is all there's investing is part of a wide spectrum of things that we're going to be talking about, about how to grow your business. But we understand if you're in this room right now, it is because investment matters to you matters to us too. We understand that. So, uh, you know, there's Robert Kim is, uh, Kim is, is, has been on, um, our elevator pitch show for years now. And, uh, you know, he's a very prolific investor, uh, along with, um, with Jonathan and more exclusive networking with high growth founders and investors who can open the door to your next round of funding. Jonathan was talking just a minute ago about that networking, how important it is to get into those rooms. And sometimes getting into those rooms means that you got to take a little trip and go to the places where the people who you want to connect with you'll walk away with tips strategies connections that take you and your business to the next level we have been working on this for a long time here at entrepreneur and we are really excited to see everybody at level up in Las Vegas so one more time you can go to entrepreneur comm list I'm sorry entrepreneur level up I'm so used to saying entrepreneur.com that that really threw me. Entrepreneurlevelup.com. Or you can just scan the QR code there in that image. And again, if you use the promo code fundraise, then you're going to get a VIP ticket at the general admission price. Jonathan, I can't wait to see you at Level Up. It's always a great chance to just carve out some time and sit down and chat and exchange ideas. And I'm really excited for everyone who's on this call to have that opportunity too. So we will see you all there. Jonathan, thanks so much for spending some time with us today. No, thank you, Jason. It was great. Yeah. All right, everybody. I hope that you walked away feeling more armed and prepared to reach out to folks like Jonathan and maybe reach out to him directly on August 22nd and August 23rd in Las Vegas. We'll see you there. Until then, take care. Thanks, everyone.