# When & How to Acquire & Invest Capital into Your SaaS Business – Brian Parks – MicroConf Growth 2018 Channel: Rob Walling Video: https://www.youtube.com/watch?v=lD5EIUE6Gnk Duration: 14 min Language: English Words: 2610 Transcript page: https://viewrankai.com/tools/youtube-transcript/lD5EIUE6Gnk --- [0:00] [Music] [Music] [Applause] thanks Mike hello Brian with Bigfoot capital so we'll jump into talking so the first thing you used to know is Bigfoot's like it's just a front company it's not really there's no substance behind it it's really just a just a front company for a much larger much more important company which is a t-shirt company for cat pun lovers so who loves cats within like throwing range of this who loves puns there you go and I'm left-handed so that worked out pretty well so I've got a pimp that it's a revenue funded company it's really my wife's company got a life.com there's an Etsy link in the top left nav check it [0:59] out another thing about me that you should know is I feel like I'm a first-time Micro confer I do feel like I'm the most committed Micro confer I've ever met as evidenced by my use of the slide deck template which Rob didn't even use so Thank You Xander number three is I went to bed at 8:30 last night anyone else go to bed early it was awesome it's so good which really to you means one I'm energized to talk to you about capital which is maybe not the most energizing subject to you hopefully it becomes more energizing and to is what was - - is you didn't have to see [1:36] my networking face last night which is basically me learning about your company but you'll see it tonight so so moving on so why am I talking about capital at a conference for self-funded companies maybe not the nice logical thing to do basic reason as it I've spent basing my whole career since 2004 really in and around other people's money so I don't want to bore you here but just like Beth Jeff Bezos I started my career in investment making also just like Jeff Bezos I got out of Investment Banking to to really start companies so I was employee one and a company founder CEO of another company been an employee at [2:14] two other companies kind of over the last eight years all software companies all less than a few million bucks in revenue all less than 25 employees all which had outside capital contributing to their success hopefully and so that's why I'm talking about capital and that's why I started big foot capital really about 15 months ago to support companies like this where I've spent my time with a different form of capital because I kind of share Rob's anti VC is the only way mentality it's not the only way it's a super prevalent narrative and our and types of companies such as such as yours and so I think [2:53] there's better ways to to go about doing this in my way that's Big Foot so that was just to be before that's so for these people with this money basically they come in all shapes and sizes coming to your company at different points in time they got names like everything up here on this screen but at the end of the day they're people and really people who have been entrusted by other people to make sound investment decisions it's all they are at the end of the day and so given that they put money out the people they got it from I'm expected to come back larger they really need to make [3:28] these good decisions and so while they're all different in terms of how they do it they're really all the same and so the way that the same is they all have a common fear these same fear anyone care to guess what that is looking at this slide it's not death it's actually a more visceral fear felt by capital providers than the long-term fear of death so that that fear is really the fear of underperforming and the text effects that come along with that so why would you be deathly afraid of underperforming as a capital Rider it's basically because if you put money out doesn't come back as expected you're [4:09] probably not going to get any more money which means you're probably not gonna be an investor anymore which means you need to go go to LinkedIn and find a job and so none of that's good so in order to ever put money out the door what does that require to overcome this primal fear and the answer is comfort right so at the end of the day investors need comfort it's more important than anything over the long term more important than excitement of course we want to be excited stay excited but we need to be comfortable that we're making good decisions here with other people's and so so that's really what this talk [4:39] is about how do you give these investors comfort early on in the process so maybe they will invest into your company if you should choose to let them so really all starts day one basically how you go about this process of raising money as an indicator for how you operate the rest of your business which at the end of the day is an indicator for well that money come back and pull more of that money come back so the focus here is six pitfalls to avoid when raising your money let's jump into them first one's casually raising raising money is not fun no one likes it I don't [5:12] like it and this leads to the notion of yeah yeah I'm kind of raising money like yeah I'm doing it you're not really doing it if that's your mindset right and so some symptoms of that are it's been forever in a day right maybe we talked you said yeah Brian I'm raising money awesome great when you're looking to close that money you know 60 90 days 120 days later you still don't have any money it's like are you really raising money what's going on here so I start to question your commitment which may not be fair but I do I have that bias I put you in a bucket I'm going to turn my [5:46] attention to people who I feel are more committed and are showing that commitment number two is you know if you're casual you're not putting me to work like I really can't do my job without hopefully helping you try to do your job or at least a portion of it right so put me to work I want to try to be helpful ask me about the process ask me about other players ask me for intros asking me to review your model all of these things that I want to do and I'm looking for you to hold me accountable in doing that so don't let me under deliver otherwise I'll lose the [6:20] inclination to help and again focus on people that are kind of pounding me to do these things for them number three is you know I'm not the only one investor markets are often localized they're small word gets around deals get stale and again people move on so all those make it really hard to actually bring that money in and put you off on a on a bad first footing so number two is having poor timing this is pretty simple you're either too early or you're too late I've raised money twice for free product launch companies sucks I'm never gonna do it again starts the clock ticking you can't explore you can enter [6:57] a you can't learn at least I felt this way and it's a very stressful position to be in so it's the first and foremost I don't think that really implies to anyone in this room so kudos to you but you can't be too early right now that you shouldn't maybe test the waters a little bit have some conversations but again you're set to prove more faster and I'll tell you with Bigfoot just specifically Bigfoot's looking to invest in the SAS companies that are call it half a million dollars in run rate which is basically your last month's revenue times 12 up to three million dollars and [7:28] this is SAS revenue and we're looking to put you know two hundred thousand to a million dollars into companies like that and so you know we'll have a conversation early but just know that like from our perspective that's our investment profile and every investor out there has their investment profile another one is being too late waiting too long and this can this is can happen easily right so maybe you've got a month of runway you're burning some money you can't grow out of it and all of a sudden you appear to be a distressed investment situation so I'm not saying you can't get a deal done but if you do get a deal [8:02] done you're probably not gonna love it so that's a really challenging position and another super stressful position to be in number three is going after the wrong audience I just told you what we look for Bigfoot's pretty scopes down so one way this looks like is you have a never-ending target list it's somewhat easy to go out there and get a lot of names of people with money and firms with money but it takes some work to really diligence that down and target appropriately right so if you tell me you're gonna raise money from a private equity firm that invests in manufacturing businesses or venture capitalists that rates 20 million-dollar [8:36] checks I'm gonna be like no you're not like cross this off your list and I'll just pick on a bank for a second I guess bank financing gets thrown around I'm gonna go get bank financing and no it's gonna be great and yes you may get a credit card yes you may get a small line of credit that's backed by your own personal assets yes they'll always take your deposits and we work pretty closely with banks like Silicon Valley banks a great partner of ours but they're not going to write it if you're not venture backed by like a kleiner perkins or a Sequoia and they're [9:08] not gonna write a check if you want like 250 K they want to put a million bucks out the door because they're inefficient banks and don't make any money off of smaller loans and so that starts to question your qualification ability look at the new today's this is sale so you got a target and you know work work a process work a pipeline and go after the right folks number four is having unreal expectations right we all have unreal expectations we think we're super valuable things are gonna happen super quickly things are gonna be good I think we have these expectations maybe we don't and then we go get beat down and [9:43] don't accomplish those things and we reframe our expectations and so being real with yourself is super important so I know I just said target your list down but don't have a tiny list don't have like two people right have maybe 30 or something I think the average like series a if we're talking you know VC speak is probably the founder probably went after 30 to 50 funds and closed one we're a little bit different we know what we look at we don't have the VC lens so the conversion rate you know for us is is a little bit higher you just need to have a big enough pipeline [10:18] number two is a short window these things take anywhere from a month to 12 months our process is about a month from our first conversation M&A transactions I've worked on take 12 months like they just take a long time so if you don't appreciate its called deal fatigue you're gonna lose steam it's like missing estimates on delivering a product it's like you know it's like anything we're just not achieving what you thought you were gonna achieve and so the last ones overestimating your value right people get turned off if you know they think you know everyone asked me about price I'm like oh it's general you're gonna here's hundred thousand [10:56] dollars and I pick me back 150 over three years and some people you know just straight-up balk it's like look there there's some riskier and we think our money is a value and hopefully we can be a value otherwise same with equity valuations all right Rob mentioned some you know fun strapped like the term equity valuations yesterday which seemed reasonable right if they were two to three X that they're not reasonable and you really shut down your market opportunity over optimizing we've only got two more so I'm trying to rush these over optimizing feels like death by a thousand cuts from my perspective right maybe we've signed a term sheet we feel [11:30] good about it it's mutually agreeable and then like renegotiating starts happening that's super challenging we're working on trust we're still building trust I've known you for maybe twenty days right and like it just kind of makes me wonder Casas so it's always gonna be good faith just kind of goes out the window overemphasizing edge cases look any investor is gonna have agreements pretty standardized that they use they want uniformity across their portfolio and while they may like yeah you can move some things you cannot move the vast majority of things so and they generally never come into play they're gonna be protective measures sure so don't focus [12:07] on that too much inability to get comfortable is another one I'm gonna skip over this but it causes doubts late in the game which is the worst time to cause them last ones not thinking ahead super important so you do what's comfortable the convertible note overdose is something I talk about it's like oh we got a note open we're just gonna raise on that forever and now we've got 50 people that invested in our note now we've got a messy cap table and now no future investor wants to get involved with that situation and by the way we've sold like 50 percent of our company without knowing it the second [12:37] one is you lock yourself in there's often times you can take financing that makes it really hard it's gonna be batt me didn't beat that me makes it really hard to take on future capital and what's really at the end of the day reduces your optionality right so you always want to have optionality you want to make a decision get resources go heads down come back up see if that still makes sense and you don't want to be locked into something that no longer makes sense so here's the recap it's basically sales if that's not if that's not your thing please get help seek help with it you still need to be intimately [13:09] involved but get some support have a process it's just like any other part of your business building a product selling stuff running marketing and investors are skeptical so the whole point along this process is reducing our doubt and making us comfortable lastly having to talk about any of this that's it oh yeah you can hit me on my calendar link email me there's that big URL thank you so much [Applause] [Music] --- About this transcript Read from YouTube's own caption track and laid out by ViewRank AI (https://viewrankai.com). 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