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How to Fundraise for your Pet Care Startup

Jun 03, 2021
I'll be doing it, but thank you all for joining. My name is Assad, but I'm the director of ventures and partnerships at Kinship and one of the people who runs our leading companies studio, which is an accelerator program. We'll get over it in a second. I also want to quickly introduce you to Isabel, who is on our team, Isabel, you want to say hello quickly, I'm sure you all know, Isabel, she's the one behind all the things at the adventure academy. I'm very excited about this conversation today. I'm going to talk about how to raise funds for

your

pet sitting

startup

.
how to fundraise for your pet care startup
A discussion about BC Angel and crowdfunding options. I'm very happy to have Gertrude from Peplade and Wesley from Leah Labs, two of our community members who have been really involved in a lot of what's going on. at the academy and I'll have them introduce themselves a little bit, a little bit of housekeeping that we're going to do, probably you know, 30 minutes of this discussion, I'll ask you some questions, and then we'll open it up to anyone who wants to ask the questions that we're asking because We are expecting a lot of people at this time. It looks like there are about 25 people in uh.
how to fundraise for your pet care startup

More Interesting Facts About,

how to fundraise for your pet care startup...

Ask

your

questions in the chat window and you're in. muted the entire time and just for the record we are recording this and it will be posted on youtube later um uh uh um you also know when you join you could quickly share your name where you're from um and what company you're with uh in the chat window uh that would be fantastic um and a little bit about leaving Venture Studio and Academy. I'm sure many of you who have been doing some of these things before know about this. We are here. to serve your pet

care

startup

s around the world, we know that there are a lot of people trying to change the industry and bring new technologies to the market and new business models and disrupt the industry, and we are.
how to fundraise for your pet care startup
We are here to support you, we are a joint partnership between two organizations, Michaelson Found Animals, an amazing social non-profit organization in Los Angeles that does some really cool things, Isabel works for them and Kinship which is a division of Mars Pet Care me too. work for them, so that's a big partnership leap in itself. I want you to think about two things we do, two great things we do to help the pet

care

community. The first is our jump academy, which is basically programming like this. We're trying to help startups get the resources and connections they need to get to the next level, whatever the next level is, and we have pitch opportunities, we have boot camps, we have webinars, and we should make a big announcement in the next.
how to fundraise for your pet care startup
A couple of weeks into our programming for the rest of the year, so stay tuned. If you ever have any ideas for things you want us to do, let Isabel or I know and she'll post ways to get involved in the Slack channel. throughout the convention throughout today's conversation and then we have our premiere premiere show, which is the main venture studio show, which Pet Plate went through, uh, I guess a year and a half ago , two years ago, maybe, um, yeah, um, and so on, basically, every year. We're bringing seven of the best pet care startups from around the world.
We bring them to Los Angeles, in a pre-coded world and virtually in a covered position, that they are investing up to 200,000 in them and really giving them the resources that they need. To take it to the next level, we've done it now with 19 companies, including Ann, who just posted on Gemini's uh in the slack and I think a couple more are in there too, so we're going to do what we do. We talked about fundraising. I just wanted to spend two or three minutes going over a manual and then we'll open it up to comments from Gertrude and Wesley, but you know, at a high level, you know before you can get funded.
You have to know where to look and before you know where to look you have to really understand what you are as a company and so you know these are just four ways to get ahead, like how would you classify yourself as a company, there are many. more, but you know, are you a social risk company? Is it a normal growth company? you look and funding comes in different flavors, there's no one model that fits all startups and you really have to know who to look for based on who you are as a startup, the most basic rule here is higher risk, um. a financial partner assumes the most return or control that they're going to require in the company, very quickly if as people join, they can mute their audio, that would be great, and then I'll send these slides on the way to everyone after or also and I'll send them, but basically, as you go through the process, you know that as you generate more, as you build your company, you reduce more risk for your financial partners and, um, uh, and that's nice. of uh um really cool, you know, um, and there's all kinds of different types of capital out there.
We're going to talk about a couple of couples that the two startups that are joining today have gone after um, but you know, I think this is it. A lot of people, when they think about funding, think Angel and VC, but actually there are a ton of different options and you really have to find the best match for your startup based on what you're doing, and so on. it's just that you know, based on that kind of four categories, sorry, I'm just admitting people as they come in, you know they're at a high level again, this is not the end, but this is just one way of looking at it.
If you know the type of capital to seek based on who you are or what your company is doing and then alternative sources of capital, you know that the best thing you can do is bootstrap and especially in a coveted world where fundraising is It's getting harder and harder in the short term, and it's not clear what it will be in the long term, you know, the more you can do to start and save money and keep money in the bank, the better, but there are all There are other types of options available, you can ask your suppliers, you can try to get grants after some government funding business plan competitions, and then you learn about our accelerator and we also run a pitch competition, a couple of fishing competitions each year where we deliver awards. money um to uh winners um and then another thing I wanted to share is because a lot of people are unsure, but when you're looking for venture capital funding you know this is kind of a funnel that they go through and they're looking. in thousands of hundreds of companies and thousands of companies to go out and invest in a handful of companies that you know and then you know, imagine, you know how difficult it is to obtain that financing and then it increases if you are specialized in some way or if you know how long you It takes getting to market and I'm sure Wesley will talk a little bit about his stuff too and then it gets even harder if you're a first time entrepreneur. um and you haven't done it before um so uh and uh and all the backgrounds are solid you know everything you have to do as you are not all you have to do but one of the most important things you have to do While we're talking to investors it's really if you risk the money that they're going to put into your company and how you do it by building a great team, building a great product you know, focusing on the fundamentals of the business, okay, yeah, Constantine, we'll send this later and with that I will bring Gertrude and Wesley.
Gertrude, I want to jump in and maybe give a one-on-one talk about your background and what. that dish is absolutely um so first peplete is a dtc brand direct to consumer service we make fresh cooked dog food um we make the food um using only human grade ingredients in you and we make the food in the USDA facilities along with human food, so it's really the highest food, possibly one of the highest on the market, depending on the ingredients and the way it's made, we ship it in an insulated cardboard box so the product It is flash frozen after cooking and shipped in a frozen state, but when the consumer receives it at their doorstep, they will place the food in the refrigerator or freezer, depending on the amount of food they receive in the box and on how quickly you think you are going to consume it. use the food if they are going to use it right away they would put it in the refrigerator so there is a product that needs to be kept cold but it can definitely be stored in the refrigerator if so if you are going to get you know in your box there is more than a week of food, you're going to put the rest in the freezer just to preserve it, but we don't use any preservatives, the only thing that preserves the food is keeping it frozen, otherwise, you know, there's no preservatives, nothing artificial, obviously , it's an all-natural product, you know, the benefit to the consumer is that the dogs you know love it, they go crazy for the taste and the taste is great for them, um, but more, maybe just as important or more important is It simply has tremendous health benefits.
Dogs that eat our food tend to live really happy and healthy lives. They have more energy. Are. You know, it's about your digestive system working. very good, so their bowel movements are better, you know the consumers and we have thousands of customers who tell us less trips to the vet because they have fewer health problems and for dogs that suffer from certain health conditions many times. It's related to the foods that they're eating and so by switching to a fresh cooked diet, they see a lot of those health problems resolved, so those things are, you know, things like, weight problems, whether it's low or overweight, you know, allergy, you know the problems, so you know, itching, you know, the coat may not be healthy, the teeth may not be healthy, the ear canals, the blockage, you know, those kinds of things actually happen.
They can be resolved with a healthy diet and it is really interesting to see. The speed with which changes occur in dogs can sometimes be in a matter of a few days or a couple of weeks and, as you know, being a direct-to-consumer brand, we have such an intimate relationship with the consumer that we They write when things are bad. they go well and when they don't go well and obviously we try to solve the problem immediately, but we listen to our consumers, they know almost everything, um, it's a really cool kind of interactive dialogue, so yeah, we've been in the market for three years , we officially launched it in the spring of '17 as a national brand, you know, we ship to every state, like we do today, we've served over 10 million meals so far, and you know we joined the elite, entered the first accelerator, the first cohort of the Leap Studio accelerator and that was in the summer of '18.
So we were only in the market for um, you know, maybe a year and a half. So it was really a pivotal moment for us to be able to accelerate our business. At that time we had a very solid foundation, but we were still relatively small. The support we got from Jump was really tremendous, I mean, we felt it. As we went through, but really looking back, we can safely say that it was a very critical juncture for our business to get that kind of support, so you know the next year and a half has been really, really strong for us. .
You know, after the jump was accelerated, a lot of time was spent based on what we learned in the accelerator, we really shored up our metrics, so we knew where we had some opportunities to improve with the help of Mars on the development side of products. with rga on the marketing side, you know, with the whole ecosystem around leaf, just getting insights into various metrics that we needed to improve, we spent a lot of time doing that, which really allowed us to raise a number of funding rounds. At the beginning of the year, the timing was obviously great because it was completed before greed was established in the US, so we were very fortunate for that, but we raised a nine million dollar funding round in January and now we really are.
We can scale the business because we have additional funds and resources, and we can expand our team, so we have more bandwidth to achieve all the different goals that we have set. I'm sure we'll get into that more, Gertrude, thank you, yeah, that's amazing, Wesley, I want to share a little bit of your story. Yes, you can bet. Leah Labs is a research-stage biotechnology company, so we are focused on bringing cell therapies to dogs. Do you know the use of living cells? And then we use gene editing to then reprogram those cells so that they can have a therapeutic effect on the patient.
So cell therapy has been around for decades and has generally only been used in humans. In recent years, there have been some cell therapies that have moved into the animal health market, but we are actually the first company that we know of that uses gene editing, which is my experience to really allow cells to transition. therapies for dogs in this way, so we first focus on curing cancer in dogs, so B cell lymphoma, soOf course, it kills about 250,000 dogs in the US each year and there is a clinical analogue of B-cell lymphoma in humans. It's called non-hodgkin's lymphoma and there is a currently approved therapy called car t cell therapy for this type of cancer in humans, so we realized that with our experience in gene editing, veterinary experience and then on the human side, cart cell expertiseWe could put all of this together and bring these therapies to dogs, so that's just the first product, but you really know we're focused on becoming the next zoetis and instead of pharmaceuticals, really biologics and live therapies.
So using live cells to provide fantastic therapeutic value. Can you, Wesley, share a little about your funding journey? How much have you raised and how have you raised it? And then we'll go deeper. Yeah, you can bet, our company launched right after I finished grad school, so I finished my PhD on a Friday and joined the company full time on Monday, so the reason I was able to finish my PhD and jump into the company that way is because first the first money in our bank account was accepted into the accelerator and combinator um, so that was amazing for us, obviously, it really boosted the company and it really set pretty high expectations for us, um, etc. . because it was the first money in our bank account we hadn't actually done a science experiment like leah labs um coming out of y combinator uh fundraising was a challenge so if you know a lot about y combinator you know it's The world's leading technology accelerator funded companies like Airbnb, Dropbox and Reddit.
In general, they like technology versus biotech, so they are getting better at financing biotech, I think, but I think we were an experiment for them because they are a startup. Also at least they like to talk that way, so we went outside of you, not really having reached milestones that are possible in two and a half months of your life, to raise, you know, a two million venture capital round dollars, at an affordable price. 12 million valuation, so we had a hard time raising funds that way and we got to a point where we were really going to give up on the dream in July or launch an equity crowdfunding campaign, so that's what we decided to do. funder and that was really a big success for us so we the funders were able to raise a reg cf round of about 470k I mean where it closed that's money in the bank and then through the campaign from reg cf that you know he gave us. life to continue making grants, so now we've had 360,000 in grants, including an nsf sbir, and then just by being here longer and having raised more money on reg cf, we were also able to close some additional angel checks that we haven't walked in the door unless we had some seed funding, of course, an angel investor doesn't want to write you a check for 10 or 100,000 if they don't think you can close a round because that money would just be uh.
It would be a bit useless if he can't reach the next milestones. So in total now, with our diluted and undiluted funding, we're up to almost 1.3 million, so we're very excited, obviously, and now you know. We have everything we need to achieve that first milestone of taking our therapy, testing it in vitro, putting it through a safety study and then applying it to some sick patients in our current track, which should then unlock a great series for us. story um, question for both of you, how did you decide the amount of money you wanted to raise for your funding rounds?
It could be your angel or crowdfunding and how much do you know, how much should you, how much? that change when you were also pitching to investors, yeah, so I'll take that first one, I mean, coming out of the combinator, there was a lot of hope and you know, fanfare that we could raise two million dollars, um. So I made a budget on how we could spend two million dollars. You know, I would still love to be able to spend two million dollars, but that's not how it worked out. And of course, you know it every time you present it.
You're iterating on your pitch deck and you're also iterating on how much money you think you need and then you also know that as you get further and further into your process, you can refine how much money you need for us as well. um, when we launched the reg cf round, you know the maximum you can raise with our funder is a million dollars and of course that was the hope, uh, but then as we went through it, you know, like I said, we raised 470,000 or so and so, we really finished up to where we knew we could get to the next milestone, so of course you don't want to raise more money than you need to get to the next milestone that you're going to get to. raise your valuation, of course, and then, you know, we realized after time went by and when we got to where we knew we couldn't raise any more money, that this is what we had to work with and it just worked out that way.
Yes, our story is probably similar in that from the beginning we have a pet bowl that we choose to increase as needed, so there are different philosophies and I know that even in our category, which is still relatively new. and emerging category within the pet food space, you know different companies have taken different approaches and I think it's largely driven by the founder, their personality, maybe their experience, you know, if they come from a finance background, if they have finance background, maybe they take a different approach than someone who has operational experience and then the investors that they partner with and probably, if your finance guy, your girl, is probably partnering with very financially motivated investors, compared to with if it's operational, you can find investors that have more operational experience and passion, and you know that the financial piece is there just to achieve the operational objectives, so we have taken the operational route largely driven by our, as I mentioned, our Ronaldo Webb, our founder, the founder of Peplade.
He has operational experience, he was a consultant for Mckinsey, he was a consultant for um el catterton uh growth, one of the largest consumer private equity firms in the u in the world and um, I was in his office, you know, they're kind of a division. consulting, etc., he consulted on operational matters with a variety of pet food companies, which is how he came up with the idea of ​​pet food for a pet bowl, and all that to say he took a very good look at it . operationally, so it's not surprising that it was initially partnered with the funds that it was initially partnered with, including one that I come from, you know, which is called the brand project, you know, we look at things very operationally and we all we have operational experience and then we use the finance, they said just as a growth accelerator, so when you look at a business that way, you think about what do I need to operate the business, what are my goals and what do I need to get there and I will raise that amount of money versus you know, the other way around, which is like going back to a situation where you say, well, if I had 10 million, what would I do with it?
You know, and that's what some of our competitors have done. You know, all of these ways can work well, I just know that for us we have this bias towards you know, increasing, as we need to achieve certain goals at the stage that we are at, not trying to achieve the goals that we should achieve within five years trying to achieve the objectives that we have to achieve this year and next, the advantages there are advantages and disadvantages. I would say the advantage of doing it the way we've done it is that we preserve a lot of value in the business, right?
We are not like that. Inflated, you know, a type of business that has a huge amount of investment, as you know, floating over us and we don't have that many investors. You know, there's a nice freedom that comes with just raising the money you need and spending it. you know what you need, you know, the disadvantage I would say is that, um, and in our event, our competitors have an advantage, you know, if you have a lot of margin, you can try a lot of other things that you can, you can try. In a lot of different things, product marketing, etc., you have a lot more room to make mistakes.
Maybe you can move faster because you know I can screw this up three times and I'll still have more money to pitch the fourth time. Can't we operate that way? We have to be super, really, you know, disciplined and very diligent, and our decision making is very thorough and methodical, and you know, when we launch, we know we have a really high success rate, uh or. probability that this can be successful and we have had a very high success rate when we launch new products and new marketing campaigns because of the way we have approached it, but I wouldn't say that we are the fastest and as a result, we have also not grown a lot because, again, at a certain point it all comes down to how much money you have to acquire new clients and we always have a limit for that because we are looking more at the short term and not where we want to be in five years, so I will end it by saying that As you climb, the equation starts to change, you become a little more bullish and a little more arrogant perhaps and you think we have something good going.
We've really proven ourselves, we have great metrics, we have investor confidence, there's a lot of demand, you know, in this space let's raise a little more and then we'll do a little more and we'll be a little faster. And I think that's what we'll probably see in our series, but you know it's a little early to say for sure, but I think that's how mentally we're already thinking about the future. That's great, yes, I wonder, Gertrude, especially with you. and ronaldo and i know less about wes so i want to hear your opinion but like you two i feel that your skills really complement each other and also the team presents itself very well to investors based on their background and what you've brought to the table, can you talk a little bit about the importance of equipment when you're going to pitch?
I think it's fortunate that we have really complementary skill sets and I'm sorry that he's not here, but Obviously, you know we were very happy to be invited and I'm happy that there's, you know, another great company on the panel, so that today's crowd won't see Ronaldo live, but he's, you know, he's really charming, obviously. He's very smart, he definitely has a very different background, so I mentioned his background. My background has been, you know, over two decades of marketing in consumer brands and in that sense it fits very well, you know, probably too. It doesn't hurt that we're two different genders, we're actually in two different age groups.
You know, that probably helps us see things in a broader sense. You know, what if we really were mirror images of each other, so I like that too. um, you know, obviously, i've known ronaldo for almost four years because he came to launch our, you know, the fun that he used to be a part of in the summer of '16, so you know, it's been a while and we get along well, You know? As good today as we did at the beginning, I said on the phone with him half the day already, um, so yeah, I mean, look, I would just add that as a little bit of color because I think chemistry is important and when you're you start. to pitch and you're in front of people that you probably know that you might not know well and that might be the first impression and the first time you meet those investors you know it really helps if the team you know is in sync with you know if you're in sync with your partner. if you get along well if you show that you're complementing each other's skills you're not stepping on each other's toes you know it's very It's nice for the audience to then be presented with the task of writing it, rather than there being some kind of of tension that is uncomfortable and not comfortable, and then once you get into a deeper dialogue with an investor, you know that's when they really start to appreciate the team and and at that point it's a lot more than just the deck and all the different numbers. that they have seen previously and maybe the first thing you know is where you are really selling, they really want to know what the right secret sauce is because what makes this business management is the people, so it is very important, obviously, to have the right team and, by the way, it doesn't have to be as big as us, you know, I think I mentioned that we're relatively small companies still and we really managed well with just a couple of executives for a long time, which means that we don't we had the benefit of a cmo, a ceo or a cto like we were those things and then as we grew we started bringing in consultants first. because that's what you can afford, I would go with someone who really knows their game for fewer hours and someone who is greener for more hours, so we went that route and those consultants eventually got sucked into our business because they liked what we were doing.doing.
We liked what they were doing, it's also a good test and then you grow your business, you know, laterally, but, yeah, obviously, when you're launching, the more you can demonstrate that it's a well-oiled, highly functional machine. . those signs go a long way towards securing funding, yeah, thanks for that, well Wesley, any thoughts, I know, you know specifically that the PhD is really like a star, that's right, that's a great sign of your experience, does it? Can you talk a little about it? that and maybe other elements of this question, yes, yes, of course, so certainly being in biotech and having a PhD in whatever it is you're trying to bring to market or trying to build will definitely be a good sign, but for me , I mean, I'm a first-time founder, a first-time entrepreneur and really the whole combinator philosophy, which is kind of like, I like to frame how I see things because that's really where I was at.
I guess that's what has trained me the most in this so far. It's just you know founders can learn to be the business side of things. Founders can learn to learn to be the CEO, but generally that's it. I think it's been a lot easier in tech or software and you know, more recently, or I guess not yet, you know, the vcs like to see an experienced biotech CEO running a biotech company, so I think about that. The aspect of our team, I think you know, when we first launched outside of YVC was another weakness of our launch and I only had one other full-time co-founder at the time and then I ended up losing him. just because of our concerns about the track um and that's why we needed to go super um low for a while um so we've certainly had um you know we've faced some challenges there but um as far as the team, you know, um, I definitely think it's very important.
You know you have a well-trained team, so we've finally hired someone. I can't talk about it yet because it's not official. Or I guess he hasn't started yet. but we signed a contract and in giving a recent update to some potential future investors, I was told that of our group's recent progress, hiring this person is actually the most exciting thing I'm most excited about is that it helps fill a void. technician in the company, so I guess from that perspective I can already see that hiring this person will be a great help to us as we get back out there. not only because his experience will help us on a day-to-day basis in the lab, but simply because on a serial level you know that people want to see that you have a device already built and that you have everything you need.
Yes, yes, very interesting, can you both talk about that? I have heard many people describe trying to raise money from angels or vcs as dating. Do you know if they are going to get married? Can you talk about that as that process? of how long it took you how many conversations you had, you know, how much insight you gained, you know, to get some round of funding, yeah, I can take that first, so I mean, technically we haven't closed any vcs, that's right. vc funding, however, we've certainly gotten a lot of no, you know, 40 or so, coming out of yc, but as far as angels go, we've seen a lot more success and then regcf um it's not really coming out because the people You just know transfer your money to equity crowdfunding, um, to a certain extent, but certainly with angels, you know, um, they want to get to know you as a person, um, so it's a little bit of a back and forth, um. and then I can see, you know, thinking about a series to, um, starting these relationships even a year from now, so it's more than a year away when I really want to propose a series to, but you know, having these meetings of coffee and now it's virtual coffee meetings, having those meetings every other month to talk to the same partner, really getting to know someone so they get to know you, hopefully eventually you can become them and give yourself a term sheet before they actually you know it you're raising funds and that's certainly the advice that I've been given by some partners at y combinator um that's what they've seen as success in the biotech space is just continuing to always have these conversations so that at some point when I've reached the milestones which the vc has told you about.
You know, they just give you a term sheet instead of actively going out and fundraising. Yeah, I'd say that's if you have the luxury of planning it ahead, which is great. you do it the way you financed it's like you've had this interesting cadence where now you have the benefit of this gap right where you can plan ahead. I totally get it and I think it's great in a lot of cases, isn't it, right? where you need the money, you need it now and you have to rush and it has to go very fast and it never does, it always takes like double what you think it will take at best, so one thing I would say it looks like a lot to dating, but if we're honest with ourselves then it's very similar to dating in the sense that you'll know pretty quickly if you're being ignored and if so, you should really walk away. away because some people have the tendency to think well, I'm going to make them fall in love with me, it really happens like in real life, if there's chemistry, you feel it right away and then those are the people you should really pursue and so why i say that because you could really spend a lot of time that is better spent elsewhere so you know what will happen do you think if there is a little bit of momentum and some people like dating again they are trying it? to be maybe in an effort to be polite um, they, in a way, know that they show interest, but if you really look at it closely, you know that it's more of a flight, but you're so excited that you just think well.
I'm just going to move on, but what you've done is you've wasted time that could be better spent and you know it from the questions and they're just faking it, um, if it's a real, sincere interest. and all I would say is you better walk, you know, keep moving and because it's a numbers game and probably similar to dating, you know some people will make it, you know you'd like to meet that person and you know if you fall in love with them. immediate. but it generally doesn't work that way, it's like you dated a lot of people right before you really fell in love, so it's really a numbers game with bc.
I'm thinking more bc than an angel you just want to have. to as many people as you can because you will be surprised who ends up falling in love with you, it is not always so obvious and sometimes I even give another little bit like, you don't know that this is like a secret, but it is something that people don't usually talk about on many occasions the ones you got right, it has a little less to do with you and maybe more to do with that investor at that moment who really wants to make an investment as if he had a goal set for himself.
That's where they're running out of time or they may have said, "You know, I want to make an investment in a pet in the next 12 months" and they're racing against the clock, so you'd be surprised sometimes you can get there. okay and that's another reason to cast as far away from the net as possible because you never know where the money is going to come from, yeah, certainly, and one point of that is that, um, I feel like a lot of times, especially first-time entrepreneurs, when you go to talk to an investor in that first meeting, they ask you for an investment and you know my advice to you and I would love to hear everyone's opinion.
That is, make sure you know that you are not the first. and the only time you interact with them is when you introduce them and then ask for money, unless they know that will come beforehand. The wisdom we give is ask for advice, get funding, ask for funding, get advice, um, just thoughts on That, um, I think when you're fundraising, there's nothing wrong with being direct, but I'll do it. I definitely don't agree with you if I think about our first similar conversation, it's like in real life, like I would never move there. and like killing, I mean it's disgusting and it seems like an act of desperation, so you know we definitely use that first meeting as a briefing and let the information marinate and if you get a signal back that there's interest, then I think that you can be very clear about what your intentions are, so I think you shouldn't be ashamed to ask for funding, I think you're right, although it would be a little awkward if you just met the person and asked them for something, you know, I think that's not the right protocol, um, but also you know, I guess the difference, a little bit different, that I would make is like I don't pretend.
When you're in that first meeting, you're just trying to get advice. I think you can make it very clear that you are cooking them, you just don't have to be so specific about what you are trying to do. you know how much I want to say, often they'll want to know how much you're raising, but you don't have to say I need this money by that date, it's like you know the start of a conversation, yeah, definitely explain it a lot better than the way I'm sure, yeah , there's no doubt, we're getting a lot of questions and so ask yourself how can I find favorite investors and how can I know which investors?
I have financed pet companies recently. I can provide you with a couple of resources. Some of these things are like free access and then if you pay a little bit you'll get a deeper level of access, but resources like Pitch Book and Crunchbase are two really great places to look because they'll track every investment made and you know there's always some level of free access and then I guess if you sign up for a service like yours, it may be I can know search, you know certain keywords, but those are generally speaking, they're not just for the pet space.
I think you know the internet is just a wealth of information, like if you just Googled the top pet investors I'm sure. You will find an article about someone writing about all the investors active in the pet space, it won't be hard to find, but if you want it to be more like a database presentation book and crunchbase would be the two places you would look, yeah , good. I was just going to say that I totally echo that, I mean biotechnology. You know, you can watch for us. I guess I look at the different companies in our same technology space, uh, on the human side of things and the scope.
For those investors, some of them say they know they're not interested in animal health, but of course everything we do we also think about human health, so I think there's a good chance you know one of our great investors. In the future, you know, a big investment in the same space in the human realm of things is probably going to be quite high, so for us, I guess it will be a little bit easier because we can look at the human side of the biotech space. Also, one thing I would add is that investors also talk to each other, so when you meet with investors, it's okay to ask them to introduce you to other investors they may know, especially angels.
I love connecting and just an example today another or this week one of the investors in our partner fund mentioned that he had a conversation with you recently and it was kind of a nice circle because I've also been talking to Wes and it was great to share our comments with each other about what we think about the entrepreneur and the business and that kind of stuff to get investors talking. He was saying it right before he finished. Wesley made a great point on the topic: Definitely, by the way, don't just invest in pens because like most of your pet investment, it probably comes from human food or you just know if it's pet food or if you If you like any type of biotech, if so, it would be unusual for you to find an investor who only invests in pets, as most will have a diversified portfolio.
I mean, one of the investors in our round is General Mills, so you know. We're there, um, we have an investment from their corporate venture arm called 301 Inc and they've made 12 investments to date, 11 of them have been human foods and beverages. We're the first pet, so you know, that would be the one you have. It would be wrong if we didn't communicate with them, but I thought because they hadn't invested in pet food yet, um, but we knew they were active in wanting to get out, you know, we knew they were looking for the pets, um. because they had bought a big pet food company in the past, we were like, oh, this could be interesting, and in fact, since we weren't even competing at the time against other potential pet investments, it actually worked out very well, so which will definitely be open minded to the type of investor and um, it's just that it's a super small world too, I mean, as you know, Assad just said that he was talking to someone that I talked to last week and they both mentioned us, so they definitely don't. burn bridges, don't be mean to investors, I mean, it's everyone, everyone knows each other andespecially in the pet care space, it's amazing how small the world is and they also ask for feedback, yeah, uh um uh, some people. or maybe the same person is just saying that a lot of times that person gets... people are interested, but they don't really know the pet market or they're more of a technology investor, you know, any thoughts on that.
I don't know if it's a question more than a comment, just that's the fundraising process, you know, that's what you signed up for, yeah, I would say there's two things, one is you want to put a certain amount of effort into it. time to educate the investor. you know that if you've met with them, there's a certain level of interest, so you want to give them the benefit of, you know, spending a little bit of time, which may not help you directly, maybe educate them on other potential investments, but You know that your debt probably wants to be structured so that there is some information upfront about the space in general before you get to Kepley or your company in particular and then the other thing, though, I would say and we ran into this for sure when we were raising our a that if there is a complete misalignment because we had a couple of investors who said this doesn't make sense to me because I know when I looked at this you know in the human food space or this in the human space you know dtc worked like this way and where we would be, yeah, but the thing is with dogs it's like that and it just didn't make sense better to walk away like you know it's okay if you can agree to disagree if you think it's pointless and not worth it you know Whatever you may think that way, I'm not going to be mad at you, but right?
You don't have to spend all your energy trying to convince them because we did it in the beginning and we thought okay, this is really a waste of time, like why am I arguing with this person, what am I going to win? At the end of the day, he or she probably isn't going to invest, so what was that? You know, just get it, you'll get it quickly, like they don't get it, then okay, move on, that's one hundred percent right and and One thing that Isabelle and I have to offer, we've shared it with a bunch of people here.
If you ever come across an investor who is interested but doesn't know the pet industry very well and wants to learn more, send them along. in our own way and we will educate them. I'll spend half an hour every hour with them talking about the pet care industry and why they know the trends and all that kind of stuff. I'm happy to do it and be a resource for all of you. We are talking to investors, so yes, please let us know. um uh, so I open myself to more questions. A question that you two went through accelerated programs and I know Richard talked a little bit about his experience and why.
Did you decide to enter an accelerated program and what are the benefits you obtained? Yeah, right, for us, I mean, why were we? You know we knew we had a startup idea, we knew we had a technology that I think can really transform the industry, so we were looking for the best accelerators in the world to help us get off the ground, so one of course is bioindie in the biotech space, so we talked to them and then, you know. he applied and successfully entered into and combinator, so for us I really think the most important thing that he has brought to our company is immediate legitimacy, as far as you know, a company that is building something with a strong team and strong technology that may be worth it. billion dollars, you know, those are the three things you look at before investing in a company.
I also think just the network, you know, knowing that I now have access to expertise in and combinator. Not only that, but there is more. 2000 yc funded companies and everyone wants to help everyone succeed so that's really helpful and then you also know that being an accelerator program allows you to pitch yourself to investors and again you have that legitimacy as soon as you approach them so which those are Actually, just some quick comments on why I think it's cool to get into accelerators. I mean, for us it was also very important to add a little more discipline to our organization and, in an accelerator, you are accountable in a way that actually feels good because when it's just you and your co-founder and maybe one or two people Plus, you're making up your own rules as you go along and you know it's great to be autonomous, but sometimes the structure you know. what a third party imposes on you is good, it actually motivates you, you know, focuses you, um, you know, so I would 100 agree with the network effect, I mean, we were lucky because, like the players or the part from the um of the players, the groups that ron jump are, you know, we were, we often said about mars um, the product development team that they assigned to pep plate when we said that was one of the things that we were trying to achieve and that we would never have access. to that talent, frankly, because that talent resides within global companies like Mars, right, they can't be hired, they're not consultants that you can pay by the hour to get advice, so you don't really have access to that guy.
Similar access was really key for us and then I'd also like to repeat what I said about there's a network effect where you just know that you can reach other people, maybe through your mentors and stuff, but there's also the peers, so people we're still very close to the people in our cohort and I've been able to meet a couple more people, you know, along the way from other cohorts that have reached out to me and you know it's just brilliant. Feeling knowing that you have a group of peers that you can really turn to because she spent a lot of time together and you guys bonded, so when you have a real problem you can call them and say, I'm really stuck and what do you think?
You are not afraid of what they are going to think or know if they are going to speak badly about you. You know that's not going to happen because you were really bonded over that experience, so that's been a big thing too. and and and uh, for the record, Israel, maybe you can provide some links to the chat, but you know there are definitely the combinators and and the tech stars of the world that are global that have accelerator programs in every city, there are also accelerator programs or incubator programs usually associated with a lot of different schools, you know, colleges and universities, every city has a different way, you know, or you know, and then of course our pet sitting specific jumps are an example.
Purina Nestle Purina has a quirky innovation award that they run every year there's a Pennsylvania group that does some things with companies that are um uh product companies um CPG companies in the pet care space um and there's an Israeli group that's doing um some things so there's definitely a ton of them out there um and happy because if you're looking for resources check out our website or ask Isabella or I we're happy to point you in any direction and of course we'd love for you to They will apply for Leaf as well. Another question is just like best practices when you're trying to raise funds, like what is it, what are the best things, like you, how do you know in terms of communicating with an investor, in that meeting with an investor over Skype or whatever? , what are the best things I have worked for you, do you want to start?
Yeah, right, so, I mean, they're taking their time to talk to you and, as you said in the presentation at the beginning, they talk to hundreds of companies that you meet a year. So respectfully take your time and prepare for the meeting, research them beforehand and have good questions for them because they'll probably have good questions for you to start with and then also follow up quickly so I. I mean, you know, they'll probably ask you for an introduction after you speak or maybe before that, or they'll ask you for follow-up information and you know I don't make them wait a day or two to send it. you know almost immediately after our call, certainly in the evening, and then you know things get lost in an inbox, so I just set a reminder, you know, check back in a week, if you don't hear from that one, Well. so they're probably doing that cold shoulder thing, um, so yeah, best practice, you know, what I like to think is that you're always respectful of their time and then you always know to innovate and iterate in your speech as well.
So take the feedback you get from an investor and change your pitch or change the way you talk about something, maybe test your pitch with different investors to see what works. Yes, I agree with all those points. I would also say this, that I think it's almost like you don't really know, um, maybe recognized enough is that you really need to know your numbers, like if you're the ideal person, if you've had this vision, if you're great at, like if you know how to put together the product, yes. you are good at marketing, you know everything is fine, but the investor remembers that they want to make money, so you really have to know your numbers and a lot of people don't know that, and it is because they have worked with a third party that you know can help them prepare the numbers or maybe they have a finance manager who you know has helped you gather the data, but maybe he is not in the meeting, there is no excuse, as if you were in the present whatever your title is, you need to know the numbers and you should be able to do it.
I'm not saying memorize every budget item you know, I'm just saying that when you're asked for those key metrics, you need to be able to stick with it. what they are defend how you know how you got to that you know how you know why that equation makes sense and you really know be able to um you know talk about the future like what the forecast looks like and explain how you're I'm going to get there and defend that and that's a very important part of the conversation and if that is missing, you wouldn't do it, you shouldn't be surprised if maybe they love the idea of ​​the business, but can't understand the investment.
Great advice, yes, for sure one of the best things I heard a startup do is that after each meeting with an investor or an advisor, they would write down the questions that came up in a Google doc and then write their answers just for them. themselves. to keep track because you'll be surprised how often the same questions come up, you know all the time, it's great to have a ready answer that you know and test them to find out what works and what doesn't work, ask how did you guys establish your first rating? They can take that as the first value or maybe any valuation.
How is it established? Yeah, because I just want to say that the first one is difficult, so if you mean if you are pre. -income that is really complicated and there is no real magic behind it, I mean I would say there is no formula behind it, it's very subjective, it's more like magic, once you have a business and you have something like you know the history. so you know there are certain multiples that make sense and sometimes it's a revenue multiple sometimes it's an arr multiple you know your annual run rate sometimes it's an ebitda multiple if you're in a more mature situation I guess.
Know the stage I would say for startups like emerging growth companies that are in that early stage or stay in series a, so let's call it c a a, which I think this is probably relevant to this audience. You know, it will probably be a multiple of arr. and why do you choose arr and not income? Well, you know that your ar annual revenue run rate is basically based on if you were to continue to earn, like if the company would, if the company's revenue was going to say even stay the same. Well, this is what the revenue would be for the next 12 months you want to look forward, not back like the last 12 months, and then a multiple of between two and four x is usually what I think investors expect on the pet. you know if there's anything really unique um if it's like technology based if it's software you know things you know technology maybe biotech things that can scale quickly you probably even get over four you know if it's more of a retail product that's a little bit slower to move because you have to put it on the shelf and all that and the distributors and everything you know you probably go low if you know two, maybe a little low, but you know you could be in that area, so that's probably the way I would think about it, yeah, yeah, well, for us we launched a combinator and so we took the evaluation that most companies do on YC, which was 12 million money posted for us, which we realized was quite a lot. too high for us, um, so when the Wii funding campaign came around we wanted something, you know, we were trying to raise a million dollars and we wanted to think about how much we thought it was fair to dilute ourselves, I guess in a seed round. about how much capital we would need as a biotech company to really, you know, take it to market and be fruitful as a company, and so, you know, we started with a four million dollar evaluation and funded the first one. 300 thousand in something like aearly bird discount and then we jumped that to a six million dollar valuation after we got that 300 grand, so it really fluctuated a little bit, but we, you know, we felt that our tech team and then being funded by yc, already you know, it gave us a valuation of about four to five, six million, right, we're getting to the end of the hour and we'll stop very soon, I hope to have a question about I think the difference between for-profit and non-profit accelerators. profit or who serve for-profit and non-profit companies is still unclear on the question, but you know at least someone I've been running accelerated programs with for the last few years.
I know it's been about 10 years and we've had for-profit and non-profit businesses. I think the best thing you can do is discover that you know the success of companies that have gone through that accelerator. program in the past, regardless of whether it is for-profit or non-profit, and the most important thing as people who have talked about is access to the network and whether you can get advisors to make your startup or your non-profit. profit the next level, um, so that would be, you know, just make sure you do your research. I think it's great. I hadn't thought about that, but yes, yes, you could definitely look at the graduates and see if they have been able to scale.
I know with them, like our cohort, they have been very successful and they all came very early, so it would definitely be a great indicator of how strong the accelerator is, so now we're wrapping up any parting advice for a startup that's about to pitch to investors or something, I mean, there was something you had on one of your slides that I thought was really interesting, assad, which was, you know, you really need something, a proof of concept to introduce yourself. I know you can't just have the idea and expect people to take that leap of faith.
I really thought it was very prescient because you know, even when we invested in a pet bowl, when I was on the fun side, you know, Ronaldo. He just, you know, the old way he started preparing food in a commercial kitchen that he rented by shift, you know, four-hour shift. Actually, the first person he co-opted to help him run the kitchen is now. Four years later, our product specialist at the company is amazing throughout the whole trip, but you know, he was cooking it in a wok and then he put the food in plastic bags, you know, ziploc sandwich bags and then he had a little carton box. designed and then he would throw it in um, you know, a bat, a messenger bag with some, you know, some like ice packs, gel packs and he would get on a bike and find himself, you know, literally going door to door. at the door and when he got a little older, he hired two bike messenger friends who he knew were just doing that as a job and, you know, something through his network got in touch, so you know it was really the old way of showing like this. people really want this and he had a retention of 88 like someone it seemed like almost everyone who got the food wanted more and that was what we as investors needed to see and it would have been very different if he had come to us with the plan of business and by the way, I had been doing it for seven or eight months, so it wasn't seven or eight weeks, but I'm sure it was one of the hardest, probably physically one of the most demanding. things that he did because he was actually doing all the work himself, but you know you almost have to be willing to invest that kind of energy and before you start expecting other people to invest dollars in you and try not to overlook that and just start increasing because you will probably be disappointed.
I'm not saying there aren't some ideas that can be invested in a business plan, but there are a lot of things, especially when it comes to something physical, unfortunately, he really has to spend a lot like you. you know, hard earned, you know, money and your valuable time to prove the concept one hundred percent, yeah, wes leslie wanted anything, uh, yeah, you know, I guess just closing down, we're all you know here because we're doing something for pets. I mean, how much more fun can it be to have a startup that has to do with our dogs, cats or other pets, so be hungry every day to help our dogs, cats and pets live a better life. um and then you know I'm so sorry I'm getting a pa ad here at mayo clinic but um I'm a big fan of reg cf and we funded it so I did it.
I'm not going to talk much about that today, but you know you could check them out. I think people love their dogs, so if they have a direct consumer business and someone likes their product, I think they raise money. It could go pretty well for you because people would want to have something they already use so I'd love to talk to people offline about rake cf or you know on another call or something. That too, yeah, this hour went by a lot faster than I thought it was always going to, so yeah, if people have more questions about anything, let us know and we can connect you with the right people or who can give you answers. and then also join us on our slack channel to chat as well uh wesley gertrude thank you so much for your time today I really appreciate it and uh this was really helpful and informative and I wish you all uh uh um a great couple of weeks, I hope everyone be okay with greed and safety uh with what's going on so uh thank you all and we'll talk soon ok bye thanks for the invite thanks bye

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