Confessions of a Serial Entrepreneur – Racing Toward a Cliff Without a Parachute

As I write this article, One Red Maple is getting low on cash, and I am in a hurry-up mode trying to reach out and connect with as many possible investors as I can.  I have never raised cash from venture capitalists before and it is a game of who you know, at least to get an introduction. I am on the outside looking in. Nor have I ever raised money from people I do not know. I am also actively looking for investment from companies in related spaces such as couponing companies, advertising agencies, in-store advertisers, etc. Really anyone in a related space. So, the whole team is in the mini van with me as we hurl forward – incredible team and I feel honoured to be driving the van. While all of the above is happening, when I look at our numbers, I know that we have a viable business. The question to me is not is this business viable but how big can it be. Like all my other entrepreneurial journeys there is a point when you know success is just around the corner.  I am at that point right now but the key ingredient that is holding us back is cash. I feel like I am an underdog character in a movie that you are not sure if I will prevail – but it will be an incredible story if we do.

 

If you ever find yourself in this situation (it is not for the faint of heart) one of the best things you can do is talk to people. Talk to anyone and everyone and ask for help or advice.  Everyone is connected and many will help.  If anyone in my network asks for my help I give it unconditionally. Let me give you an example of why talking to people helps. On Wednesday this week I poked a Partner at a Venture Capital company that I was trying to connect with through LinkedIn. Five minutes later I go have lunch with another connection I meet in the fall to ask for his help. He knew the guy I was trying to get a hold of at the VC that I just poked and quickly connected me – now I at least have a shot whereas getting a shot by a cold call is difficult. If you have problem, tell everyone your problem and let the network help you.

 

Now there are many things I do not like about this process, one of which is the pitch deck.  There are a million opinions of what should be in and out of the pitch deck. Venture capitalists use AI to rank pitch decks as part of their selection process. I have used our internal graphic artist to help create the pitch deck, I have used AI as well and everything in-between. You can spend forever fiddling with your deck instead of just getting out there and talking to people as in the end they don’t invest in your deck they invest in you. I have also been told investors do not like decks made with AI, there is no winning this battle and at some point, you need to say good enough and get out there.

 

Raising cash from a VC has changed over the years. These days the VC wants to see revenue in the company before investing – the days of building Facebook are gone, i.e., build it and the revenue will come. Gofer.run is like Facebook as we need a reasonable userbase before advertisers will start paying us. VC money always chases trends just like governments. I get that some funds are restricted to the knowledge and competence of its staff, i.e. biotech. However, following a trend always baffles me as I would rather invest in something no-one else is doing that has a reasonable chance of success than following the trend. Why invest in a crowded category. As an example, one of the companies I am involved with has developed a new way of manufacturing explosives (for commercial use – mining).  It could easily be a billion-dollar company with protected IP in an industry ripe for disruption.  There are few VC’s that would even entertain this business.

 

When raising cash there are successive rounds and all have different names. Here they are:

 

Now because we did the Pre-Seed stage already for One Red Maple Inc. and then had to pivot into gofer.run many consider us still Pre-Seed, but I think we are more Seed as we have a product and traction (user-base). But we are still pre-revenue. Why this matters is that this is all quite formula driven.  Essentially each round will dilute the company 10 to 20%. When they look at our 69 shareholders and their holdings (called the Capital Table or Cap Table), they think that there is not enough money left if all the above rounds play out for the owners. I really don’t care if I become a billionaire, I just want to build something that helps people – and I have.  I say why does that matter as long as you have the ownership you want? I have been working for free for five years do you think changing my ownership will change that?  I survived open heart surgery and a vicious bout of pneumonia that knocked me out for a month, but each time I came back. I am relentless.

 

As part of raising capital, you need to create financial projections.  These are projections of revenue, expenses, and profit/loss five years into the future. VC’s don’t really care much about the projections just that you have put in the vigour to complete them.  They are difficult to do and in my first go I used Claude to create them but in the end, I spent more time chatting with Claude trying to make changes as opposed to doing them myself. And anything Claude gave me I had to check as it makes a lot of mistakes.  So, I dumped Claude and redid the statements.  You must provide these statements so that VC’s can see the progressions of the various rounds from Pre-Seed, Seed, Series A, etc. The rounds must make sense from the 10 to 20% dilution per round etc. Essentially you need to create forecasts that fit the formula base required for the VC’s. In our case they are very conservative and I think are the worst-case scenario.  I still have a business.  I have forecasted statements a lot and I can give you whatever numbers you want.  Again, it comes down to does the VC believe you and your team can pull it off.  The answer is yes; we absolutely can.

 

Many ask me Mark are you going to put more money in.  If it was just me, I would bet the farm – but my wife forbids me from investing any more. I choose Gina. She has been at my side all through this adventure – and many others. Love ya dear!

 

I have been listening to a lot to this song recently by Neil Diamond, Forever in Blue Jeans. It is a song about how the simple things are really the important things. This goes out to Gina. I love these lines in the song:

 

Money talks
But it don’t sing and dance and it don’t walk
As long as I can have you here with me
I’d much rather be forever in blue jeans

 

You can never have enough of Neil Diamond!