Raiser's Edge Episode 1: Turning High Stakes Into Supercharged Raises with Yifan Zhang

Welcome to Razer's Edge, the podcast where startup founders take us behind the curtain of their most critical fundraising moments. I'm your host, Ben

fundraising moments. I'm your host, Ben Eloitz. In this episode, I sit down with

Eloitz. In this episode, I sit down with Eon Zang, a multi-time founder who knows all too well how raising capital can be

make or break for a startup. Eon is a managing director at AI 2, a top startup incubator in the AI space. But she got to her role as an investor by first

being a two-time startup CEO. He

fundraised millions for her companies.

First, Gympact, a viral fitness app that she launched out of Tech Stars, and then Loftium, a prop tech startup that hybridized Airbnb with home ownership,

which raised over a hundred million, including 28 million in VC over three rounds. In our conversation, she tells

rounds. In our conversation, she tells the wild story of losing 90% of Loftium's revenue in just 4 days when CO

struck and the Airbnb business cratered.

Not only did she bring the company back from the brink, but she then raised more capital and ultimately got acquired.

It's a candid conversation. You'll hear

Eon share why she dreads fundraising even though she's exceptional at it. how

you need to own your own expertise when you're in the room with VCs and why she doesn't see failure as something to avoid but as something to talk about.

Ephon also shares her fundraising playbook from running a tight fundraising sprint to building a database of every investor's style.

For any startup founder who needs to raise capital, there's gold in this conversation. So, grab your headphones

conversation. So, grab your headphones and welcome to Razer's Edge.

So, why don't I put you on the spot and have you introduced yourself the way you would introduce yourself in a in an investment pitch?

>> I feel like I'm a little out of practice at this point. Um, I'm Eon Zang. I am a two-time former founder now. Um went to Harvard undergrad, started my first

company right after college graduation.

It was one of the top mobile fitness apps um in the first wave called Gymact.

Then I started a second startup called Loftium that was in the affordable housing prop tech space. Um that company was acquired by Fly Homes here in

Seattle and now I am a managing director of the AI2 incubator which is you know born from the Allen Institute for AI also in Seattle.

>> Awesome. I thought it would be fun to start with a little lightning round.

>> Yeah.

>> So if you had to describe your leadership style in one word, what would it be?

>> I really like that. Um, the first word that came to mind was collaborative.

>> Awesome. Awesome. Uh, do you have a favorite book or podcast that you feel like every entrepreneur should check out?

>> Oh my gosh. I just read this book called The Magic Box Paradigm on Startup Acquisitions. Every founder that I

Acquisitions. Every founder that I recommend it to, they read it and they're like, I wish I read this way earlier. So, that's the one.

earlier. So, that's the one.

>> Wow. I'm going to have to pick that up.

That's awesome. If you could collaborate with any great founder, who would it be?

>> Oh man, there's so many. I don't know.

Uh, okay. First name that popped to mind was

okay. First name that popped to mind was Reed Hoffman.

I have to say that would be just a dream come true. I think the way that he

come true. I think the way that he thinks strategically about every decision, company creation, uh, so much to to be able to learn from.

>> Totally amazing. Would you say is fundraising a relationship or a transaction?

>> I was thinking it's a process. I'm

definitely much more the transaction process uh fundraising type versus the the relationship building fundraising type. I have to admit.

type. I have to admit.

>> All right. What's your biggest green flag for an investor?

If I do cold reference checks with a founder who's struggled, you know, not straight shot to success, but ups and downs, and I hear that the the investor has been helpful, supportive in the ups

and the downs.

>> Yeah. Kind of see him stick it through.

>> Yeah.

>> Awesome. And last last lightning question. Do you love fundraising or do

question. Do you love fundraising or do you dread it?

probably dread it. But there is a a perverse joy I guess when you execute really well and you know that you have done the best possible process for your raise no matter how difficult it is

right sometimes your company's doing super well and it's easy anyways but even in the moments where it's really hard and you know that you like you got the best investor the best terms

possible like there's there's a joy in that but mostly I >> and I think the vast majority of entrepreneurs dreads that a lot Lot of times when I work with people, we have to figure out, okay, how do we find joy

in this process? So, you are way, way, way ahead and in the minority.

>> Oh, in the middle of it, it feels like getting punched in the face repeatedly just getting back up.

>> I'd love to kind of talk about your entrepreneurial journey. You founded

entrepreneurial journey. You founded your first startup, Jimact right out of undergrad at Harvard. Can we talk about your transformation from kind of an excited undergrad into a an entrepreneur

meeting with VCs and asking for capital?

>> Yes, absolutely. So, I had some support.

I went through the Tech Stars program in Boston with Jimact. Um, and I think that was very helpful for me. You know, as an undergrad, you're a student, right? So,

you're you're learning. You're asking

all these questions. You're kind of like brighteyed and bushy tailed and you're always like looking to learn. And I I really had to learn how to turn like just like constant learning and looking

up to people to oh no like I'm now an expert in my company. I have things to tell other people and it's a different energy. So that that was a big thing I

energy. So that that was a big thing I had to learn. Probably every student has to learn right transitioning into the business world.

>> Yeah. And that's a really interesting transition because investors a lot of times when you start to raise money are put out there as authority figures and it's as though the entrepreneur is there

to submit to them or seek wise counsel but at the same time the entrepreneur has to be the person who is the expert on their own business right how did you handle that duality especially when you

were so young and just getting started.

Yeah, that is a great question and I I feel like probably fundraising ecosystems outside of Silicon Valley are also very different. Um, so I'm in Seattle now. You know, I started in

Seattle now. You know, I started in Boston. I actually think it's

Boston. I actually think it's interesting that in Silicon Valley probably the best investors don't quite have this hierarchy approach because they've seen so many founders go from,

you know, like at the beginning to a really influential, right, impactful owner of a company. So there's a little bit less of that hierarchy probably in SF. In the other markets like in Boston

SF. In the other markets like in Boston and Seattle definitely feel that hierarchy between VCs and founders. The

biggest unlock for me was not to think of the VCs as above me or to think of myself as a founder as above the investor but to really think of us as

equals. Right? They have things to to

equals. Right? They have things to to teach me. They have recognition across

teach me. They have recognition across industries but I also have a lot to teach them. Right? I am like obsessing

teach them. Right? I am like obsessing over this one area of the world which for me when I started was fitness and incentives and behavioral economics right I I have so much knowledge and

data and I'm doing really cool things that no one has seen before um so so finding that equality of relationship I think really helped me create a good conversation that was interesting and

beneficial for everyone >> so what was the first fund raise like what was the journey like take us through it >> with Jimact Um, >> yeah.

>> Oh, man. We launched in January 2012. We

went viral because we were an app that charged you for not exercising and paid you if you did exercise. I put together this very clever launch strategy where we were featured simultaneously on the

New York Times, Chicago Tribune, and TechCrunch. And we paired up with an

TechCrunch. And we paired up with an influencer in the fitness space and launched this Twitter party. So, we went viral. And for 2 weeks I was basically

viral. And for 2 weeks I was basically handling just media inbounds and we were growing like crazy organically. And this

is during Tech Stars, right? So we were like the it app 2012 in fitness but like revenue-wise as a consumer mobile app.

Um not anything uh really impressive. I

think halfway through the tech program, we took a trip out to Silicon Valley and met with some investors. immediately got

a 100k check from an angel which you know I didn't realize you could just talk to someone and the next day they decide to invest 100k but that's what happens in SF >> it doesn't always go that way

>> no also had no you know basis for what is normal and not normal so um I also ended up pitching a couple of investors most

of whom said no but then one said yes and gave us a term sheet that was very very low. Um I don't remember the exact

very low. Um I don't remember the exact numbers at the time, but it was a bad term sheet, right? I think it valued us at maybe 3 million or something very

low. And we came back to Boston with

low. And we came back to Boston with that bad term sheet, feeling very dejected, uh my co-founder and I. And we

came back, we're like, oh, like we took this trip and you know, we got this 100K, but then we got this really bad term sheet and you know, feeling bad about ourselves. And then the founders,

about ourselves. And then the founders, the experienced founders, right, in the tech stars program were like that is amazing. Like you just got a term sheet

amazing. Like you just got a term sheet to lead you around like what you need to do is now, right? Don't tell anyone who gave you the term sheet or that is a bad term sheet. Uh just use the fact and

term sheet. Uh just use the fact and talk to other investors. Um and that's what we did. And we ended up then finding a really great investor with a great term sheet. classic, right,

fundraising moves that we had no clue how to execute, but we ended up, you know, pitching at Demo Day Tech Stars Boston already fully raised like funded

great terms and lead investor. Yeah,

that was my first fund raise ever.

>> Awesome. You went from really just kind of brand new in the world of entrepreneurship so quickly to picking up tips and expertise. What did you learn in that fundraiser that's just

kind of become part of your permanent handbook?

>> Yeah, you know, there's pros and cons to this, but I had I have never done anything different. I went from, you

anything different. I went from, you know, an undergrad studying economics to running my first company and then my second company. So, for better or worse,

second company. So, for better or worse, I had no bad habits. I also had no good habits.

So, when it came to fundraising, I was just like a sponge, right? You have to kind of be a constant student. Um, I I feel like every fund raise is a learning process, right? Hopefully, it's fast,

process, right? Hopefully, it's fast, but even if it's fast, every pitch is a chance for you to get feedback and to know what works. So, it it's uh an interesting opportunity to immediately

take in that feedback and and improve with every pitch.

Yeah, that continuous learning is one of the top themes as I'm meeting with outstanding fundraisers that they really look at every meeting as an opportunity

not just to close or advance a conversation but really to say hey let me figure out what works and what doesn't. How do you do that? Do you ask

doesn't. How do you do that? Do you ask for feedback from investors? What are

your your ways of continuous improvement?

>> That is a great question. So the first coffee meeting typically I take alone. I

think it's really just, you know, that intuitive connection, right, of like saying your part, but also really taking the time to listen, ask questions, make it a dialogue. And the thing that works

for me is for the second meeting, for the deck pitch, typically I always have my co-founder there. And my co-founder can really help to watch what I do, what resonates, because sometimes when you're

in sales, right, like pitch mode, it's really hard for me to be both pitching and taking in feedback. You know, it's nice to have a second person in the room just observing.

>> Yeah. And that's a tactical question for a lot of people is is it better or worse to bring a a second executive with them to a meeting? It's really interesting.

So your perspective is that one of the benefits of doing that is that you get a second set of eyes and ears on the conversation.

>> Absolutely. Yes. And I almost never do that for the first coffee meeting because the first one is really about the CEO, right? The CEO and your your lead investor. Ideally, this is the

lead investor. Ideally, this is the partner that you're going to be working with at the fund, right? Creating that

connection first and foremost. But once

you have that connection, then I think it it's great to have a second pair of eyes. And also, you know, I love my

eyes. And also, you know, I love my co-founders. They're really smart. They

co-founders. They're really smart. They

know a lot. So, you know, I want them in the room as well.

>> Awesome. So, what did you learn from Jimax and the capital journey you had there that really changed your approach going forward like when you started

Loftian? Yeah, my biggest thing is so we

Loftian? Yeah, my biggest thing is so we raised like a smaller like 850k round.

That was the round that we raised right before demo day at Tech Stars. We

actually hit profitability without spending much of that money. We went

from launch in January to profitable by December in 2012 because we actually had a financial model embedded. We're

incentives app. And we also didn't know that that was a special thing. We're

just like, "Oh, look. Our bank account's growing instead of going down every month." And then our investors were

month." And then our investors were like, "Wow, like that's really fast to get there." Um, it was a small team,

get there." Um, it was a small team, too. It was like a team of, I think, six

too. It was like a team of, I think, six at the time. My second round of capital, that was where I really learned the pros and cons, I think, of taking VC capital.

So, we were profitable. We were growing.

We went out and talked to some investors and ended up getting interest from Kla Ventures. So uh the the issue was I

Ventures. So uh the the issue was I think our consumer app with its financial incentives I think there was a peak right there there's a cap to the

the growth um not everyone wants to be charged for not exercising it turns out um there's a certain group and they really love it but you know to be honest it should have been more of a lifestyle

company and I think the experience BC saw that but we were able to work with Keith Rab boy when he was at Kosla the first time and he spotted an opportunity where we could expand beyond this like

fun consumer app into a health insurance product. During that time, Obamacare was

product. During that time, Obamacare was getting rolled out. There was like some consumer or insurance type themes.

Truthfully, that should have been a different company, like not the same fun consumer mobile app and that other company definitely should not have been run by 23 year olds. Like, you know, it

took some experience. There's a lot of legal challenges. We didn't know any of

legal challenges. We didn't know any of these things. We did at least sit down

these things. We did at least sit down to think about that decision.

>> What was the thinking? What what pushed you into it? And I I imagine there's a certain tyranny of the venture capital model that kind of forces you to think in certain ways. How did that tyranny of

the VC model kind of bring you into the track of making that decision?

>> Oh, that that was where we learned about the tyranny of the VC model. I remember

sitting down right and thinking through okay we can continue as a profitable probably like lifestyle right consumer app that was you know like had its impact in the industry or we can really

bet big go after this pretty crazy health insurance smart deductible play jump into the unknown but have the ability to build something really huge in hindsight I would have chosen the

first lifestyle company and maybe done this as a separate company didn't know that right that the pros and cons of being 23. So I think we we were honestly

being 23. So I think we we were honestly just attracted to being able to work with people like Keith like Max Love and Invested in the round as well.

Personally, it has benefited me. But

from a business perspective, I always give our founders this advice like if you're not a ventureback company, do not take VC funding because you can't get off. Like once you make that decision,

off. Like once you make that decision, that's it, right? You have to see it.

>> Yeah. Yeah. And VC always prefers an outsized outcome, right? Like the idea of settling for a smaller outcome is is never really part of the VC equation.

And an entrepreneur who walks in and thinks mediumsize is one that a VC says, hm, something's missing typically, right?

>> Absolutely. Yeah. And certain funds more than others too, right? Coastal Ventures

absolutely is a, you know, you have to be shooting massive to be that type of bet for them. other funds right like our our incubator AI2 incubator we're so early that I think we are more founder

aligned in terms of you know whatever size outcome the founder wants to take but once you step over like c definitely

a right and b um you can't step off >> yeah totally so jumping forward to loftium a lot of times fundraising isn't just like a milestone or a transaction

or a relationship it's like the difference between the company really making it and potentially having to having to go under. So, I kind of wanted to dive in with you into some of those make orb breakak moments where the

stakes were really high and the future of your startup just depended on getting the funding round done. And we talked a little bit about COVID and the timing of Loftian's series B. Could we dive into that?

>> Sure. Yep. It's one of these unbelievable stories that I can't believe we survived. So,

>> yeah. Yeah. So, the world changed fast in CO. Where were you and what did you

in CO. Where were you and what did you do?

>> Yeah, Loftium was a affordable housing startup, right? We had real estate, we

startup, right? We had real estate, we had travel, right? We combined actually two revenue streams into one single family home, which is long-term rental

and short-term rental. Right before CO, we had raised our series A. We had

raised a 15 million series A January of 2019. We had grown tremendously,

2019. We had grown tremendously, expanded from three markets to 10 markets. We were adding about like

markets. We were adding about like almost 100 homes per month. We had hit about 30 million of revenue. We were

feeling really good heading into our series B which we were starting the process in March 2020. And I was talking to my co-founder Adam. I was like, you

know, Adam, I think we are actually finally too big to die. Like famous last words because things were just humming, right?

We had a team of 50 some people at the time. Like it really felt good. like I

time. Like it really felt good. like I

could step away for a whole month and fund raise and things were just running without me. I start the fundraise

without me. I start the fundraise meetings and they're really positive, right? Like I'm running my standard

right? Like I'm running my standard process. Coffee meetings are going well.

process. Coffee meetings are going well.

They're converting well into the second meetings by by the second week I was being scheduled for partner meetings already. So feeling really good about

already. So feeling really good about our series B. Um and then that week right of March when the WHO announced

the pandemic, right, like everything shut down. Uh, Airbnbs

shut down. Uh, Airbnbs basically forced us to refund all of the trips, like made an executive decision that like no one was going to be able to

stay in any Airbnbs. We lost 90% of our short-term revenue within 4 days. And

we, you know, entered into the series B fund raise with six months of runway, right? comfortable range, but that

right? comfortable range, but that depended a lot on our revenue because we had significant revenue at the time um to, you know, feed a team of 50. Without

the short-term rental revenue, suddenly our homes went from profitable to not profitable to being a drain in our resources. So, our six months of runway

resources. So, our six months of runway shrunk to one month. So, within one week, I went from partner meetings, right? like like increasing our

right? like like increasing our projections because we're feeling really confident to uh break the glass moment like redo financial projections

completely. Um we had to lay off half

completely. Um we had to lay off half the team based on those projections. We

had to make take a bunch of emergency measures, right? Scrap the series B. Had

measures, right? Scrap the series B. Had

to go back to just, you know, like customers. We had people in homes. We

customers. We had people in homes. We

had guests in our our units. Loftium

eventually hosted over 150,000 guests between all of our our units. Like we

had like thousands of people looking to us for answers about the pandemic that no one had answers to. It was a a very very intense time for us.

>> So you retrenched changed the business.

How did you know when it was time to go back for capital and whether you'd be able to earn it or not under a totally new set of conditions?

>> Yeah. Um, yeah. I mean, honestly, we probably had a 95% chance of dying in that moment. We had to basically execute

that moment. We had to basically execute perfectly to make it through that time period and then have some luck on our side. So, things that we did, we had to

side. So, things that we did, we had to rebuild the revenue from travel, short-term rental to medium-term stays, right? Emergency workers, travel nurses,

right? Emergency workers, travel nurses, like really like redo that side of things. We had to really communicate

things. We had to really communicate well with our landlords and renters, like everyone in the team who was not laid off. I actually had a a one-on-one

laid off. I actually had a a one-on-one conversation before doing the layoffs and told them this is going to be a really hard period. If you're not interested in doing that, I completely understand, but you know, let me know

now cuz I'm being honest about what this is going to look like. So, as a team, we had this this crazy system where every day for a couple of months, we had twice

a day all hands. Like in the morning before we started work, I led the all hands 30 minutes. Everyone was there and then at the end of the day we did another all hands because things were changing so rapidly. But through a lot

of these, you know, like all hands on debt, right? Like type of moments. I

debt, right? Like type of moments. I

think by the end of 2020, we had turned all of our properties around to being profitable, renegotiated a lot of contracts, you know, rebuilt up the

revenue. Um, and we had some, you know,

revenue. Um, and we had some, you know, luck items, right? exogenous factors

that I had told our investors like we need three things to go right in order for us to raise. We need we need the co vaccines to be effective, right? At

least 70% effective they were. We needed

this is where it might get political. We

needed Biden to win over Trump because we need someone competent to deploy said vaccines and we need the Airbnb IPO to go really well. That December 2020 IPO went well. All three of these things

went well. All three of these things went well and that's how we knew, right?

like the markets outside factors were positive. We had turned our business

positive. We had turned our business around. We felt confident about the next

around. We felt confident about the next phase. But I guess like one more lesson

phase. But I guess like one more lesson learned there, right? No VC cares about how you've gotten through the struggle, right? Like it's impressive, right? It

right? Like it's impressive, right? It

shows grit. It shows ingenuity. But

honestly, that's not enough for a fundraiser. Like they don't want to hear

fundraiser. Like they don't want to hear about your struggles. VCs want to hear about where things are easy. Like what

have you learned? like mark that now makes you right fundable past this very traumatic period. And for us like what

traumatic period. And for us like what we learned was that you know previous to co we had kind of an inefficient system where we had to find our properties

first then find the renters through co we we did not have that um luxury. So we

actually created a system where the renters would find the properties for us and then then we go and sign the property and that unlock created what eventually became the host to own

product where our renters could actually find the home. Um we would purchase the home for them and then they would have a path to home ownership and that that came out through co and and was this

seed of that spark right that excitement that got us through the next round.

>> Yeah. So you changed your business model not only because the outside world changed but did the business model you changed to end up being a better fit for capital for the long term do you think?

>> I think so. Um well we we had always had this vision of where lofting could go right. We started actually as a down

right. We started actually as a down payment product and started in home ownership. the down payment was not the

ownership. the down payment was not the right product uh iteration I guess but even through our rental process we always had this eye towards home

ownership you know co just forced us to to make that change faster because of efficiency and right like we saw the opportunity because of the interest rate

environment we're able to access capital right housing affordability became a major talking point uh single family homes before COVID was actually this weird type of rental category that most

people didn't believe in, right? Multif

family was was the hot thing in the the real estate investment world and it flipped. So, there were tailwinds,

flipped. So, there were tailwinds, right? We had a bunch of headwinds,

right? We had a bunch of headwinds, namely like losing our revenue and travel stopping with a global pandmic.

But we have tailwinds also, you know, around single family homes, affordability, interest rates, capital interest and also I think travel came

back much faster than anyone expected.

we had uh this I guess like team kind of like a dark like bet around uh when travel would get back up to 60% of normal

because that's when we would flip and be profitable again and uh it turned out that it happened right before Labor Day in 2020 even with like you know CO still

raging but that happened especially in the short-term rental space where we had you know separate entrances no contact hosting so yeah like the tailwinds are also there.

>> One of the things you were saying is that investors don't give you credit for all the things that you've been through.

I recently had a conversation with an entrepreneur who was talking about wanting to raise money from insiders and he's like, "Well, before the round we were here and now we're there. How can

they not want to invest?" And the answer of course is investors aren't backward looking about saying, "Well, how much progress did you make and what have you been through and how hard was it?" You

recognize that. It sounds like intuitively, >> no, my investor, my seed investor had to sit me aside and tell that to me

outright because I I didn't get it like cuz I was deep in the trenches. Like I

was I was personally so impressed by what our team was able to pull off, right? And like everyone in the outside

right? And like everyone in the outside was very impressed by it. And I I think you get some credit, right? Like

execution ability, grit, it's just not enough. is not enough for to spark

enough. is not enough for to spark another round of capital.

>> What instead do you have to do? If if

telling them how far I've come and look what I've been through and all the adversity doesn't do it, what do you think is the thing that that turns a no into a yes?

>> Um, well, I think all of that needs to be like one sentence, so you can't get too deep into the adversity. No one

likes adversity. I I think it's really about what the adversity has taught you.

like what did you not know before that you learned and what's the vision for where that takes you now?

>> So when you went back out for capital again, how hot was the temperature and and how warm or cold was the reception?

>> From a general VC perspective, this is 2021, so the general VC environment was extremely hot. The prop tag travel space

extremely hot. The prop tag travel space was still not hot at all. Right? So we

had the benefit of the general market FOMO but like for us it was nothing like our series A uh which we signed term she's in less than 30 days. We went out

even with everything we learned even with like proving survival through adversity and the tailwinds. We went

through and talked with a bunch of different investors or I did I guess um via Zoom um in January 21 and people were intrigued like they were interested

but I think there was like too much fear because there was still so much uncertainty especially in the travel space at that time. So what ended up happening is that our existing investors

stepped up with a term sheet. It was a flat round. We had a new investor then,

flat round. We had a new investor then, you know, get excited enough to jump in um to join and then that actually ended up triggering our round to be oversubscribed because all the people on

the sidelines weren't sure but you know the insiders knew exactly what the business looked like and were excited enough to jump in.

>> So that's multiple times now that kind of having one person make a move first with a term sheet or stepping forward kind of catalyzes things. How does that translate into what you advise other people about?

>> Yeah. So, you know, I I tell our founders valuation, especially in the early stages, is really just dependent on competition, right? So, your goal is to try to drive as many term sheets as

possible as as fast as possible, ideally all on the same timeline. Um, and I also tend to to think of investors, you know, differently. Like some investors are

differently. Like some investors are really fast, right? and they they like get to conviction and they make decisions on their own. There's also

like people that are very FOMO driven and also people who are slower but maybe more thoughtful. But if you just have

more thoughtful. But if you just have those folks like they may never get to a decision. So we try to craft each batch

decision. So we try to craft each batch of investors thoughtfully around like who's going to be the fast people that drive the process, right? to get

everyone on the same pace so that you know like ideally your dream team comes together from an investor perspective >> and now as you're working with multiple entrepreneurs across multiple companies

that they do you actually kind of have in your database I know this investor tends to move fast this one tends to move slow and that becomes part of your selection

>> yeah I wish it were a cleaner database but yeah I have a list of investors well I came into AI2 with my own contacts of investors. Actually went through and

investors. Actually went through and realized I personally had over 200 VCs that I had pitched as a CEO to different companies and then AI2 itself has like a

large database of you know investors that all of our founders have talked to.

I have notes in terms of every investor's thesis. I do coffee meetings

investor's thesis. I do coffee meetings to stay up to date on people's preferences. They change and VCs

preferences. They change and VCs especially right now are moving around funds. Yeah, I have notes around, you

funds. Yeah, I have notes around, you know, what type of investor they are.

You know, the goal is not just to get a term sheet. The goal is is ideally,

term sheet. The goal is is ideally, right, to get the best investor that's a good fit for your company for this stage and and can really help you grow.

>> Yeah. And I I advise entrepreneurs find a couple of navigators to have around you who have that database and actually deliberately think of investors and

categorize them and and group them and know okay who has what style and what motion. It is so valuable to have

motion. It is so valuable to have somebody like you advising an entrepreneur.

>> And I had you know all of these folks around me when I was a founder. So it's

very like very rewarding for me personally to be able to give back to foundaries in this way. I think I'm very lucky to have a job where this very niche skill set that I have is very

highly valued.

>> Yeah, that's great. And maintaining that database is a lot of work too. You got

to really keep your notes and and be debriefing with entrepreneurs to say, "Okay, what happened? What were they like?" Not just your own experience, but

like?" Not just your own experience, but learning from other people's experience, too.

>> Yes, definitely. I I think the best VCs do this for founders, right? Where um

it's not just work to me. I'm actually

curious like I'm really curious to decode. Sometimes I feel like that the

decode. Sometimes I feel like that the VC language, right, is like a second language and some people are fluent and some people are still learning it. So I

like to see what VCs actually wrote back, what type of questions are being asked. Sometimes there's like back

asked. Sometimes there's like back channel calls just to like get the real answer of like what happened in this meeting. I I think founders really

meeting. I I think founders really appreciate that because often, you know, I I had this as a young first- time founder from a meeting, you're like, "That was great."

It's like never pay attention to the things that people say, right? You have

to look at their actions. You have to look at like where they dig into afterwards.

>> Yeah. One of my best mentors said the ignore all the happy talk and just measure how long does it take them between one action and the next and the time gap is one of your top indicators

of how interested they really are.

>> Absolutely. Yeah.

>> Yeah. You've kind of gone from not knowing anything to now you're advising other entrepreneurs on kind of all the best practices for fundraising. You're

known as an exceptional fundraiser.

What do you think makes you such an exceptional fundraiser?

>> Like truthfully, I have not always thought of myself as an exceptional fundraiser. I realized that especially

fundraiser. I realized that especially in Seattle, I'm an extremely aggressive fundraiser. Like I don't think of myself

fundraiser. Like I don't think of myself as an aggressive person, but my philosophy towards fundraising is that you should try to find the best investor

possible as quickly as possible because, you know, you have to get back to building your company, right? And like

the longer you spend with VCs, like that's time away. That's a trade-off. I

don't feel bad, I guess, that I'm not a relationship fundraiser. I also don't

relationship fundraiser. I also don't feel bad about playing the game of fundraising, right? Because the VCs are

fundraising, right? Because the VCs are playing this game as well. Like, we're

all playing this game, right? And I

think a lot of first- time founders feel bad about negotiating, about, you know, chasing a term sheet when maybe they don't always want this particular term

sheet. And yeah, for me I think it's

sheet. And yeah, for me I think it's it's really just keeping the northstar as you know what is your role as a CEO?

Like you have to bring in resources. You

have to bring in great ideally great like board members, right? And like if you need to play the game to do it, right? You have to learn how to play the

right? You have to learn how to play the game. Trying to to change that game

game. Trying to to change that game sometimes is at the detriment of of your own company.

>> Yeah. And so you leaned into that. And

so when you give advice to entrepreneurs, what do you say to keep that speed high? Is it about volume or what's your what are your big cues that you give people to kind of get them in that mindset?

>> Yeah, I tend to advise my companies to do month-long batches or sprints and to keep it very contained. So this is my personal style. People have different

personal style. People have different philosophies on this. I don't tend to do like a hundred investors all at once.

You're just like backtoback 30 minute Zoom calls all the time. That's not my style. I tend to trunch it into like,

style. I tend to trunch it into like, you know, batch one, batch two, batch three. And in each batch, you kind of

three. And in each batch, you kind of have a mixture of investors including right ones that you really really want as part of your round. And I I tend to keep a very tight timeline around like

week one coffee meetings, week two diligence, week three ideally is like partner meetings and term sheets, and then if nothing works out, then you start on batch two the second month. And

that way you're always, you know, clean or like day zero, right? you're starting

over. You're fresh. You're focused. And

it's not so overwhelming that you're like not remembering your last conversation or you're just like a robot repeating the same lines cuz pieces can tell if you're you're not genuinely like

with that the right energy.

>> Wait. What do you think is some of the best advice that you ever received as an entrepreneur that you now pass along to others?

>> Great posture. uh uh just generally as an entrepreneur outside of fundraising a concept that I heard about is I call it single point of failure and I heard this

from the COO of Rover Brent. We had

coffee one time. This is when my company was growing rapidly and it was getting harder for me to to manage like how big the team was getting and hiring and

processes. I was like, how do you manage

processes. I was like, how do you manage to keep the spirit right and the speed even as you know the company gets to be thousands of people and his answer was

that you know no matter how large a team gets each individual still has is a single point of failure for something right and it's counterintuitive but you think that larger companies will have

more like coverage but like having that ownership even if your scope gets smaller and smaller as the company gets bigger right it creates motivation. It

creates ownership, right? It allows the best people to shine and it adds a little bit of tension, right? It's like,

oh, like you truly own something. It's

not just like you're a cog and you don't matter, right? So, that's something that

matter, right? So, that's something that I I bring out to our founders. I

definitely talked about all the time at Lofty. SPF was like the acronym that was

Lofty. SPF was like the acronym that was like all over our Slack. Like, who's SPF for this? But I like that it's called

for this? But I like that it's called single point of failure. Like people ask why failure? why I thought my single

why failure? why I thought my single point of like ownership or something positive. I don't tend to think about

positive. I don't tend to think about failure as a bad thing. Like I I think like as a founder, you can't think that failure is a bad thing. Failure just

means that you learn something, right? I

like having failure constantly being talked about so that it's not uncomfortable. It's not unfamiliar. And

uncomfortable. It's not unfamiliar. And

that way people are willing to take more risks and raise, right, areas of failure so that we can all learn from it.

And >> that's a pretty fierce attitude, right?

because it's both empowering, but it's also a lot of responsibility. When it

comes to the fund raise process, some entrepreneurs when they see signs that an investor is not super interested, they say, "Well, I better not pursue them." Some are fighters. Some try to

them." Some are fighters. Some try to convert nos into yeses. Some of them instead say, "Oh, there's a lot of fish in the sea." How hard should you work trying to convince somebody and how hard should you fight to get that best

investor over the finish line?

>> Yeah, you're asking such great questions. that's making me reflect. I I

questions. that's making me reflect. I I

don't personally think it's possible to convert a pure no into a yes, right?

Like if the investor has gotten to a no, I tell founders, don't try to convince them. It's honestly kind of like

them. It's honestly kind of like embarrassing and annoying to the investor once they've already gotten to the no. I do think if an investor is on

the no. I do think if an investor is on the fence, you can do quite a lot to try to convince them, especially if they're an investor that you really want to work with. I think it's worthwhile and and

with. I think it's worthwhile and and that really just comes down to understanding right where are the areas of hesitency you know like really thinking deeply like hey like can I

actually answer those questions right do I feel confident about these answers like do I think that they're wrong in terms of that perspective yeah so I think on the fence yes you can definitely convert people and I I've

seen that and also like now as an investor I have changed my mind right I'm like open-minded sometimes like an a founder follows up with me with that surprises me and that's great. And

I should say the founder should know if the VC enthusiasm is obvious to the founder like your enthusiasm for the VC is also pretty obvious. Some people are

very good at faking it but usually it's pretty apparent if there's a good fit or not.

>> Yeah. So on that note, as you work with entrepreneurs, what have you learned about managing your psychology through the process? What have you found worth

the process? What have you found worth to be able to manage your attitude and help people to correct it when it gets out of whack?

>> Yeah. Yeah. I mean, you know, as a CEO, you're a single point of failure for capital injections into your company.

That's a pretty big, you know, thing to to not fail at. I think uh for me in the fundraising process, because you have to bring so much energy to every VC

meeting, I needed space for me to just kind of like collapse.

When I was fundraising, right, I had investors like with offices nearby and I would just like go in and just be a shell of a person. I can't talk to people. I just need to like be in that

people. I just need to like be in that mood and get it all out of my system so that I can go back into that like energetic fundraising mood. That's why I

don't do a hundred VCs I'm pitching simultaneously. Like I I just don't

simultaneously. Like I I just don't think I can keep up that type of energy.

I want it to be genuine, right? Like I

I'm a very genuine fundraiser. If I

believe in my company, I can convince people to believe in it, too. And I'm

like the toughest critic of all the risks around my company. So, you know, I need to have proven that to myself before I can go out and talk about it to other people. I I think, you know, the

other people. I I think, you know, the breaks for me really allowed me to show up with that type of like genuine confidence, clearheadedness. So, for me,

confidence, clearheadedness. So, for me, that's very important. And I try to create that space for our founders here too. With fundraising, like you do have

too. With fundraising, like you do have to put on this show, right? you can't

have them often when you're when you're fundraising. Um, so I I try to create

fundraising. Um, so I I try to create space for them to come and like talk to me about their worries. They can remove all the veneer, right, and come and just like talk to me about their fears, talk

to each other about their fears. We

typically have founders that are fundraising at the same time so they have buddies. Even in the hottest

have buddies. Even in the hottest processes, like it is really hard.

You're still getting nos. You're getting

your hopes up and crushed, you know, and you just need to know that this is normal.

You're a really highly appreciated adviser to so many entrepreneurs as a real expert in this. How important of a skill is it to be a to be an effective fundraiser?

>> I would say it is the number one skill once every 18 to 24 months. So you you have to have this skill, right, for the

good of your company. But it's only one skill. I think it's uh just as important

skill. I think it's uh just as important to be a really great CEO in other ways, right? Like recruiting talent, right?

right? Like recruiting talent, right?

Managing people, setting the north star, seeing strategy. There's many other

seeing strategy. There's many other important skills to being the CEO. The

ideal, I think, is that you are running such a great business that you don't have to be the best fundraiser and you're able to show off just a great

machine that you built in your startup.

I would rather have that uh mixture. I

guess >> how often do you get that fact set versus having to work pretty hard at it though.

>> Uh depends on the timing. I think we're very lucky in that we're early stage AI investors. So there's a lot of grace

investors. So there's a lot of grace given to to founders, especially our very technical founders, right? That

like this is totally new for them.

>> You know, I I think it's an important thing to learn and the founders that dismiss it, right? I think often don't get very far because it's not always up and to the right. Like you will run into

difficult times and those are the times that the really good fundraisers really show up. Like the the difference is

show up. Like the the difference is massive. And I see a lot of founders

massive. And I see a lot of founders that have only previously lived through the good times like raise 2021 basically and they're like, "Oh, fundraising is so easy." And like I I do agree, right? If

easy." And like I I do agree, right? If

you're in the right place at the right time, it is extremely easy to get money.

But then you know ideally if your company grows large enough you are going to face challenges and you know this is a skill just like any other that if you

have it you'll get through those times.

>> You are you're amazing and have already helped so many entrepreneurs. So I

appreciate you doing this with me and having this conversation to help a whole lot more. Thank you so much.

lot more. Thank you so much.

>> This is really fun. Thank you for having me Ben.

Wow, what a great conversation. Ivan

took us from her first fundraiser right out of college all the way to becoming a top fundraiser. Throughout her journey,

top fundraiser. Throughout her journey, Ephon sought out great mentors and asked the right questions. That guidance mixed with some highstakes do or die moments

transformed her into the excellent leader she is today. And now she's helping the next generation of founders become great leaders and fundraisers themselves.

For startup founders, fundraising too often feels like a mystery. But stories

like Eons can help give you an edge. I'd

love to hear in the comments what you think of her advice and what challenges you face. And hey, if you liked what you

you face. And hey, if you liked what you heard, please rate and review us on Apple Podcast and Spotify.

Thanks for joining me on Razer's Edge.

I'm Ben Eloitz. See you next time.