Money Baggage in Fundraising (ComplYant)

By Jason Yeh
December 22, 2022
Listen on Apple Podcasts

Episode Summary

Launching a startup requires not only expertise and skills but also immense determination and resilience. The journey from the ground up demands substantial effort, skills, and financial resources. However, not everyone feels comfortable asking for money, even though fundraising is often necessary for scaling the company or meeting basic financial needs like salaries. Shiloh Johnson, an innovator who merged technology and taxes, shares her remarkable fundraising journey in this episode. Starting with no prior knowledge of fundraising, Shiloh overcame her personal discomfort and operational financial needs to raise millions for her company, ComplYant. Join Shiloh and Jason as they explore the pivotal moments that led to her decision to raise funds, resulting in multiple successful funding rounds.

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Money Baggage in Fundraising (ComplYant)

Launching a startup requires not only expertise and skills but also immense determination and resilience. The journey from the ground up demands substantial effort, skills, and financial resources. However, not everyone feels comfortable asking for money, even though fundraising is often necessary for scaling the company or meeting basic financial needs like salaries. Shiloh Johnson, an innovator who merged technology and taxes, shares her remarkable fundraising journey in this episode. Starting with no prior knowledge of fundraising, Shiloh overcame her personal discomfort and operational financial needs to raise millions for her company, ComplYant. Join Shiloh and Jason as they explore the pivotal moments that led to her decision to raise funds, resulting in multiple successful funding rounds.

Episode Transcript

Shiloh: When you're just bootstrapping, you're just kind of letting life guide you. But when you take the position of, "I'm going to raise," that changes everything.

This is Funded, a show where founders who raised millions in venture capital share the gritty side of what it actually took to get that money in the bank. I'm Jason Yeh. Not too long ago, I was trying to get my ideas funded. And back in the day, I was a VC listening to founders pitch me for money. Have you ever heard a founder brag about how many years they slept on a couch before getting their big break? Only in startups and fundraising is that a flex? And that's because the VC community knows how important grit is when building a generational company, but does everyone expect founders to stay on ramen forever while creating unicorns? We often hear about raising money to scale your business. And today's founder also raised for that reason. But today you're going to hear entrepreneur, Shiloh Johnson, an innovator at the intersection of tech and taxes, talk about another reason to raise: the reality of needing a salary. Shiloh, who's now raised millions for her startup Compliant, says she was also motivated to take the leap away from bootstrapping to funding her business for her three kids. But one thing standing in her way: shyness around asking for money that goes all the way back to her childhood.

Shiloh: I was very much a very quiet, very introverted nerd. So I used to read a lot. I had really thick glasses and I had a really wide gap. Like you could literally fit quarters and it was huge. And I was also very tall. I'm tall in real life and very thin. So I wasn't popular. I didn't have a ton of friends. So I just found joy in books and being alone. And even to this day, just being alone. But I never, ever asked for things. Oh my gosh, no, I wouldn't even ask for normal things, let alone money. That was not my life at all.

Jason: I mean, I think that's a great background for people to hear, especially as so many people that start companies come from very technical backgrounds and aren't used to this idea of being on stage, being in front of people and being the center of attention. I imagine that wasn't a quick transition. And the point is not to ask you necessarily about the start of Compliant, although I think it's very fascinating from what I know. I'd rather just ask how the company started and whether or not when you started it, you were like, "Oh, I'm going to go raise money and does that scare you?" Or was it just, "No, I'm starting this company and maybe I'll raise money or maybe I won't." Fundraising was never the...

Shiloh: Early days, I wouldn't even let myself get that far. I was very much like one foot in front of the other. So early days, it was just, is this a thing? Will people buy it? Those were the only two things that I wanted to focus on. Like the first six months of trying to figure out. In my mind, I knew what people needed. My background, I've been in corporate tax accounting for 14 years. I was seeing businesses and people just struggling with the nuances of tax compliance. And I knew it was a thing that people needed. I think what I needed to reconcile was whether or not people would pay for it because those two are not the same thing. So in the early days, it was just like, that's the only thing I'm going to focus on. Especially at that point, there was a lot of conversation happening in the industry around early diversity conversation. This was like pre, well, kind of in the middle of George Floyd and those really early conversations about diversity and how uneven the Federation world is. I can't even give that a thought. I think sometimes if you go too far, you'll scare yourself out of trying. So I just wouldn't even go that way. I was just like, let me focus on even figuring out if I can do this and then I'll worry about the next thing later. But early days, I was like, yeah, I could bootstrap it. I'll just learn, make revenue and just let that be the way we fund. I was trying to find podcast stories about founders that didn't raise because I was like, I don't know how to, I can't ask people for money. I'm not that kind of person.

Jason: You know, I think the common narrative, especially in tech and the headlines that people love to see, are these aggressive founders that know they want to raise $10 million out the gate. But I think that what people should understand is this focus on a business and focus on a problem. Do people want this? Will people pay for this? Do people want this? Will people pay for this? Is, in many ways, one of the best ways to start if you're going to be a venture backable business. So kudos to you for focusing on that. And going back to this idea of being on stage and whether or not that was something comfortable for you, you said that as you were starting, there was a spotlight on minorities, especially people of color and black people around George Floyd and how they were being impacted in places like startups in technology. That had to have felt like another form of being on stage that you had to deal with. You know, how did you reconcile that? Or how did you even think about that when it came to both running your startup and thinking about, at some point, I'm going to have to ask for more?

Shiloh: Yeah. So I incorporated in late 2019, and then actually had something going early 2020. So literally, all this is happening around me. I wanted to spend more time trying to discuss some crazy, but like, avoid some of the responsibility of trying to play a role. I just wanted to be seen as a good founder or someone who has a good idea and can halfway build this thing. I don't know if I was ready or my naivete was ready to hold the weight and responsibility of all black women in tech forevermore. I would sometimes now. It's more responsibility, but certainly didn't. I was very naive in the sense that I was like, if I stayed heads down and if I stay focused, then I, as a founder, can become undeniable and that I won't have to sort of bear the brunt of trying to play the diversity role. It will just be that I am an undeniable founder. And so that was more of my naive, narrow focus.

Jason: Maybe not so naive. I mean, it's actually a common narrative. You know, I spoke to another founder, Camille Terry, who spoke a lot about the same thing.

Shiloh: She had this line about just wanting to be thought of as a good business, you know. I don't want to be this or that or fit into any sort of role that people think I need to be playing at this point in time.

Jason: I just want to be focused on building a good business. And so, I love that, that was your focus. And again, like it seems counterintuitive, especially when so much of the narrative and even training around fundraising is like, you kind of have to always be thinking about fundraising. But I think the trick and the understanding people don't realize is that kind of thinking about fundraising is one of the cores of that is just being a great investible bet, which is focusing on building a great business.

So, you might not have known it, but sticking to those guns probably led to a lot of your success today in that field. I want to be able to push this into the next phase of this, right? So you had 14 years of corporate tax accounting. You had worked with small businesses and understood this problem existed. At some point, you were able to start checking boxes, like yeah, this problem exists. People are telling me and they're voting with their checkbooks, right? They're actually signing up to pay for this. This is a real business and real businesses can fund their growth through revenues. Right. They can continue to build themselves as bootstrap businesses. At some point, you started thinking you had to start thinking, oh, Yeah, there might be something bigger out there for me. There might be something that I need to raise outside capital. Do you remember that shift? Do you remember that sort of time and place in what the realization was?

Shiloh: Very clearly actually, um, I was in grid one 10, uh, in spring-ish 2020.

Jason: Can you, can you tell us what grade one 10 is?

Shiloh: Yeah, it's a program local to LA, it's run by Mickey Renald. She's the director and they have some backing by the mayor and I think it's sort of community-based and they support startups within the LA tech community that are usually pre-seed or very early on. Um, and I hadn't raised any money and I was just trying to figure out what was next. Mind you, I still had clients, so I had a tax practice. I left corporate tax accounting and started my own tax practice and I had clients. That's how I funded Compliant. Worked unbelievably hard and had a max amount of clients. And I would work on my clients during the day and then I would work on Compliant at night and I did this for like six months. So that was what was my friends and family around. That's how I was raising or basically being able to build the tool out and test theories.

And so in that space, I knew I was getting to a point where I had to choose between continuing with my clients and then pursuing Compliant full-time. I couldn't do both physically. My body was worn down and then also I couldn't afford it. I have kids, so I couldn't afford to just leave my tax practice and not be able to. I had one daughter going to college at that time. I was like, ah, I still have to make money. So it was a very pivotal decision that was like, whoa, I can't keep growing at the rate and pace that it needs to grow if I don't have steady income that I can let go of my client base. So that was decision number one, I wasn't going to be able to pay myself enough. The company wasn't making enough to be able to have employees like the first four people that joined the company, plus me, plus the expenses.

It wasn't making enough money. So that was decision number one, in order for me to leave my clients, I'm going to have to raise money in order to be able to pay myself. The other thing was, I needed to make a decision. I had a conversation early on, Austin Clemons was also one of the very first yeses that I got, my pre-seed round. And so, he kind of helped me understand early days that you just need to make the decision. And because if you don't, if you let the decision make itself for you, you end up fizzling away. So you need to decide if whether or not you're going to be a venture company or if you're not. And that has to be an actual decision. You make the decision. Make it for yourself. So at that point, I was in grid with him and he sort of talked through that with me and I was thinking, okay, I guess I better make the decision.

And it was so smart because it changes the way that you think about the company and how it grows and how you position it when you're just bootstrapping, you're just kind of letting life guide you. But when you take the position of, I'm going to raise, that changes everything. Like you have to now consciously make decisions about product roadmap and growth and hiring and how you, sort of the entire shebang. So it really, you know, that program, but the conclusion of it, I remember my goal was to raise the first bit of funding was my exit goal. So that was sort of that decision for me.

Jason: Yeah. And just digging into that a little bit deeper, I mean, it's not an easy decision, right? We're not saying, um, oh, you know, I have a successful business that I run on my own. I'm going to go raise money and pay myself more, right? This, oh yeah, let's go raise money and then like, oh, I'll be so much more comfortable. Like, what does that decision actually mean to you in terms of pressure and trade-offs?

Shiloh: Yeah. Um, first of all, I had a working tax firm and I was making really good money and walking my family to this day, my parents, they're older. They're like, so you're really going to leave your tax firm for a website? Like they say that to me, how's the website going like, okay, thanks guys.

Jason: Yeah, this is a common refrain for people in our industry is like, having to explain to your parents what it is you actually do around here. Right?

Shiloh: Exactly. Right. And so that was hard because everybody in my life was like, you're crazy. I would love to have a book of business like that and you're just going to leave it. But one thing I think for sure, for me, it was less about financial security and more about, I need to give myself an opportunity and I need my kids to see me giving myself an opportunity. If they don't learn anything else from me, they're going to learn that you just have to try, no matter what it looks like, no matter what, like makes sense. And you have to trust yourself. And I knew this is the beauty of being like founder-market fit or whatever they call it. Like, I knew this market so unbelievably well. I wasn't trying to guess if like this is a need, I moved. What was the need? I was watching businesses every day come to me never having paid sales tax two or three years behind in income tax, didn't even know what business licenses were. I was just like, what is everybody doing? And I moved. So I knew that was undeniable, but I think it was just like, I have to bet on myself, like, and if it doesn't work, it doesn't work. You can always go back to get more clients.

Jason: I was just going to say that. I think a lot of super talented people like yourself don't realize how high the floor is, right? The scary idea of stepping away from something comfortable and to taking on what sounds to be risky feels like this, like, maker, if I don't make this work, then maybe it all goes away and I'm left homeless. But like you built a business before, you have the skills to make money whenever you need to. And so, I mean, I just love betting on yourself and also establishing yourself as a role model that you want your kids to have. So really, really cool. But we'll move on from there because the decision to raise money, the act of raising money, right? So, you know, one big old step to be able to be like falling off, Climate's great advice and saying, if you want to do this, you got to do it. And then so you're like, okay, I'm going to do it. But the gap between doing that and actually closing money is quite wide. So talk me through that. Like what was that transition like? What did you have to start doing and how did that road feel even?

Shiloh: Oh, so three things had to happen. Number one, emotionally and mentally, I had to get out of the way because my fear was so resounding in terms of a) fundraising as a black person is hell so, oh my goodness. b) you don't, you're not to ask for money. What, what? So there was that like, if I could just reconcile some of my sort of fears, my introversion. I'm very, very much an introvert. I like very much. So it was getting out of that and the behavior of that and learning how to think differently about myself and what I was embarking on. That was like phase one. The next thing I needed to do was get educated.

I didn't know anything about anything, about anything. So that was like phase one was education, like figuring out how can I equip myself with as much information as possible so that I can at least try to start making some good decisions. So between podcasts, I mean books, anything and everything, I could like wrap my mind around, to try and figure out if this was going to work, that was probably phase one. And then also the third thing was just gearing up for the fight. I just mentally told myself, like, I may have been you, I don't know. I've taken in so many pieces of content. It's like, you have to take like a hundred meetings or something like that to get like, uh, so I was like, oh, this is going to be hell. Okay, great. So I just was like mentally trying to prepare myself to gear up for the fight. Like, I'm going to just hunker down and do all these things. And like, if I can mentally put myself in the position, then it's done because naturally I am by behavior a doer. And hence why

Jason: Yeah.

Shiloh: I'm like, I'm just a doer.

Jason: You've done so much. Yeah.

Shiloh: Yeah. So if I can get my mind wrapped around it, then the rest is easy. So that was sort of my approach.

Jason: Okay. So I will say, you did take a step that I feel like a lot of founders don't take, which is, a lot of founders will make the mistake of being like, I'm just going to wing it. Right? Like, I'm just going to figure it I come from outside of this world, but. What's fundraising? It's just asking for money. I'm just going to go ask her money. I mean, we talk about this a lot. It's such a complicated web Of processes and networks and people that, um, is really dangerous. And, and to me, a big mistake, embarking on if you don't really try to level up and educate yourself as much as humanly possible. But you were able to do it. Tell me you, you raised a pre-seed round. I think Techstar was it, was it Techstars outlet? it how, how did that whole around?

Shiloh: it was kind of a trickle-in thing. So. So like a round that I raised, it was like, Hey, we want to give you some money. Okay. Oh, Hey, we want to give you some money. Okay. It was very much, uh, impromptu. I didn't necessarily say I'm going to raise X amount of dollars in this amount of time. It was not a process at all. Reason being is because when I completed grid one 10, that's when Austin came into the fold and was interested in investing. So that changed the dynamic a bit. And so it was, it was lots of Nicole, which is Austin's fund. And then it was more. So those were the first two funds that were in. Fantastic funds.

Jason: Yeah.

Shiloh: Yeah. And Mucker's program is the part that I wasn't as like the actual fund and they have like this accelerator program. So I then did their sort of unique, very unique accelerator, not in the way you would think about an accelerator, but that was the first bit. And then at that point, I had ended up getting like one or two other people that were interested. And so this was. Months apart. So it wasn't like a full round. It was just sort of this trickle-in. But then once we did the seed, it was like, okay, you need to like focus on a process. Actually funny thing, a few investors were like, okay, you need to run a process. Let me teach you. I was like, you don't need to teach me. I have the notes.

Jason: I love that. Oh yeah. It's very nice of you to reference that. and great student.

Shiloh: Yeah. So it worked in the sense that like, I would kind of, Hey, what do you think about this? And he'd be like, well, what can they do strategically for you? And that's what makes sense for you to do this. So he really sort of helped me understand how to think like a person that's on the upside of receiving money rather than the desperation side of seeing money. So I didn't necessarily feel like this is long, it just works strategically. So like, I wouldn't necessarily need the money, but the right investor came along and like, oh, they're going to help you with government relationships. You should take their money. Oh, they're going to help you with the next round. You should take their money. So it was more like

Jason: Yeah. So, um, that's the key that. I'll call out, which I was about to guess you had this great confidence or, you know, I guess I'd call it confidence, but that feeling like we don't need to take any more money than we've already taken on is such a liberating and empowering feeling when it comes to founders who are raising money. So, whether you're raising tons of money or you just maybe take another small check in there. Mental approach is what unlocks so much ability to fundraise. Um, let's fast forward then. so you recently closed an incredible round. and when I saw the announcement, I was just so happy to hear about it, but, I think it was like $5 million led by a fantastic from Kraft ventures. Michael Tam and David Sachs up north. Um, tell me a little bit about that. So when you realize that you had gotten to a space or a place where. The numbers and the customers were showing you that you had this opportunity to scale. What were the trigger points? What were the things that made you say, Hey, let's, let's go do this. Like we want to go raise more money.

Shiloh: So actually this is a nod to a will Sue at bucker. He was really instrumental. He still is to this day, the person in my ear constantly reminding me to just like protect my stake and to only raise on milestones. He really ingrained that in me early. Like, no, no, no. We don't care how much time you have. When the milestones are completed, that's when we raise. And because that was my framework, I started thinking early on about, where are we on the roadmap and what do we need to get to the next thing? And then how much money do we need to get to the next thing? So that was always my thought process. So early days it was okay. Very bare bones features. And can we sell it? And then that barebone scenario it turned into? Yes, we can. And okay, we're getting asked for additional features that we need more staff to build.

So that became the milestone number one, like, okay. We're getting asked for things and we have a really bare bones engineering team, and we really need to like double and triple the size of it in order to accomplish these next four milestones for the next year. And that became the trigger, with which I feel like it was time to raise. And I just strongly encourage anyone listening. Please, please shift your thinking from the months of revenue that you have, or the months of runway that you have, and really shift it to the milestones that you need to hit, because it takes different things to reach different stages of your company. And sometimes that's not, it doesn't coincide with 16 to 18 months or whatever they tell you. So that was how we thought about it.

Jason: Yeah. That's so smart. And it probably means that you hit a milestone that creates a really strong narrative and with good amounts of runway, you get to go raise running. I swear, you're in the power, you know, you're, you're in the power position. You don't feel like you have a gun to your head and you can, you know, start narrowing in on a great firm like awesome that this played out the way it did. I'd love to ask you across either the multiple safes that you raised, and this is great. $5 million round. Um, What was like, what was the most painful experience you had there had to be, you know, some bad times in there, or, or meetings that really punched you in the gut and anything come to mind?

Shiloh: yeah. For you.

Jason: Yeah. A few. How much time do we have?

Shiloh: uh, let's see. So resounding was, I didn't understand, the position that I was in early, I just focused on building the company and like, okay. If I have some customers and what revenue and customers I had, I thought was very, very. Like a couple of hundred or something, very, very small. So I was like, this doesn't feel like much of anything. Meanwhile, on the other side of the fence and that suits her, like she is moving and I was like, huh. So it took me a second to get out of like hustle, focus, head down, don't pay attention mode and into like, oh, you're actually the commodity here. So we positioned the way that you think about. The deals that you're taking. that was one thing early. It was like, I thought certain deals were good and then I would get feedback from other people and they'd be like, not good.

Jason: Oh, you're getting, oh wow. You're getting, you're getting taken advantage of almost you're

Shiloh: Yeah. Like don't, don't do that at all, actually. And I think because there aren't a lot of. Detailed intimate conversations about money, especially in like this very weird, unique, and relatively new text fundraising space, or there just isn't a lot of transparency. And a lot of the stories you hear are really unrealistic. I walked into a meeting, wrote it on a napkin and walked out with a check. It doesn't happen. So then there aren't enough conversations about what actually does happen. So I didn't really know what was quote unquote, a good deal. So. That was probably hurdle slash mistake. Number one was like, I didn't understand that I was actually in the upside of the conversation and that I could play the fences and like, you know, negotiate around. I thought, oh, okay. They liked me. Let's go.

And people around the table were like, no, we're not doing. So that was a big one for me. Um, also just understanding, like there is founder, ethical behavior and like the little things, no one talks about, about things you should or shouldn't do or should, or shouldn't say that stuff is stuff that doesn't get said. Ha. It was like a hard lesson for me. I had somebody like, Hey, don't say that, or don't do that. Oh, okay. It just, not anything bad, but just things that I didn't know, like certain ways to communicate or you need to be making sure that you're telling this person this, or you need to like, you know, you have to like actually tell everyone that that's what you're going to do. So they're just like a little naivete there that I just didn't know that, that, was required. I was used to flying solo, so I would just make decisions and then people would be like, You should talk to us first. Oh, my bad. So just like, things like that too, that was a learning thing. and this single thing in the book venture deals. Yeah, that too, when I read, I feel like I read that too late. I feel like I needed to read venture deals after taking your program. And then it would have been this perfect, like one, two punch. Because I didn't read it until Techstars came in the hole later. And I was like, why didn't I read this earlier? I needed to know all these things

Jason: Yeah, it ended up being historical fiction about what had happened as opposed to an instructional manual. That's funny. Um, those are great little tips or gotchas. Um, so on the flip side, do you remember where you were when you got the call that you're getting a term sheet from

Shiloh: Yes. I was in Portugal,

Jason: do you remember what that felt like?

Shiloh: Yeah, I was at, um, whatever that conferences in Portugal that I can never remember the name. And all I keep wanting to say is what three, but that's not what it's called, but the protocol has this tech conference. Every. And I was there. We actually were going to, going to take, I'd already gotten a term sheet from a different fund and the terms of that fund were not favorable for everyone else at the table. So they were really pushing me to not take it.

And I was just like, who else is at the table? What do you suggest that we do? And then just like that, another investor swooped in and said here, talk to this person. And I'm literally having tacos in Portugal talking to craft and just they're casual. And it's so funny. Cause I was like, I don't really care if we do this deal or not. I'm taking this meeting because my investor asked me to, and I'm trying to be nice. And it ended up being great and Michael was doing great. And I was like, oh, I think I like this could work. And so they were like, don't take don't sign anything, just give us a couple of days. And then they came back and were like, here's your term sheet?. I was like, oh, well, great. That worked out. And it was a much better deal.

Jason: That, that big time energy is amazing. Well, so once it all came through and you're like, huh, there's going to be $5 million in the bank, that feeling washing over you. What did that, What did that,

Shiloh: Um, so let me be a little careful to say fundraising doesn't feel like a win to me. It almost feels like a burden, because you are now responsible to. Other people and your equity just got diluted and you now have more people at the table, more voices. It's I think sometimes founders, especially, I've seen this amongst my peers where they, they tend to like glamorize fundraising as if it's this you won, you should sell. No, I just gave away more of my company medicine. It feel like a win to me.

Jason: Yeah.

Shiloh: Uh, so, but what it did give me was just like, go energy. Let's. Yeah, it was like, go energy. Like now I have the resources I need to quickly bring people in that we've been talking about. I'm a planner. So I had a lot of plans before I ever signed a term sheet around what I would do with money. I'm also because I'm in accounting. I very much like organize my finances. Well, the business.

Jason: Shocker,

Shiloh: This is finance. It was a bit, so I very much knew how much I was gonna put into payroll account, how much I was going to put in a reserve account, how much I was going to be in our operating account. Like I very much had that plan. So it was more just like execution rather than like relief or feeling a relief.

Jason: I'm just going to, I'm going to jump in here and say like your investor updates must be an investor's wet, wet dream. You know, it's just like, usually it's like pulling teeth.

Shiloh: Yeah,

Jason: portfolio companies like send us numbers, be better about reporting. And you're just like, oh, what do I have off the shelf? How about all of

Shiloh: Well, not lately. I don't have the time as much, but yeah, for sure.

Jason: awesome. I love that idea of the go energy and, and how it, it's not a win for you. It's just a marker along the path to the destination that you're going after. Shiloh, one last thing. You have such a diverse set of experiences, bootstrapping your own successful accounting firm to starting the software company. And now having closed a five plus million dollars from some really, really great investors. and you talk about learning along the way. Is there one, piece of advice that, You would have been excited to give to a younger version of Shiloh, maybe specific to fundraising, but life in general, like would just love to hear, um, you know, something that you'd tell younger, shallow, maybe another founder that, that asks for advice.

Shiloh: and relax. That's what I want to tell her. Relax. It's going to be okay. And no matter what, it's going to work out the way that it's supposed to relax. That was my conversation with Shiloh Johnson, founder of compliant, a startup that empowers small businesses to get tax compliant. When we come back in some ways asking investors for a million dollar check is nothing like asking your parents for money to see a movie, but still a lot of founders find themselves bringing their childhood relationship to money into their fundraise.

Jason: My producer, Olivia. Asks me about my own money, hangups and baggage.

Olivia: So first of all, Shiloh is so cool. She got it done. She's a mother of three kids and I loved that part of her motivation in founding compliant. Like I, first of all, I so related to the jump of having, um, I'm sure everyone can relate to this, but your work that's paying your bills and then your passion project and feeling torn about. You want to make long term, you want to work on the work that speaks to you, but how do you take that leap of like, you know, foregoing a paycheck? Um, so I so related to that, and I loved that she was like, I need to show my kids that, this is possible and to go after what you want. But what I wanted to talk about with her was, Right off the bat, she described herself as, like a bookworm and she said something like, I'm not someone who asks for money. And, um, can I just say I am someone who asks for money? So if you'd like to ask me any questions about my, uh, money baggage, that's my money baggage is that I'm a money asker, but I wanted to talk about. You as you coach people to fundraise, how often are they bringing in kind of childhood baggage about their relationship to money?

Jason: I think you see it more often than you might expect from. I guess what people believe is the hard charging prototype of startup entrepreneur. Um, you'll see a lot of people that don't come from a sales background, don't know how to make the ask, and then layered on top of that, you know, have some level of imposter syndrome where they don't believe that they belong there. And if you don't believe you belong where you are, then asking for money to support your business is even harder. Um, and so, yeah, I think. Comes into play with a lot of different founders, with Shiloh in particular. You know, if you listen to more of her background, she's just a really understated but impressive woman.

Um, I met her early on and, um, it never came out that she had these really, really interesting, markers of grit in her background. Like she put herself through graduate school. you know, she was a single mother, that then stood up a really successful. bootstrap business and all these things she did, she kind of kept it hidden, even though it's like really, really cool in the startup world to have those markers of grit. Like being able to start those companies, be successful at it. Uh, and I think that plays into what her relationship with asking for money is. Like, she's like, gotta do it all on my own. I can do it all on my own. Don't want to ask for help, and when I have to ask for money, it feels like, something that doesn't.

Olivia: She said desperation.

Jason: that's right.

Olivia: Yeah. The word she used was like desperation. And I found that really interesting. She clearly, I guess kind of the subtext I was interpreting is that I think she feels a real obligation, um, like I think for her taking money. Is a serious thing where she's like, I now, I don't know, but in her mind, I think she's like, I owe this money. Like it's not free money. This is money that I need to either pay back or deliver on. and so I was wondering, a, I would love like a lay of the land. Okay, so if there's the, I'm not someone who asks people for money profile, like is that a common profile of people you encounter and what are the other kind of common hangups?

Jason: Man, I, but, well, it's a funny thing that you, were kind of placing it on a spectrum here, because we are right in the middle of exposing a bunch of people who are on the other end of the spectrum. So if you think about Shiloh Johnson, and maybe even me in terms of my profile, it's like you take a dollar in, you're like, That is a huge responsibility and like you said, an obligation to return capital. Whereas if you look on the other side of the spectrum, you have founders like SPF for FTX who

Olivia: Oh gosh. Okay.

Jason: And are fraudulently using that

Olivia: They're like, this is mine. This is

Jason: Oh, you gave me

Olivia: I can use it for anything including committing fraud. Yeah. Including for my scams. Yeah.

Jason: You know, I think along the way there are people that think about taking investors dollars, very aggressively, if not flagrantly, maybe not all the way to, Sam Bank, freed and ftx, but some of the aggressive business models that, you know, you're starting to see things like. Pipe and other startups who are having difficulty, justifying their business models, who would go out and raise tons of money before, really, really validating the unit economics of a company. and in doing so, you know, would probably had a relationship with Startup Capital that was like, we're gonna take this money.

People know the risk, we're gonna go aggressively after this market, and then find out later that it actually didn't work and. So be it. You know, and some of these, some founders, if you see these highly, these quickly scaling companies were taking money off the table and . Secondaries. and so I think that's another level of the spectrum, whereas, um, Shiloh is, I feel bad for taking money when I have a dollar. Um, I spend it, I keep it very close to vest, and I'm very responsible with the dollar. I think the, you know, secure profile, someone who is nice and balanced, understands the

Olivia: talking about attachment styles now.

Jason: Oh my God. Yeah. So I should.

Olivia: You used the term secure.

Jason: use the term secure. Uh, you know, I think Shiloh's definitely insecure with her acceptance of money. I think a, a secure attachment to, uh, investment dollars would have someone that was like, look, I have a good sense for why these dollars are coming in. but I am being trusted to. Take a risky bet here, and I will, in the best of my ability, spend that money to grow, not aggressively, but in a way that like does right by my investors, but also, um, you know, makes me feel comfortable in growing the company that I am. So I, I'd say that there's like this whole spectrum, much like attachment styles,

Olivia: That's funny. And where did you say you have fallen on the spectrum in the

Jason: I'm much more on the Shiloh side. I'm much more on

Olivia: Oh, you are? On the shy. Okay, that makes sense. I was gonna say, that would surprise me if you were. In the like, Nope, this dollar is mine camp.

Jason: Yeah, I mean, I would say what you, you know, a good description of that is I took in a couple million dollars of, investment capital for my last company and. I was extremely tight with every dollar to the point where I'm not sure that I did anyone any favors by going any slower. And sometimes when I see that profile, um, like a Shiloh Johnson, I actually do encourage a little bit, um, more aggressive spending because, getting to the answer more slowly, doesn't do anyone any favors. So, you know, you have to coach people to come to the middle, I think. Crazy aggressive. You want your advisors to say like, let's reign it in a little bit. And if you're crazy conservative, I think you want your advisors to push you to the middle and say like, you can go a little bit faster, you can be a little more aggress.

Olivia: Cool. Um, okay. So the other thing I wanted to talk about was her refreshing honesty about why she wanted to fundraise. And obviously, she said she wanted to fundraise, um, I think she said to acquire new... I can't remember the other reasons, but I think they were very traditional, like to expand, you know, scaling, traditional reasons. And then she also said she was like, 'I need a salary.' And she said one of her kids, her daughter, was getting ready to go to college and I just really appreciated that because I think, first of all, fundraising from an outsider's perspective has such a glamorization, like, I think it's one of the only cultures where people brag about how long they might have slept on a couch or something. And so I so appreciate that she was, 'I need money to live on.' And admitting that that was an actual hindrance to her, maybe not commitment to the company, but like, if you are not making money to live, the company will fail because that's not a realistic equation. Um, and so I was just wondering if that's something you hear from other founders or, I guess, is that something people also just don't wanna talk about is like, 'I've been bootstrapping this business for like seven years and I need to fundraise in part because I need a salary.' Like, is that common and do people have trouble admitting?

Jason: Well, it's certainly common that people need a living wage, some sort of money to cover their bills. I think the difference that is important to call out here is that if you listen to what Shiloh talked about, she was running this really successful accounting firm with tons of clients, a great salary to cover her life and her kids going to college. And all the while she's working on this software project on the side because she knows it's a big problem and she knows it's a big opportunity. And she's balancing, balancing, balancing. And there's a point where she sees the window, she sees the opportunity to actually build this and go full-time. I don't wanna maintain my company because I think this is such a big opportunity and that is when it's like, in order to continue this in the way that I want to do it, I need to raise money because I need to pay myself and I need to pay my team.

Whereas I think what you'll see with a lot of inexperienced founders or people that are just getting sucked into what you described as the sexy industry of startups and raising money are just like, 'I have this idea. I wanna build this consumer app, or I wanna build the next TikTok or this next beauty brand or this random science project that I... And I don't wanna not take a salary, so I wanna raise money and I wanna pay myself.' Like, it's a very different perspective on why you start the company and why you need the salary and all these things. So, what I would point out with this Shiloh Johnson story is that she showed every signal and every indication to an investor that this is a great bet, that she's only doing this right now because the opportunity is pulling her into it. And yeah, she deserves to have this capital to pay herself a full salary and to really run.

Olivia: Okay. If I can go back to the childhood...

Jason: Do it.

Olivia: I've been hearing a lot of talk of a coming recession. I hate saying it. Okay. I don't know about your circle exactly. I don't know about your circle, but a lot of people I know are accepting it as a fact that a recession is coming. And so I'm wondering if some of... childhood baggage, if it's showing up in either like, 'I need money now to weather the coming recession,' or like, 'I'm not gonna be able to pay this back,' or whatever it is, because of the recession. I'm just wondering if you're hearing founders kind of factor that into fundraising and if you're seeing some of that like baggage come back, if it's triggering people in short.

Jason: I think it's very hard to be a founder and not hear about the coming recession and what that means for them and their ability to fundraise. Every venture capitalist is talking about it. They all have hot takes on what 2023 is going to look like. And so overall, I think all founders who are considering raising capital in the next 12 months have a healthy degree of anxiety around what that... now, you know, how it shows up in a founder's behavior and maybe what they experienced when they were growing up. You know, I think it's a lot about scarcity mindset, whether or not you had a scarcity mindset as a default, or if you have an abundance mindset. Um, I think I do run into both right now and... the people that have a natural tendency towards scarcity, as they hear about something scary like the recession coming, it just doubles down. And I think they have a harder time presenting a story that will get investors excited even in these murky...

Olivia: Interesting.

Jason: I think the people that in general...

Olivia: Into their pitches. Sorry. It's coming into their pitches. Like that insecurity you feel like is leaking out into their presentations.

Jason: When I review a pitch deck or even an initial story, there are a lot of opportunities for people to kind of make excuses or talk about the coming recession and why they might still be good, and I'm quick to point out, like, that's not gonna get it done. You have to come over the top and be like, 'This is an incredible opportunity.' In fact, like when the last recession hit, those were the opportunities for the biggest companies to build. We are one of those companies in this round. Like, this is going to be exciting.

Olivia: Interesting. So it's already factoring into people's actual pitch decks and stuff about why they're recession-proof or whatever.

Jason: Sometimes it's explicit that... and I think even talking about why we're recession-proof is almost like sometimes it comes out more like, 'I'm making excuses and I'm sorry that I'm asking for money in a bad time.' And that's where we don't want founders to be. We want founders to be like, 'Look, I understand things are changing, but we're awesome and let me just tell you what the future looks like for us.'

Olivia: Nice that you would call that a secure attachment style to money.

Jason: As secure with an abundance mindset, all those good things.

Olivia: Mm. Cool. 2023. That's gonna be me.

Jason: Secure and abundant. One more thing. I asked Shiloh who her most memorable client was.

Shiloh: An entrepreneur that ran a very popular OnlyFans account. We all need a good accountant, right?

Jason: Thanks a bunch for listening. If you have any questions about today's show, or maybe you're raising money yourself and want some help problem-solving, if so, find me on social. I'm at Shea, that's J A Y Y E H. Or shoot me an email at I'd love to hear from you. This episode was produced by Olivia Rheingold. Thanks also to Angel Adriano from Adamant. And thanks to Shiloh Johnson, CEO of Complyant. That's C O M P L Y A N T for being an amazing guest and challenging all of us to rewrite our relationship with money.

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