The Secret Science of Fundraising (Part 2 of 2)

By Jason Yeh
January 19, 2021
Listen on Apple Podcasts

Episode Summary

From the start of our conversation with Sam Corcos from Levels, it was obvious there would be too much sauce for just one episode. In this second half of our 2-part series, Sam begins by sharing details around a large key to his success - his very large cap table. Afterwards, we discuss specifics around his approach to attracting a $12MM seed round led by Andreessen Horowitz and how newcomers to the sport of fundraising might fare employing similar tactics. 

We wrap this episode as we always do with a debrief, but this time include a special guest who had a front row seat to all the action.

Live Q&A on Clubhouse!! In response to the flurry of questions sent in by curious listeners wanting to know more about Sam (fundraising and otherwise), we've decided to host a live Q&A after show on Clubhouse. We'll be announcing the timing on Twitter so stay tuned!

Topics Discussed

  • Sam’s unique strategy of utilizing stacked notes/SAFES [2:28]
  • Leveraging investors for feedback [6:13]
  • Sam’s theory on how time does not scale, but content does [8:28]
  • How Levels embraces transparency during a fundraise [10:50]
  • How to time your next fundraise [17:17]
  • Sam looks back on his relationship with Jeff Jordan (a16z) [20:45]
  • How to manage your monthly updates to investors [25:08]
  • Jason breaks down the episode and discussion concepts with show producer, Olivia Reingold, and a very special guest [29:09]

Resources Mentioned

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Sam Corcos
Jason Yeh (host)
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  • Subscribe to the Funded newsletter at
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  • Grain is an awesome tool if you spend all your time on Zoom calls like we do. It helps take notes and save amazing moments from your calls in easily shareable clips -

The Secret Science of Fundraising (Part 2 of 2)

From the start of our conversation with Sam Corcos from Levels, it was obvious there would be too much sauce for just one episode. In this second half of our 2-part series, Sam begins by sharing details around a large key to his success - his very large cap table. Afterwards, we discuss specifics around his approach to attracting a $12MM seed round led by Andreessen Horowitz and how newcomers to the sport of fundraising might fare employing similar tactics.

Episode Transcript

Jason (host): [00:00:00] Hey everyone. Quick note that this is part two of our two-part conversation with Sam Corcos founder of Levels. So you should have caught part one for context also because our end of episode debriefs have been so popular, I'm extra excited for you to hear this week where we invite a special guest to weigh in.

Sam: [00:00:22] I probably did easily 500 plus pitches to investors and oftentimes it would go very poorly. And that's okay.

Jason (host): [00:00:36] This is Funded. A show where founders who raised millions in venture capital show the gritty side of what it actually took to get that money in the bank. I'm Jason Yeh, your host, 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.

Growing up. I was obsessed with basketball. I went to camps with intense coaches, ran drills in my spare time and watched ESPN religiously to soak up everything I could about the game. I think it was that baseline that made a trip to see a rookie named Kobe Bryant play when I was in eighth grade seem so incredible.

I remember being shocked by one of its crazy moves, comparing to what I knew about basketball to what I was seeing and thinking, what was that? And how is that possible? Sam  founder and CEO of levels, the digital health product that tracks your metabolic health has his own crazy moves in a space I thought I knew well, too.

But instead of crossovers and fadeaways to score points, Sam is stacking investment notes and open sourcing internal strategy docs on his way to raising millions in venture capital. In this second part of our conversation, Sam walks me through more of his strategies that fly in the face of expert thought.

Of course, that's all really different from Kobe, but in similar ways had me thinking how on earth did he do that?

You ended up adding something like 150 angels to your, to your cap table. Can you tell me if coming out of that angel army strategy, did you know that you were going to go straight into a bigger fundraise or like, how did you think about staging and, and all of that? 

Sam: [00:02:24] Yeah, so we, we took a fairly unusual strategy.

Um, one of the things that I had experienced is in witnessing previous fundraises and also just talking to other founder friends of mine is that, um, price is incredibly opaque and there's so much information asymmetry between founders and investors that I wanted to figure out a strategy for how to understand what price would be.

We knew that we were going to do a larger raise at some point, but I wanted to think about well, what I guess you would go again to first principles? Like, what is price? Price is the willingness of somebody to pay for something. So it's inherently arbitrary. There's no, there's a basis of price. It's like, well, what's your EBITDA multiple.

No, that doesn't, that's not how this operates. It is the willingness of other people to pay for it. So we thought a lot about how, how do you do price discovery? One of the ideas was in layering SAFES. And just having, having a dilution goal for each SAFE increment. So, uh, we started at 10, uh, 10 million post just on SAFES.

Uh, once we filled our allocation for that, we bumped it up. And once we filled that allocation, we'd go to, we went to 20 million, we went to 25 million and we would just see, we would, we wanted to get to the point where people started saying no, And that that was a sign. Like we knew coming into our round that our valuation was going to be somewhere between 30 and 50 million, just because we knew empirically that people were willing to pay that.

And  any term sheet that we got, that was less than that we could fairly confidently say, I actually know with certainty that the price is more than this. So I can confidently say no to a term sheet because we know that the price is better than what we're being offered. Um, so it was an incredibly helpful way of like building confidence and how your company should be valued.

So that, that was the core of the strategy. 

Jason (host): [00:04:32] You know, it's. I'll just, I'll just say this and I can, you won't take any offense to this because you executed it flawlessly and you raised from fantastic investors. And I think you announced the round, right? You announced a $13 million round, $12 million dollar round led by Andreessen Horowitz.

So it's interesting. I be curious, other people could execute it as well as you, you know, the. There is something about the perception of everything that happens within a fundraise that is incredibly important for an investor. Like they're, they're just matching off of what they see and what you described is your personality.

That is you. So, you know, w when I, when I think about, if I were, you know, running a fund and you came to pitch me and I saw this happening. I wouldn't, I think if another. Company where to try to do that. To me, I would feel very like almost offended. And I was discussing this with an investor friend of mine.

Who's looked at your rounds and, and, and seeing it happen. And it's like, well, there is this irrational feeling that investors get. When someone says we just closed that round. And here's a higher valuation and you're like, Oh yeah, I don't want that then. But there is something about everything that goes into who you are and like your process and your transparency and everything that goes into it that I think is very genuine.

So, um, you know, kudos to you. That's, that's super interesting. Now, how long did that whole thing take? How long have you been fundraising? Actually, I go again or are you you're always fundraising? Like what would your answer be? 

Sam: [00:06:13] Kind of always fundraising, but I guess a lot less now, now with the round is closed, but in the early days, I think that one of the things that is often underappreciated

is using investors to learn from them. I was talking to a friend who started a, uh, he started an insurance company. That's actually doing pretty well now, but he'd been thinking about it and working on the business plan by himself for like a year before he was confident enough to pitch. And when you finally.

It's like, all right, the deck's ready. I've got everything solved. He did his first investor pitch to a guy who knew the industry super well. And the guy was like, yeah, that's cool. But what's your distribution strategy? It's like, Oh, I've got that handled us right here. He's like, yeah, this is completely wrong.

Like, look at these four companies. They tried exactly this. There's a reason why this doesn't work. What you need to look for is this over here. If he's taking notes, he's like, man, I really should have pitched earlier because that would have saved me a lot of time because my sample size in health tech is one and these investors have visibility into hundreds or thousands of companies.

And so you might think that you're this a unique snowflake. The reality is you should not be afraid to fail. I probably did. I would say easily 500 plus pitches to investors, uh, possibly more than that. And some of those were actually meet pitching, but in every case I really did tell them like, we're going to be raising in September.

So I'd have a call in February and say we're raising in September, but I'd love to tell you more about what we're doing. And I would have notes in advance of the call of like in a test, this pitch for this investor and just see how it goes. And oftentimes it would go very poorly and that's okay. And you just like, it was like, okay.

So it turns out that terminology does not resonate. And then I would try it, different thing. And like, you can see in my email history, I would do a pitch and like something just really clicked with the other person. And I would email the team like, Whoa, guys, we really need to use more of this terminology in our language because it's totally working.

Like, it's, it is the thing that gets people to understand it. So it, it was incredibly helpful. One of the other things is another first principle thing is that my time does not scale, but content does. And so in these conversations, investors would ask questions, like, what are you unit economics? And if I would get the same question two or three times, that was an indication that everyone's going to ask this question.

So. I would spend a few hours writing up a long form document that I could send in advance or after the call. Um, or I'd say during the investor pitch. Yeah. I can totally give you the short version of unit economics, but I'll send you a longer form document after where you can like really dig into it if you want.

And so we ended up with a pretty. A pretty solid data room of, uh, all of the most common questions that we got and all of the answers to those questions. So people felt confident that we were paying attention and, and had the answers to pretty much any question that they asked. 

Jason (host): [00:09:17] So it's actually a great segue into a topic I wanted to discuss with you, which is

your level of transparency between you and the investor class, if you will, it's been a fun top of your conversation between me and other investors to, from an arm's length, distance, observe Levels. And, you know, especially in early stage company, right. Where you just don't have that much data, right? Like you've been alive for a little over a year and maybe like technically operational for less than a year.

So what I talk about a lot is that when you raise these rounds of capital, you are telling a story, right? There is a narrative that you work, trying to get investors to believe in, to believe in you and data is so black and white words are so black and white when they are put on a piece of paper and let to be read without a talk track without you representing exactly what's going on.

Um, and it's been interesting. I've even seen tweets where people have publicly lauded you without naming names about like, Throughout the process of raising money, opening up a data room for anyone to see before I like give you point and counterpoint or other ideas around that wanted to hear kind of what your driving force was behind it.

You already mentioned that content scales and your time doesn't. And is that, is that the primary thing that you were just like, that's what I want to do and that's what we're going to do, or is there, is there more to speak to you. 

Sam: [00:10:50] There's definitely more one of the things that we really index on, where people who do the homework, and one of the reasons why we really liked Jeff Jordan at Andreessen, Jeff and VJ ended up leading around.

Is, uh, there were a couple of our documents where I saw in the edit history that Jeff actually corrected typos, like in the meat of a hundred page document. Like he actually read it and was paying attention and understood what we were doing. I think part of it is just. Being able to show other people, uh, what you're doing is really important and building that confidence.

I think the other is that I think it is much harder to get people to care about what you're doing than it is to keep information secret. Execution is hard and ideas are easy. So people have seen our data room and they're like, Oh man, like your customer personas document is public. It's like, yeah, sure.

It's like, Oh man, your, your growth strategy is public. It's like. Guys, it's not a secret that you can use influencers to grow. These things are not secret. It's really just conveying that. You're thinking about this in a really principled way. Um, so very little of strategy is really that secret. Part of it is we just have sufficient confidence in our own ability to execute.

If other people see our idea, it's like, yeah. Okay, good luck. Like have fun trying to do that. It's hard. So I send a list of all of our competitors. When people ask, I send a list of whatever, like I am sufficiently confident that we can execute. We don't think about competition. We think about how do we execute at the best possible level.

So I think that's the other thing is like, it really does build, it builds trust and confidence in other people as well. And they want to help you when you do that. 

Jason (host): [00:12:35] That's a fascinating to hear all those things. I mean, there, there are a few things that I wanted to pull out of there. Um, the first, the last thing you talked about in terms of not caring about competition. I talk about this a lot, mostly because in previous companies that I had been in leadership of, I was so concerned with competition.

Yeah. And now reflecting on that, I am, and I see it in other companies. I think it's a sign of not really knowing why you specifically exists. Like you have a very specific point of view and why you're better. And yes, there are other people that are targeting something similar, but the chances of them being exactly the same is like literally slim to none.

So I really want founders to know why they shouldn't care about competition. They love hearing that. And then, you know, the other thing to bring out about all of this is that anytime I give someone advice or like sit down to talk them through things, I go look in this game in early stage startups and venture capital and fundraising on almost every specific

topic worth giving advice around. Now you can probably find two equally credible people that will give you 180 degree opposite advice. And the reason behind that honestly, is, is, um, you know, the devil's in the details, right? Context matters, and why you do these things. And so you described a process which is exactly opposite from an investor

I respect Mark Schuster who has a whole post on never sending data rooms, never sending data rooms. And, you know, I would say that he, and you probably actually see eye to eye on most things. It's just the reason he says says those things. So I'm glad you were able to unpack that. Very, very, very fascinating.

Um, yeah, 

Sam: [00:14:24] I would also say that I think the best investors also know that most of the time they're wrong and most of the time I'm wrong. Like, they'll say, I think you should do it this way, but like, that's probably not right. And what you're doing right now is also, probably not right so figure it out.


Jason (host): [00:14:40] So are you a guy? That'll figure it out. That's what we're betting 

on. Right?

When we 

come back, Sam's arguments for why mistakes are a good thing.

I spend most of my days, one-on-one with founders, helping them understand strategies that make a difference in fundraising. One super important tip I always stress with founders is to make sure they send their decks and materials using a document sharing tool. And for that, I always recommend DocSend.

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Anyone who's tried to raise money, knows what it's like to be rejected. For most of us, it feels like an insult to your child and a punch to the stomach all at once. But Sam is, and I'm going to sound like a 

broken record here. 


is different.

Honestly, it sounds like from my vantage point that you've executed a flawless process, but I also know that everything you see on the outside is not everything that went into it. Uh, do you have any horror stories? Do you have any cringe-worthy moments, anything as you were going to the fundraiser like that, that sucked anything like that?

Sam: [00:16:35] Not, not this time around, I've experienced it enough times. And I was sufficiently methodical this time around that we didn't have any horror stories. I would say in past experience there have definitely been problems like at Sightline we raised money after I actually left the company, but I was involved in the process.

The biggest mistake that we made there was we timed our funding round around when we would run out of money. And like, it's totally logical. It's like, well, we have cash for six months. So like in a few months we'll start raising money and then we won't run out. The reality is you give up all of your leverage and you put yourself in a really, really bad place.

And when we ended up accepting terms that were not what we were hoping for and what you learn after that having been through it, it's like you should raise money when you have momentum. That is the best time to raise money. When you have lots of cash, it's actually very easy to raise money. And so every founder I know who has raised a lot of capital, they always say, I wish I raised less capital and took less dilution.

And everybody who ran out of money, he says, man, I really wish we raised more capital. So nobody's ever happy with their decision, but one of those is an existential failure and one of those is like a slightly less awesome outcome, but still pretty awesome outcome. Yeah. So, um, that, that was definitely one big lesson.

Jason (host): [00:18:01] Well, you know, two reactions to that and the last thing is people try to get too cute with things they're like, well, yeah, but if you wait three more months, so our numbers are going to be 20% higher and then, you know, it actually doesn't affect the valuation that much, you know, three months, but it does affect your ability to negotiate for sure.

And then the other thing that is, it's really amazing to hear, and it's a reflection on your maturation as a founder and a fundraiser where I asked you, like, did you have any horror stories? And it's. You know, it was actually, I bet you, a lot of those bad meetings would be perceived as horror stories by other founders, but, you know, going into the process, knowing it's not going to be for everyone and not, everyone's going to say yes, and people are not going to like this.

But every time we do run into a negative, it'll be a learning process is just a great way of reframing things and a mindset that I think founders need when they're going to fundraise at least successfully. Um, so does to flip that question, who's the most interesting person you've met. Or had invest in this process and you know, this isn't a question that I would ask most founders, but most founders don't have 150 people on their cap table.

Um, so, you know, there are some that you probably can't share, but any, any that like make you light up personal heroes of yours, anything like that would be cool to hear. 

Sam: [00:19:22] Yeah, I I'm happy to share all of it. Um, of course I, I have been surprised at just how incredibly active our angels have been a friend a couple of days ago, asked me to put together a list of who, who have you been most

your most active angel investors. And I went through the list and it's like, I think we have 130, 140 something like that. And I was only able to pair it down to like 110. Yeah. It's like, these are our most active, which is, uh, was not much of a filter, I would say. Uh, The people who've recently been most helpful.

Uh, Lenny Rachitsky has been super helpful. Um, Julia Lipton has been super helpful. Matthew Dellavedova from the Cleveland Cavaliers has been really, really disproportionately helpful. He's been able to make some of the most important connections to us that we would not have guessed that he had connections to.

Jason (host): [00:20:22] Well, I think you just helped him get a bunch more amazing deal flow. 

Sam: [00:20:27] Yeah. I mean, I could just list names for days. We have, uh, every, almost every person we have involved has been just incredibly helpful. 

Jason (host): [00:20:34] That's very cool. And then, you know, a question I like asking every founder, you know, do you remember when Jeff Jordan called you and said he wanted to lead the 

Sam: [00:20:45] Yeah, I called him. He signed up on our wait list and I was receiving emails for every person who signed up on our wait list. And I saw that he had signed up and wanted to be in the beta program. So I, I did a lot of user research myself. I think I interviewed personally, maybe 600 people by phone from the waitlist, just to deeply understand who your customers are and what do they want.

And like, what does success look like for them? What is the job to be done? Where do they get their information from? How do we, how do we basically using that user research to build what our marketing strategy would be? And Jeff was one of those people. He signed up for the waitlist, we got him on the program and I told him that

you know, we, we weren't looking to raise yet. I think that was in June or July when I talked to him and he ended up coming on as an angel investor, because he's personally really interested in this. Uh, his daughter's a diabetic, his wife is involved in almost every major diabetes non-profit he really, really cares about personal health.

And so it just seemed like a great fit as an angel investor. And he was incredibly active. And like a very disproportionate way. Um, he was super helpful with all of our asks. I could tell that he really cared about what we were doing and that, that was a huge factor coming into our fundraise andreessen was our top choice specifically because of our interactions with Jeff.

I sent a survey out to 50 other founder friends of mine, uh, when we were in the late stages of how do you decide what firm you want to go with? And the thing that was most interesting to me, almost every founder. Who, as in like a late stage company, they say that the most important thing is the partner that you're working with hands down.

Um, the firm is nice, but you have to really like the partner. You're basically married to this person. And so we just felt really good. It's just like the, the personal interest in what it is we were doing and the reputation that he had, uh, every person I know who has worked with Jeff, say he is with the best and he's an excellent person to work with.

So yeah, that's, yeah after doing a lot of this user research, he, he was one of those calls and at a certain point, think of it was in August, we put the stake in the ground of like, all right, we are running our process on this week in September. So anything you want to do beforehand, we do the partner meetings now or later.

We, we are looking for term sheets to that week. So if you just say like, I wanted to get all the term sheets this week in September two and a half months from now, it gives everyone enough time to like really, really do their diligence and understand what decision they're making. 

Jason (host): [00:23:33] Yeah. Well, look, a very atypical answer for a very atypical process, but like we've mentioned a couple of times in this conversation executed very well.

I think the thing that is very universally applicable. I'm trying to pull out things that are worth and actually able to be executed by other people. Is that the, I think the dynamic between you and Jeff Jordan, which made it such a great process is that you really built a relationship. Right. And, and, you know, early on

I think the investors want to invest in known quantities, founders that they believe in, you know, understanding the way they think about people. And so I would say, especially how the market has been, there's been so much investing that has done like very rapid fire, but I think you do see the best

outcomes and the best sort of investors matching up with great founders when there has been an ability for them to meet ahead of time, to like meet them outside of the normal fundraising environment. Um, having an early conversation, at least obviously you took that to another level and there's another level at Levels.

I was, I was waiting to drop that. And then the last, you know, it looks the last phase of conversation that I like talking about is just, are there a couple of things that you've been very happy with or lessons that you've learned that you would tell a younger version of Sam, or maybe that you like sharing with other founders as they think about particularly fundraising processes?

Sam: [00:25:08] Yeah. I mean, I think the, the biggest ones and we can reference Mark Suster again, he wrote a famous post on, uh, investing in lines rather than dots. I would highly recommend writing a monthly investor update and keeping yourself accountable to it. We send our investor update every month on the 15th. And it has the, both the good and the bad and like challenges that you're facing.

And you just, just be honest, everyone knows the company, run companies run into problems and that's okay. If you have a challenge, you can talk about it. And if people see over time that you overcome these challenges and that you can execute, that is a really good way of building trust. And so when there are people that say you want them to potentially lead your funding round in several months or a year.

Them being able to see a year of steady progress is incredibly valuable. Like they know that you're not a fly by night organization. They understand how you execute building that trust is incredibly important. So we send it on the 15th cause we get our books every month on the 10th. That's when we get our financials.

And so by the 15th, we're able to ship it. I probably spent four hours a month writing it. Everyone on our team writes basically what their department does and we compile it. We write it, send it out, add people, people that you think you might want to be involved in a future process. Just add them to it, keep them on the distribution list

so they know what you're up to. I would say that building that trust even very early on, I think we started shipping our investor update when we had like five people at the company. So, and we had very few investors, but the goal was to have that discipline. Uh, to, to distribute that information and keep that, uh, keep that mentality of like constantly showing people, uh, how you're executing over time.

Jason (host): [00:27:01] Um, everyone that I know that is involved in Levels from an investor point of view, raves about the team here at, in particular your ability to execute. So, um, Not shocked at, you know, shocked at some of the answers, honestly, in this, in this conversation, but at a certain level, not shocked. I think I was expecting something like this.

That was my interview with Sam Corcos, founder and CEO of Levels. But don't leave just yet because we found someone to give us another perspective. Hey, hopefully lighting works. After this message, an early investor joins our debrief to tell us how she knew betting on Sam would pay off.

Sometimes when I'm a huge fan of a product, I go crazy person and network my brains out to try to chat with the founder. I did that with Mike Adams, the founder of this amazing Zoom enhancement tool called grain to find out who his other users are and I was a little surprised that one of the really relevant use cases.

Mike Adams: [00:28:08] We pulled all of our users. We had, um, three segments that popped to the top where they were like 80% PMS score, meaning like 80% of the people in these buckets were like, I'd be very disappointed if you took Grain away. So one of those was researchers. One of those was marketers. And then one of those was founders.

Founders were like, I need this because they end up kind of being everything. Founders are like, they're the researcher, they're the marketer, they're the fundraiser. And so in the context of fundraising, I use Grain to like improve my performance. It's like game film. 

Jason (host): [00:28:47] If you ever take notes on calls or wish you could save magical Zoom moments, you've got to try out grain to get started for free.

Go to that's grain as in whole grain oats. Okay. Back to the show.

Remember Sam, shout out to an investor named Julia Lipton. Julia, this is Olivia. Olivia, my good friend, Julia. 

We got Julia to hop on a call with me and my producer, Olivia. 

Olivia. This is cool. We don't usually get a chance to speak twice about one interview. Um, And for listeners of the reason we're doing this is because we pulled some strings and we were able to get Julia Lipton, founder of Awesome People Ventures

And one of the investors that Sam Corcos named drops in 

the episode. So welcome to our debrief, Julia. 

Julia Lipton: [00:29:44] Thanks 

Olivia: [00:29:45] Yeah. Welcome. 

Julia Lipton: [00:29:46] Thanks olivia. Happy to be here.

Jason (host): [00:29:47] You know, usually when we do this, we have a debrief and Olivia just kind of reacts to what she heard. Um, and when we talk about it from a different point of view and I try to break it down and easier terms, um, what I kind of want to do this time is I've been waiting.

Honestly, I've been waiting to talk to another investor so that I can get all these questions out. Like, is this really crazy just to me or was it crazy other people? So I have all these questions to ask you, Julia, and then Olivia, I'm sure some of this stuff is going to, um, inspire some other things. So please chime in wherever.

Okay, but Julia, so you didn't get a chance to hear the whole episode, but Sam breaks down a fairly unique process. And one of those things that he talks about is just the way he ran a, essentially a pricing discovery exercise with a ton of stacked notes. Um, and I want to know. Where did you fit into this equation?

Like when did you meet him and we're along in the process? 

Julia Lipton: [00:30:50] Yeah, so I met him in September of 2019. Oh, no way early. And so I met him pretty early on through a mutual friend and my friend wanted me to take a look at it because he knew that I had led growth in revenue at Rise, which was a nutrition coaching startup.

So he thought that I might be interested in Levels. So I met him quite early on, but it took me six seven months until I invested.

Jason (host): [00:31:14] No way. And, um, now I'm realizing that I've already used a bunch of insider language inside baseball language. So when I said stacked notes for everyone. Yeah. What was that? Um, yeah, I was like, Oh yeah, Olivia totally picked up all of this from okay.

Um, stacked notes. So. A note is the vehicle that many early stage companies raise money on. So the investment vehicle, the thing that people use to take in money.

Olivia: [00:31:43] Wait I I'm so sorry. I'm not even sure 

I understand that concept. 

What's a vehicle in this context. 

Jason (host): [00:31:50] Yeah. So it's essentially the legal 

entity that an investor will put money in into in order to gain that upside in the company.

Right. And. Shorthand for it. They'll call it a note. Okay. Okay. One version of it is called a note. Um, and generally speaking, the reason I threw out this term stacked notes is that it's unique. I mean, it's not a lot of people do this when they raise money, it's usually one note and they taken that note and they take the money that they need to get to the next milestone.

And then they go raise it again. Sam did something a little bit different when I think Julia had a front row seat because he, she met him actually at the very beginning. And so when we talk about stacking notes, it means he raised one note and then immediately after raised another note on different terms.

And so that's what he was talking about in terms of stacking notes and increasing valuation. So I didn't know that about when Julia you, you met Sam, which means I get to ask, when did you first consider and know where along the ride did you actually get on board? 

Julia Lipton: [00:33:01] So I don't remember to be honest with the valuation was when I met him.

I think it was an eight. And when I first met him, I'll never forget because our first meeting was a phone call and most founders, their first meeting is a Zoom. And he was pretty adamant about a phone call. And now I understand that's because Sam walks 10 miles a day while taking all of these phone calls.

But at the time I didn't know it. And I was like, okay, you want to take a phone call? I'm going to go for a hike and Sausalito. So I remember this call so viscerally, and at the time they were basically just distributing Abbott devices to people through their doctor prescription network. And I was like, you guys haven't done anything.

You've built a doctor prescription network that isn't a product that is in a brand that isn't anything. Um, but what was so interesting about Sam is he, whenever he says he's going to do something, he does it. And then he follows up with you to tell you that he's done it. And so I had all these questions and concerns and we had this ongoing back and forth that quite literally lasted six months and a few meetings in between.

Sure, sure. And dozens of emails. So I met him, I think it was an eight. I did it at a 10. Then I was going to do another SPV at an 18 because I just really believe, and I still believe, and I missed that 18 window, but we got in at the 25, which was before a16z led their most recent round. 

Jason (host): [00:34:28] So a lot of things that she just threw out, I want to, I I'm seeing Olivia's face and she doesn't even have to chime in.

Like I know this is a good moment. So first of all, Julia invested first at an eight and then wanted to raise another SPV. Right. Oh, sorry, 10. You missed the eight. Of course I missed the it. Everyone I've talked to missed something with Sam and then finally got on, um, raise that 10 and then wanted to raise an SPV, a special purpose vehicle.

So raising money for the sole purpose of investing in this opportunity and then wanted to do even more. And so before I even go on like, Julia, you kind of. Talked about that, like, Oh yeah. Not a big deal personally. I've never seen that happen and I've seen a lot of deals. I've never seen somebody come and continue to raise a valuation on investors and continually, successfully do it.

Yeah. Um, Julia, can you, can you talk a little bit about that? It was that. Normal to you. Have you seen that before? 

Julia Lipton: [00:35:32] So it was not normal to me. I'd never seen this before, but the thing that I've come to understand about Sam is nothing that he does is, and over time I've now known him for over a year. I've just come to trust him and the best founders do things their own way.

So when he says he's going to do something, he's going to do it. So while to me the stacking note, Feels very risky. And I remember asking him about it being like, Hey Sam, like, what's the plan here? This dilution, like, it's going to get kind of messy. And he shared me a doc where they had it all mapped out and assured me that it was going to be okay.

And in fact, he pulled it off. 

Olivia: [00:36:09] I I'm wondering if you can explain why is it risky? 

Jason (host): [00:36:13] Julia? I, you know, I'd love to hear your thoughts on that. 

Julia Lipton: [00:36:15] Well, what happens is founders will end up taking on too much money and taking on too much dilution, such that when they go out to raise their next round, there isn't enough space for the funds to come in and, or the founders end up over diluting themselves.

And so they can't bring on that investors that they want to bring on because those investors don't have enough space to be able to write the check size they need to write, to be able to get into the round and or founders can't raise at the valuatio they need to, to be able. To keep a reasonable dilution target.

Olivia: [00:36:48] Wait, so, okay. Tell me if I'm understanding this correctly. So basically the. Problem is not in the first round. It's in the second? 

Julia Lipton: [00:36:59] Your, your first institutional round, Jason, feel free to jump in. 

Jason (host): [00:37:02] Yes, Olivia, you have that, right. So essentially if I had to like break it down in different words is you start setting expectations for another round.

The next round that you raise that if you don't meet them, it can can create a situation that actually makes it hard for institutions to get excited enough to put enough money behind it and actually back you at that stage. 

Olivia: [00:37:27] Hm. Okay. So it, it sounds like you need a lot of confidence that you'll be able to meet your thresholds.

Julia Lipton: [00:37:36] Yeah. 

Jason (host): [00:37:36] And Olivia I'm so glad you used that word because this is a hundred percent the theme for breaking down Sam and Sam's process and Sam's unique strategy, which I think we talk about in the conversation and we've talked about in our debriefs and he executed it flawlessly, and it's honestly amazing to watch, but I would say that if anyone's trying to draw from this,

the analogy that I give is that if we did a conversation about golf with Tiger Woods and Tiger Woods was like, you know, this is how I would improve my shot-making and how I would, you know, shoot a 62 the next time I went out on these types of holes, I would carve the ball just ever so slightly and land it, you know, two feet below the hole so that I could make the putt.

And if amateurs were listening to this, it would be like, Oh, so sh should I go do that the next time I play golf? Should I be trying to like, you know, shape the ball and hit it perfectly there? So. Ideally. Yeah, that's what you do, but it requires so much confidence and so much skill in order to do what Sam did.

I, that I couldn't like, I couldn't really recommend just everyone doing this. Julia are you on the same page here? Yeah. Okay. Yeah. Um, and you know, the other thing I was going to say is when it's a little bit related to this, Olivia is like you asked, what are the risks? Julia definitely talked about one, one for me is that.

I think the first time I heard what was happening without even meeting Sam, I was like, I was really turned off about even just like hearing what was happening. And it felt like someone was being a little bit too cute and trying something tricky and I'm like, okay. In that case, like I'm not interested. I don't need to be gamed around any of this stuff.

And so like, if you're not doing this for the reasons and with the confidence that Sam did and executing this, the risk is that you go try to run this process and you're like, yep this notes closed. Here's the next note added higher valuation. Oh, sorry. You missed that one. Here's another one at a higher valuation.

Is that people, if they don't believe that you are. As execution focused and as incredible of an operator as Sam is, you might get everyone to turn away. So that was one of the big risks that, that I came away with. Yeah. Similar, similar Julia. 

Julia Lipton: [00:40:00] Yeah. I think that's very real, but the other piece of this component is for every investor along the way, there's these notes that are

getting higher and higher and more expensive and more expensive. And they're closing and they're closing and they're closing. And as an investor, it's like, you've gotta get on the train. You miss the train. You've gotta get on the train. You've been sitting and in parallel to watching the price go up, you're also seeing the company updates.

So you're watching them hit milestone, hit milestone, hit milestone, and you're building more and more conviction. And he's excellent with email followups and sending docs. He has this process so dialed not sure if he shared, but he is one of the top users of Superhuman because he is a machine. And so as an investor, you have these two things happening in parallel.

You're seeing the price go up. What feels like in real time, which doesn't usually happen in private companies and you're building more and more conviction and gaining more and more company insights. And this only works is if you know that every time there's a touch point every week, every month, you're going to be nailing it and nailing it and nailing it.

And if you are that good, you can do creative things, but very, very, very few companies can execute them. 

Jason (host): [00:41:16] So I wanted to ask you now that I know Julia, when you joined. I think he probably raised three or four more notes after you. And then the full equity round from Andreessen Horowitz. Tell me a little bit about what you observed or what you saw, maybe what you heard directly from Sam as he was going into formally raise the, I guess $10 to $12 million round that ended up

being led by Andreessen Horowitz. Was he telling investors that this was happening or you just kind of watching with, with, uh, with popcorn? 

Julia Lipton: [00:41:53] Yep. He was like, I am an enclose the round at this date. Like we are going to go out on this date and we're going to close around at this date. 

Jason (host): [00:42:00] Okay. So you're laughing a little bit and, and shaking your head and, uh, and just narrating what I'm seeing here.

Tell me a little bit more about what, like, why that was crazy from what your experience having done many, many rounds of investment and seeing it happen. What was so crazy about that 


Julia Lipton: [00:42:17] The timeframe that he was planning for, it was very short, so it can take founders three, six, nine months to raise the current market is a little bit different, but traditionally it can take founders quite some 

time to raise. So one, I was like, okay, let's see. And then two, how specific he was on 

what he was going to do what and why. And again, it just comes down to this plan. Like he knows that he's milestone milestone, milestone, and because they're so consistent, they can plan. Very effectively. 

Jason (host): [00:42:51] That's amazing. Well, look, here's my question.

We've said that a lot of what was covered in the interview with Sam is kind of like showing what Tiger Woods would do, and then maybe creating the false perception that a new golfer should do that. Maybe you can talk a little bit about things that you saw Sam do that you're like, I want more founders to do this.

Um, you know, something that is a little bit more. Accessible if you will. Yeah. 

Julia Lipton: [00:43:19] So one he's incredible at sharing company updates. In every investor update, he says, our goal is still not growth. Our goal is product technology and execution. He's committing to delivering on the things he knows he can win at.

Now it just happens that the growth for that company is out of control, but he set himself up to be able to deliver month after month after month. 

Jason (host): [00:43:43] Great Julia, last thing I just popped popped in my mind. What is the most unique thing about Sam that you've seen? Not fundraising or startup related. 

Julia Lipton: [00:43:53] He 

doesn't use to do lists 

on his calendar. And his calendar drives his life, which means he has almost no mental energy spent on worrying about things to do, because if there's something he needs to do, he just puts a block on his calendar. And at that point he assumes it's going to get done because he's so disciplined about following his calendar.

And so what's interesting to me is most people have this gap between like thinking anxiety, wondering, and then doing. He doesn't have that. He just like has a thought and he puts time on the calendar to deal with it. 

Jason (host): [00:44:29] That's cool. 

I'm glad you shared that. 

Julia Lipton: [00:44:31] It's pretty admirable.

I've I've been working on the same strategy, myself, not executing quite as well, but one can dream.

Jason (host): [00:44:39] Yea h 

I can only imagine what your calendar looks like. Not a lot of room for these little tasks, so, Oh my gosh. Anyways, Julia. Thanks for finding some time for this. This is going to be an amazing counterpoint for people to hear from, um, and illuminating given how interesting the conversation with Sam was.

Thanks so much. I appreciate it. 

Julia Lipton: [00:44:58] For sure. Thanks for having me.

Jason (host): [00:45:04] So that was our debrief with special guests, Julia Lipton of Awesome People Ventures. By the way, much love to Julia who held off a bonafide investing legend to give our audience the scoop on Sam. 

Julia Lipton: [00:45:15] Oh shit. Oh fuck. I forgot that Mike Maples rescheduled our meeting to now. 

Jason (host): [00:45:20] For those who don't know who Mike Maples is, he's the founder of the VC firm, Floodgate and first investor and a few tiny companies you might've heard of like Twitter, Lyft and Twitch.

So yeah. Oh, fuck is right. Thanks as always for listening. If you have any questions about today's show. Or maybe you're raising money yourself and want some help thinking through it. If so, shoot me an email at I'd love to hear from you. Follow us on social, where we share awesome insights into fundraising and life.

As an entrepreneur, the show is @fundedpod and I'm @jayyeh. That's J A Y Y E H. And one more exciting announcement. We've gotten lots of great emails after other episodes, but nothing like the questions that have come in about Sam. Everyone wants more details. And if I had to guess this episode probably made it worse. Because of that, he and I are hosting a live after show Q and A on clubhouse with some really special guests. Check us out on Twitter for more info and let us know if you need any invites to Clubhouse. This episode was produced by Olivia Rheingold, yo yo yo. Thanks also to Jordan Pascasio from Adamant Ventures. Hey guys. And thanks one more time to both Sam Corcos and Julia Lipton, two people I would like to invest in a round I'm raising in June of 2023.

I'll be sending you regular updates and think I'll be able to convince you once I figure out what the company does. And one last thanks to our awesome sponsor DocSend the most trusted document sharing platform.

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