I'm Alec Lee. I'm CEO and co-founder of Endless West. 

We are the creators of a technology called molecular spirits. 

We deconstruct the molecular profile of wines and spirits out in the market, figure out what makes them tick, and then we source those same components from other sources in nature, and recombine them to recreate those spirits.

This allows us to make spirits without aging, without the traditional fermentation processes required, and to use more sustainable and scalable feedstocks.

We raised a $2.7M seed round at the end of 2016. We then raised a $10M Series A in early 2018. 

We then raised a $20M Series B in May 2020. Lastly, we raised a $60M Series C at the beginning of 2022.

In the early days, we really just wanted technology validation. I had a social media person to help us manage some of the press, but at the time, it was effectively all R&D. 

For the Series A, our goal was validating at pilot scale, so we built out a small facility in San Francisco. We were able to launch our first commercial product with the Series A at the end of 2018. 

The Series B was focused on further expansion and launching new products. It was about preparing for our full-scale facility.

The Series C was primarily used to build a facility and to further grow the team. 

Part of that was leaving San Francisco and moving to Detroit. We started that move at the end of 2022 and closed our San Francisco offices at the end of 2023.

The reality is that very few entrepreneurs have the luxury to turn down investors. 

There were many times that we did turn away investors, but it was mostly due to check size not matching the round. 

It was always cordial. Generally speaking, I believe that having more supporters on your cap table is better than fewer.

But for the most part, if someone was willing to write a large enough check, we made a spot for them. 

We didn’t really get to a stage of turning down big investors because we largely screened investors on the front end. 

The biggest factor was considering which investors had enough firepower to write a check in the current round, but then also to follow on in future rounds. 

There's a lot of times where people are operating out of very small funds and so they can't write subsequent checks, so we would always prioritize someone who was able to follow on. 

Another important factor was how likely an investor would be to work well with us. That's a combination of how helpful they can be and how difficult they are going to make your life. 

Most founders know, even if they won't acknowledge it, that investors are only so helpful.

Investors aren’t there to recruit for you or to help you sell products. There's all kinds of founder resources that VCs have, and those are great, but they don't make or break your business.

Early on there was a lot of press that was serendipitous. That brought a lot of inbound investor interest. 

We were also part of an accelerator called IndieBio. They were super helpful in establishing some of our network in the early days. 

That network grew to advisors who helped us along the startup journey. They made intros.

Eventually you build your own network. One investor makes an intro to another investor and you build your rolodex that way.

Most conversations happen at the seed. It’s realistic that I had between 50 and100 conversations. I ended up with 5-10 people on the cap table.

The breakdown is very round specific. It wasn’t that hard to get some conversation going, especially because we were the first in our space. 

We were also the benefactors of a hot food tech space at the time. 

From an initial contact, I'd say probably ~80% moved to a conversation. It was relatively rare that people would outright decline to at least talk, but the drop-off is very quick after that. 

Many VCs take meetings just to get smarter about a space, even if they have no interest. Of the first conversations, maybe only 10 to 30% got to a second conversation.

The number of conversations goes down dramatically as the check size increases. In the early days, you're testing your pitch. 

By the time you get later in the process, you're no longer testing your pitch with anyone.

You already know who or what types of people are ready to hear what you have to say. You end up pre-screening a lot of the no's just because you know it's not going to be the right fit. 

There’s also a lot of attrition as check sizes go up; far fewer funds can write 8 figure checks than can write 6 figure checks. You naturally have to be a lot more strategic as things progress.

Most of the stuff that we cared to communicate was our proprietary technology that dramatically changed the course of the future for a very stodgy industry. 

We emphasized that this technology is one that will not require significant amounts of capital in order to come to fruition.

The thing that was more important was comparing our commercial progress against our peers. They’ve needed to raise 5x to 10x the amount that we have to achieve even close to our results. 

It was really important to communicate the ratio of the results we were able to produce per unit per dollar invested.

I got feedback from my investors who told me that I was telling them stuff that was too conservative. They wanted me to sell them the dream.

The context for me is that I bootstrapped my first company to an exit. 

A lot of your mentality gets galvanized in those very early days of entrepreneurship when you don't have anyone else's money. 

We had always approached the world far more conservatively than a lot of our counterparts. 

That meant we survived much longer with the capital we raised than we would have otherwise.

But it also made the pitch a lot harder in many ways because I wasn't willing to make things up just because an investor thought that the numbers weren't optimistic enough.

In the startup world, you still end up with optimism in schedule or optimism in cost, but it’s certainly better to have scaled back an order of magnitude and then been closer to being right than just have been completely off.

There is a cohort of investors who want to invest in the dreamer because they know that some of the dreamers are just going to make big, and that's the game that they're playing.

Other investors want to invest in someone who's down to earth and has their feet planted on the ground. In that sense, our investor base selected itself.

It's almost always the time to close. It's just the herding of the cats. The best illustration for us was our seed round. 

We got that term sheet signed in June, but we didn't fully close until early September. In retrospect, that was quick, but I remember losing so much sleep agonizing over it. 

The big thing was that I had investors in Asia, investors in Europe, and then I was on Pacific time and my attorneys were on Eastern time. 

What it meant was that every Monday is basically someone else's Sunday and every Friday is someone's Saturday. 

Every loop takes 24 hours to just get 1 answer to one question. So if you have 3 successive questions, that takes 1 week. That was the worst part of the process.

I had an investor in 1 of my rounds who offered to lead a term sheet at an aggressively low valuation. 

I had other investors who were sitting on the sidelines, but the moment they saw this term sheet come through and realized that, if that investor were to come in, it would significantly devalue what their shares were worth.

Instead, the existing investors wrote a term sheet at a valuation that was more fair. 

Those investors weren't willing to step up initially, but only when things started to look the way it looked, they took action.

If you understand how to navigate investors’ secondary or unspoken incentives, you can better strategize with your fundraising process. If you do that well, you can end up in a better position.

Your startup has to “meet the moment”. You see specific magical intersections of market interest in a technology, available funding, and your startup’s progress, and that’s when the time is really right for a fundraise. 

If you’re fundraising based merely on when you need cash, you’ll inevitably have to raise at least one round at suboptimal timing and that can be dangerous.

A lot of “meeting the moment” is extrinsic to you. Many founders believe they have full agency. It's your startup and you get to write your own destiny. 

If you didn't believe those things, you wouldn't be a founder anyway. It requires a sufficient level of hubris to believe all those things about what you can do.

But that hubris can also come at a cost if you’re not being realistic or responsive to what’s happening in the macro environment. 

There are a lot of people who didn’t raise in 2021 because they didn’t need the money, but then in 2022 it was mostly too late. 

Others didn’t raise enough, thinking they could just keep the endless cycle of fundraising going. 

Still, others raised too much in 2021 and couldn’t get the momentum to catch up with funding, which meant they had real burn issues that they couldn’t manage by the time the market softened. 

The best founders over a long stretch of time are going to time those things well.

It depends on what stage you're at. IndieBio is excellent. They're going to catch people super early. For a first time founder or someone who's just getting their feet wet again after a transition, they're excellent.

I've had a really great experience working with Collaborative Fund and Horizons Ventures. 

There's a small fund called Level One Fund. They co-lead our last round. They're multi-sector and effectively an evergreen fund. They're one of very few investors who like to get really close with their founders.

Building those deeper relationships is super valuable in making sure that everyone's aligned for the long-term. 

We’ve worked with a bunch of other investors that are really great, this isn’t an exhaustive list. 

We’ve also worked with some great investors who didn’t end up pulling the trigger, but they still taught me a lot and were very supportive. 

The world has a lot more great investors out there than it has bad ones. 

Horror stories are relatively common in terms of absolute numbers, but relative to the number of startups and investments that are happening, they are few and far between.

I love listening to How I Built This. 

A lot of us are navigating startups with the idea that there’s a sea of wrong answers in front of you and you’re trying to catch the right answer with your fishing pole.

The idea that many of us have is that eventually it'll come and then once you catch that right answer, you can roll a little bit further and then throw the bait back and try to catch the next right answer.

Your next thought is that if you catch enough right answers then you can get to the finish line. 

The reality is more that there's a sea of many right answers mixed with many wrong answers and as long as you get enough right answers among the wrong answers that you've also caught, you're going to be ok.

The difficulty isn't knowing whether the answer you've caught in real time is right. It's that in many cases, whether it's the right answer or not will be written after the fact. 

You're only going to weave the story halfway through. It won’t be obvious in real time.

When people say that startups are storytelling, you're writing the story in real time, but you don't know what any of it means until you look back at it a year later. 

The best founders are the ones who know how to tell the story after it's been written.