My name is Will Goto and my current startup is Rize.io. Rize is an AI-based time tracking tool that helps you be more focused and productive.

Before Rize, I started another company called Humble Dot, which was a communication tool for asynchronous teams.

I’ve gone through 3 total funding rounds. The first 2 were at Humble Dot and the 3rd was at Rize. 

At Humble Dot, the first round was a $550k pre-seed led by Afore Capital. Our valuation cap was $4.5M and it was done in SAFEs.

We got connected to Afore through a mutual friend who also worked at Twitter. Afore ended up leading our pre-seed by committing $400k of the $550k.

My Co-founder, Macgill Davis, and I were working at Twitter at the time. We had gotten acquired into Twitter from a startup called Peer. 

One of the co-founders of Peer invested in us as an angel investor. We were having conversations with him at the same time as we were having conversations with Afore.

They saw that we were capable of getting funding and had actual backing from people we’d previously worked with so that heavily contributed to our ability to receive cash.

After funding us, Afore then immediately started connecting us with angel investors from their network to close the rest of the pre-seed round.

Afore also helped us raise our seed round for Humble Dot. They gave us warm intros into other firms like Susa Ventures. 

Susa then technically led our $2.3M seed for Humble Dot. It was at a $19M post-money valuation.

It was a syndicated round so Susa technically led the round, but they didn't actually invest the most money.

We were actually aiming for $3M for our round. Susa was willing to do $750k, but we still needed to fill out the round.

We got 2 other firms to jump in for around $500k each. Then a few other investors and angel investors put in anywhere between $100k to $600k. 

One of those investors ended up putting in more than $750k. The other investors included Village Global, Core Ventures Group, and TenOneTen Ventures as well. 

To be honest, we didn't really have much of a plan. We need to pay ourselves and that was the surface level of how we were thinking. But in reality, we actually needed the money for growth. 

Whenever you're building something you're selling to mid-market level companies, and even enterprise companies, which we were doing at the time, you need a full sales team.

Our approach was attempting to get managers on board directly. 

We attempted to mimic how Slack achieved enterprise sales by targeting a manager at a company, landing and expanding to acquire a whole team, and eventually a whole company.

We had early indications of being able to do this with our tool. But we still needed people to get that first touch point to actually install the tool.

So we had a bunch of SDRs that we hired to do a lot of cold outreach and early sales pipeline work.

Then we hoped the rest of the tool would land and expand itself. We hired a designer and also an engineer.

We looked at their website and what companies they funded in the past. Every fund has a thesis. They need to raise money from other investors.

So they need to make the case of why their fund is going to be more successful than anyone else.

Every single one of these has a theme. If you go out and take every single investment company meeting and try to pitch them, you're just going to be wasting your time.

What they say in their ‘about us’ page on their website is usually enough to know if they could be the right firm. You should take the time to filter out which ones don't make sense for you. 

The other thing would be the stage at which your company is in. One of the biggest indicators of this is simply looking at how big their fund is. 

If their fund is a $500M fund, they're not going to care about spending their time investing $100k into your business. 

Even if they say they invest at any stage and they're a $500M fund, they're not going to care about you at the early stage.

If you're a pre-seed company, look specifically for pre-seed venture funds because they're the ones who actually care about you.

It's all about your network. Our connection to Afore was through a friend who worked with us at Twitter. 

We got to know our first angel investor, David Schellhase, while working at Peer. 

He was able to connect us with other people.

Our funnel actually had a really good conversion rate because our initial connections were based on warm intros.

Our conversions were significantly higher than what a normal person would go through in their seed round.

But it was still pretty brutal.

A tenth of the people whom we reached out to probably got back to us. Anywhere between half to maybe 75% of those resulted in a first meeting. 

From there it was around half each time. It's a numbers game. You must figure out how to optimize the funnel, just like you would for a sales process.

For the seed round we talked about the TAM. No VC is going to be interested in you if you don't have a large theoretical market that you can acquire.

If that's not there then there's no reason for your company to be a VC-backed company at all.

The other would be how the product solved a specific problem, but also having the vision that this large market would use our product frequently. 

We would take them through our product and how it worked. We’d also talk through the engagement metrics of our tool and how long they retained as well. 

We’d also talk about the customer testimonials and our land and expand strategies.

Our vision was this really large people analytics thing that the company lives and breathes with so that it becomes core to the company's communication system. 

The hardest part about creating urgency in the beginning when you don't have someone who is already committed is you have to create a false sense of urgency. 

You're still looking for a lead so the only urgency for you is that your company is going to die if you don’t get the funding. But that's of course a negative signal.

For us we’d say that we were doing well and we just wanted to get fundraising out of the way as soon as possible so we can get back to work. 

We framed it as, we're not looking to optimize on our valuation, we just want to raise money. 

It gave them the sense that we care more about the product than actually raising money. We weren’t trying to optimize our shares or anything like that. 

Coming off that way, it made it seem more genuine. In terms of urgency that worked pretty well for us.

There's probably plenty of other ways to do it as long as it comes off as genuine and not unreasonable.

The fundraising process is just brutal. Investors have a formula for how they decide on investment opportunities, and a lot of the bigger venture funds have the same formula. 

There’s the email intro, the first meeting, and then you need to meet with the second partner, and it's literally the exact same meeting. 

You're just pitching it again, and then a final pitch to all the partners or whoever the general partner is. It’s once again the same exact meeting. 

Then you’re just waiting for responses and following up. It's stressful to be in that stage of limbo.

The more difficult challenges were where you would get conflicting feedback or no feedback at all. 

But for every rejection that you get, you can tweak your pitch to make it better or hear all the objections that you would get from an investor and then improve upon them on your next one.

But sometimes you’ll get conflicting signals — one objection would be a plus for one investor, but a benefit that you would think was a benefit would be an objection for another. 

The grueling nature of the process as a whole is a challenge.

When we got our pre-money valuation terms from Susa, the round quickly became oversubscribed because we cut down on the amount of money that we actually wanted to take. 

Susa gave us a valuation and a specified amount of money. We said that we’d take that valuation, but would take less money because we didn't want to delude ourselves too much.

When we got all of these ‘yes’s and the round became oversubscribed, we had to deal with the interesting problem of asking investors to put in less money.

But because they want a minimum amount of ownership in the company, you have to either include their investment and dilute yourself, or you can bump up the valuation to get more money in and keep your ownership the same.

But in those cases, it will also drop the amount of ownership that everyone else has, and then they have to put in more money to maintain their desired ownership percentage.

It’s a very intricate balancing act to make sure everyone is happy in the round.

For us, we ended up giving up a little bit more ownership. It was less of an impact for us than it was for them to get that extra from 6% to 7%, as opposed to 38% to 37% for us. 

The best way to get and build your network of investors is to work for early stage startups as an employee, and then build those relationships. That's the way I did it. 

If you're trying to build these relationships directly, it's too forced. If you do it that way, it's very rare that you get really good relationships out of it.

Also strategize around how and what order you reach out to your prospective investors. 

The first couple of investors that you reach out to are more than likely going to be no as your pitch is not fully nailed down.

They're going to come with a lot of objections that you haven't thought about yet. If you try to go for your best-fitting investors right away, you're hurting your chances.

It’s more beneficial to try to get meetings with people who aren't as good of a fit for you in the beginning. As you start getting the pitch nailed down you’ll be able to do the pitch without even hesitating.

The first month is a warm-up round. The second month would be your best fit investors that you want to have an absolute best chance with.

And then after that you want to trail off in terms of order of best fit. As you start getting too good at your pitching, it becomes kind of mechanical and like you're going through the motions.

Village Global. 

When we closed down Humble Dot and returned just over half of the amount of money left before starting Rize, Erik was really interested in investing in us again because he liked us as founders. 

I thought that was really cool.

There was a spreadsheet by Shai Goldman. He had this massive list of investors that contained the size of their latest round and what they were investing in. 

That was probably one of the best resources to prospect investors for fundraising. 

It had a bunch of stuff that you don't even think about like how old their fund is and how much money they had unallocated.

When founders say they have trouble with fundraising they think something is wrong with their company or their pitch. 

Oftentimes the actual problem is the founder fit for the problem. 

For example, people will say that they’re starting the next Uber, but they have no experience in taxi services or any related field.

A lot of people get into entrepreneurship and startups because they like the idea of doing their own company. 

The founders that have the most success come from an experience that they've had or a job that they've had and seeing an opportunity where things can be done better in a unique way. 

Founders need to be more introspective about themselves so that they can fall into the right startup opportunity for them uniquely.