I'm Ali. I studied computer science and math at Berkeley.

While at Berkeley, I started micro1 and it started to take off so I decided to graduate one year early to focus on it.

We’re building an AI recruiter that mainly helps companies hire software engineers, but really it's a pretty generalized model that can apply to other roles as well.

We launched in 2022 and raised a rolling $3.3M pre-seed round. We started at a lower valuation and then kept increasing the valuation as we went.

The latest valuation for our pre-seed was $30M. The main people that joined our pre-seed were Joshua Browder, Cory Levy, Jason Calacanis, and Dream Ventures. 

We also had a bunch of other angels. The way that I designed the pre-seed was to get as many supporters as possible. We had 25-30 people join the cap table with relatively smaller checks.

Right after we raised our pre-seed, we actually became profitable.

We weren't really thinking about raising again, but about 3-4 months ago we had a couple of people that were really interested in investing.

Dan the COO of Deel wanted to invest. Sean Rad, founder of Tinder wanted to invest as well.

Because there was some interest, we decided to do a seed round.

We ended up raising the same exact amount that we raised in the pre-seed. We raised another $3.3M but this time it was at an $80M valuation.

Because we were profitable the idea was to have a nice cash cushion and speed up product development without having to worry about losing money in some months.

We want to operate at break even as we grow — as we have high velocity on product development — there will be months where we lose some money.

We want to have a cash cushion for that. The reality is we were in a pretty good position to get a good valuation, which is why it was ok to take on a few million more.

The milestone that I was thinking about before we even thought about raising was getting to a $10M run rate. 

Our $10M run rate is a little bit different than pure SaaS because our revenue is not pure SaaS — the gross margins are lower.

I ended up deciding to raise a little bit before that. We were at around $7M a year or so run rate when we decided to take on the few million in checks.

The valuation was at more than a 10x multiple — which is aggressive — especially for our business that isn’t purely SaaS revenue. That felt like a nice valuation so we took advantage of it.

We will probably raise a full Series A early next year.

Since this round was small strategic investors, I wanted to make sure every check we took on was going to be super helpful in some way, and in different ways. 

The strategy for the seed was quite different from the pre-seed. 

The goal of the pre-seed was to get a ton of supporters and find the people that care about the company. For the seed, it was to get people that were going to be really helpful.

Sean Rad was one of our biggest clients so aligning his incentives was super helpful. Sean also became a mentor to me in a way.

For Dan this one was clear — he's COO of Deel. 

We're not only getting Deel as a client for both ends of our platform, but we’re also dependent on Deel's platform for certain parts of our product.

The third investor that joined us in our seed was Motley Fool Ventures. The goal with them was to have one enterprise VC eventually become a big client and help us close other enterprises.

We also had Companyon VC invest — they’re a smaller firm that we knew would go to bat for us and get us intros and leads. They've already been super helpful in that regard. 

They're almost all warm intros through existing investors. 

We've been building in public for the last year and a half. 

I've slowed it down a little bit, but building in public has really helped us get inbound interest from VCs. 

Throughout the time that we weren't raising, post-pre-seed, I would get probably 2-3 emails a week.

Regarding cold outreach, for the first round, if you really need to do it, then you should — I personally haven't seen much success with cold outreach. 

We actually got one of our investors in our pre-seed round — Seaplane Ventures — from a Twitter DM. They ended up putting in a few hundred grand.

Other than that, we had zero success with cold outreach. You should really try to use cold outreach as a last resort. 

Another approach is connecting through founder friends. This is a really underplayed strategy.

A lot of people use the strategy of connecting with existing investors to get more investors, but if you don't have existing investors, that can’t work.

If you don't have those you could probably try to join a community of founders that have raised and become friends with them. 

If you don't want to join a community like that, you can DM your founder connections on LinkedIn even if you don't really know them. 

You can still try to ask for an intro.

Regarding sole cold outreach, I probably reached out to 50 people. This was a combination of Twitter DMs, emails, LinkedIn, and others.

There were around 10 reasonable responses. This turned into maybe 4 meetings and 1 ended up investing.

My pitch changed as I learned about the process.

This was the first time I was raising even though I’d built bootstrapped companies in the past — I learned a ton really quickly and embraced the idea of iterating on my pitch. 

In the beginning I didn't want to spend any time on pitch decks, spreadsheets or anything like that. I had the philosophy of solely spending time on product, and that nothing else mattered.

I would say that I still have that philosophy, but if you're raising, you should spend some time on it.

When I rushed the pitch deck and didn't really have a good narrative I realized that the meetings weren’t going all that well. 

I decided to spend a little more time on the deck.

I also thought more about what the actual narrative of my personal story was, but also what the company's narrative and vision was.

One thing I iterated on by the 15th or so pitch was spending a lot more time on my personal story — for about two minutes in the beginning.

I realized if you spend a minute or two describing your personal story and how and why you started the company, humans relate to that. 

This is especially important in the earlier days when the numbers are not really there — the most important things become the actual connection you build with the investor.

Another thing I focused a lot more on was the vision. In the early days, you really have to sell the vision and get investors excited about that. 

One phrase I kept repeating was “how can I induce genuine FOMO for this investor?” 

I tried to figure out how to make the vision so big that it got them excited — but more than just excited — attempting to induce real FOMO.

I started pitching the company as to what it would be in the future. The pitch was much more around what it will be versus what it is currently.

Another thing was that in the very early days, we had revenue, but we didn't really have a fully functioning product.

It was a scrappy bunch of spreadsheets put together. I ended up actually designing the full product on Figma.

Most early stage founders would probably agree that there isn't really urgency. You almost have to fake it, but you have to be very careful about faking urgency.

I set timelines for the round to close many times. That actually ended up being a mistake because investors would tell me that they couldn’t do those given timelines. You can’t then tell them that you’ll give them another month because that's going to make you look like an idiot.

Be careful with trying to build a narrative for urgency.

Once you get your first couple of checks it becomes a lot easier — especially if it's a couple bigger names like Jason Calacanis was for us. 

It's hard to actually understand what the number of rejections feels like until you experience it. They often come right after another, which is pretty intense.

If it's your first time raising, it's probably the first time that you're going to get this many rejections in a row in life generally.

You learn pretty quickly that it's just part of the game. You have to be very much okay with the no’s.

You have to assume that an investor is not investing until they've literally wired the money. 

I put probabilities on it. If they say they're interested, there’s maybe a 10% chance that they'll invest. At that point what they say doesn't even matter, just try to set up the next call.

If an investor asks you to send the SAFE, you could consider it a probability of 40-50% that they're actually going to invest.

If they've signed this SAFE, it’s now very likely, but still not a 100% percent chance.

Not understanding this in the beginning was a big challenge.

When Joshua Browder invested he said he wanted to invest $100k and asked where he should wire it. 

This was one of the first investor calls I had. I barely knew what SAFEs were at that point.

I really valued that high conviction. After he said that, we did due diligence and it took about 5 to 6 days to actually close it out. 

But that was a really interesting thing to me where he immediately said he wanted to invest, and he said that Cory Levy wanted to as well — Cory wasn't even in the call.

Another interesting story was with Jason Calacanis. I met him and we had a 30-40 minute call — I messed up the narrative on this call.

I told J Cal that we'd raised about $1M and that we weren’t really raising anymore.

And that was sort of true. I was open to checks, as I always am, but I wasn't super actively looking to raise more than $1M. 

When I told him that at the end of our call, he said that this was a bit of a bait and switch.

I didn't really know what to say. I was obviously meeting him and we were doing an investor call, but then I told him that we weren’t really raising. 

It wasn't the best ending but a day later he sent me an offer regardless.

If you’re struggling to create urgency, you should set your funding round goals to be lower amounts.

If you’re raising at a lower amount, you can actually tell investors that you’ve filled the round, and if they were to invest, it would be oversubscribed. 

You can then confidently ask them if they're in or out. The narrative that comes about from that is that you don't need them (which is good in their eyes).

You already filled your goal and then people are going to want to come in at that point. When more people do come in, you can increase the round’s amount/funding goal. 

You can just keep increasing and it's fine. 

Also don't push so much emphasis on the fact that you need to close within a month or two, especially for a first round. 

For a pre-seed it's okay to do a rolling pre-seed and keep increasing the valuation and close it within a few months, maybe even 6 months. 

Founders should embrace rolling pre-seed rounds more.

A lot of founders do this, but they don't talk about it. They pretend that they close in a short amount of time, but a lot of times they don't. 

Joshua Browder — he's been incredible. He always answers the phone. Every time I text him, he calls me no matter what time it is. 

He's been truly helpful in terms of solving problems, but also has directly added a bunch of revenue with introductions that he's made. 

He's probably directly added $500k/year from his intros. 

Watching a bunch of This Week In Startups to get the lay of the land of the current VC market is helpful. Especially the ones that have partners on them. 

The second is Ryan Breslow’s book, which is literally called Fundraising.