My name is Orri Bogdan and I’m the co-founder and CEO of VAE Labs.

We started VAE Labs as McGill students, with the end goal being to break into the neurotech industry. 

My team was studying neuroscience and chemistry at the time — we wanted to start with something easy to understand that also solved a problem directly applicable to us.

One of the biggest issues we faced every day was staying awake during early morning classes. 

After looking deeper into the market, we realized that in theory the best way to consume caffeine would be to spray it on your tongue because absorption through the buccal membrane allows the effects of caffeine to be felt 5 times faster. 

2 years later we developed our patent-pending HyperSoluble caffeine technology, which allows VAE to deliver a coffee’s worth of energy in just 3 sprays. 

We’ve had one successful crowdfunding campaign, two failed launches, and a successfully closed seed round. 

We’re now in the market selling D2C, and are prepping for a much-improved launch with 3 new flavors in over 1,000 NY-based stores this coming October.

In terms of market size, caffeine alone represents a $25B TAM in NA, whereas supplements are closer to $80B. 

Once we cross the chasm to pharmaceuticals, we’ll be entering a $550B NA market.

We started trying to raise a pre-seed rather than seed, because we didn’t think we’d be able to raise more than a few hundred thousand dollars. 

This was due to feedback from the few VCs that actually responded to our cold outreach with a non-generic reply. 

That reply was almost always some variation of “you’re too early, come back when you have at least a $1M run rate.”

The main reason for that feedback was because I primarily reached out to CPG funds. Everyone told me “you’re a packaged goods company, you need to talk to CPG-focused funds.”

The problem was that CPG funds don’t typically invest in innovation — they invest in proven concepts to get a lower return than a typical fund, but at a better hit rate.

It was at this point that we realized that without getting both capital and a serious strategic alignment, we had no chance.

From November 2021 until May 2022, I met with over 50 angels, of which almost all were from cold outreach on either LinkedIn, Discord, or Clubhouse. 

During this time I flew out to Miami to pitch a billionaire, CPG vets with insane industry experience, as well as random people on LinkedIn who just had ‘investor’ in their bio.

By February we calculated that if only 20% of our angels converted, we’d have about $250k in the bank — this felt like a fair estimate, so at that point I officially “opened” the round.

In March despite hearing “yes” or from many investors, we still had $0 committed — something needed to change.

I decided to try a new approach and apply to as many accelerators as I could find. After a few months, we got into three: Launch House, Newchip, and the Draper Startup House Accelerator.

We joined Launch House for their online program and accepted the offer from DSHA to welcome the first investors to our cap table. 

DSHA was the first and most important inflection point for our seed. 

After just one meeting they offered us $50k on top of a rigorous month in Austin learning from top founders. 

We quickly negotiated a deal, accepted, and left for Austin with the goal of bringing VAE back to life.

That news spurred excitement in my angel base and led to us closing the first $250k tranche ahead of our eventual negotiations with VCs. 

We had 2 lead offers, one $300-500k offer that was strictly follow-on, and several other funds ranging from $250k - $1M that we ultimately had to turn down.

After months of negotiating with multiple funds, we were able to bring the cap from $3M to $8.5M, got the investment dollars up, and remove the terms we weren’t comfortable with. 

We ended up giving up a significant chunk of equity, especially counting advisory shares which we concentrated into one person.

We don’t regret 1% of the equity given away — we liked every single investor we raised from. As a result we were able to get smart people on our cap table — rather than passive money polluting our business. 

We’re significantly stronger as a result, and it reinforced how important it is to have perfect-fit investors rather than anyone who can bridge you to the next financing round.

We raised over $2M but definitely didn’t intend to raise that much at the outset. Our first deck has $244k as the target, which we identified as the minimum we needed to get started. 

Because we were so unsure about our ability to raise, the cap was set at $2M — before someone convinced me to increase it to $5M.

Despite the low valuation cap, we couldn’t raise a dollar.  DSHA recommended we put $1M as the goal on our deck, both to give us a buffer and make us seem more appealing — so we did.

When we finally accepted our lead offer, the amount was for $1M and the cap went up with each negotiation.

We took on 2 other funds, and while we wanted to limit our dilution, we ultimately decided to raise well over the amount we initially asked for. 

We did this in part because we wanted the other 2 funds involved, and because we knew the market was likely to get worse.

We wanted to bootstrap until we had revenue. As a physical-good startup, we knew that it would be a lot tougher to raise than a B2B SaaS company — we needed PMF. 

This led to us bootstrapping an Indiegogo campaign in late 2020. 

The campaign itself went well, netting us over $55k in sales, but resulted in a botched run, a year-long delay, and running out of money due to all the points of failure.

As a result our options were to either give up or fundraise. We were 100% willing to raise a small amount at a low valuation cap.

The sudden increase in interest due to our improving product and growing network led us to doing a more standard pre-seed, followed by a seed raise.

We had split part of the money into future R&D, a small portion for founder salary, and the rest into inventory and marketing. 

We ended up realizing we needed to hire a CMO, and did so later on in the year.

Smart people on our cap table, and not just passive (or even worse, actively negative) money polluting our business. 

The way we got in front of VCs is very different from the way we got in front of angels.

I was extremely nervous during the first VC pitch, which happened in late 2021, after our first manufacturing run just bombed. 

He asked what valuation I wanted to raise at, and I told him we only needed $250k, and would do it at a $2M cap.

That was obviously a low valuation, but it was enough to get him interested. Even so while the conversation continued for the next 6 months, he would ultimately back out. 

This was a shock for me - not only was it a warm connection, but he’d seemed 100% in.

He was taking on the role of a mentor for me by giving tips on my pitch and deck — I felt he was someone on my side. 

I’d even met him in person and that meeting went well!

I’d also pitched 30-40 other angels, many of which were from cold LinkedIn DMs, and had several other verbal “yes’s”.

We met our second fund — Midnight Venture Partners — through the introduction of a founder they’d backed. 

Not by email but by meeting that founder at the gym and then having the good fortune of one of the Midnight investors being there at that same moment.

We met Alex from Cartograph through a referral after going to a CPG event in Austin. 

I sent him an InMail on LinkedIn and while he started with us as an advisor, he ended up backing us both personally and with his fund, Cartograph Ventures.

From November 2021 until May 2022, I met with more than 50 angels, of which almost all were from cold outreach on either LinkedIn, Discord, or Clubhouse.

We had trouble raising funding until we started talking about "sprays" as opposed to "caffeine sprays." 

Investors saw caffeine sprays as a limited market, but loved the idea of using caffeine as a stepping stone to go into other verticals.

Bolstered by the potential of a lead offer from a meeting with Draper Associates, I sent out a mass email letting everyone know that the current $5M cap was moving to $6.5M in just two weeks, and we’d be closing our round to Angels by the end of the month.

The result was FOMO.  

In just a couple weeks we went from $50k raised (only the money from DSHA) to an additional $200k from angels. 

We converted the serious ones and were finally in a position to negotiate with our first real VC: Draper Associates.

Getting in front of DA was easy, as we were connected through the DSHA program. 

Part of the program included pitching Tim himself — two weeks later — we got an email asking for a meeting.

One week after the meeting, we got our first offer.

Our first challenge was getting VCs to talk to us. We got saved by getting into a perfect-fit accelerator, and worked hard to make use of our time there.

Our second challenge was moving up on valuation. Initially, we only had one VC offer, which made it seem impossible to secure a better deal. 

By getting more funds interested, we were able to get a much fairer deal for both sides, and still managed to get in each fund that we wanted.

The last unexpected challenge was simply the time it took to go from signed term sheet to close. 

It took about 3 months to get the money in the bank, and while we were confident we’d get it, it was a bit unnerving to wait.

Most of the “no’s” claimed we were too early and to reach out later. 

I think we had one or two on market size, with a question mark around our future product — those were from consumer tech VC’s rather than CPG funds.

We turned two “no’s” into a yes. One was from a fund that we knew was super interested, but needed an extra push. 

Getting a perfect-fit strategic advisor plus a lead offer on the table is what solidified their interest.

The other “no” we turned into a yes was from that same strategic advisor. 

He initially wanted to just be an advisor as he was early in setting up his fund, but as he got to know us better, he decided he wanted to be more actively involved.

He ended up investing both personally and with his fund.

Make sure you’re the right kind of startup to raise capital. Most startups aren’t, and you’re wasting your time if you try to raise VC as a company that won’t generate returns that a VC would need.

You need to stand out — especially if you aren’t ex-FAANG or a Stanford grad. You need to make sure your business - not your idea - has a real USP.

Ideally this will include traction, high margins, and reasonable evidence that capital will allow you to grow at a rapid pace. 

If you can’t prove this it will be impossible to raise from any reputable fund.

My favorite investor and mentor is Alex Cantwell from Cartograph Ventures. 

He's an amazing person with experience building other companies in consumer to billions in revenue. Anyone who gets to work with him is extremely lucky.

Yes. Try out my new product once we launch - it's called hotseat :)