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Embark on a journey to success with the Startup Founder Roadmap, your go-to guide for navigating the challenging yet rewarding world of startups. Whether you're a seasoned entrepreneur or just launching your first venture, this podcast is your compass for building, growing, and leading a thriving startup company.
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The Startup Founder Roadmap Podcast is your weekly dose of practical advice, industry insights, and expert guidance. Hosted by Christopher Hines, a podcast specialist with a passion for empowering startup founders, each episode is crafted to equip you with the tools and knowledge needed to not only survive but thrive in the competitive world of startups.
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00:00 - Chris (Host)
Hello founders, bootstrappers, venture capitalists. That's tuning in out there. Thank you for tuning in. Welcome back to the show. Today we have Steph from OpenVC Super excited to have this guy on. He was referred to me by another amazing gentleman that you guys heard on the show, so I know this is going to be good. Steph, welcome to the show.
00:18 - Steph (Host)
Hi, chris, thanks for having me.
00:20 - Chris (Host)
So, before we get into it, I always like to ask my guests why should my listeners listen to you?
00:26 - Steph (Host)
Oh well, that's not for me to say, but I talk a lot about raising funds. That's what I've been focused on in the past three years. So if you're an early stage tech founder and you're thinking about raising funds you are raising funds or you try to you have then there are probably some things that I can share that you will find valuable.
00:50 - Chris (Host)
I love it. I love it, okay. And so you said you've been doing it for three years. What do you think is the most surprising thing you've learned in that timeframe so far?
01:01 - Steph (Host)
far. Oh, so many things, man. I guess the one thing, the one misconception that I that I fixed, was, when you start in this space, a lot of people, and myself included, see venture capital as a marketplace. Okay, you have capital and you have startups, and it's a matter of matching them. Just like, you know, buying a toothbrush on Amazon, you match the buyer and the seller.
01:27
When you look at the actual dynamics and this is what we do at OpenVC, right, you see that it's not just matching supply and demand. You see that there is a human aspect to it. You see that there is a psychological and emotional aspect to venture capital fundraising and all that stuff aspect to venture capital fundraising and all that stuff, and and so it's not something that you can automate of, you know, um, turn into a full process, and so my learning is that it's much more like a dating dating dynamics. Right, you have desires, you have, uh, you have the top 1% of founders are chased by the top 50% of investors and the top 50% of investors are chased by the 99% of the founders, and it's very imbalanced, it's very asymmetrical, just like dating.
02:19
And a lot of people are just irrational and they invest with their heart rather than their brains, and so this is yeah, this is. My main takeaway in all of this is that it's like one big you know dating scene out there.
02:32 - Chris (Host)
That's so funny. You say that because I've talked to VCs who would say they try not to be too emotional when they're making a decision on what company to invest with and who they'll work with. They try to keep that part out of it, but they never can. So that's a very interesting dynamic. I love the way you put that. I think that's something a lot of founders should be aware of too is, if you're not the top 1% of founders of companies, then you're going to be in the other group. That's chasing the venture capitalists, not having them chasing you.
03:11 - Steph (Host)
Yeah, and that's a difficult thing to hear for so many reasons. Right, raising funds has high stakes for founders. When you raise funds, it's usually kind of all or nothing situation and it's often seen as the pivotal point, right, where, if you pass it, then you have the funds. You have 18, 24 months ahead of you to build, grow and succeed, and if you cannot raise, then everything stops. And so people are very emotional about that fundraising thing. And, yeah, this is something that a lot of founders need to take a step back and breathe in and understand that if you're chasing, if you're desperate, you're not going to give the good signals, right, because investors notice that. So you want to be cool, you want to be chill, you know, and you want to be in control of that process and not be like, you know, headless chicken running around chasing after every investor.
04:08 - Chris (Host)
Yeah, I think that's kind of what I do see from the people that are the founders that are trying to get funding. It's almost like it's their only focus in life. It's a weird thing where they're so deep into it and they see it so desperate and they're so crazed about it that they kind of obsess to a point where I would say it has to be unhealthy to get the result that you actually want yeah, but and I and I mean who can blame them?
04:35 - Steph (Host)
it's, it's hard, it's super hard and you're told it's super hard and you've never done that before. And that's another thing most founders have never raised funds before, so they don't have the playbook, they're just trying stuff. They have bits of information here and there. They gather that from Twitter, from LinkedIn, from podcasts, and so they do their best with what they have. But you don't learn that in school and you just do your best with what you have, which in most cases, is not much. So, yeah, it's a tricky right of passage, but that's what it is.
05:14 - Chris (Host)
So one thing that always interests me is what are kind of the basic entry level requirements that a founder should kind of have if they want to get funding? Like, do I have to have a certain amount of users, a certain amount of revenue? Does my idea have to have enough validation, like what do I actually need to where I can go to VCs and have that serious conversation?
05:37 - Steph (Host)
Okay, so short answer is you want to show product market fit, product market fit. What's product market fit? It's retention, so people use your product and come back. It's meaningful usage, so people open your app but they actually use it to do stuff that matters, right. And it's growth 10%, 20% month over month, right? That's the kind of short answer. The long answer is that it's really going to depend on what stage you're at, because if you want to raise a pre-seed or a series A, there are completely different requirements. It's going to depend on your product type, right. If you're doing hardware or deep tech, there is no users, right?
06:26
And there's not going to be any users until you have shipped the product, and sometimes it's going to take five years if you're building some quantum computing stuff, and these are also startups. So there are many, many sub niches, right, and I cannot give like one blanket answer. And then the last big criteria is going to be the team, because the stronger the team and the less evidence investor require. If your team, you know, if your team is like elon musk is a cto and mark zuckerberg is the ceo, then people are not going to ask for traction, they don't care, right?
07:01 - Chris (Host)
just throw money at you right.
07:03 - Steph (Host)
On the other hand, on the other side of the spectrum, if you're an unproven founder, you're a good person, but you've never done that before and you don't even have a technical co-founder. You're alone on this. You have to show more. So it's kind of a continuous balance between who you are and how much traction you can show. And if your track record is low or non-existing, then you have to compensate with more traction, more retention, more growth, more evidence of success and that's the trade-off, basically here.
07:40 - Chris (Host)
It makes sense why a lot of bootstrappers don't want to chase funding, then because a lot of them are like I work alone. I like to work alone. I'm OK with that. I don't want to build a team, and it sounds like having a team is one of the most important aspects of this.
07:55 - Steph (Host)
Can be, because, for one thing, there's a prejudice against solo founders. The data is not clear on that. There are studies on is it better to be a solo founder, a duo founder, whatever. The data is not super clear. Is it better or not? But a lot of investors just have this prejudice that if you're a solo founder it's a negative, it's a red flag, and so why would you change them if you know they are already prejudiced against you? But also prejudiced against you. But also, I agree with you, it's a mindset thing. A lot of people just want to build their little business comfortably and I 100% support that.
08:33
I'm not saying everyone should chase VC money Absolutely not. And actually I'll tell you something I think for most people it's great if you can bootstrap a business first, have a first success, have some money in your bank account a good situation and then your second company, this time, can be VC backed because now you have a track record, now you have done that before, now you have the cash, because it takes cash to actually raise VC money. You need to prove that you're already a bit successful, and so it's much, much easier to raise if you've already had some success as a solo founder as a bootstrap founder than if you just a blank slate. That's my opinion, and so in some way it's kind of building a track record. It's a long-term game that you're playing to become a track record. You know a long. It's a long-term game that you're playing to become a founder. That.
09:27 - Chris (Host)
VCs want to fund. Hmm, that makes a lot of sense. I kind of agree with that, because it's hard to work with people who haven't done what they want to do at that level yet. When they're like here and they're trying to get here, you're if you're like the first one to take a chance on them. That's always difficult to do because you've got to have some kind of proof, some foundation, and I think bootstrapping something like a no-code tool to make 100K ARR is at least a foundation. That's a starting point, right.
09:56 - Steph (Host)
Absolutely, Absolutely. It's not a downside. But the one thing you have to be careful about, cautious about, if you go that route, is that bootstrapping a company is one thing and then going VC-backed is going to be a different experience. And I guess some people just love the bootstrap life too much that they eventually never fit the VC model. But that's fine, because guess what? They're making bank, they're making good money for themselves, they are free, they are autonomous, so more power to them as far as I'm concerned.
10:29 - Chris (Host)
Yeah yeah, I'm always fascinated by both sides. I love hearing from both sides about why they're on their side. It's really fun to me as a founder myself, because I don't see really a problem with either strategy. I think either one can be good. I believe it really comes down to who you are as a person, because I know that we all become entrepreneurs for the freedom and then I meet some VC-backed companies and the founders are like I cannot do anything that I want to do. It's insane.
11:00 - Steph (Host)
Yeah, but that's the deal. If you raise VC money, you know, or you should know that's what you're signing for. You're signing for a shot at becoming a billionaire, that's the deal. But in return you have incredible pressure on your shoulders, you have oversights, but that's the deal. For some founders it works out super well and they love it, and for others well.
11:26 - Chris (Host)
It's not made for everybody. I like the way you put that. I want to talk a little bit more about you, With you being Steph from OpenVC. What is it that you do at OpenVC?
11:41 - Steph (Host)
I'll tell you what I don't do. What I don't do is the tech. Okay, I'm not a tech guy, so I cannot code. Uh, even to save my own life, I couldn't code and I don't want to. I hate that actually. Uh, my co-founder my co-founder I'm the same way. I'm not technical at all.
11:58 - Chris (Host)
I'm a people person, you know. Get me in front of people. I can do my thing, man, but coding is not it. I don't want to learn. I like talking to people. Chopping it up, that's my thing.
12:08 - Steph (Host)
Yeah, my co-founder, he's a tech guy. He's a certified genius, right. So he does all the coding, all that stuff, and I'm super happy and I do all the rest. So, basically, I do the Twitter posts, the LinkedIn posts, the newsletters, the podcasts and all that stuff. And, yeah, from time to time I meet people and I shake hands, but that's really actually it's a very healthy distribution of roles. He does the tech and I do all the rest, and we just love it that way Because, on his hand, he's not a people person, so it's just, it's just nice like that yeah, I love that.
12:45 - Chris (Host)
I love that balance for you. I think, as the people person, you always want to find somebody technical, because it's just a lot of times people will tell you to go and work on the things you're not good at. I just disagree when it comes to business. I think it's much smarter in business to focus on what you're great at and stick to that and then find somebody else that can do those other things, and then you guys work together in unison and you can build something special.
13:10 - Steph (Host)
Absolutely that, 100%, I mean. That's why you want a co-founder, you want someone else right To compensate your weaknesses. So yeah for sure.
13:21 - Chris (Host)
So with you at OpenVC, like, what's the big overall goal for the company? Like, is there a certain amount of brands that you guys want to work with, or is it about education mostly? Like, what's the goal?
13:34 - Steph (Host)
I'd say the goal for us is to become the entry point for Venture Capital. So you're a tech founder, you're going to raise funds. First thing you're going to do is sign up to OpenVC and there you have everything you need, right? You have access to investors, you have all the tools that you need, all working together in a native way. You have all the knowledge, all the content, because a lot of founders have never done that before. So we try to provide you know, guides and tools around. You know what's the valuation for my startup? Right? How do I call the email investor? All this stuff. We're really trying to build the yeah, the entry point or the front door for venture capital for founders. And, of course, we also work with investors because it's a two-sided space. So we're also providing some stuff for investors to engage with the founders of OpenVC.
14:30 - Chris (Host)
Oh man, I love that. I love the balance you have, because I think the education part is so important. I was on YouTube and like 2019, 2020. And that's when I just started getting really deep into startups, like I wanted to learn just everything I could possibly learn and it's crazy how little information is out there. It's almost like a secret world where you have to know a certain person to get the details, and it's like I think at least the basics of definitions of certain words should be like people should know that, because if I'm a founder, I might have an amazing idea, a great product, but if I don't know anything about the other side of how I use this, then it won't get anywhere and I can't help the world the way I need to.
15:13 - Steph (Host)
And what I find is I 100% agree with you and what I find is really lacking is structure and playbooks. So you're going to find a lot of inspirational posts or a lot of posts with anecdotes and stories, but what's missing, in my personal opinion, is step by step. How do you do it if you've never done that before? How do I raise funds? Step one, step two, okay, then step two. Two options Option A, option B. Then Like step one, step two, okay, then step two. Two options Option A, option B. Then what happens? What does that look like exactly? What are the templates and tools I'm going to use? So something very practical for people who've never done that before and you know, rather than just another personal branding stuff.
15:53 - Chris (Host)
And that's what we try to do.
15:54 - Steph (Host)
That's really what we try to build A library of resources for first-time founders, guiding you step by step, and I think people see it and they love it. So we're not doing that for nothing.
16:07 - Chris (Host)
So let me ask you this In terms of your content, what do you think has been the most valuable piece of content so far? If you're educating founders a lot and you're giving them details, what do you think has helped people the most so far?
16:20 - Steph (Host)
So evaluation guides always. That's a solid one. How do I value my startup? That's one we have all the time. We have one about can I hire someone to raise funds for me. I'm just going through our blog posts that work the best. So we have one like can I outsource fundraising someone to raise funds for me? I'm just like going through our blog post that worked the best right.
16:41
So I have one like can I outsource fundraising? Right? Because a lot of founders say, hey, can I just hire someone to do it for me? So we have one on that how to call Gmail investors. We have a template there that is free to use and a lot of practical advice and all the mistakes that you should avoid, so this one is also an all-time winner. So, yeah, stuff like that Just questions answer da-da-da and this kind of stuff that works really well Much more than opinion pieces.
17:10
Sometimes I do one opinion piece because I want to say something that people don't really care about, what I think they just want to be. So what they want is execution right, and the closest thing to execution is playbooks and tools. So if you can give them templates, you can give them frameworks, you can give them step-by-step instructions. That's what they crave for, because they can take it, make it theirs. They can take it, make it theirs and execute and move forward in their project.
17:44 - Chris (Host)
And that's what matters. It makes sense that those two are at the top, because can I hire someone to raise funds for me? It sounds like a crazy question, but when you really think about it it kind of makes sense. If I'm a new founder, it's like, well, I could just bring them on my team and I can work with them this way. It sounds like it would make sense. But then I'm pretty sure on the legal side and all kinds of stuff, it just gets all jumbled up and it's a bad idea.
18:07 - Steph (Host)
So actually what they want is they want to hire a freelancer that would raise funds for them and only pay them a success fee. That's what every founder wants to do. Wow, well, which you know? Why not? You know, if they raise you $5 million, sure they can keep $50,000. Why not? But this doesn't work like that at all, and there's a whole blog post on OpenVC to explain why it doesn't work.
18:33 - Chris (Host)
Yeah, that's such an interesting concept, man. I love that you're educating the founders in that way, though, because I don't see it a lot. It's just not something that's public, and a couple of VCs I've interviewed have kind of broken down from their perspective. They really want it to be a partnership where they're only willing to educate the founders that they're working with. Like, if I'm a VC, I only want to educate the founders I'm working with. If you haven't signed a contract to work with me, then I don't want to educate you, which is kind of weird from my point of view, because, again, I just think having that information, those details out there, can help founders a lot more, a lot faster. I just think having that information, those details out there, can help founders a lot more, a lot faster, especially if you're a VC trying to invest in more companies or build more relationships. It just seems like it would be better to educate more upfront, you know.
19:20 - Steph (Host)
Yeah, it does make sense that way. At the same time, vc is an outlier game. You know Power law, so one deal will make 90% of returns, something like that. I mean, I have the exact numbers actually, and so you don't. It doesn't make sense to spend time, actually, if you're being rational helping everyone, because most everyone will fail and most everyone will be a loss. And what people tend to forget is that VCs are investors. Would you ask an investor on Wall Street to spend time explaining to you how to invest? No, they don't care. If you have a good deal for them, they're interested. Otherwise they move on. And VCs, because they work with tech startups and they do all this marketing and all this PR puffery. People tend to believe it's a different story and that they are their friends. But this is our. Aren't your friends, right? They can be friendly. I mean, they're good people Most. I know I disband hundreds of them personally and they're most by far good people. But they're business people. They're here.
20:27 - Chris (Host)
Yeah.
20:27 - Steph (Host)
They have a portfolio of startups. They have LPs that expect to return, and they're here. They need performance. If the fund doesn't deliver, they cannot raise the next fund. They're out of business. So it's a business. They're not here to be friendly or to educate. They're not teachers. They're not managers. They don't have a duty to provide feedback or to help you grow. That's not their job. Duty to provide feedback or to help you grow. That's not their job, right, and they're not paid for that and you're not paying them. So some of them will do it because it's part of their marketing. That's very nice, but most of them, they have, you know, 50 deals to review per week. They're not going to, you know, provide constructive, detailed feedback to everyone. They decline.
21:09
I mean they're going to do 10 deals per year out of 1,000 or 2,000 decks, and founders usually don't see that side of the story. They just see that they contacted 50 VCs and got zero replies. And yeah, again, that's just educating people and explaining the dynamics are much closer to sales. You know, when you do sales, you go pitch a client. They buy, they don't buy. If they don't buy, they don't owe you an explanation, right? They just don't buy. They stop talking to you, they ghost you, they stop replying to emails. It's the same thing. You're selling equity from your company to a client which is an investor. That's the story.
21:51 - Chris (Host)
Yeah, that's a good point, that's a really good perspective, and I do think founders have to think of it from more of a business point of view and not like, yeah, I'm just trying to get information, but I think that's what makes brands like yours that are putting out that information so much more valuable, because if you guys weren't doing that on your blogs, founders just wouldn't see that kind of stuff. Like, that question of how do I value my startup is something I've literally sat with founders and talked about here in Seattle, which is so funny. I got to go and find that blog post now so I can just show it off to people Like, look, I interviewed this guy and he has all the information.
22:27 - Steph (Host)
Yeah, please do it. By all means, be my guest.
22:34 - Chris (Host)
All right, right. So before we go here, I always like to end the interview with some more personal stuff. Show more of who you are. So what's the the favorite movie you've watched so far this year? Right, any movie you've watched has just been top of the line this year the matrix really I watch it every year.
22:50 - Steph (Host)
I re-watch it. Best movie ever the matrix. No questions asked. Next question there is not even an explanation needed. I love this movie.
22:58 - Chris (Host)
It's the best I agree, I agree. It is, like, I think, the best trilogy ever. I do agree, I do agree. So, um, I know the olympics are here. Are you tuned into any sports for the olympics this summer?
23:11 - Steph (Host)
I know the Olympics are here. Are you tuned into any sports for the Olympics this summer? No, I'm not a sports guy, I'm European, I'm French, so we're not. Americans love their sports. Actually, I try to avoid the crowd and I try to avoid the Olympics. I'll be in Paris for a few days at a time and I'll do my best to just avoid the crowds and the sports and all that stuff.
23:33 - Chris (Host)
That's just not my thing. I get it, man. Everybody got their thing, so what is your thing? If you're not into sports, what's your thing? I got to hear this.
23:39 - Steph (Host)
For the past three years, honestly, it's been OpenVC. I mean, that's my mornings, my lunches, my nights, my everything Other than that. I loved video games before when I had time. You know I was a huge, a huge geek. Um, it's still somewhere in my heart. I just don't have time to act on it. Um, and then, uh, yeah, that's, that's pretty much it. I'm a very dull guy, quite boring. You can ask my wife, she'll tell, She'll tell you that much.
24:13 - Chris (Host)
Oh man, this was good. This was good man. I love having people like you in my corner that I can always send people to, Because now that I do this podcast, I connect with so many more founders and just so many business people that are like doing really unique things. So I just love being able to have different references and connections, because I know that those relationships are just really valuable in the business world.
24:42 - Steph (Host)
Absolutely. Yeah, well, you know, relationships are everything, especially when you're raising funds. That's when you need network and to know people, and podcasting is a great, great way to build that network. By the way, that's an advice actually that's a piece of advice I give founders. Sometimes they ask me hey, how can I connect with VCs? I say you know what? Start a podcast in your industry. Interview the top 20 VCs in your list. They will all say yes because they love talking about themselves. And just like that you build a connection.
25:11 - Chris (Host)
Yeah, trust me, I've been podcasting since 2015. And I've been preaching for years that I think everybody who has a business should also have a show, because it's just the easiest thing in the world. To be honest, it doesn't get any easier. Anybody I want to connect with I can.
25:30 - Steph (Host)
But you know what. You're a people's person, so that's why you enjoy it and it comes naturally to you. But for a lot of founders, especially the technical guys, right I don't like hearing that they say, why should I have to do a podcast and why should I be on LinkedIn and Twitter? I just want to send my deck and get replies.
25:52 - Chris (Host)
Hey, man, Welcome to the real world. Right right, Good luck with that man. Steph, this was great. Thank you for being on the show. I really appreciate you being here.
25:59 - Steph (Host)
Oh, thanks for having me, Chris. It was great. We had a great time. Thank you for inviting me.