In a fundraising environment that has been challenging for startups of all stages, how can you set yourself apart from the pack when approaching investors? Antler partner Tyler Norwood, Antler venture partner Robbie Crabtree, and post-investment platform co-founder Mike Preuss discuss the best ways to become a top-decile startup with investors.
Tyler Norwood is Managing Partner for Antler in the United States, where he oversees the firm’s US growth and geographic expansion. Tyler joined Antler in 2017 as its fifth full-time employee and has been instrumental in launching and scaling the firm. Prior to joining Antler, Tyler was the Global Head of Business Development for Global Fashion Group (GFG), where he was in charge of launching a marketplace business model for GFG’s companies across 21 different countries; he also assisted with the company’s IPO in Frankfurt in 2017. Before GFG, Tyler was the Interim Head of Marketplace at Jabong, which he helped sell for $70 million in 2016, and Head of Marketplace Vietnam at Zalora, the largest fashion e-commerce company in Asia. Along the way, Tyler has also completed the Vietnam Marathon, Singapore Marathon, and Boulder Iron Man. Tyler is passionate about providing a better on ramp to Venture Capital for founders who want to change the world and hands on support for founders in the first 6 months of launching a new startup.
Tyler Norwood is Managing Partner for Antler in the United States. He joined Antler in 2017 as its fifth full-time employee.
October 27, 2023
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What does it really take to get noticed by investors? That’s one of the most common questions founders ask in the early days of building their company—and even more so in the tough fundraising environment we’re living in today.
Most of the time they’re looking for a silver bullet. The one flash-bang thing that will get them where they want to be. The reality it’s doing boring, simple things with discipline and consistency that will distinguish you as a top-decile startup.
I recently sat down with Mike Preuss, co-founder and CEO of Visible—a fundraising, stakeholder communication, and reporting platform for founders and investors—and Robbie Crabtree, competitive storytelling expert and Antler venture partner in the US, to talk about the best ways founders can stand out with investors heading into 2024.
Watch our discussion and or read some of the highlights below.
What have been the big takeaways of 2023 in terms of macro fundraising?
Tyler Norwood, Managing Partner, Antler in the US: It's been a very exciting time in the venture capital world and the alternative assets world as a whole. We went through a crazy period of huge volume and huge valuations throughout the COVID era. What's becoming apparent now is that wasn't normal and we are now living a return to normal—not waiting to return to that era.
By all accounts, you can classify what happened during the COVID era as the end of a 14-year credit cycle. Two things happen at the end of a long-term credit cycle. The first thing relates to all of the asset classes that were allowed to inflate and move away from intrinsic value. There's a period of repricing and that’s often very painful. When thinking about venture capital valuations, founders need to remember that ultimately—at the end of the private market venture capital valuations—the company will be attached to the public market. So public market multiples on companies like Google and Salesforce ultimately determine what the exit environment looks like for what we call growth-stage companies (Series B and beyond). When public market valuations come crumbling down, there's a huge effect on growth-stage valuations and deal flow—the number of deals that are getting done. And as the growth stage starts coming down it affects the early stage that’s positioned to exit to the growth stage or IPO.
What we've seen over the past two or so years is those public market valuations coming back down to earth and slowly watching it precipitate through the private markets. It doesn't happen quickly. The private markets are much, much slower than the public markets because they're not priced on a second-by-second basis. And from every stage, there's less and less of an impact. What I think is really positive for founders, is that pre-seed and seed rounds are largely detached from the public markets. There are many stages away from public market multiples. The reality is that a disproportionate amount of decreased funding and decreased deal activity is happening at the growth stage—Series B and beyond. That has slowed down because the IPO market is pretty much closed. The valuations for IPOs are a lot worse than they have been previously.
But as you get down into pre-seed and seed activity, from what we're seeing at Antler in the US, in the first half of 2023 we had 28 companies bring in term sheets at the seed stage. Seed is still very much alive.
Another important thing that happens at the end of a long-term credit cycle is a new long-term credit cycle starts. And so one of the things that happens there—and this is tricky, because it seems like these are opposite activities, but they actually happen in parallel—is big institutional asset allocators. So ultimately, where all the money for private venture comes from. They see an opportunity to invest in the next wave of startups. They're doing two things simultaneously. One is shoring up later-stage funds that haven't been performing well and repricing positions that are probably less profitable than they thought. But at the same time, they're thinking: this is now the time when the next generation of great startups is going to be started. And so they're actually allocating money into seed and pre-seed. So seed funds are getting additional capital from LPs. That means that they're going to continue writing checks into companies and so the positive here is that the pre-seed and seed market for founders at that stage is still very much alive. We expect it will be the first stage to recover as we go into a new long-term credit cycle.
Our optimistic view is that for the next five to six quarters, we’ll see sustainable growth of pre-seed—both in terms of the number of deals, and also the amount of funding as an output of the number of deals.
By all accounts, I think right now is the best time possible for founders to decide to start a company. Because over the next year-and-a-half to two-and-a-half or three years, I think we're going to see a slow and sustainable increase and good pre-seed and seed funding. And when I say good, I mean it's coming from quality funds that have survived this downturn and continue to raise capital, meaning that they're creating good returns. They are generally good actors, since all the dumb money gets washed out at the end-of-cycle periods. Number two, when I say good, I mean the evaluation and the structure of the deal is going to be good for founders. I'm very optimistic about the quality and the quantity of funding at the pre-seed and seed that will continue to increase over the next two to three years as we start coming out of this repricing exercise and the market starts to focus on the future.
Why does storytelling matter in the current fundraising environment?
Robbie Crabtree, Antler venture partner: Storytelling is more important than ever, because you have to get investors over that fear hurdle of what's happened in the past. And you have to get them away from looking at the past and more focused on where the future is going. Some companies do this really well, especially in the AI space with all the changes that are happening there and what that potential unlocks. Refocusing attention on that future potential is crucial, especially for companies raising a Series A or B right now without the metrics investors may be looking for at this point. It wasn’t as harsh an environment when they raised their seed funding. That means your storytelling—your visioning and your explanation about how you've de-risked and what the reward is moving forward—becomes more important. Because the only thing you can really sell at that point is a vision of what you're going to be able to achieve in the future.
When should a founder start thinking about fundraising?
Tyler Norwood: Unless you're sitting on a bunch of your own money and have $50 million to do whatever you want in stealth, founders should be thinking about fundraising from day one. There's obviously a balance between bootstrapping and raising. By no means am I an advocate of raising as much possible venture capital money as you possibly can. I don't think raising VC money is a business model. There are a lot of businesses built over the last four or five years where raising money was their business model and they weren't making any money doing anything else. But if you're going to go out and build something large, it is going to take investment. You are going to have to pay to bring on amazing people. There are going to be variable costs depending on what your business model is. So I think the reality is you're going have to raise, and eventually get to a point of bifurcation, deciding if you continue to raise or focus on growing the company sustainably. But in the beginning, I think you have to raise so founders need to be thinking about this from the start.
A lot of founders think about fundraising as something you do and then stop doing and then you do and then you stop doing. The reality is it's an important ongoing part of the business at all times, just like any other functional area. You don't do finance and budgeting once every three years and then turn it off and forget about it. That would be a disaster.
Let’s say we decided to start a company in the climate space, and we’re thinking about the team and product that we need to build, and figuring out who our first customers will be and how we’ll go to market. At the same time, there are probably 100 really good climate VCs out there in the world. And so if our aspiration is to build a company that makes a big difference in the world and becomes a darling in the climate space, at some point in the journey of our company, we're going to talk to all 100 of those VCs. Why not start now? Those are the people we’re going to be working with. And those are the people who are going to be meeting our competitors and helping decide where capital is allocated within all the companies that are building in this space. I personally would start meeting them saying, hey, my name is Tyler. I'm working with Mike. We're planning on building a business in climate. Here's where we are right now. We don't have a product yet. We're still just figuring out who our initial customers are. But we know we want to build a fantastic company in the climate space. We'd love to chat. We really respect the portfolio you've built in climate. We're not raising right now, but I just figured that at some point, we're going to meet each other and why not start building that relationship right now.
Taking a much more human approach to fundraising versus a transactional approach, and treating it as an ongoing function that you can be investing in, is a really good mindset shift for founders to think about as they enter into building a venture-backed startup.
What should your point of emphasis be when you first approach investors?
Tyler Norwood: What I think is important is you're not going out and asking them: do you think this is a good idea? You're not asking them for money. You're really not asking them to co-sign on what you're doing. You're telling them we're going to build a successful company in the climate space. Because of that, we're going to know each other at some point, we might as well know each other now. And I would love to hear your thoughts. I think it's important for founders to create the right intention with those meetings. I'm not asking you if this is a good idea or a bad idea. And I'm not judging whether or not we're doing the right things based on what any random VC is telling me. I'm building for my customers and I'm listening to what they want. But I'm also building a human relationship with the VCs over time so that when I do need to go out and fundraise, I know them. They've seen that, for example, I do what I say I'm going to do. I'm building and telling a story.
Mike, you mentioned in our pre-call that it's about creating lines, not dots. You know, when I do raise my seed, and I've already spent the last six months sending an update every month to a VC, showing them that every month we are executing and growing and executing and growing. It's more about building the human relationship, not necessarily going out and trying to have VCs validate whether what you're working on is interesting or not.
When should you start thinking about the specific story you are going to tell about your startup?
Robbie Crabtree: Ben Horowitz says that story is the strategy. Steve Jobs said the most powerful person in the world is a storyteller. Michael Moritz talks about storytelling being critical for every founder. Don Valentin said the money flows as a result of the story. So we have these giants of industry who continue to say that story is critically important for a founder to be able to tell.
If you don't have a story, you don't have a vision. And if you don't have a vision, how can you build anything? How can you align a team around that? How can you get investors to want to be a part of what your journey is going to be? You have to think about story from day one. It sits at the very top like it is at the top of the organization and it flows throughout.
So the founders should be building out that story day one, it should be evolving over time. If you do this right, what happens is when you're talking to investors ahead of time like Tyler described, they get excited—by your founder story and your vision story. The reality is if you don't have those things ready to go. When you're meeting investors, that first interaction is a missed opportunity. That first impression that you're giving is not going to be one that's positive.
You want investors who are so excited about who you are as a founder, and about what your potential vision is, that they will back you even before you have the product. Even before you have the idea and before you have revenue. And it continues to evolve over time when you go to your Series A or Series B, which is where I work with a lot of founders. How do we make sure that those investors are excited about the story? That they understand where you're coming from and where you're going? By constantly preparing and working on your story. I've got a founder right now who is a Series B. We've worked on that story together every single week for two and a half years. Every single week we have come together and worked on the story, evolving it and telling it the right way. And as a result, they've been able to go from seed to Series B, and it's been effortless and the growth has followed because they can recruit people from it. They can get investors excited by it. And again, it sets the vision of what the product and what that end result is going to look like. So from my perspective,it's an ongoing day one to day IPO type of exercise.
Is this storytelling coachable?
Robbie Crabtree: Storytelling is a skill just like anything. You can learn it and you can develop it. There are frameworks and principles and ways to develop it. I did not speak like this when I first started. I always tell people I had a stutter and a lisp growing up. I was terrified to speak and hated my voice. I never wanted to speak up. And then I worked with a speech therapist to overcome those issues. And over time I got better and better and became a trial lawyer. So I've learned it, I've developed it, and I continue to refine it.
People may say, well, I'm an introvert or I'm technical or whatever. And I thought that was a really interesting interview the other day from Deion Sanders. Deion Sanders said I'm an introvert. And yet if you look at Deion's social media, you'd think he's an extrovert—except he's not. He has a persona. And when he goes into prime, the extrovert party turns it on. There's a switch. Beyonce has Sasha Fierce. There's an alternate ego that comes out. Any founder needs to step into that role because the founder’s job is to set the vision. It’s to make sure you have the capital you need in the bank, and the ability to recruit great people. And that all comes from storytelling, which you can learn. Steve Jobs turned himself into a great storyteller and anybody can do the same thing.
What should founders do if they feel they are not good at communicating with current or potential investors?
Tyler Norwood: It's very easy to get distracted by the one flash-bang thing that will change whatever it is you want to change in your life. And the reality is, it’s actually about doing the simple, boring stuff over and over again. We've all been there. I want to lose weight and I chase all these different magical solutions. But the fact is, eat less, walk more, and just do that for a year and you'll get where you want to be. People don't like that answer. It’s boring. It takes discipline to do things that you don't want to do all the time. And I think the real value comes from sharing regular updates with investors over and over again consistently.
Sharing regular updates in a meaningful way means deciding on what are the important parts of your business to measure and measuring and reporting on them—win or lose. One thing I see founders do all the time is making every investor update an amalgamation of whatever's going right that month. But there's no consistency from month to month. They're not quantitatively measuring whether or not you’re moving in the correct direction.
You're just listing a bunch of things that went well this month and it's not really helping. It doesn't create a story for the people following because there's no narrative connection. And it forces founders to face the objective reality that sometimes things aren't working. And it's nice to ignore it and pretend all this other stuff is going really well. But if user retention or revenue growth or whatever your north star is isn’t going well, no amount of separate qualitative updates is going to change that number.
You need to face the music and build the muscle. And there’s a cultural component to this. The founders who build a muscle of always being very quantitative and very objective about whether what we're doing is working will precipitate down into the company. If the founders never do that, then everyone in the company will do the same.
Probably less than 10% of founders in the very beginning stages of building their company from zero to getting close to being able to raise a Series A actually sit down, measure the business, write about what's going well and what's not going well, decide on what their plan is to fix anything that's not going well, and then move forward and execute—every single month. There's a temptation because it's self-narrated. It’s like being an athlete with no television coverage. When we say what happened in the game afterwards, you can say I missed that free throw, but I got a couple steals. That's fine, but you still lost the game. If founders can build this muscle, it will serve them for the entire length of their company. One, it'll help make them a much better founder. And two, I think it'll help instill a very powerful culture of quantitative objectivity around whether what they're doing is working and if not, let's change. And it creates a very powerful way to communicate and set yourself apart from investors.
The average seed investor sees 1,000-plus pitch decks a year and everyone's pitch deck is awesome. It's well designed and it has all these crazy stats and we're the best company in the whole world.
No amount of work on a pitch deck is really going to set you apart. If every month you send an investor what happened this month, reminding them what you’re tracking to see whether your business is working—here it is in July, here it is in August, and here it is in September and October and November and December—you are within the top 10% of companies to that investor. That indicates you're consistent, you're disciplined, you're objective. All those things are very hard to find. So being able to do that on a consistent basis, in my opinion, is a much more powerful indicator to investors of you as a founder than like some fancy pitch deck you spent 60 hours making.
What are common mistakes you see founders making when they're storytelling?
Robbie Crabtree: Investors are looking for a founder who is able to articulate the thing that they're working on and is going to be able to attract other investors, talent, and customers onto that movement. Can you make what you're building sound exciting to the normal person? Not speaking in technical jargon, not speaking in buzz words, not making it opaque or boring. They want to see if you have the ability to lead people. That is what storytelling comes down to. The common mistake I see founders making is giving a bunch of facts, figures, and numbers and thinking that makes it a story. Or reciting your resume. That's not a story. A story takes someone on a journey. It's emotional, and it rises and falls. Going back to the idea of sharing your struggles and your losses and your failures: nobody wants to hear a story that starts with “they inherited a bunch of money and their life was amazing—and it just kept getting more amazing. They got the best job then they married their dream girl then life continues to be great. They had amazing kids and they made more money and happily ever after.” No one wants to hear that story.
People want to hear the challenges. The hard parts you overcame because it shows that you can overcome adversity. Another common mistake is not leaning into the true story of who you are. I always say the job of storytelling is to open up your brain so they can see how you think, your eyes so they can see how you see the world, and your heart and soul so they can see how you feel about things. This is a very vulnerable activity and most founders don't get nearly vulnerable enough. Or raw enough to really pull people into the movement they're creating.
Many founders also tend to word vomit and ramble all over the place. There's no structure. There's no thought process behind what they're saying. So it's a different story in every meeting they go into, which is terrible. How can you tell what's working if you tell a different thing every single time? This happens because they haven't put in the practice ahead of time. This goes back to the idea of what does prep look like? And I was thinking about as a sports metaphor—I was an athlete so forgive me for using lots of sports. There's off-season, pre-season, and regular season, and there's the playoffs. The way that you prepare in those first two phases is going to lead to your success in the regular season, which I would consider your first meetings with an investor. Founders often don't prepare—they just go into fundraising like well, I built a deck. Your deck is pretty visuals. Like Tyler said, investors see 1,000 of them. They all look nice. So how do you stand out? You stand out by connecting on an emotional level and having a conversation, which is what I call conversational storytelling.
How should founders think about crafting their startup story?
Robbie Crabtree: There are two core stories I think every founder needs: your origin story and your future story. With your origin story, you share three things: what makes you special, how you got here, and why someone should care. If you answer those three questions and put them into a story, it will deliver. With your future story, it’s your biggest, boldest, most ambitious vision and what it looks like years from now when everything goes right. This is where you can pull investors into that vision. Chris Sacca talked about this when he spoke to the Instagram founders. They were already talking so far in the future about all the users they had on board that he felt like it had already happened, even though it was years away from actually coming true. That pulled him into the deal because he said these guys know something that I don't.
That's really what it comes down to—can you make someone go home at night and say I can't stop thinking about what Mike told me. The future that he’s building. I have to be a part of it.
Tyler Norwood: There's a ton of powerful things that come out of being able to tell people—like Robbie said—where did you come from? Why are you here and why do you care? Okay, you have an amazing vision. You’re Babe Ruth—you stepped up into the box and you pointed to the outfield. Hitting the ball is the sending a monthly update. Swing for that line there that's going up into the right showing investors that you're plotting along that line.
Execution is a really important part of this. From the time you first meet a VC to raising a seed round, you're probably going to spend six to eight months building the relationship, etc. You get them hooked with an amazing origin story. You get them thinking about you with an amazing future story. And then over the course of those six or eight months, you show them I keep plotting updates on this line. We are making progress towards the future that I told you we're going to build. At a certain point, you start to see investors asking when are you raising your next round? Hey, have you thought about bringing on capital?
I've had investors say I want to give you money right now—don't even go out and raise. I don't want you to talk to any other investors. To reconcile those three things, storytelling is the compelling strategy founders should focus on. Get them locked in, get them hooked. Show them why you're here and that you're here for the right reasons. And then show them consistently that you're plotting on that line and executing and staying focused and being objective.
Robbie Crabtree: What happens on that line is as you get closer, the future story becomes your IPO day, and as you keep moving, you're essentially showing them you're getting closer and closer to that throughout time. So your series A is going to be further up that line, your series B is going to be further up that line. So you're constantly showing the execution story, which will be the third story that you tell around the metrics that Tyler was highlighting there.
I see the exact same line play out with every single founder I’ve worked with who has raised more than $600 million in capital. When I first ask them to tell their story, it sounds natural but may be sloppy. As we start building out the story, they start feeling like it's less natural, because it feels more rehearsed. They are essentially creating a script. And so they go down this U shape, and they get towards the bottom, where a lot of people give up. I don't like this. This feels terrible. And they’re right, it does feel terrible. But it's because what you've gone from is no longer as natural, but is getting more polished. Then it goes from being memorized to internalized. When they internalize a story now they take full ownership over it. At the end of the day, it is their story. As they internalize it, they start coming out of the U shape and they get up to that top right. So then all of a sudden, it sounds both polished and natural. I could wake them up in the middle of the night and they could deliver the story in exactly the right way. They can do it in a repeatable way so we can test and see what's working. So we can really figure out what are the high points, and where we need to make some changes. And that's really what mastery is all about.
This is why I always say the best impromptu speakers are never speaking impromptu. They're always prepared. They're always ready. It sounds like they're impromptu, but they never are. Because they've done all this work to get to mastery.
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