The Founder's Job During a Raise: Four Pillars of Leadership

Think you can just set up your offering documents and watch the money roll in? Think again. Successful online capital raises require active founder involvement, and in this episode, we reveal exactly what that looks like. Martin and Brendan outline the four essential pillars of founder leadership: narrative leadership (crafting the "why" behind your raise), content creation and evangelization (becoming the face of your company), decisive operations (making quick decisions in a fast-moving campaign), and strategic planning (budgeting and cash flow management). We share real examples of founders who excel at evangelizing their mission, discuss why investors bet on people not just products, and explain how authentic founder content outperforms generic marketing by 90%. From filming video ads to leading webinars, learn what successful founders do differently and why your personal involvement is non-negotiable for fundraising success.

Transcript

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Welcome, everybody to another episode of Behind the Raise, and today we have an exciting topic that we are very excited to share with everyone. It's the founders job during a raise. What actually moves investors and the reason that we wanted to do this episode is that we obviously talked to a lot of founders on a daily basis, a lot of which are just getting introduced to this idea for the first time, and they might not know what exactly their role is during the raise. A lot of founders, maybe in traditional capital raising, are very involved at the beginning. They're making connections, they're connecting with bankers, institutions, etc. they're getting checks signed. But this is a very different type of raise. And what we have found is that when we work with very active founders that are willing to contribute and play a very active role in terms of content development, providing direction, those raises tend to do really well. So we thought it would be helpful to do a little bit of level setting on what we see successful founders doing in this space, and also to make sure people don't go into this with the expectation that you can, you know, just sign your offering documents, put the offer on an investing portal, and investors will come to you. And likewise, you know, same thing with signing up with a marketing agency such as virtual AD. You know, obviously we'll do a lot of the heavy lifting, but there's a strong role for the the founder to play. And so we thought this episode might be helpful in giving everyone direction and founder specifically direction on this. So yeah, in terms of why this topic matters as well and why the founder plays an important role, there's a couple of key points that I'd say we'd rally around like four major points here, that we've been able to distill it down into and I would say that the four core pillars of why a founder's role is important is one is narrative leadership being able to set the tone of the raise and the why behind the raise. Second would be content creation and evangelization. So being the evangelists of the raise, essentially and of the company is important. Three is being a decisive operator. There's a lot of decisions that need to be made during these raises that are not just made unilaterally through one entity. It's not just the marketing agency that can make a decision on whether to continue the race, for example, or whether to cut a certain channel. It's usually one made in conjunction and through various partners. So there needs to be a decisive operator on the issuer side. And the fourth would be planning, funding, budgeting and cash flow. So those are the four main pillars. We'd be we're going to be chatting with you guys today. Let's start off with the first one and talk about narrative leadership. So narrative leadership is building out the actual the core narrative I guess you could say. But the main reasoning behind the raise. So Brendan wanted to toss it over to you here to maybe give a little bit of input on the role that you see founders playing in framing the raise, coming up with the narrative and the messaging around it, and why it's important for the founder to to be involved in that. That's a great question and a great point. I mean, the founder knows their their business and their market and their industry the best. So, you know, that's why they started a business in that space. And so there's a lot of sort of conviction that comes with the founders, you know, opinion or perspective on on where things are going. And so that's pretty powerful. And so, you know, they're going to be best suited to deliver that message. I'd say, you know, when I think of the importance of the of the founders involvement from that standpoint, think about it also from like the investors perspective. And, you know, we see this with some of our clients. There's a lot of engagement and questions when the founders involved. And then there's maybe a little bit more skepticism from an investor standpoint if you don't have that level of involvement. And I think it's also because, you know, investors don't always just invest in like a great product or a great company. You know, they invest in the team that's executing the vision. And the founders sort of kind of spearheading that. So I think, you know, that's just an important thing to keep in mind is that founders opinion and perspective, when it comes to the offering, the investment that the growth potential is going to be going to resonate more with investors than, you know, maybe someone else from the company or from the team. Yeah. I think it's also helpful for potential investors to put a face to a name as well. It's the difference between running an ad that has like a picture of a building versus a founder talking about why it's an interesting deal, and I find that it's so much more engaging to you to do that. And people they're looking for that authenticity behind leadership. And nowadays, where it's easier for people to run ads or put things up online, you're almost breaking that barrier by being like stepping out into the public, being open to people's feedback, comments, etc. showing that vulnerability that actually resonates more with people than just being like this faceless name that nobody can identify totally. It builds trust and credibility with the end user or the potential investor. It's a lot easier for someone who's looking to invest in the company to invest. If they feel like they almost know the person behind the company, if they're just going to a landing page. That kind of speaks to the products and the features and the product roadmap, but there's really no people you know behind that are visible. That becomes a harder decision for the investor to make. So yeah, I totally agree. Like the founder's presence in the actual content and the marketing message will just be more effective when it comes and building trust and credibility and getting people to take action. Yeah. And then also I find in terms of like framing, messaging, I found the founders role very helpful here. When we are in that stage of doing the initial strategy like messaging, strategy mapping. And I think it's because the founders themselves, one is they've already talked to so many investors before they make it to this stage. So they've been pitching this company idea for so long that they already have a sense of what's resonating with people and what's not. So it's helpful if they share that with all the stakeholders coming up with the broader messaging as well. And then I do find that they've already spoken with so many people at that point that their their framing is usually pretty accurate. The simplification founders have a really good ability to simplify messaging when you're working with multiple stakeholders. So if you're a founder and you're just getting started on this process, you are going to be working with, let's say, with an ad agency like Virtual AD, for example, you want to be able to articulate very clearly what you do because that message is going across all of these different venues and all these different people that are working on the messaging. So if it's not very simple, it's going to get diluted and very difficult for it to be articulated clearly across all of these assets like landing pages, ads, email automations, etc.. So I find the founders are very effective at distilling it down to like 2 to 3 sentences or even 1 to 2 sentences. And having that core messaging is important. So that's also another key part I find in terms of narrative leadership, where founders have a big impact. Yeah, I agree it's kind of like why you get 1 or 2, but it's to pitch your idea on Dragon's Den or like the elevator pitch, VCs will kind of want to. They want to be able to understand what you do in like 30 less than 30s or something. And from a marketing side of things, stuck, right? You need to be able to have that some stopping content that will capture attention within five seconds. You know, we can do a lot of market research as a as an agency. But, you know, the founders input will be more valuable because they've talked to investors, they've talked to, they know their customer pain points and things like that. And so yeah, having that collaborative conversation to just nail down what the hook is and what the pain points are and what the solution is that they're offering. It's great to have the founders input on that. Obviously, you know, one point that you got me thinking about as well is the specificity of certain areas as well. And the problem that that the company is solving. And the founders are very good at articulating that. And sometimes it's very difficult for outsiders to even know what some of those points are. So I'll use one of our real estate clients as an example in terms of some messaging that they helped us to develop, which was around annuities. And so the, you know, core messaging around a lot of real estate offers is a targeted return within a specific period of time that typically will be a market average. And so a lot of people will get hooked in because they like to, you know, that average is is higher. It's usually within the double digits. And the turnaround depending on the offer, can be, you know, short to long term. But it's a compelling offered right off the bat like that. But what's interesting is this client had experience a little bit more in the financial planning space, and they had some insights in terms of how this type of investment can beat annuities as an example. And so that type of specificity and and narrative is very helpful coming from founders. And I would say that difficult for an outsider to come up with without having that perspective. But that was a very unique contribution. I would say, from the founder, and they're very passionate about it as well. They really did not like annuities, from my understanding, has been working pretty well. It's been working great. And that yeah, that's a perfect example because that might not have been a messaging angle we would have really like maybe we would have identified it, but we probably wouldn't have pushed it so hard without that founders experience when it comes to annuities. And so yeah, the the angle there and it's a great qualifier too, because people who are invested in annuities, you know, oftentimes have invested hundreds of thousands, if not millions of dollars into annuities. So if you're going after people that have invested in annuities, you know, they have the capital to potentially invest into your fund. And there's a lot of pain points when it comes to annuities because you get locked in. There's penalties if you want to pull out, to pull your money out early. And so they've created a solution where they can maybe cover some of those penalties to, you know, switch you over, give more flexibility, give better returns, potentially. That's a messaging angle that came from 20, 30 years of experience in that space, from that particular founder that they were able to kind of share with us. And so, yeah, those ads, that messaging is bringing in really qualified investors to their fund and so much so that we're we do seminars around annuities, we do webinars around annuities, and we push that message pretty hard. Yeah. Yeah. That was a that was a great collaboration there. And I think the founder there was also very passionate about it, which takes us to our second topic which would be content creation and evangelization. So evangelization is a sort of trend where you see you see this a lot in the public markets space with certain CEOs that really evangelize their companies. They are out there talking about their solution constantly, and they become a bit of a star on their own. And I always go back to the example of Alex Karp from Palantir, who has this sort of like cult CEO hero from followers of Palantir, and he's out there basically filming, not testimonials and not the equivalent of ads, but he's basically filming content specifically for retail investors that have been big believers in the company and followers for a long time. And he's always like talking smack about short sellers and doubters and haters and thanking the investors for believing in them. If you classify him as an evangelist CEO, he's out there constantly supporting their company and making sure that he's bringing a positive message out. And so I think the evangelization can go in a couple of categories. One is you can just sort of evangelize your company, but you can also evangelize a specific cause. It's ideally something that the founder is passionate about. And the annuities was a good example because that client, passionate about solving that issue, helping people find a different solution. In other instances, I would say for robotics company that we worked with, it was not evangelization necessarily of the particular like of their product, but of the problem they were solving. That's also a key trend, I would say, between the annuities example as well, is that it's passion behind solving a problem. And so with the robotics company, it was about removing pesticides from food, which became a really broadly applicable problem that appealed to a lot of Americans, which if you looked at the actual category, which is B2B agricultural robots, you would think that they would have a harder time raising funds because like the total addressable market is essentially agriculture, which is a lot smaller. But the messaging that the evangelized was really resonated with a lot of people. So they they had the ability to expand their impact through the evangelization of that message. I want to bring it back to the sort of the content creation. I finish my evangelization spiel. There, but I think there's a big part of that. It's it's doing things like being open to stepping behind the camera, filming ads, sharing a perspective. So Brennan was wondering if you could speak to that and how you see founders doing that successfully, and why you find it important that they do that. That's a good point. And you kind of goes back to the beginning of the episode here. Why the founder is important. The founder brings a lot of credibility. And, you know, that resonates with someone who's looking to invest in the company. So now when it comes to content and evangelization, it's like now we need to capture that credibility and push that out there to potential investors. And you can do that in different formats, right? Like obviously the ads meta is a very much a visual advertising channel. So, you know, videos perform really well. It's not to say we can't like, create videos without, you know, using stock footage and doing video editing and doing our own video production. But having the, the founder there to speak to the opportunity just brings so much more credibility and trust to the end user. That's why we oftentimes see those ads perform the best, because people are rallying not just behind a company and a product, but they're rallying behind someone who's passionate with a vision, who willing to go do whatever it takes to make it successful. Like, you know, I've rather invested in in that, like in the person behind it, then just, you know, a cool product idea, but like, it's all about the execution at the end of the day. So that's why, you know, having that founder create that content will help drive, really good interest for the for the fund. And then, yeah, that can be done in different formats. So obviously the ads, whether it's video ads on meta or YouTube, the landing page videos, so we'd like to do explainer videos on the landing page, the automations, you know, often times have some automations that are almost like written by the founder in addition to some marketing, automations, but then webinars as well. So the webinars are a great mid funnel tactic. So, you know, when people have already shown interest, maybe they need that extra boost or push to to actually invest. And so having a founder, you know, present webinars and education and build up the value of the opportunity goes a long way as well to preventing people from getting cold feet. They're already kind of showing interest. But then, you know, that extra push can help a lot. So yeah, having the founder is a availability to do content is great and it doesn't need to be a big list. Like, you know, as an agency partner, you know, we do all the heavy lifting or, whoever your agency partner is should do the heavy lifting when it comes to scripting the video, giving very clear instructions on how to film it doesn't always need to be high production. You know, everyone's got a phone these days and we can do the editing. And if it's a webinar, we'll do the presentation. Derek. So it's we're almost hand-holding along the way. And then the founder just needs to show up for that 20, 30 minutes to film that content and then provide it to us. And it goes a long way. Yeah, definitely. And I think you brought up a good point about like the different mediums as well. This resonating a lot on meta and meta ad. So it's interesting because with meta ads, people are they're looking for that authenticity. Like it's really easy to fake stuff in terms of just like putting an offer out there without much specificity. But when you put your face to your product, it's like automatically moves you above 90% of the people out there. I would say in terms of what they're advertising in this particular way at least. I also find that where it's helpful is that it's helps to personalize the product as well. So again, kind of using the robotics example is that robots can't speak. And so they are a cool technology, but it's difficult for people to relate and understand deeply with it without understanding the broader, deeper story that is often related to to the founder. So one interesting point, I think that you've had good experience with Brendan is how you're working with founders to create some of this content and have them be a part of it. And, you know, one thing is just the first step is being open to it and then, you know, doing it for the first time. But in these campaigns, especially if you're running, like in some instances, a $50 million raise, maybe 12 to 18 month period, you're going to have to do it more than once. And you've had some good experiences with founders being like very responsive to your guys suggestions. So I was maybe wondering if you could walk through like a best practice example of how you guys have done some metrics review with clients and they've been open to creating new content with you guys? Yeah, it's very collaborative. So you know, in terms of how we work with issuers or companies raising money or the founder, you know, we like to meet them, obviously, if there's availability. But, you know, some clients we meet twice a week or once a week. And so having that availability is like a first step. And then during those conversations or whether it's reports or emails, you know, there's different ways we can share updates, but we have a good cadence when it comes to content creation. So it's not necessarily ad hoc. And out of the blue, you know, we typically like with with some clients we have filming day kind of blocked off, but they're aware of months in advance. And so and it can be a couple like two hours, in the afternoon where they just need to kind of block off their calendar and be available to film. That can be a reoccurring with with clients that are at higher scale. They're raising more capital. They're spending a lot more money. We need more content more quickly. So sometimes they do like a filming day every two weeks. So that's already, predictable for the founder so that it's not they're not, you know, because they're busy and they've got busy schedules. So they need, you know, needs to be, you know, scheduled in terms of the, content production from an ad standpoint, it's largely data driven. So, you know, we'll do these ad reports for the clients. And so we'll bring in on the paid social side, you know, you know, our a team member there, you know, on the data analytics side, a team member there. And we'll put together we have dashboards, but we'll put together like a specific ad report and that ad report, we'll take a look at what messaging is actually working and what actually is working. You know, the metrics that we're looking at aren't just some of the ad metrics when it comes to how effective is this ad getting a user to actually stop and watch it and click through and book a meeting, for instance. And so we'll do an analysis to see what messages are working and what messaging are actually working in terms of assignments as well. And then we'll want to double down on that. So based on that sort of analysis in that report, you know, our team will come up with a plan when it comes to creative production so that we can get more content of what's currently working. And, you know, when it comes to those filming days, really the founder just needs to kind of show up in a sense. So we'll actually do the scripts. So we'll write the scripts for, for what we want to get filmed, and then we'll give some instruction on how to film that, sort of like can do it yourself filming set up, unless, you know, some clients have, you know, a photographer or a videographer. So it can be a bit more premium as well. And so we'll coordinate that, brief them on what what we need and why we need it. So they actually understand what we're trying to do. And then they just film it and then pass this along the the Google Drive folder or whatever. And then we'll take it from there. And, you know, we'll add it out the pauses, we'll add the intro and the outro, we'll turn it into an actual high performing asset, and then we'll run with it and we'll get, you know, approved final approvals, obviously, and then run with it. So that's just an example. I think it's important for the agency partner to make it predictable for the founder structured so they don't have to think too much. And then in a cadence so that it's almost like a routine so that it's not sort of ad hoc last minute. We're expecting them to just hop on a call or something, which isn't realistic. So I mean, that's a good ad, that's a good example. Having one like a data driven approach, structured schedule the partners on board to be able to take that feedback, create new assets, scheduling ahead of time. And then obviously I serve wrapping up in AD in a neat bow, at the end of the day with some post-production editing and all that. So that's a good cadence I wanted to touch on. Also some some other topics. Also on the operational side, from, from a founder's perspective, that was really helpful. We touched on the content creation, setting the narrative, but then when it kind of gets into the nitty gritty of things and I would say like, this is maybe like mid-race in terms of like where the founder's role is and things are launched now and there's, you know, assets in market. So we have this, bullet point titled as being a decisive operator. So still being collaborative and in the mix, but ready to make some decisions based on, on feedback. I find that in the marketing space, specifically for these, for these raises is that it's good to have a quick, quick feedback loops and ability to have fast approvals because, for example, you might be running a marketing asset that's in-market and it's underperforming, but you need to create something new. So the longer you have between making that decision that something needs to be new and market, which can be, you know, as simple as maybe you're just changing 1 to 2 ads, or it could be larger, like you got to change the broader narrative to something that you see working better. If you take longer to make that decision and then actually create those assets, you just have stuff in market for like 2 or 3 weeks. That's not really resonating. So you have to be able to have a fairly quick ability to to make that decision. And then also the approvals to get that, that content done. Brendan, I kind of wanted to bring you in on on the point around like as a founder, being an operator, but understanding some of like key marketing principles as well, because these direct to investor raises are so marketing centric that I feel like as a founder, going in without having an understanding on direct to consumer marketing, they might be at a bit of a disadvantage. So what are some of like the key basics you think that a founder should know around, like on the marketing side of things, just to go into it with a little bit of, you know, a little bit of understanding when it comes to the, the metrics. You know, there's lots of metrics that we're, we're looking at, obviously, when it comes to managing the campaigns and optimizing them. I think like the metrics from a founder, like from the founder's perspective, like obviously they the budget is a key component. So how much are we spending on ads? Then there's the, you know, if it's a D5 or sexy offering exemption, it's oftentimes a meeting booking funnel. So you know, the budget and then the cost per meeting for instance meeting. But and that gives you the number of booked meetings. And then out of the booked meetings we need the attendance rate. So how often are people actually attending those meetings? And then that gives us our attended meetings. Then we need the investor close rate. So how effectively are the reps or whoever's taking those meetings, closing the attended meetings into investments, average investment amount. Typically we'll give you and number of investors. And then that will give you your cash and or your capital raise. Your, marketing efficiency ratio is pretty much looking at the cash in, minus the cash out in terms of advertising dollars, which can give you your, you know, your free cash flow that you can reinvest into the the subsequent month on running more ads or scaling out more, acquisition campaigns or more investors and just, you know, pushing things along quicker. And so I'd say like those are like the high level metrics that are important to understand, because if we have nailed those down, then we can actually do a forecast for the rest of the fund so we can then understand, you know, how much we need to spend to get, how many meetings to get, how many attended meetings to how many closed investors. And you know what the average investment amount, how much we can expect in terms of cash in. And so we can then make plans and like operational decisions when it comes to capacity to take meetings, you know, hiring maybe reps to take meeting. There's a lot that we're going to do when it comes in diving deeper into the marketing metrics to create more efficiencies when it comes to improving the cost per meeting, improving the quality of meeting, etc.. There's tons of metrics that we're looking at in terms of ad performance and things like that. I don't think those like in-depth metrics are important for the founder to really be aware of, but we're happy to dive into those because oftentimes there's a lot of curiosity around around that. But then, you know, we have separate, for instance, with the client that you were mentioning before, the real estate client, the annuities example, you know, we have our sort of marketing dashboard sections, but then we also have our Investor Relations dashboard section so that we can understand, close rate and understand the close rate by person and understand how opportunities are moving through, to becoming an investment. And, and that allows them to make a lot of operational decisions because they need to understand the efficiencies internally when it comes to managing those conversations and being able to kind of make whatever decisions they need to make to get the most out of that. So are those some of the metrics that you're thinking of? Absolutely. I think those are spot on, on the the meeting booking funnel side of things. One I would just add on to that is the idea of like return on ad spend. If you're doing a direct investment funnel, a red funnel, which is basically the concept of, you know, how much am I spending on marketing and how much am I getting back? And the idea around being able to scale that out. So like you mentioned, being able to reinvest that into subsequent months afterwards, I did notice that we are just coming up on time. So I, will maybe run us through this this final point here a little quicker than originally expected. But I will provide some food for thought for, for viewers and listeners, and then we can always follow up with them if they have any other questions. But the last point was just going to be around planning, funding, budgeting and cash flow. So one thing that we have run into with some founders as well, which is totally understandable given the complexities around the space, is that the it's important to have a really well thought out approach to structuring the raise before launch. So knowing your timeline, the rules internally at a company like the time commitment needed, knowing your capital target. So what's your minimum viable raise your floor and ceiling. In terms of, you know, how much are you willing to get by with, in terms of like before you want to cut the raise off or, you know, be able to continue with and then also planning for gradual scaling. So like you mentioned, being able to have a plan around that reinvestment of cash in into marketing dollars or how else you're going to fund your operations. Those are some pretty components and components. I think really only the founder can make the decision on. Ultimately, we can, you know, provide the guidance, but the founder is going to be the end all there. Maybe. Why don't we leave with some some final advice here. And Brendan, if you want to, if you have some points you want to mention here and I'll, you know, leave with my two after yours. I think it just goes back to the idea of founder involvement. So being available as a, as a founder to really kind of lead the charge when it comes to the raise, I don't mean in terms of like time and doing all the legwork, but I just mean more in terms of like the content evangelization and and the content production. We want to get feedback on, on the messaging that we're pushing out. We want to make sure that we're, you know, hitting the right pain points and things like that. And the founder brings a lot of, valuable knowledge when it comes to those things. So just, you know, availability when it comes to feedback, making operational decisions, being open minded to what we need to do to kind of take the race to the next level, again, available for it from a content production standpoint. Yeah, I would say my advice would be is for founders to start building just a very basic understanding around direct to consumer marketing and some of the key metrics there like we had mentioned. So if you're doing a direct to investment funnel, it's the idea of return on ad spend, scaling that out. If you're doing the meeting booking funnel, it's understanding like your attendance rate, show rates, clothes rates, those types of concepts and then also preparing yourself to be a charismatic, public facing leader that evangelize is your company. So nowadays people really want to they they're looking to two leaders, people with a very clear vision, the ability to articulate it. And if you can do that successfully, I think you have a huge leg up on a lot of people in in the capital raise space. So those would be my words of final advice. And yeah, I think this was great. Brendan, appreciate the the input and the, the points you had. I think that was going to be super helpful for founders to, to hear some of these. Thanks for having me. And no worries. All right. I'll talk to you later. Okay. Let's. That's it. By.