New Ways to Raise Capital in a Digital World

In an environment where interest rates are continuing to rise, suddenly raising venture capital is not as easy as it used to be.

If fact, it’s getting a lot more difficult.

However, there are always investors who are looking for interesting opportunities. 

The key now is knowing how to find them.

I’m Jane Singer and it’s great to have you as part of our global community of industry leaders here at A Seat at The Table.

Today we are joined by Ron Bauer, Founder of Theseus Capital Ltd, principal investor in a number of science and technology companies and author of “Capital: Raising Money in a Digital World”.

Ron’s helped and managed 5 IPOs to raise over $200 million and scale their businesses.

In this podcast he’ll share

- How performance expectations for startup have changed in the past year, from an investor’s point of view.

- How any entrepreneur can reach new investors and raise the capital they need (even if you’re not slated to be the next unicorn).

- Classic mistakes founders make when pitching investors that can cost them the deal.

USEFULL LINKS

Asianet Consultants:  https://asianetconsultants.com

Connect with Ron Bauer:

Instagram:  @ronbauer888

Twitter:  @ronbauer888

LinkedIn:  www.linkedin.com/in/ronbauer888

Website:  www.thescapital.com and  www.ronbauer.vc

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Explores the latest trends and topics on global talent mobility and the future of work.

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Visit A Seat at The Table's website at https://seat.fm

Transcript

Jane Singer  00:02

In an environment where interest rates are continuing to rise, suddenly raising venture capital is not as easy as it used to be. In fact, it's getting a lot more difficult. However, there are always investors who are looking for interesting opportunities. The key now is knowing how to find them. I'm Jane singer, and it's great to have you as part of our global community of industry leaders here on a seat at the table. 

Jane Singer  00:25

Today, we're joined by Ron Bauer, founder of Theseus capital limited principal investor in a number of science and technology companies and author of capital raising money in a digital world. Ron's helped him manage five IPOs to raise over $200 million and scale their businesses. 

Jane Singer  00:43

In this podcast, he'll share how performance expectations for startups have changed in the past year - rom an investor's point of view. How any entrepreneur can reach new investors and raise the capital they need (even if you're not slated to be the next unicorn). And classic mistakes founders make when pitching investors that can cost them the deal. 

Jane Singer  01:04

One of the most important investments any company can make is in top talent. Even the best products in the fastest growing markets need the right people in order to deliver on goals and drive sales and profits. Finding these people can be as difficult or even more difficult than another round of financing or negotiating with your bank. That's why top corporations and even smaller enterprises rely on Asianet consultants to help them fill those key positions. Since 1988, Asianet has been working in partnership with its global clients to help them make the right strategic hires. 

Jane Singer  01:41

They have a well earned reputation for being able to fill even those difficult to fill positions. So if you need to recruit new talent, or you think you might be doing that soon, head on over to their website. That's Asianet consultants.com.  I'll leave a link in the show notes. 

Jane Singer  02:01

Now let's sit down with Ron and find out where we can find that next round of funding. 

Jane Singer  02:06

Ron, I'm really happy that you're able to join us on the seat of the table. I mean, I think that the whole topic of startups and venture capital has been such an overwhelmingly big topic. And now that we see a lot of shifts coming through in the economy, I think it's continuing to be a big topic. So thanks for being with us today. 

Ron Bauer  02:26

No, thank you so much for having me. I appreciate it. Thank you. 

Jane Singer  02:29

I think maybe we'll just dive in as you look at startups and raising venture capital to fund them. This has mushroomed in the past two decades. And now it seems that the market is shifting, it seems that investors are starting to focus a bit more on profits, as well as growth or scaling rates clearly have started to rise and look set to continue to do so at least for a few quarters going forward. 

Jane Singer  02:54

In your opinion, what if anything, has changed from an investor's point of view have the criteria and expert expectations for funding startups shifted. But if they have in what way?

Ron Bauer  03:08

 I think the whole economy has changed. I mean, globally, if you can't see that, as an investor, or as a founder, let's step back, if you can't see that, as a founder of a company or a CEO, that the entire global economy has shifted literally in the span of a few months, then you've been like hiding under a rock somewhere or not. Not in tune with reality. It's just $1. Today, it's like $100, a few months ago, for a startup company, it's almost IPO levels have gone down dramatically. XP being taken public have gone down 90% IPOs are going to be you know, lower than they were a pre pandemic or during the pandemic. It's just become very difficult to raise capital. 

Ron Bauer  03:51

I think the economy and the current climate right now has made it very difficult. I think that people are looking now for you're seeing a dramatic shift, looking for startups that are generating revenue already people are saying If the company does not have at least in my case, people that I deal with, who are investing in early stage, startups are growth companies are telling me they're saying don't come to me unless there's revenue unless there's proof of concept. We're not interested in pre revenue deals anymore. 

Ron Bauer  04:20

So I think the landscape has changed. And it's going to be extremely difficult for people with back of the envelope ideas, startup ideas to raise any money. 

Jane Singer  04:31

There are a lot of startups that have been quite successful at generating revenue, and they continue to grow sales. But year after year after year, they never managed to get profitability and there's been increasing conversation around the fact that how long can they continue to just keep getting funded to grow sales and grow revenue without really turning the corner on profits, particularly in an environment where you have existing companies, right, established companies that are taking a beating on Wall Street and so forth. Because even though they're profitable, they're not growing sales as fast.

Ron Bauer  05:11

Okay, that's a great question. And a perfect answer for that would be look at Amazon, Amazon for many years, did not turn a profit. They started out as an online retailer to sell books, and for probably two decades didn't turn a profit. And they kept raising money. They were small IPO, a lot of people fail to realize Amazon only raised $54 million in their IPO. When they went public. 

Ron Bauer  05:33

Now they're, you know, one of the biggest companies in the world. So I think that if you can find a problem in the market, and you can create a solution, and you can get people to buy your service provider software via your product, don't worry about profitability worry about revenue, first revenue is already a big thing, it's a big thing to get someone to first of all, it's a big thing to create a solution to a problem, then it's a big thing to get someone to actually pay for that. 

Ron Bauer  05:59

So don't worry about profitability, there will always be a bigger company or someone out there that can use what you create if someone else is willing to buy it. And they can do it in a more economical and efficient manner. For example, a company came to pitch me last week, they've created this robotics and automation system to, to package groceries for for supermarkets, and it's going to revolutionize the industry right now it takes 45 minutes to do, they can do in like four or five minutes. It's crazy. 

Ron Bauer  06:29

And then their cost basis is what would cost right now 30 $40 million for these grocery companies to build these guys can do for two or $3 million. And you know, they have a proof of concept in Japan that they're building right now. And but for example, the industry is against innovation. Sometimes people don't want innovation, because they're making money a certain way, people are being trying to stop them from innovating. 

Ron Bauer  06:51

So I think the number one goal is when you create a business, try and find a solution to a problem and try and get people to pay for it and generate revenue, don't worry about profitability, when you have a startup worry about, you know, bringing your idea or your product or your service to market and getting people to actually buy into it.

Jane Singer  07:12

Okay, I think that's really an interesting point of view on that. Now, in the market that we're facing nowadays, where you have less what was referred to as free money free because interest rates were basically zero. Do you see things have changed? And and from an investor's point of view? And in what way?

Ron Bauer  07:31

I think investors have a lot more opportunities today than they did, let's say, even two, three months ago, wow. Everybody's looking for money. And, you know, money is harder to come by. I think the the shift in the in the global markets as far as stock markets have just been in freefall. And they're up and down and interest rates like, like, as you said, you know, mortgage rates used to be one or two or 3% are now you know, 6% to 8%. You know, I spoke with someone the other week in the US who was offered a 50% loan to value mortgage and 8%. 

Ron Bauer  08:07

On, you know, on an expensive home. I mean, that's just insane. That's right, you know, that was hard money lending rates, you know, not bank rates, it's ridiculous. So So I think it's a lot harder to raise money, I think there's a lot of opportunities out there, people are hesitant to even people with lots of money and billionaires and millionaire investors, they're hesitant to write checks today in the current climate. So it's, you know, not an easy market, and I think it's gonna get a lot harder to it's gonna get more difficult before it gets better.

Jane Singer  08:37

Right, right. So then if I'm understanding you correctly, then as a startup, or as a new venture, you have to work a lot harder to be able to win that venture capital than you did, even as you're saying a few months ago.

Ron Bauer  08:53

Well, you have to work much harder. And I mean, there's, there's no shortage of opportunities and places to look for money. Definitely not. But I think you definitely have to be more creative, you have to think out of the box, you have to figure out who your who your target investor market is in your audience and, and try and reach that audience because it is, as you say, it's getting more difficult and investors are being inundated with, with multiple deals on a daily basis. 

Ron Bauer  09:23

And they're turning down projects unless the projects are unless the founders have have had an exit before and they're experienced, or as you say, they're no longer pre revenue, they're generating revenue, we don't have to worry about profitability. But if they're generating revenue, that's already a bonus compared to most startups. And you know, they have to be in an area hot sector that's very scalable with the ability to automate or not have hundreds or 1000s of employees.

Jane Singer  09:51

Now, having raised over 200 million in venture capital for several businesses, as well as being a principal investor yourself, what are the key things things that you've learned, what the founders of startups often misunderstand about raising venture capital? 

Ron Bauer  10:06

I think the biggest problem that I find is that founders try to be, you know, jack of all trades master of nothing, it's really good to be focused, I like to invest in people that are really good at one or two things. And they're, they're extremely focused, they're experts in one or two areas. And they can hire, you can always find people, you can find a CFO, you can find a CEO, well, you can find someone to help you with various things with HR etc, or, or your growth. 

Ron Bauer  10:37

But I think it's very important for founders to be focused and be very good at what they do. I think it's also the biggest problem is people invest so much money in their business, but then their investor materials look, they just look terrible, they look like garbage. So I'm a big believer in investing in yourself and investing in first impressions. You know, hire a copywriter, hire a graphic designer, you know, hire a photographer, and videographer, don't use stock imagery, don't use templates off the internet. 

Ron Bauer  11:05

I mean, you're trying to raise millions of dollars, and make yourself look like the next unit. Invest in yourself, you know, first impressions, like you're going on a date with a man or a woman, you know, you're gonna invest in your appearance, how you look the same with your business, you know, dress up your business the same way you would dress up yourself, make sure all your materials look proper, make sure numbers look make sense, you know, I've seen hundreds, if not 1000s of, and I've never had one deal that has met their financial projections. 

Ron Bauer  11:34

So be realistic, be realistic in your numbers and your financial model as well. No one expects you to meet your numbers and be you know, 100% on the ball when you're a startup. But I think the key is really be focused, and invest in yourself and make sure your business looks, you know, the best they can look,

Jane Singer  11:52

I think those are really good points. And I think that oftentimes people do overlook that. In today's market, how can entrepreneurs or startups best reach out to potential investors? It can be a little bit of a money situation, right? Where people are good at what they do, as you said, but they have no experience in raising funding, so they didn't really know where to go, what advice would you give them?

Ron Bauer  12:18

You know, people say to me, always, I don't know where to turn to or who to go to that. So you know, your question is a great question. And people always come to me and say, How do I find investors? Where do I go to I don't know who my audience is. I remember when I started out in business, you know, almost 30 years ago, now, you know, almost, we're talking like late 90s or early 2000, over 20 years, it was there was no internet, the internet was true. It was just coming out. You couldn't go nowadays, go on the internet. 

Ron Bauer  12:46

You have these databases, like, you know, Apollo, like, you know, PitchBook, et cetera, you have all these databases you can go into and you can pinpoint through subscription, the actual targeted person, you can go online and find underwriters, investment banks, brokers, you can cold call them, pitch them up, write them an email, all their contact details are on LinkedIn or online. You know, don't be shy to reach out to people. I'm a big believer, people are afraid of rejection, right? Yes, you know, it's going on send out 100 messages, try to get 100 connections to people say so you've got two more leads than you had the day before. 

Ron Bauer  13:24

You also have all these portals, you know, you never had regulated crowdfunding portals when I started raising money. So you can go now to portals like we funder or start engine, and you can go and structure your company in a way that you're gonna hit the masses, you're gonna hit 1000s of people in a targeted manner. And you know, you can raise now in the US up to 1,000,070. In a crowdfunding without an audit, you can raise up to 5 million with an audit, which is a basic audit doesn't have to say very much. So you could be like 45 to 60 days later, you could be hitting the ground, raising up to $5 million, you now have Regulation A plus offerings, which is almost like a mini IPO. It's like an IPO for a private company without being public. 

Ron Bauer  14:10

You can market it the same way as you market, a crowdfunding portal digitally. And through a regulated platform. It's a full prospectus you file but you can raise up to 50 million through through a Regulation A plus offering. And there are loads of marketing companies and regulated platforms that are regulated by FINRA and the SEC that allow you to go and target and market to, you know, retail investors through having a, you know, prospectus filed and approved by the SEC. 

Ron Bauer  14:42

So, there's so many opportunities there and you can do all of that without even leaving your like you're your office. You could be sitting in Hong Kong, Singapore, London, Berlin, la Miami, Toronto, Vancouver, you set up a US company you structure your business underneath then you can go and hire a team of consultants and organize.

Jane Singer  15:04

Wow, that's really interesting. When you are talking about what you might call more of a micro venture, I'm probably using the wrong word to describe it. But obviously something that's raising smaller amounts of capital, he made an interesting point about the fact that you can get funding through these different portals for really what I might call and probably using the term incorrectly micro deals. 

Jane Singer  15:28

Now, when you're trying to put together a prospectus or a pitch for something that's small, you're probably not realistically projecting the same thing is that you might when you're looking to position yourself as the next unicorn, are there different criteria? Are there different ways that you would position that?

Ron Bauer  15:47

Not really, I would look at every company, you never know what's going to be the next unicorn. I mean, it's, you know, I started up a company in 2006, was a small little oil company, we had a concession in Kenya, we raised, you know, $6 million for this company to kick it off. And, you know, we were acquired by a company during the crisis that took over our concession and grew to 3 billion market cap and they became a massive company and raised $2 billion on our concession. 

Ron Bauer  16:15

So I've learned that you never know where you're going to find the next unicorn. And I liked and I believe I tell all the founders and CEOs I work with, you know, act accordingly, prepare yourself day one for either an IPO two or three years down the road, put all the pieces of the puzzle, and all the the the all the tools you need, put everything in place. So you're ready to go and raise capital, whether it's, you know, starting from your friends and family to your, you know, Angel and seed investors to your investment clubs, to a crowdfunding portal to the reggae plus, to an underwriter to do a pre IPO and an IPO to the institutions to do a follow on offering. 

Ron Bauer  16:59

I said, you know, I like to look at the process as an investor journey, and get all the stepping stones ready. So at every stage of your business, based on your success, then based on your growth, you're ready, and you're prepared, it's very difficult to go back and rewrite history, but you can prepare yourself for the future, if you plan accordingly. And that's always what I tell the founders that I deal with.

Jane Singer  17:21

Right? I think that's interesting, because I think most are really just in survival mode. And people just want to get to the end of this year, or the end of this quarter or whatever. And they're not really thinking that far in advance.

Ron Bauer  17:36

No, I mean, and you and you have a strong point there. But I think even today, everything is so economical to for to plan and to do there's a there's an app for everything, there's a tool for everything. There's a portal for everything. So I think you can you can be in survival mode and care and maintenance mode. 

Ron Bauer  17:50

But you can also be planning for a year down the road, two years down the road, people, the last thing I want to do is I don't care if someone comes to me and says, we're just trying to stay alive. I'm like, sorry, you know, I'm not giving you any money, and I'm not raising money, the last thing I want to do is take good money and put it after bad money. That's the biggest mistake. So I'm always looking for people that are planning forward and looking for you know, how to grow the business not to survive.

Jane Singer  18:15

Right, right. I think it's an interesting point. And I think that one of the challenges that people face when they're startups and they've raised money, particularly if they're relatively new at it, is how much do you try to raise? Do you take it and try to throw it all at the business immediately and see if you can make it scale as fast as possible? Or do you try to budget it a bit more, so you don't run out of runway? I don't know. 

Jane Singer  18:41

That could be very different in each situation. But I've seen startups that have taken both approaches, and some of them just burning through money really fast. But they say, Hey, we got to just try to do everything we can to scale as fast as possible, when others are a bit more conservative, but then they run the risk of disappointing investors in terms of how fast they're scaling. What's your take on that?

Ron Bauer  19:05

My take is always raise more money than you need. So and a perfect example is, you know, I was involved in helping create a company that we listed on NASDAQ, and we started the company with a $250,000 seed investment. We then raised 1.6 million in a pre IPO round. Our IPO was planned to be 15 million. We got very lucky. We were a week before a big IPO in the same space as our space that was going to go public, you know, multiple billions of valuation, and we were going public at like 3040 pre money. 

Ron Bauer  19:38

So our IPO was heavily oversubscribed, we hit the full cap when we raised 27 point 6 million. So to almost double what we planned on raising we didn't even know what to do with that amount of money. And then what happened is the stock, you know, tanked a little bit after the IPO. And it was around the same time as Gamestop and we became like a meme stock like Gamestop style.

Ron Bauer  20:00

 Everyone rallied behind the company, the stock went up like three, four times. And the company managed to raise close to 40 million in a secondary and weren't conversions. So this small company, in a period of 14 months raised $70 million, they still have 48 million in the bank today, two and a half years later. And, you know, in this market, cash is king, I was with the CEO for dinner last week. And he told me, he's looking at opportunities that were $20 million for like two $3 million investment now, because he's got so much cash, a low burn rate. 

Ron Bauer  20:33

And so I'm a big believer, and people always say, I don't want to raise too much money, because I don't want to give away too much of my business. Don't worry about dilution. I tell founders of companies, you know, dilution is your friend, it's not your enemy. I said, if you're getting someone to pay fair market value or true market value for your stock, and you can have more cash than you know what to do it, you can never have enough money and enough health. 

Ron Bauer  20:55

So it's very important to it's important to raise more money than you need, bank that money and park it aside. Because you never know when a situation a perfect tsunami, like we have today in the markets where it's you know, it's a buyers market, and companies that have cash are king. And so I think it's important to watch your spending to answer that question. It's very important to watch your spending, it's very important to raise more money than you need if you need to raise 5 million raised 10 million if you need 10, raise 20 go after it. You know, don't say no to capital that's coming in.

Jane Singer  21:28

Right? Yeah, I think that's a very good point. And I think dilution is something that a lot of people who are founders of companies worry about. And it is a very delicate balance, of course. But you know, certainly sometimes people who are founders underestimate how much risk somebody is taking in investing in their company. And yet at the same time, other people perhaps err on the side of giving too much away, just to be able to get funding? Well, how would you approach that? What sort of guidelines might you give someone for that?

Ron Bauer  22:03

My guidelines are very easy, but really, a really easy thought process on dilution and my thought processes, I myself as an investor would rather own 5% of a company with 100 million in the bank than 50% of a company with 10 million in the bank 100% dilution offers two things that offers you the ability to have way more money in the bank than you need to have. It gives you dramatic liquidity. 

Ron Bauer  22:27

And you know, the ultimate game plan. If you're going public, it's not just to raise money, you have in the back of your mind, a potential exit down the road, you want to take money off the table. And when I say to founders, doesn't mean when you go public, you're selling your entire position. If you own let's say, 40 -50% of the company, pre IPO and now you own 30% or 35%, you're still the CEO or the chairman, you control the board, you have your all your close allies on the board, you have stock options, you have a salary, it's your business, you're running it, you're the biggest shareholder, shareholder activists are not looking to take over smaller companies, unless you're, you know, like a Herbalife or some massive company. 

Ron Bauer  23:03

So my belief is, it brings you dilution brings you more money, it brings you more liquidity, which allows you then to sell some of your stock and take money off the table. And there's nothing wrong. I tell founders, if your stock is liquid, and investors are selling their stock, and they're making money, no one will care. If you sell down part of your position and take money off the table. Maybe you want to pay your mortgage off, maybe you want to pay for your kids college education. Maybe you want to buy a vacation home. I don't know, everyone has reasons, you know, and no one cares, just plan it properly. People are scared always that they think that "Oh, well. If I'm selling my stock, it's gonna send the bad signals to the market". 

Ron Bauer  23:42

Yes, if you're selling all your stock, it's a bad signal. But if you own 50%, and you announce that you're going to sell every day, no matter what 10,000 shares in a, in a selling plan, that you've notified the market and the broker about no one's going to care. And so So I would say, don't be afraid of dilution. Don't be afraid of of not controlling 50.1% of your company, worry about meeting your business plan and growing your business.

Jane Singer  24:11

Right. Yeah, I think that's a really good point. I think people do in some cases become too attached to it becomes their baby. And they have an emotional attachment to it that probably, as you're pointing out, goes beyond the relationship that you perhaps should have with the business being an actual separate entity. So I think that's very interesting. 

Jane Singer  24:32

Now, I just wanted to bring around back to the point where we were talking about growth versus profitability. I know initially, you're pointing out that investors are really looking for something that has a revenue stream, you've been able to convince people to buy your products. But as we're seeing with a lot of startups, they never really get to profitability. 

Jane Singer  24:55

I mean, at what point do investors lose patience? You know, How many more rounds can you get where you're just keep growing revenue and all, that's great. You know, there's many cases that have that obviously, everybody knows about, and I don't want to call any company up and put them in a bad light. But where this just seems to be year after year after a year of losses, and yet revenues growing, I mean, at what point do investors start to pull the plug on that and say, you know, we got to get to profitability. 

Ron Bauer  25:29

I think investors, you know, the patience of investors and patience of hedge funds has changed dramatically, you know, long term used to be five to 10 years, it's now like two to three years, the time the time fuse on, what is long term has changed. And I think that you have these brands today, that people can create a direct to consumer or an E commerce brand overnight. And through marketing with influencers and through celebrities, they can, you know, hit the masses and generate revenue and profitability very quickly. 

Ron Bauer  26:05

And you see certain companies that scale up too fast, like forever. 21, for example, was a perfect example. You know, they went and they started growing, and they were profitable. And then they just realized, Okay, let's go and take over the market. And they grew way too fast. And they couldn't turn a profit, and they went into liquidation. And so I think that's what's happening. 

Ron Bauer  26:25

What you're seeing now is a big paradigm shift. You're seeing a lot of the, you know, bricks and mortar well known brands now turning online, and you're seeing influencers and celebrities buying brands, like for example, RadioShack, or Pier One imports, for example, or Bed Bath and Beyond a lot of these brands, dress barn, for example, people are buying the the trademark and the name and the brand and taking it on shore and close JC Penney and closing down all the stores, less than less people are going to shopping malls, people are buying online. 

Ron Bauer  27:01

So I think the shift is, investors are losing patience, you know, if a brand cannot reach profitability or be turned around, then you know, they're on the chopping block. And that's it and try and slice and dice it and someone else will try and buy it out and turn it around if they can, you know, like forever 21 went to a group that is in the similar business. But you know, they watched their profit margins a lot higher than, you know, forever previous owners of forever 21 did.

Jane Singer  27:30

 I think it's gonna be interesting to see what happens in the next year or so to some of these DTC brands. And that never worried about, I shouldn't say they didn't worry about it, but there was less concerned about profitability than there might have been with an established brand. So it's interesting to see how that's gonna play out. And at what point investors start to see that there may be better opportunities for their money than then another round of funding.

Ron Bauer  27:58

No, exactly. And  I agree with you, you're seeing it now. Every day, there's someone else going out of business, someone else taking them over. And everyone's turning into an activist all of a sudden, you know, the only funds and how short funds that had happened, everyone's become an activist, all of a sudden, even smaller companies are becoming, you know, targets of activists as well. So the landscape is definitely changing.

Jane Singer  28:20

Yeah, it's interesting, I just wonder how all of this is going to play out, I do think that we're probably going to see interest rates being well above zero for a while.

Ron Bauer  28:32

I think it's definitely I mean, you can see already mortgage rates in the UK are well over 6%. And even if you're willing to pay six and a half, or 7%, good luck getting a mortgage, you know, they've changed the rules here, the rules are now before it was an acid base loan. Now it's an affordability loan. So I think it's going to be a lot more difficult, the cost of borrowing is going to be much higher. And they're also banks are not going to lend money as easily as they lent money before. It's gonna be difficult. Right now,

Jane Singer  29:01

definitely. So it'll be interesting to see how that impacts on investors. Now, just for my own edification, you know, because some of us who don't work in the financial sector, are not necessarily clear on the different aspects of funding. Now you have, of course, venture capital, which is a very high profile. But what's the difference between that and Angel invest?

Ron Bauer  29:26

I think there's no the only difference between venture capital and angel investing, angel investing is usually the first round of investments. So if you've created a startup, it's brand new, it's back at the moment. So back to the envelope idea, you might have just incorporated your company. And your first port of call would usually be friends and family, which is almost the same as an angel investor, or an angel investor. 

Ron Bauer  29:49

It could be you have worked for a big company and the founder of that company, had a huge exit and made a lot of money and they are an angel. They're giving you your first 100 grand or 500 grand, I would say Angel investors or, you know, bigger investors writing anywhere from 100 to a million dollar investment. And your first port of call, and a seed investor would probably be your second round of investor, it could also be a first round of investor, there could be an angel who says, I am putting my support behind your venture. And I'm going to bring 10 of my friends or eight of my friends. 

Ron Bauer  30:23

And we're going to do a seed round together. And they'll come in at the same the same level, like for example, Amazon, Jeff Bezos went out to about 60 people, and 20 people gave the first few million dollars, which, which was 20% of Amazon when it first was created. So I think that would have been a seed round. And then venture capital, venture capital funds can invest in seed rounds, too. 

Ron Bauer  30:47

But a VC round is usually once you've done your friends and family or your your angel or seed round, sometimes venture capitalists like to call themselves incubators and accelerators. And so what they'll do is they'll create almost like a competition or a contest where you'll present to a panel, and they'll give you like a small grant, or a small, you know, convertible loan of 150 to 200 grand into the business. And they'll run you through a a process, they have to see if there's viability or if the project has merits and they'll probably usually they'll put a mentor on or they'll put a partner in the venture capital firm. 

Ron Bauer  31:28

And when I say mentor, it could be a previous venture that they funded another startup founder that's been successful. And he'll, they'll mentor you, he or she, and and sort of help you through the growing stages.

Jane Singer  31:39

I think that's really interesting. So if you're, if you're someone who has a business idea, a startup, at least from your point of view, looks like there's viability, you have found a few people who are willing to pay for the product. And now you're thinking about raising capital, this can be a very, very difficult challenge for people who don't have that experience on the finance side of things, right? How do they go about it? What do you do? 

Ron Bauer  32:07

It's not really it's not as complicated as it sounds. And people seem to think it's very complicated, I think the first port of call is you want to have a good lawyer, hire a good securities lawyer, someone that's a corporate lawyer and securities lawyer that can help you incorporate your company properly, and understands what it takes to deal with fundraising, whether it's a crowdfunding angel or seed investment, venture capital investment, that lawyer will usually have a good source of contacts, I like to look for, you know, smaller to medium size lawyers, not the big, you know, law firms. 

Ron Bauer  32:39

And usually they will have a network, they'll be able to make introductions to smaller brokers, smaller investment banks, crowdfunding portals, they might even have some investors that they think would like the deal, because they know who's writing checks and their other clients, companies, these lawyers will have 50 clients like you, you're not unique in the sense, you know, and so you want to be one of 50 rather than one of to price lawyer and so they'll be able to introduce you to but like I said earlier, you know, there are loads of crowdfunding portals you can go to, and they explain the process. 

Ron Bauer  33:09

It's not a complicated process, it's hiring a lawyer, hiring an accountant hiring an auditor, you can, you can hit the ground running with, you know, a 10 to $20,000 investment in the process between lawyers, accountants, and auditors, setting up a company today to go and raise money and opening a bank account, you know, costs almost nothing, you know, they're even a perfect example is stripe stripe, you know, is the payment processor, they've created a company called Atlas stripe, where you can go online and create a corporation, immediately, they'll even apply for you for your EIN to get you know, your tax ID code in America to get to have the ability to open a bank account, or we'll set up your payment processing for you. 

Ron Bauer  33:53

They've done that as a tool to get people to create companies to use their services. So very easy today, you know, for $500, you can set up a business, and then you can go and hire a lawyer and hire an accountant. So I think it's very, very easy. And you know, just look up online, there's multiple services available that offer the ability for you to go and raise money and learn how to raise capital.

Jane Singer  34:15

I think that's really interesting. And I think that so many people really don't know how to go about it. And because they don't know how to go about it, they don't. So yeah, I think this is just great. I mean, you've shared so many interesting things we're on and you've really given us such an interesting look inside how companies particularly some of the smaller guys or midsize guys can raise money. Where can people connect with you? I think a lot of people would want to be able to reach out to you.

Ron Bauer  34:44

Thank you. Thank you. And so people can go to my website, which is that WWW dot fest, capital th e s caapi@aol.com. They can reach out to me someone from my team will make contact we're happy to hear it Diaz in pitches from founders, we also offer mentoring services and advice as well. And, you know, I've worked with 5060 CEOs and founders over the past 20 years, where, you know, we work right now with a portfolio of 15 companies. And so we've seen, you know, The Good, the Bad, and the ugly. And we know what's going on in the in the market right now and how to overcome and tackle the current climate and problems. And you know, we're very happy to speak with anyone and have set up a discovery call. And you know, and thank you so much for, for having me on. On your podcast. It's been fantastic.

Jane Singer  35:36

Well, Ron, it's been a total pleasure. I will include all those links in the show notes, because I know sometimes when you're listening to something, you might not have a pen or paper right at hand. So all of that will be in the show notes for people. And again, thank you for taking the time to join us.

Ron Bauer  35:51

No, thank you so much for having me. It's been an absolute pleasure, I appreciate it.

Jane Singer  35:54

I'd also like to thank our sponsor, Asian net consultants, Asian that's a specialist in recruiting top talent in Asian markets. Since 1988. Asianet has been working in partnership with its global clients to help them make the right strategic hires. They have a well earned reputation for being able to fill even those difficult to fill positions, learn about how they can help you find the best talent by heading over to their website. Asianet consultants.com. That's Asianet consultants.com. I'll also leave a link in the show notes. 

Jane Singer  36:26

Thank you for joining me here on a seat at the table. If you enjoyed this episode, or learn something from it, I would love to hear about it. If you'd like to support the show, please hit the subscribe button. And if you can take a minute to leave a review on Apple podcasts or other channels. That would be fabulous. 

Jane Singer  36:43

Don't forget to check out our podcast website https://seat.fm.  If there's something you'd like to share ideas, suggestions or comments, please feel free to reach out. I would love to hear from you. Thank you again for joining me and being part of our international community. I'm Jane singer, and I'll see you in the next podcast episode.