274. How to Effectively Raise Money for Your Startup

00:06
Welcome to Raw and Real Entrepreneurship, the show that dares to bring the no nonsense insight to those who have the courage to start, grow, and scale a business. Here's your host, entrepreneur, investor, and best selling author, Susan Sly.

Susan Sly 00:24
All right, so let me ask you a question. How many of you have an existing startup? Raise of hands. Show of hands. Okay, awesome. About 50% in the room? How many of you have an idea for a startup? Okay, cool. How many of you have an existing business, but you don't consider a startup? Awesome. Okay, good, good, good. So, many years ago, I was a professor, and I used to write on the board when the kids would come in class. Welcome to physics 101. And it was so fun to mess with them. Because they'd come in, you know, 17 years old, they're like, I didn't sign up for Physics. Anyway, so the reason I mentioned this is because some of you, for some of the things I'm gonna say, as we get into venture cap debt based financing, you might go, this doesn't relate to me, Susan, but it could, and it will. And I want you to listen to what I have to say as though it can make you hundreds of millions of dollars, because it just might. Sound good? If it's good say yes. All right, let's get the party started. This is the topic, it's not physics 101. All right. So startup failure rate is 90%. And you're like, why the heck would I get into something if I only have a 10% success rate, right? What does Sean say about resilience? What did Brad say? So if you know going in that you only have a 10% likelihood of being successful, let me share some other 10% statistics. So back in the early 2000s, I used to do speaking events with a man by the name of Jim Rohn. Any of you familiar with Mr. Rohn? So I was sitting there in the audience, I was making about $300,000 a year. And Jim said this, write this down. If you want to make a million dollars a year, you need to give a million dollars in service. Make sense? Yes. Jim also said that only 10% of people ever would read a book that he recommended. He also said 10% of the world's wealthy hold 90% of the world's wealth. Do you know the number of people who actually achieved their New Year's resolutions is only 8%? So slightly less than 10%. So if you want to, Brad talked about habits. Shawn talked about habits. If you want to be in the 10% you have to out habit everyone. And that means you go to the frickin gym at four in the morning, I was there. I used to be 200 pounds. I was a women 16x. I left home when I was 15 years old, I had skipped two grades in high school. I went to college when I was 16. And you know what? I got in an abusive alcoholic relationship and I thought nothing of myself. So little of myself that I put on all of this weight as a shield to protect me. So I'm turning 50 this year and I'm feeling like a badass. I don't have as many kids as Brad but I did give birth to mine unlike like him. It's more fun for the guys. But I have five kids. They range in age from 12 to 27. I'm also a grandmother of little Honor and Christian. And the thing I have to say to you is I failed calculus my first year in university. I'm now the CEO of an AI company. I'm one of just a handful of women in artificial intelligence. And my GPA in university was 2.69. You gotta get the point 69, because that counts for something. But I will out habit, anyone. So next thing I want to share. The number one reason startups fail is lack of cash flow. So Sean reaches out to me, he's like, Hey, I'm doing this event with Brad, The Weekend MBA and I am so choosy about what I say yes to. Your results are more about what you say no to than what you actually say yes to. And because it was Sean, and he's Sean's OCD, like let's just call it what it is, right? And he is so meticulous he's like, Susan, I don't know if you get excited about this, but I do. He's like, we're going to talk about accounting. I'm like amen, brother, thank god. Sign me up. I'll be there. Because you don't need another motivational event. Write this down. Motivation is like a sugar high but inspiration is going to last a lifetime. So your startup

Susan Sly 05:18
is going to fail because of cashflow. So if you don't learn the accounting, you are setting yourself up to fail. How many of you, show of hands, confession. We'll have, we'll, you know, maybe cry together in the lobby, how many of you built a business and actually lost it? Let's give all of the honest people a massive round of applause. So in the year 2000, I had a brick and mortar business, and it was a fitness club, and I used to train celebrities. So when I saw you speak at Clickfunnels, a few years ago, I was like, I get that, I know that. So I was a celebrity personal trainer, I was on television, radio, all of these things. And I had this gym, but I didn't know anything about cash flow. But I was the marketing person. I let other people handle the accounting, other people do all the things because I just wanted to do the fitness schedule, be with the clients, do the marketing and be the media personality. So one day, I walk into my gym, and it's Good Friday. And PS, I had been diagnosed with progressive MS and told I only had 10 years left before I'd be in a wheelchair, 20 years until I would die. I was 27 years old. My marriage is falling apart. I go to teach a fitness class, and there's a padlock on the door. We've been shut down for failure to pay taxes. Standing all around me were all of my spinning class participants. But to make matters so fun, because especially when you're a celebrity, they wrote about the demise of my business and my divorce in the newspaper on the front page. So at that moment, I had a wall kicking moment, I cried a lot. And I got down on my knees and I said, God, I'm going to spend the rest of my life empowering women. And I love men too. I was raised by single dad, but I knew it was going to be harder for women. And I'm going to share some really hard stats for women in startups in a few minutes. But first, I had to put my life together. I said, I'm going to become a self made millionaire. So I went on to start a business, 2003. That business generated $1.7 billion. So then I felt like I had earned the right to have a conversation with all of you really amazing people who have sacrificed to be here. Some of you sacrificed money. How many of you have kids at home? How many of you have a partner at home who's like, where are you going? Why are you going there? Right? And you know, you gotta be taking someone out for dinner when you get home, right, and like flowers and the whole thing. Because the reality is, it is very tough and lonely to be an entrepreneur. And you don't need anyone up here teaching you who hasn't walked the walk, who hasn't had the school of hard knocks, and who hasn't put the results on the board. Right? Because everything else is theory. So I'm gonna jump right in, we're gonna, like get this dialed in. So the first thing I want you to know is, you'll always need more money than you think you need. So put your hand in your heart. And repeat after me, I will always require more money than I think I need. You know what, stand up. And I want you to look someone in the eye. And I want you to say this with conviction, because when I get into how to raise money, someone came up to me. They had a tech company, they're like, Susan, will you invest in my tech company? I said, How much is it gonna take for your tech build? They go $250,000, I started laughing and I almost fell out of my chair. Yeah, I'm like, add some zeros to that. That's how much you're going to need just to get your MVP out the door. Okay, put your hand on your heart, look at to, look at someone in the eye. Find someone, make eye contact, and we're gonna say this with frickin conviction on the count of 3. 3, 2, 1 go, I will always require more money than I think I need. Give them a high five say yes, you will. All right. So if you've ever listened to my show, it's called Raw and Real Entrepreneurship. I've had Sean on the show. I've had Jesse Itzler, Dave Asprey, a whole bunch of amazing people. I'm on episode 300.

Susan Sly 09:52
Did you know 90% of podcasters haven't put out a new show in the last 90 days? There's that damn 10%. Yes and for women it's even less. So. Anyway. So I want to acknowledge my dad, his name is Joe. So my dad was, he still is, but he's retired now, he's 82. He was an engineer. And he helped invent the microprocessor and the pacemaker. So growing up with being raised by a single dad, I was taught the power of curiosity. But one of the things he always said to me was this, the skills will pay the bills. And he said, Susan, when you have the opportunity to learn a new skill, take it. Read the books, study. Did you know the average millionaire reads 12 books a year on business and finance? The average billionaire reads 24. So when I read that, I'm like, there's the recipe. So this year, I think I'm already at 20. Audio Reading, I just like all the time, I'm training. I've done Boston six times since being diagnosed with MS. And I want to qualify to go back next year, because I'm a Boston Bombing marathon survivor. And I have some ass to kick. So I go through a lot of long runs and audio reading. I'm like, I take books everywhere. I have a, I have a book problem. I can't go through the airport without buying books like, it's, that's why I have the Louis Vuitton heavy carry on, because you can put 200 pounds of friggin books in that thing. Anyway. So my dad said the skills will always pay the bills. Then number one skill you're going to need to build a startup is sales as Sean said. How many of you have ever done a network marketing or direct sales business? How many of you made money in it? I made 25 million in it. It was the best training ground, I can't even begin to tell you. Why? You have to learn how to sell a product that's not yours. You have to learn how to build and motivate a team, you have to understand their level of sales commitment. And so if you've ever made money in a business like network marketing, let's give everyone in this audience a massive round of applause in that. And there is no shame in it. There is no shame in it. And you're you know, the skills as I said. But anyway, my dad, very interestingly enough, when I was a little girl, he's like, if you want to be successful, you need to go to MIT. Now the problem is, I was very bad in math. That is the problem to get into MIT. So I go off to university, and my first year I failed calculus. Dr. Qiang. Ask me any professor name from university, I can't tell you one. But Dr. Qiang gave me a 49.5%. So I thought, I'm not going to MIT now. So a little bit of my backstory, I had been very successful, lots of businesses as Sean said, and I, in 2016, I went to Africa, my eldest daughters from there, and I ended up getting very sick. And I came back and my organs were starting to fail. And so I'm laying there and I realized that I still had something left inside me that I haven't yet fulfilled on. How many of you know that in your heart, there's something there, right. So I'm lying there. And I didn't really know what it was. But I kept going back to technology, because when I failed calculus in university, I was actually coding the first iteration of facial recognition technology. But I still failed calculus. Dr. Qiang, who knows? Anyway, the thing I want to share with you is, it doesn't matter how old you are, it doesn't matter what your GPA was. Anyone else get under three? Is it just me who's the, not bright? Okay, good. Thank you. We'll have cocktails later, we'll celebrate that. The thing I want to say is, guess who's graduating from MIT this summer, me. And guess who gets the MIT dad shirt? So in 2019, I enrolled in MIT and not only that, I now speak for MIT. So there you have it. My skills do pay the bills. All right, so we're gonna play a game startup true or false. Because I love games. So here we go. Number one. The average age for a startup successful startup founder is 29. How many of you think it is false? Okay, about 50%. It is false. The average age for a successful startup founder, write this down, in Silicon Valley is 47 years old.

Susan Sly 14:52
So, remember, that's an average age. Less than 2% of US tech startups have at least one female founder. How many of you think this is true? About a third of you? The answer is sadly, it is true. So as you're looking at me, you follow me on social, I am in the 2%. I will take the applause, I will take the applause. And we have to change that, ladies. You actually don't need to know how to write code to be a successful tech startup founder. But you have to have an idea. Okay, next one. 30% of startup founders have at least a PhD. How many of you think this is true? Oh, you all are smart. The answer is it's false. Only 8% of successful startup founders have a PhD. I am a big believer in education. That is applicable, left handed puppetry, and a $250,000 degree probably isn't gonna get you very far. But you're here investing in the real world education. YouTube University. It's also a fabulous place to go. You don't have to go to MIT. Part of the reason I went to MIT is because I wanted to do it to actually make my father proud. He, you know, my family emigrated to Canada. I'm originally Canadian. Where are the Canadians in the room? Yeah. Where are you from? Calgary, which quadrant? Northeast Okay, cool. My aunt lives in northeast. There you go. You know, Canada's a small country, but maybe later, we can ride polar bears and you know, have some maple syrup on poutine in an igloo, okay. So, stand up again, stand up again. Put your hand on your heart. Turn to someone different and repeat after me. I am equipped for startup success. Now this time, say it like you mean it because if you can't convince yourself, you are not going to convince anyone else. Let's do it again. 3, 2, 1 say it. I am equipped for startup success. Again, I am equipped for startup success. One more time, I am equipped for startup success. Give yourself a round of applause. Yes, have a seat. So if a billionaire is doing something ethical and moral, I'm gonna do it, right? I'm not yet a billionaire. So one of the things I read about this billionaire is he wakes up every morning, he does affirmations. So I started to do the same thing. So as soon as I'm like, halfway conscious, I'm like, I am favored. I am blessed. I am wealthy, I am healthy, I am happy. I am whole. I am loving, I am generous. And I just like, go go go. And so at Radius, we're opening what is called a pre Series A round. We've raised $7.1 million in friends and family round, our company valuation is 140 million. I co founded the company in 2018. We are doing the largest computer vision deployment in America. I'll tell you what that means a little bit. And so I'm like, Hey, I'm raising money. One friend's like, oh, it's you, Susan, I'll put some money. Another friend's like, I'll put some money in. I was talking to a friend of mine. I'm doing speaking event for her. And she's like, how are things going with Radius? I told her, she's like, Oh, I think I'll come in for a million. And then another friend call me, 2.5 million. So in one day on Monday, I had verbal commitments of about $5 million dollars.

Susan Sly 18:48
Why is that? Integrity, trust, proven track record. They believe in me, but who has to believe in me first? Me. Right. And that's the key. That's the thing to understand. So let's get into it. We're going to talk about two types of value key funding types and the perfect pitch formula. All right, so gratuitous plug for my family. I have been with my husband for 22 years, sometimes it feels like 54. We have known each other since high school. And these are some of our children. So and you know, I'd love to tell you it's all roses and sunshine. But as I was just quoted in Forbes the other day, I work my ass off so they won't have student loans. That's my why. My oldest daughter just graduated $280,000. Her first year she was like I really want to go to Boston U and I'm like, $80,000 later and she was like, I don't like the cold. I'm like, you're freaking Canadian. So then she transferred in state. So anyway, my vision, our son, he's on the autism spectrum. He was told he'd never go to college. He's got a 3.9 GPA at Grand Canyon University. I live in Scottsdale, Arizona. And so thank you. Anyway. So you've heard Simon Sinek start with the why. Your business has to have a why and you have to have a personal why because you are going to have wall kicking friggin moments, right? You're gonna have customers that want to return product, you're gonna have people like, what is it you're doing? You're gonna have critics on social media. So when I have all of those things, I'm like, no student loans. That's my number one why. So a little bit about where I speak now. I don't break arrows on people's throats anymore. I used to do big events like that. I don't jump up and down in front of 20,000 people, though those days may happen again. Now I speak for like Intel and Lenovo and Nvidia. I was telling Charlie in the back, I'm doing three speaking events in one week. Two in Las Vegas. And then I fly to the National Restaurant Association, 20,000 people, and I speak on a panel with McDonald's, Deloitte and Touche, Nvidia, and Lenovo, all of these multibillion dollar companies. And so one of the things I do when I do a lot of talks, is I talk about career pivots. So how do you shift the optics to making it look like Hey, I am a legitimate startup founder. The other thing I did is I founded an incubator. That's my friend Jared Yellin. I founded an incubator for women who have a tech idea. So you submit your idea, it's all $49. We that your idea. And if we accept it, when you pitch, we come alongside you, we show you how to raise the money and we even build the tech for you. And we get your tech out the door. My vision is 1000 companies, female founded, changing the 2%, getting them from inception to exit in three to five years. And I come alongside you as your co founder. Thank you. So if you want to know more about that, it's fembossincubator.com Because you're a boss and your fem, there you go. Alright, so here are my quick stats right now. Co CEO, co founder Radius AI, we have a current valuation 140, 140 million pre money, we're doing a big growth rounds in Q1 next year, it's going to come in at around 300 to 400 million. I'll talk about where those come from. 7.1 million our friends and family round, we're at revenue. And I'm a tech investor, Best Selling Author, Fem Boss, MIT, mom. Alright, let's get into you. That's enough about me. Let's talk about you. Okay, I want to talk about how you put value in your company. Two types of value. The first one is real value. Go ahead, write this down. So real value are the numbers. In the beginning with your startup, you might have an idea on a napkin. But if you're fancy, it's on a PowerPoint. If your idea's on a PowerPoint, it's real. Now, if you're really fancy, you went in Canva. And you made a template, a pitch deck and you're like, I have a pitch deck. This is on, it is real, right? But where your real value comes from are these four areas. So MRR and ARR. You're gonna hear from Chris after me, he knows all about this stuff, monthly recurring revenue, annual recurring revenue. So your value of your startup is going to be related to how much revenue is coming in. Now, in sectors like artificial intelligence, what do you think the multiplier is in evaluation on your AR?

Susan Sly 23:45
Who said 20x? Put your hand up. 20x, pardon. 10 to, 10. We got a 10, we got to 20. So it's as high as 30x. How many of you have used the face tune app? It's a free app that touches up your face, photos, right? You may be familiar with it. When they had 100 million users on their freemium version, they sold the company for $3 billion. So people like Sean and Brad and Charlie and myself, these are the kinds of things that interest us because I didn't come to play. Someone said why did you found Radius? Well, obviously we have a big why of what we're doing human centric AI. But I came to take that company to at least a $3 billion exit. I know what we need to have an ARR to get it. I know how many locations, how many customers, how many cameras, how many customer journeys we need to be in. The next thing, patents. Sean talked about those. If you have patentable technology that is also going to add some value, inventory, and then pre existing orders. But all of those things are a slippery slope. And when you are first starting, you're gonna have none of that. So when someone, what's your first name, sir? Matthew. So Matthew has a startup and someone comes up and it's like, you know, do you have any patents? So what you say is, I have four patentable ideas, and a portion of my startup raise is going to patent applications. Then I know Matthew knows what the heck he's talking about. Each patent you're going to apply for is going to cost you anywhere from 25 to $35,000. So as a tech investor, I go, he gets it. So he's allocated about 150,000 for patents right off the bat. I love that stuff. Now, we're gonna talk about perceived value. This is when you have a startup, this is what you raise money on. Everyone repeat after me, perception is reality. And this is where I'm gonna get you guys to do some work. Okay, so your perceived value is going to come down to the team you have around you. So who are the co founders? Who are your advisors? And has that team had wins? Have they had successful exits before? Have they sold anything? Right? So let's give an example. Let's say Christie and I say we're going to do a tech startup. And we are going to take a significant market share from you know, My Fitness Pal. And we're going out to pitch this idea. This woman has made millions and millions of dollars, I've made millions and millions of dollars. We've made money in the fitness industry, media celebrities. Do you think we could be investable just based on who we are? Yes or yes. Yes is the answer. Let me say it again. Yes or Yes. Right? So what you want to do with your startup is you want to bring in, if you don't want to give up a lot of equity, bring on advisors who have built and scaled massive companies. So one of the advisors I brought in, in Radius is my friend, Jason Pfeffer. Jason was a co founder of Myspace, the OG social media platform. They sold that platform for 300 million back in the day, in today's dollars that would be a lot more. And so when we brought Jason in, if you look at our CrunchBase profile, you think, Oh, I've got Instagram. And I've got Twitter. And I've got LinkedIn and Facebook and Tik Tok, and I'm everywhere. If you're not in CrunchBase boys and girls, you're not anywhere in the startup world. Because CrunchBase is the collateral. All of the institutional investors, they're like, what's Matthew's CrunchBase profile? It's like the Tinder of investing. So let's go to TAM, total addressable market, what

Susan Sly 28:12
is the total addressable market for your startup? So one of the startups I invest in is called BlocPal. BlocPal facilitates payments in crypto in the developing world. My friend started that company three years ago. And I thank God that he invited me to invest. So when you look at the total addressable market of transactions that are being facilitated in the developing world with different payment methods, that is trillions of dollars, that is a bigger TAM. So write this down, the bigger My TAM, the bigger my perceived value. Because if you, so I'm not interested in investing in a company with a TAM that is lower than you know, in and around the 50 billion mark, because I know the most you're going to exit for is maybe eight figures and that is of no interest to me. Now there are investors, and you can go on We Funder and things if that's what it's gonna be for you. And even in my incubator, you might come through there, but for me as a personal investor, I invested in a company called Lite Pink, it's my friend Lori Harder's company. It's a sparkling wine beverage. You know, it's keto. It's all you know, the good stuff, no sugar, it's alcohol. It's all the things we love as girls. Anyway, and it's pretty, the packaging is great. She's got a massive social media following, but her TAM is massive. Sparkling alcohol drinks, massive TAM. So even if she doesn't get a huge market share, she has a very small share of a great big pie. Does that make sense? Right. So if you come to me and say I've got a startup idea, and it's only for people with degrees in left handed puppetry, I'm proud only gonna pass on investing because it's too obscure of a market. Yes. Makes sense. Okay. All right, next is your concept. So how many of you read the book Blue Ocean, Red Ocean or Blue Ocean Strategies it's called. Please write that down, be in the 10% of all the books that I might recommend. Blue Ocean Strategies is massive, it's by two economists. When you're looking at your idea, is your concept in the red ocean or the blue ocean. The red ocean is very competitive. That's where the sharks are swimming, the blood is in the water, you can be successful, but you're gonna have to spend more money on marketing, you're gonna have to have more staff to be competitive. Let me give you an example, electric vehicles. When Elon started in electric vehicles, he and I have the same alma mater, Queen's University in Canada. When Elon started in the electric vehicle space, he was in the blue ocean, he didn't have a lot of competition, did he? But now Ford has an electric vehicle. Porsche has an electric vehicle, Apple is going to have an electric vehicle. But Elon, as Brad said this morning, has never spent $1 on advertising until he just spent 44 billion on Twitter. Why run ads when you can own the platform? So if your concept, and there's something called the pink ocean, which means there's some people there, they've made mistakes, but you're one of the early people there. So write that down, you want to be in the pink ocean. It's a new term in tech we talk about. And the next thing is your media. So in a moment, I'm going to have you guys do some work. And I'm going to do some gratuitous social media video. Because one of the things, even as a tech founder, look at Whitney Wolfe Herd with the day she took Bumble public, her net worth went to $13 billion on a Friday the 13th when Mercury was in retrograde. I don't follow astrology, but I wouldn't have done it that day. But $13 billion in a day. Your hat says billionaire, imagine 13 in a day. Yeah, he says 100. So your social media, your media, I just did a talk with Intel. It's all these techy people. And they're all like noon. I didn't care. I took the video, I had my video person put snippets up and it's on LinkedIn, it's on Twitter, it's on Instagram it's everywhere, because you have to be investable.

Susan Sly 32:48
And if you don't think of yourself that you can walk as someone who's going to exit at a $3 billion level and you're going to talk like that and dress like that, then you've got to shift because if you want to achieve something you've never achieved, you have to become someone you've never become. I'm gonna get you to turn in your notebook, I want you to have a clean piece of paper. And we're going to focus on perceived value for your business, perceived value. And I want you to make a list of as many ways as possible that you can increase your perceived value. And I want you to ask yourself a question. Do I need to maybe bring on some advisors or maybe I need some co founders who have walked the walk, done it, have that credibility in order to raise money for my startups. Very quickly, put up your hand, I'm gonna point to you what's a way you can raise perceived value in your company? Yes. Find a successful advisor, Yes. And when you do, when you're, I'm gonna get to how you allocate your pieces of pie in a minute, you're gonna give them a little bit of equity in your startup. Yes, yes sir.

Susan Sly 34:08
So boosting your media. Yeah, exactly. Yes. Can you say it louder? So how you fix the problem with your product so you're, that's the concept, right? And being very clear on what your concept is, what it does, and as Sean said, Just it's that singular message. How else you're going to use it. How are you going to boost your perceived value? Yes, sir. Pardon. Surrounding yourself with talented people. Yes. Sorry, what's that? Cast the widest net you can in your town?, Yeah. Now I need, direct your energy to your business. That is a great answer. It's not investable. So I listen to pitches all the time and I watch a lot of pitches. For me to invest in your business, this all has to add up to a number that what you're going to value your business at. Now directing your energy to finding the right people surround yourself with, doing the research, dialing in your concept, getting your media on point, that is a good place to direct your energy. So we're going to talking about funding types and rounds, someone please draw a circle. So there's this guy, and I'm having dinner with him in La Joya. And he's a very famous scientist. And he's like, Susan, whatever you're making, I'll pay you double to come be my CEO. And I'm psychologically unemployable. So I'm not interested in being someone's CEO, unless I own a part of the company. And he said, how much of the company do you want, I said, 20%. And he said, I would give you more. And I said, I know you wouldn't. That's why I'd be your CEO, because you'd give all your company away, because you don't know what you're doing. So I'm not leaving my position anytime soon. But the reason I bring up this story is because in the beginning, you're going to be so tempted to give away a lot of your company, because you're going to lack the confidence. So this is the most important thing I'm going to teach you, please draw the circle. So in the circle, the yellow stands for your first investment round, this is your friends and family round, you're gonna give away about 10% of your company. And if you're raising money, and you're going to have more than a couple dozen investors, you should do it in a Delaware C, I have the same speaker agency as all the guys on Shark Tank, and none of us will invest in a company that's not a Delaware C, I'm not investing in your little LLC, I'm not interested in that. If you're gonna do a We Funder round, I love, we fund our amazing platform, you need to be in a Delaware C. So you're gonna give away about 10%. How many total shares, generally there's about 100 million shares when you're starting. And then you're going to give away advisor shares, and that might be about two and a half percent. So each advisor is going to have about half a percentage point. And then the green is your ESOP. That's your employee stock option program. So at Radius, ours is 20%. In Silicon Valley, it's 20% is standard. And why do you do this? Because you've want to attract talent without paying them that much money. So let me give you an example, in Radius, one of our head front end engineer, he worked at GoDaddy for 10 years, he is a boss, and I love him. He is so smart, he can make a website that's like $100,000 website in literally a minute. He's ridiculous. But we knew we couldn't pay him his going rate. In Silicon Valley, his starting salary would be about $400,000. But we could give him shares in the company. Your early employees get shares in the ESOP. My friend was an employee at Yahoo before 100, he might have an employee 68, when he exited, he had enough money to live on for the rest of his life.

Susan Sly 38:24
So that's what you're going to do, you're going to have an ESOP. And the rest of it is for the founders of the company. The funding types. So friends and family, this is your first one, you've got your idea on the PowerPoint, you've got the concept, you figuring out how much is my company going to be worth that is going to be based on that perceived value slide that I shared. And generally, when you're doing your first funding round, I only take advisory positions, if we're looking at an initial valuation of in the 10 to $20 million range. And we're going to offer that friends and family round, we're going to raise about somewhere in the neighborhood of 3 million at a discounted rate of 20%. I won't get into all of that, because Seann said at 45 minutes, not four and a half hours, but if I was going to teach you more, we would be working so hard on that and how to pitch. The next thing is your seed round. So this is the next round. And people are investing a little bit more money than you have a pre series A, that's what we're doing with Radius. The minimum buy in is $100,000. Then your series A, Series B, Series C, and then debt based financing when you're taking on debt. I do not like debt based financing in the beginning until you're at revenue, because if you can't bring in money and you owe someone money before you even get on the starting gate, you're just screwed. And so put your hand on your heart say, I will guard my equity. You will guard your equity. So last thing I'm gonna cover very quickly, this is a formula. And so this is based on neuro linguistic programming. So I am NLP certified. If you're in the computer world, it stands for natural language processing. In the personal empowerment world, it's Neuro Linguistic Programming, I have gone to the same school of NLP as Tony Robbins, the Bandler school. So in NLP, we work in this concept of what is a relatable problem, then what are other solutions out there? They are not working. What is our solution and why is it different? And what is our real and our perceived value? So, let me go through this very, very quickly. So, the problem that investors can relate to. So Christie with her business, is her universal problem is that, you know, people have tried so many different things to lose weight, there are a lot of gimmicks out there, there are a lot of fads, they spend all this money, they never get resolved. And, you know, what are other solutions out there? And she lists a bunch of them. This diet, that diet, this product, that product, and she's nice about it in a firm way. And she's teaching no nonsense. And then what is my solution? Why is it different? My solution is, this is common sense. This is a community, you become part of the code red tribe, I'm giving you a lot of plugs for your business, sister. I was teaching a group of female entrepreneurs and I use your business actually as I use case. So when I do talks, whether it's for MIT or different places, I will take a lot of women owned businesses and showcase them and we'll dissect them about why they're so successful. So amazing job. And then, you know, looking at why our solution's different? And then what is our real and perceived value? So at Radius, let me give you an example. So here's the problem. A lot of companies know they need to invest in AI and companies using AI, they're making 80% more revenue than companies not using AI. There are a lot of solutions out there. But you know what, not all of them have been proven. Some of them aren't real AI, some of them aren't even effective. Our solution is battle tested, we are deploying in 1000 locations in over 14 states. In America right now, for one of the largest retailers in our sector, we are at revenue, we are growing. Two years ago, our investors invested at $20 million valuation, we're already at $140 million valuation, we have a really small round open right now. It's only $5 million. And you know what, you can come in now because this is the last time you individual investors get to come in, or you can come in as an institutional investor next year. But if you're not an institutional investor, and you're not coming in right now, I'm sorry, I love you. But you know what, this train is leaving the station? Are you getting on or are you not? It's a question, right? And that level of confidence, that being able to do this, and I know that's a lot to really think about in a moment. So that's why if you go to Susansly.com, I'm actually updating this over the weekend, I have put

Susan Sly 43:22
how to pitch for your startup in a white paper for you. And the cost is free. So you can just go there right now, I'll take applause for that. So this guide book is there for you. And if you're an employee, and you're going from employee to entrepreneur, I also have a checklist for you. So I want to finish with a couple of words of wisdom. Number one is that, how many of you would agree we're, we've got some problems in America right now, and Canada, and South Africa, how many of you would agree that we've got some problems globally? And for some people, it might be the environment. For some people, it might be cultural differences. For some people, it might be the economy. For some people, it might be the war in Ukraine, it might be so many different things. But my question for you is what are you going to do about it? Because that idea in your head that just sits there and you don't start, you're not going to change the world. And politicians, as Brad said, are not going to change the world. You're going to change the world. Only entrepreneurs change the world. So with that, I just want to say much love to all of you. It's been an honor privilege to be your trainer. Thank you, thank you.

45:09
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