Featuring Lightspeed Partner Amy Wu
Listen to the episode in full below - and subscribe on Apple Podcasts, Spotify, or Google Podcasts to never miss the newest episodes from all of our Founder Insights podcasts.
In this episode of the Founder Insights podcast, special guest Amy Wu, Partner at Lightspeed Venture Partners, joins Female Founder Initiative co-creator and FI Global Marketing Manager Rachel Sheppard for an AMA on venture funding for women entrepreneurs.
Throughout her career, Amy Wu has enjoyed being on both sides of the table as investor and operator, joining Lightspeed in 2019 as an early member of the growth team to lead the reinvestment platform and invest in growth-stage consumer and enterprise businesses.
The following includes a transcript from this Founder Insights podcast episode – these transcripts are produced by a third-party natural language processing algorithm, and are not checked word-for-word by humans for complete accuracy—so, there may be some errors or typos!
Rachel Sheppard 0:02
My name is Rachel shepherd. I'm the Director of Global Marketing and in the CO creator of the female founder initiative. The female founder initiative is a platform powered by founder Institute, the world's largest pre seed startup accelerator. We want to help women around the world launch, grow and fund their startup companies. And that last piece is what brings us here today to speak with Amy, which is how can we get more funding in the hands of female founders. We support women through our monthly newsletters, slack channels, partner resources, office hours, and webinars like this. If you're interested in learning more about the female founder initiative, you can go to www dot female founder initiative calm. And if you're interested in learning more about founder Institute, we're currently enrolling in over six continents, and you can see the list of email@example.com slash enrolling. And without further ado, I'd like to introduce a new partner at lightspeed venture partners. We are so excited to have Amy here today with us. She joined lightspeed in 2019 having previously enjoyed both sides of the table as both an investor and operator. She was an executive for several years, most recently at Discovery, Inc, a global media company with 17 TV networks in 220 countries and a news credit growth stage marketing software company based in New York City, where she helped raise over 60 million she's a BA from Harvard, and majored in biochemical sciences and fun fact has submitted over 14 Alpine peaks over 10,000 feet high so I'd like to talk about that and and really just if you could share a little bit more about yourself Amy and and why you're interested in helping female founders get funded. Oh, yeah, the mountain climbing the skiing I don't know if anybody whose honor also share some of his passions. I mean, we spend so much of our time working and like nobody more than founders you know, that I think it's always good for mental health honestly to have like a good or like something that's going to take your stress levels down a little bit decompress, and for me, it's always been extreme outdoor activities.
Amy Wu 2:00
And yeah, I'm like, super excited. And thank you for having me here today, Rachel, talking with all these amazing founders. For me, you know, like our community, the tech community, early stage growth stage. And then, you know, beyond, I think one of the most incredible things about our community is just how helpful and friendly and just like, you know, inclusive it is. And people have helped me so much in my career. I mean, just back in the beginning, when I honestly didn't have like anything of I felt like a value to help anybody else. People were just helping me my career. And then every step along the way people helped me and I've just tried to, like pay for it and every step. I mean, I have so much respect for founders, I think it's the hardest job in the absolute world, like much harder than my job. And so, to the extent where I can help, like demystify some of the, some of the parts of a fundraise process, which is oftentimes a very stressful, you know, period for founders, you know, all you want to do is just to get over it and like focus on building your company, but there's all these like hidden rules around fundraising that is so much like insider knowledge, and I would watch just help you know people kind of demystify that. Yeah before I was at a give a little bit more about investing background specifically actually started as a growth investor at insight Venture Partners, where I spent a lot of time in you know, SAS marketplace in e commerce businesses in the US, China and India was sort of the era JD COMM And also was pulling in about 35 deals across those three categories. I spent a year in early stage investing at AI ventures. Personally, I'm more of a growth investor. But I understand how the sausage is made on the early stage investing side. lightspeed is a global, we have about $10 billion under management. We have offices in the US, India, China, Israel and Europe. And most of our funders actually like early stage investors, we have three on one to three growth investing partners. And then we have about 12 Investment Partners in the early stage size, slipping enterprise and consumer in the US and then across all those offices. And so I look at both enterprise application software infrastructure security marketplace and consumer tech. So fairly broad.
Rachel Sheppard 4:03
Fantastic. And is there a certain type of company not just type of you know, sort of software versus but industry that you're specifically interested in these days?
Amy Wu 4:12
Gosh, there's like so much innovation going on and so many different categories like lightspeed has really been a thought leader in infrastructure and like insecurity for a long time. And so like, that's, that's an area that I've personally been looking at across the board. I've made two investments in AI, like India and China, and then also board observer thought spot, which is, like a data bi company, but I've also worked across our consumer tech portfolio across each region as well. And, you know, there's just really great stuff happening. You know, many industries.
Rachel Sheppard 4:48
Yeah, there really is. It's an exciting time to be a part of startups for sure and to be investing as well. So Amy has generously provided her time to answer your most pressing fundraising questions today. We kind of have a high overview of what we're going to go over today, which is going to be you will dig in deep on each of these categories. But how to know when your company is ready for your first round of funding, alternative types of funding, we'll talk a little bit about that as well. How to find the right VCs, how to get those meetings with those VCs, how to showcase traction, because that's something I hear a lot from female founders is that they're being told they need to produce more traction. So I'd love to dig in on that. And then lastly, if anything can female founders do to sort of increase their chances, right?
Amy Wu 5:31
Yeah, I'll talk about that because I mean, this is a topic that's super near and dear to my heart. I've always been in hyper male dominated, you know, work settings, whether it's sports media, media in general and like investing cetera and so I think, like, over the years, I've thought a lot about like, you know, how do we level the playing field a little bit more in a room with predominantly like, honestly men, so I love talking about that.
Rachel Sheppard 5:55
Fantastic. So first and foremost, how do you know your company is Ready for a first round of funding? Now I know that that changes specific depending on the type of company and industry. But how would you suggest that founder start to assess when their company is ready to start that fundraising process? And then how would they go about, you know, getting ready for fundraising?
Amy Wu 6:18
Yep. Sounds good. So we're talking about the pre seed stage, I would say, you know, there are certain founders that just have their, you know, are fortunate enough to have their own capital to sort of bootstrap their way to more traction before they go out and raise and then there's gonna be founders who who don't, and an either case is fine, you know, and these days, like a lot of like pre seed ideas are honestly funded with an idea like, you know, pre product, certainly pre revenue pre traction. But I also see, because I'm a personal angel investor, like, I also see pre seed deals that where there is traction, that's a lot of times it's like the founder has already bootstrap their company to a certain stage. There's no right time to raise you If you feel like you're being constrained to the next milestone of your company with by capital, then you know you should go out and raise I think in terms of like raising your first round of capital, like one of the things is probably going to be from friends and family, right? Like, particularly if you don't have concrete traction, whether it's user revenue or customers, etc. Like, you know, friends and family, whether, you know, your acquaintances, they're writing a check because they believe in you. Like they might believe in idea but it's really in you, right? And so that's going to be your friendliest. You know, people that you're going to talk to and the vehicle I think somebody mentioned like convertible note or safe like a safe is easy because it's like not even dead is essentially a convertible instrument and it's very light on legal, there's not a lot of terms essentially converts into your next round of financing. And it tends to be like kind of a default like what everybody uses these days. Because it is easy and it's faster is I would say like in terms of putting your best foot forward I always recommend putting together like a pretty buttoned up You know, investor deck, even for your pre seed rounds, because your friends and family deserve like your pitch like a polished pitch. And these days, I totally recommend, you know, asking like investor friends, we have them or other founder friends for examples of decks, because I literally advise a founder this morning is trying to raise a Series B and I looked at our deck and I was like, you know, you're not putting your best foot forward with this deck, this deck does not look like what I've seen 100 times a month, right? Like, know what it should look like. There's like a template to follow it. I think it's probably good literature online, but then an investor friend or a founder friend could just look forward you a couple of examples that are that I would say are like, kind of, like in line with like, what a angel investor will just see across the board and that, again, puts your best foot forward. That really spells out what's your vision, pain points are like, you know, who are you who's your team, like, how big is opportunity you're going after? What's the product that you're building timeline and how much you're raising. Those are some of the core elements of a good investor deck. I would also put some thought into like designing the deck, right? It's it's not just PowerPoint deck was well designed, because you know, like they as they say something that's well polished gets a little bit less scrutiny than something that's less. And that's just human nature. So it always doesn't hurt to just maybe pay a designer and just have a really polished deck.
Rachel Sheppard 9:18
And would you say when somebody is very early on and looking for fundraising, and they're and they're in that pre seed stage, they're going to friends and family, like you said, they're investing in them, right. So like the traction is not fully there yet. Some of the business models things are going to continue to develop, would you say in the deck that that should be showcased that they're there, why me should really be front and center into like, why would you invest in me and why am I the right person to bring this company to fruition?
Amy Wu 9:43
Yeah, that's gonna be definitely part of it. But I actually think a lot of investors look at how scrappy a founder is. So you don't have customers. You don't have users. That's okay. Like what other leading indicators do you have? have you sent out a survey? Have you like piloted you know, your product with like, On testflight with like a number of like, you know, users, yeah, beta users, like any sort of like evidence that you have is better than no signal.
And I think there are many cheap ways of getting that signal these days. And so I think being subscribed, it can be literally be like you putting up this beautiful website, it's like, hey, sign up for this product. Even if you don't have a product, you can actually see how many people are interested in that, right? You blast that out on your social network, etc. You don't even put that much acquisition marketing towards it. And you can all of a sudden, like see, again, like early signal. And so like in this day and age, I would definitely recommend like not just putting out an idea with no likes are a leading data points like everybody at this point, even without that much capital like can can actually get those data points.
Rachel Sheppard 10:43
Awesome. And then we briefly touched on the safe agreements. At that time I wanted to know convertible in safes. What's better for pre seed stage.
Amy Wu 10:52
For pre seed, I think the safest and easiest basically like a convertible note is a debt instrument, right? So you're gonna have to put in like maturity you have like Interest rates etc. A safe is essentially look like convertible note without the debt terms. And so it's just like that much easier to put together. You can honestly go with either, but I think the pre stage is more like you can get away with doing a safe as a founder. So just I would just do a safe because again, it's like the founder friendliest sort of way to fundraise a small round. And it's usually that like, as you get into like your institutional seed round series A your institutional investors will demand that you have like either price round, convertible note, etc. So like whatever like the founder can get away with this is totally fine. And I think at the pre stage safes are absolutely benchmark.
Rachel Sheppard 11:39
Awesome. And then King had a question. He said, What advice do you have for a startup that needs to build a full product instead of an MVP in terms of proving traction?
Amy Wu 11:49
I would literally need to understand an example of what that would be because again, in this day and age, like people have found very clever ways of like nvp being a product, right? Whether you have this beautiful front end, and everything below the hood is just like manual labor even, you know, like, like, there's a lot of ways you can hack an MVP. And so I would say like, it's always, always good to be iterative. And the only category that I would say, where that happens to be less of a go to market strategy is actually in bottoms up productivity software, where the trend that we see is actually founders with deep UX DNA that are actually like iterating on their company for maybe like a year two years at a time so that when it launches is absolutely beautiful. So if you like think about how maybe like a notion or an air table etc, like some of these guys, kind of not sure, like the founding exact founding timeline of those but we've seen quite a bit like one of our investment partners is mercy who used to be head of growth at slack and this is one of the things she talked about a lot is this trend of productivity products where they kind of like launch, fully baked, beautiful UX. And then it basically hits like reality sort of adoption off the bat. And that's why you see these crazy valuations like with these productivity suites, because all the investors are seeing that in the engagement metrics on the users even ahead of revenue.
So in that space, we do see sometimes like, you know, companies like spending a lot of time before launching their product, but I think in most cases, fast iteration, like, you know, failing fast is typically like just a good way to go.
Rachel Sheppard 13:34
Yeah, and I think if this is the same King, we've spoke I've spoken with before, I think this is a b2b product, too. And so when you're building those types of software weeks, I've seen founders sort of do like pilot programs, where they're doing a lot of manual work, and they're sort of proving it with one or two customers, and then really launching something that's very wireframes and not a lot of features. Would you recommend something like that? Is it an MVP for a beauty product?
Amy Wu 13:59
Yeah. Get on to get it on test, like beta customers without going before like going live on it. I think those are all really common ways of doing it. And I've even seen like, you know, a founder that I met last year who was like it was launching a product in the contract management space like they were they were literally their MVP was like an Excel model almost with this like Excel front end like super MVP, but they were honestly they were live with like 10 customers, like you actually can live with, with customers with with barely anything if it's solving their pain point. And that's, that's like an awesome signal that you're solving a pain point and they don't care how polished your product is.
Rachel Sheppard 14:36
It's great point and really great motivation, right? Like anything's possible. You just kind of got it out right away to get it out there. Awesome. So Lydia from Toronto, who I think we were speaking with earlier in the in the informal chat, said, How do you assess the benefits of alternative types of fundraising, and specifically, I would want to touch on grants and equity crowdfunding.
Amy Wu 14:56
A gotcha is like an angel list or grants like government grants. I mean, I think founders are scrappy will kind of, like raise everything across the board. I would say, you know, crowdfunding on like an angel list is probably more of like a more commonly used way than like like a path and even like government funding, which can be lengthy and challenging, but if you get it then it's almost like free money, like an interest free loan type of situation. So it's like not about way to go. But it could take a lot of work to get through the multiple rounds of application, I would say if you're and also depends on the category of your startup, if you're in like a very hot sort of like, and also very, like traditional vertical within tech, then you have all of these like, you know, traditional venture investors that are used to seeing like your business model, but I think there's questions on like I saw where if you're in maybe like education, but not education, tech, or you're like in healthcare, but not education of healthcare tech, that are more like traditional, I think you will find a harder path in the traditional VC fund raising row and then and being a little bit more creative and looking for funding, whether it's crowd sourced whether it's government grants or whether or I think actually think strategics that might be that know your space really well and interested in like funding a emerging company, those are like or family offices and other sorts of like alternative funding, I would say those might be you might want to like increase your, your scope to those asset classes.
Rachel Sheppard 16:23
Awesome. And does that signal anything to you at lightspeed? So like, by the time a company gets to you, and you've seen them, either take a grant or you know, do it around equity crowdfunding? Does that change your perception of them in any way or give you any signal as an investor,
Amy Wu 16:39
the signal even for growth investors, and I think this is like surprising from founders when I've mentioned this is when I'm sourcing as a growth investor and I'm looking at like seeing a company name for the first time and then I go to pitch book I take a look at the company. If you have phrase from tier one, like institutional founders in the early stages instantaneously, I will Take a meeting with the company, right? It's essentially signaling that like somebody else who like I understand what their investment criteria are believes in this company and have invested. And that's just like another check the box for me in terms of like, okay, that's one more thing I've checked off the box. But like, the thing is that was a growth investor. It's like the numbers speak for themselves like, right, like, if your numbers are great, like, I don't really care who this company is, has taken money from or like, maybe they bootstrapped their way all the way through, right? If you're an earlier stage, like series, a type of company, or even like a institutional seed raising institutional seed, I would say, and that area, I think a lot of those investors are looking for like, what kind of experiences the founder have, you know, has a founder like actually started other successful companies, and then the category that the founder is in, those things are more important because they are his first institutional investor in so they're not looking necessarily for a signal before that, in fact that the less money that company has raised up to that point like the happier they are, mom is if you've got a government grant In the form of a loan, that's great, because he's basically have, like, you've got a cleaner cap table for your first institutional investor to go into.
Rachel Sheppard 18:08
Okay, that's great. That's great feedback so that two founders don't necessarily have to be nervous about taking on those things. It's a matter of really being able to make sure that it makes sense for their company. And then ultimately, I guess investors look at it as a way of creativity getting stuff done and proving traction in some ways. Awesome, fantastic. So, Isabel Arnold wanted to know, we're building a financial services app that will take users capital, because of financial regulations, we have to have a fully developed product before onboarding any users advice for showing traction before we can launch. So kind of similar to the other question we had earlier as well. Okay, understand?
Yeah. So they have to have because of financial regulations, their product has to be fully developed before they can onboard users. How can they prove traction or sort of MVP their way through the growth stage for something
Amy Wu 18:59
like that? I would say maybe having like going the website route, you know, having this website being like, Hey, we're launching our product, like who's interested in hearing more about having a newsletter just like, you know, talking about your product, giving people updates and like how many people on that email list that you have? How many people are expressing interest, like, those will all be, will be helpful for you. I think FinTech you know, particularly like regulation, heavy FinTech is tough, because I mean, like the bar is high if you if you need to go through, like regulatory approval, just like it is in the biotech space where they are like FDA approval. And so there's going to be more investor hesitancy if you haven't gotten that approval. And so the more that you can show any sort of demand in your products ahead of time, the better and I would say probably you have to show that demand, unless you're a multiple time like successful founder where just based off of the idea, somebody will fund you, then you're going to need to show some sort of leading indication of demand for that product.
Rachel Sheppard 19:55
Awesome. All right. And then Dale had a question I've seen pitch decks on the Ask slide and write the date when the round is closing. Very interesting. I understand that an end date gives impetus for investors to move but how do the founders know what to put as the end date? And what would they do if they don't raise that target amount before the end date?
Amy Wu 20:15
Yeah, this is a very gray area. It's like dance right? Like you're trying to drive demands but then like investors are all like lemmings and so they're just waiting for somebody to like lead your round and then everybody piles in. So like driving urgency is very much very much part of the psychology of raising around some founders are amazing at it. And they really leverage it to their benefit I would say like in your deck you can usually say like okay raising $200,000 I'm targeting and then I wouldn't even write in your deck because decks get like forwarded and then you then have written evidence that of one your target like close eight is but verbally, an investor will often ask Oh, When are you planning on closing the right when are you expecting term sheets, etc. And so like, depending on like what the traction is, and conversations that you're that you're having you can be like more or like less tight with that expectation, like and so I mean, I think a good rule of thumb is taking one to two months time in terms of fundraising is pre kosher up to three months time four months if you're like, international market I think takes a little bit longer than if you're like area startup longer than that and investor who knows you've been in the market for a while will just be like, Okay, well, you probably talked to a lot of people and then everyone seems to pass so what am I not seeing? He sir having kind of negative momentum, which is not good. And so I think just saying like, generally so like, let's say, you know, it's February 27. Right now, you're having first round conversations with a number of like angel or seed investors, then you can be like, Okay, I'm having like very early conversations right now. You know, if somebody moves faster than I would like to close this round as soon as possible. Otherwise, I'm targeting like to complete this round sometime and by the end of March, like it Do that, right? Like you basically always want to try to, like make it seem like you're really hot. And like a lot of people are talking to you, and you're talking to a lot of people right now. So there's like certain wording can use, you know, like, I'm making a trip out to the west coast, like, you know, in two weeks and got a lot of meetings lined up and, you know, really hoping to close around about about four weeks after that when you're in that second third conversation. And there's like a number of people that are quite interested, but you don't have anyone quite committed yet, then what you really want to do is you want to find a lead, right? Whether it's a it's a bigger Angel round or as a seed round, you want to find somebody who's going to like speak for over 50% of that round. Typically, some people just like kind of collect checks from everybody, but like, the easiest way to raise is to go after, like, let's say you're raising an institutional seed like 500 K to like a million dollars. You go out you find your least seed investor. And when that happens, everyone else would come into your round, especially if it's an institutional see that everyone's heard of, like so many Angel invest are just looking for somebody to raise around. So do realize that dynamic that you can talk to, like 100 people, they're like, Oh, you know, I'm maybe interested in like putting in whatever like 20 k 50 k, but you really want to prioritize finding somebody who can write that lead Chuck.
Rachel Sheppard 23:17
Yes. And some VCs are very upfront with the fact that they like to be the lead and some art. Do you have any sort of tips for founders in terms of just knowing who's who and how to go after that lead investor? Because I do know a lot of founders get that sort of stage. Absolutely.
Amy Wu 23:33
So first asking their portfolio companies like what the process is working with not just the funds but also like the specific partner the more granular you can get the better understanding who has the most power in an organization what is their decision making, like the investment decision making some funds are very democratic. Some funds are like single partner decision making, right? Like I know where they are from like all of our front of us in Valley, but like, it's what as a founder, you got to discover that for yourself. And so first doing that back channeling and information gathering from other fellow founders who have done the roadshow and fundraise with these guys first, because like, early stage investors will will take meetings from founders that they've already invested in, almost unilaterally, right. And so that's like their number one channel of like getting new investments. And so, like, definitely get that warm introduction and whether it's like a founder and other founders have spoken with them, or better yet, like founder in their portfolio, and then get as much information as possible when you're in the meeting with fund right. You got to ask those questions to what is your process and making an investment? Like what is your typical cheque size? Like we know are you capable of and are you interested in leading this round? And I think like most investors will be pretty forthright around just telling you up front, and then you know you have that information and then just move on to the next investor.
Rachel Sheppard 24:57
Awesome. And then kind of a digital Question two, that is how do you address an investor, when you don't yet have a full time CTO for a health tech company? So you're really at that early stage, you're full time but your co founder or your your C suite is not yet full time. Are you ready? And how do you approach investors at that stage?
Amy Wu 25:16
Yeah, I have some friends that are starting companies where they're the non technical co founder, and they have found when they're raising their Angel round or they're applying to yc or they're buying like or they're trying to get into some you know, program that it is very important to have a full time like technical co founder particularly if you're a tech heavy products, like if you're coming in to the meeting saying like you're still looking for a co founder that is actually a huge risk, like for the investor and so I would say if that's the case, you're probably not ready to go fundraise unless you're fundraising from friends and family that based on just the merits of yourself like they're gonna write you a check. Yeah, from personal experience for my for my friends and network like they have struggles with it. Like without having like a A clear co founder on board.
Rachel Sheppard 26:02
Okay. And then related to that, Katherine wanted to know, is it a red flag, as a female founder, you've sort of coded MVP 1.0 by yourself. And you know, you're getting ready to approach investors. And you're, you know, trying to get that MVP going trying to show traction. But yeah, you don't have that CTO on yet.
Amy Wu 26:22
I mean, if you're capable coda your MVP by yourself, like more power to you, Catherine, I mean, I think you should literally just go in and be like, I know how to code and I like go to the first version of my own app. And yes, I'm looking for a technical co founder, because I would actually like to spend more of my time and go to market. Like, I don't actually want to be the technical co founder, but like, I'm technical. And I coded this by myself, like, what would a male founder come out and say, right, one of the things that I actually do see is like, you know, with female founders is they, they want to like not represent like, they're worried of representing themselves as more than what they are. And the fact is that like every male founder will Go out and basically promise like the absolute world and their capabilities. And so like, I think if you go to the version 1.0, like more power to that's like freaking awesome.
Rachel Sheppard 27:11
Yeah, I agree. I think that that's something that anyone on the call could take and take forward is, is really showcasing your story if you're doing amazing things to build your company like, and you've done amazing things in the past, and that's part of who you are, as a person, like put that out there really, really showcase that I see a lot of founders, female founders in particular sort of wanting to showcase more humility. But the reality is, is that only humility?
Amy Wu 27:38
Yeah, you don't really honestly need humility in a pitch that's like, honestly, not even what investors are looking for. Like we're looking for coachability. Right. And so a lot of early stage founders will actually ask like, what you might consider to be tough questions. And like, what they're really trying to get after is not trying to be abrasive, but like, under pressure. How do you react as a founder Have you thought about your mind? market and you're challenging your pain points, like five layers deep, not like surface level, have you talked to all of the major incumbents in your space? You know them? And then like, do you have a clear vision, like when a male founder comes in and they're pitching, like, they're not even thinking about, like, oh, who coated the fruit, they're already talking like, this is my vision. And this is my wedge into this market. And here's like, customers that are already using my MVP. And by the way, like, this is like my founding team. And these are the people that I'm recruiting and look at these advisors that already have on board, right, there's a lot more of like, I was like entitlement, like, the wrong word for it. But there's like a list of skip all of the basic stuff. Let me bring you right to my vision and traction today. And that just should be like every founder needs to come in and just be able to pitch that. Awesome. That's great advice.
Rachel Sheppard 28:47
Amy Wu 28:48
With a 25 years marketing experience, I mean, you're an absolute like, you know, authority in your area. And so the fact that you can then be like, I'm authority in my space, I understand like my And users like deeply, over 25 years, and by the way, I coded my MVP. But that's a great story.
Rachel Sheppard 29:06
Yeah, that's amazing. All right, I want to move on to some questions about finding the right VC for your company. So Rebecca asked, Where to look and how to connect with the right investors. Do you have AV platforms? Do you see founders using networking tools, anything like that, that you recommend?
Amy Wu 29:24
investor day is really important, because I think about like making investment almost like getting married to that company. I mean, for like, 10 years, you know, and so it's really important to find an investor that just you click with, and who's going to have time for you? And I think like one of the biggest sources for you to understand that is from an investor's other investments, right, like talk to other founders in their portfolio was experience working with an investor, particularly what is the experience of working with them best or when things are not going well? Right like that. is going to be most important cuz I mean things don't go well, every single day in like our early stage portfolio in our companies with like, over 100 million era, like things don't go well, right like and so, you know, how does an investor react in those times? It's like reputational building for us. We're super sensitive to it. And like, I think as a founder, you should really diligence that. But I mean, like, there's like, if you have the luxury of multiple term sheets, and multiple investors to bring on absolute diligence, that sometimes you just gotta raise the money to survive another day. And in that case, I would just make sure you're raising that money with the least sort of like, pair is possible. Like when you really need money. Sometimes you have these kind of like investors that are not like full time investors and they will, they will like give you really like weird terms. And I would be really careful not to accept them because it's going to hurt you like later down the road when you're raising more money and you got more experienced investor looking at that being like, well, I love you, but I mean your cap tables, essentially Impossible to work with because of all these terms, and you don't want that to be the answer, like in 18 months. So I would say, you know, like, those are a couple things to think about.
Rachel Sheppard 31:09
Awesome. And by the way, these are excellent questions. So keep them coming, guys. Ladies, I would love to hear more and more questions from you. So next steps in how many investors do you think a pre seed or seed stage company needs to reach out to before they can raise their round? I know it's a general range would be awesome.
Amy Wu 31:28
I mean, people reach out to hundreds of investors like to close around when I was a news crowd, and we were raising our series D. And you know, there were like awesome things going on with our company. But there were things that were also not best in class with our company. I mean, I literally had a spreadsheet of maybe like 50 growth investors that we went into like data and process with and I think in the day, it really only takes one lead investor to like basically make up most of your round and then your insiders, all of while. I put in The rest or like, you know, just that lead investor is going to be enough signal to pull in the rest of it and, and it might take like, you know, use or like kissing like 100 frogs in order to, to, like get there. I think people think that Oh, you talked to like four investors and they're all gonna throw down term sheets that is not like 95% of founders experience with fundraising maybe like 99% of founders experience fundraising.
Rachel Sheppard 32:24
Yeah, we usually recommend like minimum 100 meetings is really what you're probably looking at, at our institute for the early stage in particular. Awesome. So Maria said Hi, were two female co founders from Europe. Thank you for joining us in the middle of the night Maria. Our startup is about network marketplace content and SAS multi sided platform we are in the pre seed stage is being established in the UK a problem to be funded by us investors.
Amy Wu 32:55
I have a lot of thoughts around European companies. So having seen like a number of them as like going to the Series B. So some thoughts on that I think there's amazing technical talent in Europe. And so like you actually get a great technical product. And it sounds like, you know, you have probably something in the b2b space maybe. And I would say like, you know, you're sounding in Europe. And the interesting thing with Europe is like UK, interestingly, is not it's a big hub, but like, grey startups are very distributed across Europe. So there's like, actually, like investors flying everywhere meeting founders, like literally everywhere. And so I think like, if you're a European company, your first rounds like pre cc probably series A, you are going to be most likely to raise from a European and European investor who understands your market really well who like already knows you in the network, or maybe have heard of you in the network. Because of this locality thing. The fact that up until like, even the series A tends to be local investors investing in local companies, because again, like there's just going to be a lot of touch points going on all the time and Like, you know, I'm in SF, like a bay area investors is just not going to have a portfolio series A companies in Europe because we're not going to be there every month, which is what we need to do in order to have a great portfolio. As a result, I feel like CSE pre seed seed series A, your best bet is to raise from a European investor. And then like, the thing is, like, a lot of European investors have a Series B or the series C, then you know, they've got European grain of European investors on board, they then want to get a US investor on board to really help with their us go to market strategy, which I think is really smart. Which means that between the series A in the series B, like the company really needs to prove couple of things that your product can actually expand outside of just your country that you're in. Like because actually it's pretty difficult to even expand your product to other European countries like we see it again and again, you know, like you go a bunch of traction, let's say Germany is actually very hard. So like a lot of traction, France and so having some evidence of that, like users and cars And another European country that will be really helpful for you. And then even in your series A, I would say all the four series, I think it's like less, like I see Series B company that like very dominant one market and that's okay. But like, in the round that you're looking for a big, big round of funding with a US investor, having early signal of being able to sell into the US is pretty important in order to get like a really like solid round of pro financing. And so that's just one thing that like, I think companies who don't actually invest the time to, like do that maybe struggle and have a little bit of a harder time. And then there's also like plenty of business models where you're only ever going to go after maybe a handful of European markets, and that's totally fine. That's going to be part of your pitch.
Rachel Sheppard 35:44
Okay, awesome. And then Melissa is based in Australia and Thailand and wants to raise money in the US. Would you recommend the same for her in those areas of the world as well?
Amy Wu 35:53
Yeah, really similar. I think early stage of financing I would definitely recommend raising from in a regional event. Vester somebody who has a lot of investments in Asia Pacific and in your markets. There's plenty of funds these days go investing in Southeast Asia and I would definitely go for them first. First of all, because they understand that market, you know, most like us investors don't know the first thing about helping you and like, you know, Southeast Asia. And so, like, you also just need like that day to day like operating, help everything get from a local investor.
Rachel Sheppard 36:24
Awesome. And then just as a follow up, if you are located somewhere in the world, but you really want to go to market first in the US, how would you go about sort of addressing that as a founder so I've seen some founders start to build their team in the US or
Amy Wu 36:39
the US currently based outside of the US and using us as your dominant market, you should move to the US like we have plenty of like for example, we have a big lightspeed India team and you got like, you know, like now second third generation founders of companies and if they're, if they know that their target enterprise customers are in the US, the founder literally will just move to the Bay Area. Stand up the team here. I personally think that's going to be but we have plenty for example of Israeli founders and like European founders that also you know, they actually like leverage the cost gap of the cost difference. Yeah putting standing up from other teams and local markets. Like let's say like your company in the enterprise space I think like honestly like the best go to market executives, managers, like sales reps in the world are still in the US. And so then you see a lot of companies where they put like tech and r&d in their local markets where there's like, deeper like certainly cheaper talent and in the Bay Area and they scan up higher head of sales in like the US and then start building out go to market maybe some marketing and sales customer success in the US also like if you're primarily selling into us customers, and you need that team like in the country in which the customers base to give them the comfort to know that like they're in your timezone they speak the language. They understand. They're like, uniquely, whether it's like the US or European like, you know, challenges.
Rachel Sheppard 37:58
Yeah, that's interesting. We're starting to see see more and more of that, too. So you would see that as a as a positive signal from partner and investor perspective, have you got your bases covered? And you're also distributing costs efficient way?
Amy Wu 38:11
Yeah, I think if you're able to set that up successfully, that's great leverage for your expenses. But if your customers are primarily in a certain market, then you as a founder should live in that market. Right, like to really look deep. I think that's like, we will most want to see that.
Rachel Sheppard 38:29
That makes sense. And then kind of along that that theme and how we talked about earlier speaking to about 100 investors, Kathryn wants to know, would it be better to talk to 100 prospective customers or 100 prospective investors?
Unknown Speaker 38:43
Well, I think it
Amy Wu 38:47
is both the only thing is like fundraising is a means to an end, right? Like fundraising allows you to just like, have the capital to like, do the actual thing, which is building and running your company. And so what do you want to optimize with before fundraising is the fastest path to getting your round raised, which means you don't want to talk to investors that are not going to be a good fit for you or not going to write you a check. And so basically like spending that time don't like spray and pray with investors, investors can waste so much of your time asking for more data, more meetings, like meeting more partners, etc. Like I think the smartest founders who are smarter about like managing their time have a very focused list of like investor they know know the space, invest in their through like amount of traction, and just like you know, knows him the network, etc. And then there's like, very like focused, like, you
know, you don't want to just spray and pray and talk to any customer who might not even be using your product. Like you don't want to talk to any investor either. Right.
Rachel Sheppard 39:43
Okay, that's awesome. Next up, we have a question Courtney from Tucson. So according from Tucson said, with only 3% of venture funding going to female founders and knowing the statistics are stacked against female founders, what are ways we can mitigate the obstacles that female founders face and be successful? In our races,
Amy Wu 40:02
yeah, I mean, it's crazy. It's like, I would love to see more female founders, but there's just more male founders out there, you know, to me with, right, so I have a list of companies I'm tracking. And they just happen to be primarily male founders, which is quite sad. But this is also like, you know, I'm a growth investor. And so I think for both investors as well, I'm like, sourcing specific companies. Whereas like, I think an early stage investors looking for founders, I think it's just like, male founders are great, I leveraging their, their network. Like, you know, there's like all these cliques like networks and like leveraging them into like getting warm intros to the investors they want. And as a female founder, you've got to just do that as well. And a lot of the networks that actually we're going to have the most like maybe leads for you are going to be male networks. And, you know, you have every right to be part of that and just put yourself out there a little bit uncomfortable and just ask for the introductions to the people that you want to write and like I think a lot of times like I get on a call or email throw with a female founder. And they're asking you very open ended questions. And the fact is, is that it's a lot more effective if you've already done the research. And instead, you're asking me, I want an introduction to these five people, like, are you capable of making any of them? Right? Like, that's why male founders are asking me for, like, you know, they're just like, taking that extra step in terms of like, a bold ask, and I think it's just like, you know, that will kind of increase I think, like, get you one step closer to what you want, which is like the getting funded.
Rachel Sheppard 41:31
So rather than saying a question and sending you an email, like, Is there anyone you think would be interested in my company, if you're not interested? They're saying, These five people are in your network? Can you introduce me to them? And here's a blurb about my company for you to be able to do that. Absolutely.
Amy Wu 41:47
Yeah, definitely. Like I already have done that research. Like, you know, know which conversations are going to have are like friendly, safe conversations, get all of those like basic questions out of the way in which and which meetings Where you might not get a second meeting with that person and so you're going to come in with like a list of asks for that person figure out where to like add value to that person. By the way, if you're meeting an investor, the best way to add value is to tell them other interesting companies, because we're always trying to find the company's founders as you come in with that because obviously, you have a better net worth than we do. And then you come in with a list of assets a little bit of like a quid pro quo there's a very effective way to like asking for a lot of favors from somebody
Rachel Sheppard 42:27
Wow, I've never heard that before. That's great tip. So come in and say like what other companies are you interested in and and just kind of have a Rolodex in your mind of like, I can make introductions to these types of companies based on my network as a female founder.
Amy Wu 42:40
Another thing I would recommend is like when I'm like, about to get into a call with like a pretty high profile founder that I really want to like, take my money, etc. You bet. I have read everything I have, like listened to all their podcasts. I have lists, like read everything that they've written about, and I know their space and coming in, like not being like, Oh, I love to hear more about your stories more like I'm a huge fan of XYZ and like, let's dive right into like a more meaty conversation. And that actually can go the opposite way. Like when a founder comes in, and they already know, like what I've invested in, maybe something that I've like, written about, I'm just like, oh, like, you know, they like care about me. And they like taking the time to actually, like, do a basic Google Search basically, have mean like on the internet, like, that will also lead to a immediately warm conversation that can, like lead to you like asking for a lot from this person. Like my like little tips that will, I think, be super helpful.
Rachel Sheppard 43:34
Right? So when a founder comes to you, and they're like, I've submitted five Alpine peaks, you know, like, something like that, that there's something about you that they had to found out and researched. And they and they clearly,
Amy Wu 43:46
I'll recommend that you've actually like, read about something that I did professionally. Okay. Yeah, I think that's honestly, more interesting to me then, then on the personal side, and then at the end of the conversation we want to jam about like, climb mountains that's always like fun. And it's a way to, like meet somebody, you know, like get to know somebody a little bit better,
Rachel Sheppard 44:06
totally. And then in general, any other strategies to help female founders raise more money, anything else that you recommend? Those are some great tips you shared, but any more detail on
Amy Wu 44:16
a couple of things come to mind. Like there's like a certain way that a very experienced founder will approach their outreach, what their email accounts like what their pitch deck looks like, and what their first meetings are. And, like, you can figure that out by just doing a little bit more like research with people who are in the industry, right? So that you kind of like, Look, talk present yourself in a way where like, as a signal for an early stage investor who looks at like, thousands of entrepreneurs, they're like, check the box. This person kind of like fits in with everybody else, right? Like that's just one more thing that somebody needs to like. It's all about like reducing friction to like a early stage. Investors writing a check. And that's just one more thing to reduce friction around. Like, you know, we can get really tactical, it's like, everything from like, the obvious stuff, like warm introductions, but it's also like, you know, you go into a meeting and you're immediately talking in the language of like that investors are like portfolio, the area they're interested in, get professional almost like immediately, you know, rather than, like small talking, and that's like a way to kind of stand out and be and make somebody feel like, Whoa, this person really knows what we're talking about, which is, again, another signal that an early stage investor is like trying to look for. And like, I think the assertiveness factor is just huge, right? Like, male founders are so assertive, like borderline. I've written so many emails where I'm like, Oh my god, I love this founder, like, you know, they just like know what they're talking about. It's such a strong perspective. borderline, maybe like too much ego.
Like, if that's the email somebody is writing about you, that is like a great thing. That's a great level of assertiveness, right? You don't have to be apologetic about anything. Now. I do want It like point out that the line between assertiveness versus on coachability is like a fine one. And so what's really key is like, if an investor is starting to push on your idea, a mistake that I've seen female founders who are assertive also make is immediately dismissing that concern. They're like, Oh, that's ridiculous. Like female or male founders is a big problem. Like, they immediately dismissive around the actual like, push. And it could be a dumb question because the investor just doesn't know your space. They're not in your space, like day in day out. So all the questions are gonna ask are going to be dumb, like in your mind, you need to be able to handle that question. So you assertively like, you know, answer, what your point of view is, but in a way that doesn't sound defensive. But you know, it can be as simple as like, you know, little ego stroke. Good question. Here's like how these three customers think about that point. And by the way, like, this is why I'm not as concerned about that specifically concerned because I already talked about, you know, talk to these classes. Rumors are I've already validated XYZ and use data points to really like make your point around that.
Rachel Sheppard 47:05
I love that. That's awesome. Kind of along that same thread. Sloane from Switzerland wants to know what columns in blogs Do you read get inspired for your day to day work. And I would follow that up with Is there any columns or blogs that you recommend founders follow fundraising advice as well?
Amy Wu 47:21
My daily reads are axiom and Ben Thompson statutory. Like I read those two like pretty much religiously every day axiom just to understand like, what all the deals that are getting done, what hills that I've missed for the day? And then then toss him because I think his like his thinking around like law, different verticals and faces. It's like so deep. And then Twitter is a great way for you to scale a lot of like real times or like knowledge around what are people thinking about? people share a lot of benchmarking, like insights on Twitter all the time. It's like following. A lot of times if you follow some of the prominent VCs are like super active on Twitter, because That's like their branding platform. And so like if you follow them, then you can see who all the founders that you follow. And then you can start following the thought leaders in your industry. And then you can stay very current on what's going on. And also, you know, if you're a founder that doesn't have a ton of network in the tech industry, you can start like hearing and being able to speak that language. Right. And like speaking that language is important. I remember when I first tried to find a job, like in the tech industry, and the first interviews that I went into, I literally just do speeches that speak the language I couldn't I didn't know like, any of the names that people were asking me, what do you think about this company, that company I just like had never heard of them? I like didn't speak in the right terminology. And that's like a big Mark like, oh, you're an outsider, like, that's another like, friction point that you're gonna have to get through. And so again, like do that homework, immerse yourself in that and that just like makes it one step easier for you to raise that capital.
Rachel Sheppard 48:53
Awesome. And then kind of getting Cindy had a follow up question regarding what we were talking about earlier about being assertive as a woman. She said, Do you feel like women are judged a little more harshly? And so there's a little less room for them to be more assertive. So like when we're coming out a little strong like that, sometimes that makes people feel uncomfortable. Do you? You sense that? And then what should female founders do about it?
Amy Wu 49:15
It's a good question because I think women are absolutely judged more harshly in this spectrum of like, passive to, like hyper passive hyper assertive, right? If a guy is in like, middle of the spectrum to like, extreme assertiveness, people are like, oh, wow, you know, they're so visionary. I feel like the reality is, is that woman needs to be obviously like, be yourself. But I'm just saying like if you just want to make your life easier and kind of fit into this, because again, I'm always like a fastest path to getting capital. And so sometimes just about like play the game a little bit, so like not waste your own time.
The target zone is like 50 to 75% assertive because the people who are like in 75 to 100% assertive, I've absolutely heard that, you know, mill mill calls in the end Destroying, like, oh, gosh, the woman is like too assertive. I have found that inspires a reaction in a lot of men. That's like unfavorable. I have personally been told so many times in my career, including at lightspeed, like, maybe you should just like make a few fewer comments, like in the Investment Committee, or like, maybe you should, like just speak up a little bit less. I've been told I've been to a sort of my entire career. Like, I kind of have the mindset of like, I don't care, like I have an idea, I want to express it, but you're gonna have to be ready for that pushback from people who are just offended. And it happens, like I get it all the time. And so you either need to have a thick skin because it will happen. Or like, if you want to make your life like the easiest, again, that 50 to 75 percentile. It's like, where you're gonna get the least people who are offended.
Rachel Sheppard 50:46
That's good. That's the best sort of metric I've actually ever heard. So 50 to 70% percent assertive, I like that. Awesome. So, um, just a few more questions. So how do you feel about VC investments sort of scooting up, Carolyn? wants to know in terms of fewer bigger later stage companies essentially so this type of investment strategy of fewer bigger and later stage
Amy Wu 51:11
The fact is that at every stage of financing like late stage growth growth like series a seed you actually have like unprecedented at least in the US by the way this is not the fact like in some of the other markets in the US and in Europe right now you see unprecedented levels of capital like our market is awash in capital so actually like an own residence a number of like companies are being funded right now like in particularly the US fall by Europe I would say like it's this is not the case for example an eight pack which is going through definitely on the leading end of like, feeling civil issues with like the tech industry and like for example in China all time low in terms of VC capital and market in the last like probably like five to eight years. Like I actually think raising money in the US is quite easy right now like you know, funds we were coming off of Have a low interest rate environment. So there's a lot of capital being moved to venture capital allocated venture capital. And so as a result, like there are actually a lot of dollars chasing few assets is like my personal feeling for both like institutional early stage investing in growth.
Rachel Sheppard 52:16
Fantastic. And then last question for the afternoon is going to be from hota hai hota. She's one of our portfolio companies. Hoda said, thanks for the feedback. Could you speak to the best way to introduce our company and team to lightspeed ventures?
Amy Wu 52:32
Oh, I love it. So the best way is that, depending on what stage you're at, right, a fund like lightspeed can be a fun like any any other like larger global lifecycle funds. There's a lot of investors and they're focused on different things on the early stage. And so having a friendly, reach out, like you guys can reach out to me and just be like, okay, who should I reach out to, like in this particular space, I'm happy to tell you but even better, just go on the website. And like Take a look at the investor profiles, I think people are very clear about areas that they're interested in, as always, and I think like doing that research around at a specific fund who's interested in a particular category, whether it's healthcare like application, infrastructure, software, etc, is always helpful verse and then there's just a lot of generalists. And so figuring out an early stage team who's the right person reaching out to them, so like we are typically series A investors, so if you're a pre Seed Company, or even a Seed Company, probably too early for lightspeed. And so I think that's like a different subset of like funds, and also angel investors that are really focused on that stage of investing. And then we have a lot of scouts that also invest for lightspeed in the seed stage. And then you can reach out to one of them as well, you know, as part of like, just the angel ecosystem.
Rachel Sheppard 53:48
Fantastic. And so I would say, Are there any final closing tips you have for female founders who are raising funds right now?
Amy Wu 53:55
It's a great environment to raise money. It really is. I think like You know, having the right mentors, advisors, I mean, you're gonna be told, like everything. And so kind of knowing who is an authority and an area that you're getting advice from is important. And to just like, always prepare yourself, put yourself in the best light, be assertive, be assertive and asking for things from people that you meet with, like, I think have a goal for yourself, for every person that you meet with, like, ask me like three things that they're going to do for you. And then maybe they'll do one thing for you that will just make your life that much easier. Don't be afraid to ask.
Rachel Sheppard 54:31
And also, it sounded like based on our other conversation come in with what can I help you with as well? Like, can I always helpful?
Amy Wu 54:39
Yeah, absolutely. That's, that will always like put you ahead of like, almost anybody else that we're going to meet with?
Rachel Sheppard 54:45
Fantastic, awesome. Well, Amy, thank you so much for your time and your amazing advice. You're awesome. And I think the female founders got all around the world. Just got a wealth of knowledge from you. So thank you so much. Oh,
Amy Wu 54:58
no. Thanks so much, Rachel. We're having me on and like good luck to everybody again, like, you know, you guys have literally the hardest job but you know you're not alone, like so many other people going through, like all these same challenges that you are. So make sure you reach out to like right communities. I want to give a shout out to one of my friends communities on Facebook like dreamers and doers. I don't know if anybody is on that but amazing community for a lot of female founders and entrepreneurs and operators. So that's one of many that you can tap into.
Rachel Sheppard 55:25
Fantastic, awesome. Thank you Amy for your time. Have a great day, everyone. Thank you. Bye bye.
Subscribe on Apple Podcasts, Spotify, or Google Podcasts to never miss the newest episodes from all of our Founder Insights podcasts.
* * *
Graduates of the Founder Institute are creating some of the world's fastest growing startups, having raised over $950M in funding, and building products people love across over 185 cities worldwide.
See the most recent news from our Grads at FI.co/news, or learn more about their stories at FI.co/journey.