How do you fundraise successfully for over 25 years?

Jason Kirby (00:02.186) Welcome to episode 19 of Fundraising Demystified, the podcast where we uncover the untold stories startup founders who have raised capital to bring their visions to life. Join me, Jason Kirby, as I interview these founders and dive into the hidden truths of how they got funded. And if you haven't already subscribed, be sure to go to join.thunder.vc to get our weekly newsletter that covers valuable tips and insights. for those raising and deploying venture capital. Today we have Nick Desai, a serial entrepreneur with multiple exits who has raised over $250 million in his career. And today he's the co-founder of Together by Renee, an AI-driven health tech company that has recently raised a total of $8.8 million. Nick shares his lessons learned raising capital every single year since 1998. the only person I've ever interviewed that's been raising capital every single year for that long, and what it was like being a dot com CEO, feeling like a celebrity back in the heyday to raising capital in today's market. Nick's story is unlike any other guests we've had on the podcast, and I hope you are as engaged as much as I was when I got to interview him. Let's go ahead and get started. Nick, thanks for joining us. Nick Desai (00:08.622) Great to be on the program. Jason, glad to talk to your audience. Jason Kirby (00:14.06) excited to have you on the show. You have an incredible background, extensive background in the healthcare space. Currently running Heal, not Heal, all right we'll cut that part out. Currently CEO together by Renee, which recently raised you know 8.8 million in total. But you know Nick, you have an incredible track record fundraising. You mentioned that you've been raising capital every single year since 1998. You have such an incredible story to share. Would you just be happy if you could just dive straight in, give us a little bit of background on yourself, what got you into the world of entrepreneurship and raising capital. Nick Desai (00:50.534) Yeah, you know, look, I have wanted to be an entrepreneur ever since I can remember, since I was a little kid. My father had his own business, my grandfather had his own business, and it's sort of all I never ever knew. And in fact, I distinctly remember, he was in high school that I realized that... it was possible to do something other than just start your own company, right? It was, um, so I went to college and grad school, uh, finished my graduate degree in electrical engineering at UCLA. And then I worked for a couple of years at Rockwell science center. Um, and as an actual engineer, a couple of years in management consulting, and then, then I started my first startup and. You know, people always think, Oh, you learn more as you go and venture pitching and. Jason Kirby (01:07.997) to do something other than just start your own company. So I went to college and grad school. Nick Desai (01:35.114) I didn't know anything from anything. I was in Los Angeles and A round, B round, C round, F round, C round, convertible. No, I didn't know anything. I didn't know any of the terminology. I was 28 years old, 27, 28 years old. And we had this idea and we had an angel investor, which, you know, was just a really rich guy that my co-founder and I knew that put in a hundred grand and helped sort of get the company started. And we went to pitch Draper Fisher Jervitsen. Right. And I, there was an event in LA where, where I got in contact with him. We went to pitch him. And by the time we got back to our office and just to date how far back this is, we had a term sheet faxed to us. Right. So one pitch term sheet in, I was like, this is great. This is easy. And so that was my very first true fundraising experience. And, and There have been great ones since then and really arduous rounds since then and everything in between. Jason Kirby (02:38.042) And so that was 1998 you mentioned. That was when you got your first term sheet. So I guess kind of walk us through, you know, what was that first company and kind of what was the outcome of that kind of going into the dot com boom and coming out of it. Nick Desai (02:40.054) You've got to have all the time you need to trust. Nick Desai (02:53.886) Yeah. So, you know, it was interesting because I was this, you know, 28 year old guy and I was tell this because I was single then and, and I was pretty nerdy, dorky guy and an engineer and not really like smooth with, you know, ladies or anything. And all of a sudden I'm a dot com CEO. And that became like a celebrity back then. It was, it was this weird, weird time in, in industry and in America where everything internet was. Like, you know, now still tech moguls and tech companies are, are looked upon in a number of ways, but they've sort of more normalized into society, whereas back then it was just very brand new. And so the first company, the idea was an extremely simple one, which was a self-updating address book on the internet, right? So when I update my contact information, if you're in my contacts, you automatically get the information. It's sort of an idea that we could all, you know, still relate to now. Now we have LinkedIn and email and social networks that sort of serve that purpose. But that was the very first idea. And we, my co-founder and I, we talked to, as I mentioned, a rich friend of ours, and they and a few rich friends of theirs put in some money, and we really didn't know what the structure should be or what. And then we got Draper, and then I learned the process as we go, right? And the value of investors... and professional investors in particular, which is not just that you have the capital to build your company, which is obviously important, but that a professional investor brings with them expertise, brings with them contacts, brings with them hiring. Just because you start a company doesn't mean you know everything, right? Legal structure, what's a good law firm, how to patent something. The things you don't know, often a good VC can help you do, can help you figure out, can help you. you know, stay grounded yet, you know, sort of continue to pursue your passions. And so, learned all that process and then, you know, been doing it ever since, right? And interestingly, that company grew and grew and we should have, there was a point at which we had an opportunity to be acquired at a very, very favorable terms, like great returns for everybody. And it was sort of the very, last end of the dot com. Nick Desai (05:17.518) sort of boom right before sort of the bubble burst and Our board did not think we should we should take the deal and so we didn't ultimately we sold it got a lot less money someplace else, but One of the lessons I learned there is you know, I distinctly remember this board call where all the VCs were like Nick You know If you say sell it like if your heart won't be in running this if we If we don't sell, then we'll sell. And I made a stupid mistake then. I said, you know, guys, I would never leave this company. It's my heart and my soul. Instead of saying what I should have said, what was in everyone's best interest, which is, yeah, sell it, right? This is the, we're never gonna get more money than this. It's time to sell, move, let's move forward, right? And so that was an important lesson that you have to speak up and. Jason Kirby (06:11.075) And. Nick Desai (06:14.062) There's a certain amount of obviously respect and professionalism, communication, information, financial statements, all that stuff that you should properly provide to your investors. But beyond that, there's a point where you can't be so reverent that you're not opting in your or their best interest. Jason Kirby (06:33.216) Now that's incredibly well said and you bring up an interesting dilemma that I think often happens to a lot of founders where they're kind of conflicted on, it's kind of like a double standard where there's shareholders best interest, you have a fiduciary responsibility of shareholders to provide the best possible returns, but then the selling mean you're selling short, you're kind of cutting out early, you're quitting, you know, you leave money on the table, there's that kind of second guess and it's hard to know what was going to happen eventually, but you know, when everything's going up into the right. And we just had an event like that, you know, in the last couple of years where a lot of founders are probably regretting the decision to keep at it or not to raise capital in those markets when, you know, it was flush. Yeah. Well, what I was just going to go into is, you know, Nick Desai (07:16.63) Yeah, and I... All right, go ahead. Jason Kirby (07:22.58) Kind of going from that experience, you've, you know, you mentioned you've been raising capital ever since, every single year. Does that get exhausting? Nick Desai (07:30.358) You know, look, people talk about fundraising. exhausting or consuming or annoying and there are times when it certainly is right there are certainly times where like God especially nowadays when you have zoom right because it used to be you'd be in Silicon Valley you'd go up and down Sand Hill Road to the VCs or New York or in LA more in Silicon Valley than anyplace else and you do three or four meetings to two or three in a day you'd have breaks in between your driving your eating your doing whatever and now it's like zoom and so there are days where I've had one two three four minute VC and drill calls back to back to back to back to back right and you just get tired of saying the same thing but overall I would say it's an incredibly important if you can't raise money if you can't enjoy the process of raising money you should not be the CEO of a company it is the hallmark of a great startup CEO is that you're the one that can raise the money in fact a friend of mine who's starting a company and a really interesting company. It's like, oh, I found this great guy to be a CEO and blah, blah. And then I met the guy and he's really brilliant. It's in the healthcare space and accomplished guy and ran big divisions at huge healthcare companies or whatever. And then he said, would you consult with me to raise the money? And I called my friend who's the founder of the company and I said, This guy cannot be your CEO. He can be a CEO, he can be a president. But the hallmark of a CEO is that they can raise money. And to me, if you're not pitching to an investor for an active round, you are passively pitching them, like getting to know them, staying in touch with them, keeping updated on your progress, all that stuff, or. Nick Desai (09:12.262) you are defensively bitching, right? My wife is my co-founder. When we first started bitching, she's like, these guys are never gonna invest. I'm like, yeah. But if they hear our story, and they like it, even if they don't invest, when our competitor comes in the room, they're gonna remember us and think, well, if I do wanna invest in this space. Nick and Renee are the way to go, right? Whether it was Heal or Together or whatever company. So overall, I enjoy the process. I enjoy seeing how investors think. Once I developed for myself a clear picture of the difference between... what, you know, investors' jobs are to make returns on their capital, to expect anything else. Yes, they can help you, they can be good advocates, they can do whatever, but ultimately their job is to turn the million dollars they put into your company or 10 million dollars they put into your company into a hundred times that or a thousand times that, right? And that is what their motivation is. They're not your friends, they're not your parents, they're not your brother, they're not your counselor, they're none of those things, right? understand that relationship and treat it with the professional respect, but also independence that it requires to be successful. It's also an enjoyable process and learning from and speaking with investors is an important part of my day-to-day work. Jason Kirby (10:40.697) And, you know, you brought up something interesting there and, yeah, there's something I was going to bring up in this conversation is the fact that you've co-founded, you know, multiple companies with your wife. What's kind of been that experience, kind of having you and your partner in the trenches, you know, building companies and raising capital together? And has it ever been a friction point for investors? Nick Desai (11:00.578) Well, so I'll answer that last question first and say yes. In the early, when we first started Heal, so this is going back nine years ago, and we went to one of our first, we ran the Angel Capital first, and that was a really fun experience we should come back to because we got some cool celebrities in that, and it was sort of a wild experience. But when we went in to meet one of our, and we were an LA-based company that was doing something really interesting, meeting an LA-based VC, right? We walk into the office, summary summit competition, we walk into their office and the partner from this venture fund turns to me. First he says, look, we don't do husband-wife teams. We won't invest in them. You know, like we look down upon that, right? And the insane part of that statement is I could go to any co-working space or coffee house in the Bay Area, meet some dude, start a company with him, know him for like... a week before I start that company or go to a hackathon, meet someone, know them for a day and no VC is going to ask that question. But my wife with whom I raised three children and we've been through, you know, ups and downs of life. Oh, that's, that's a negative. But then the real turnoff was when he turned to me, looked at me in the eye. So, well, what if you get sick of working with her? And it's like 2014. I'm like, hello, 1976 would like their sexism back, please. You know, it was, it was, it was absurd. But today It is not, you know, it's changed a lot in the nine years and a lot of VCs look very favorably upon or at least equally upon. Nobody asks the question, right, what's, you know. Nick Desai (12:46.058) What are the negatives or what are the downsides of? People ask, what's your working relationship? What is it like? How do you resolve conflict? But in no different way than they would ask of any other co-founder, right? Plus, we succeeded in doing it in one company and we're doing it again. So it's also less of a question this time around, right? In terms of what it's like, it's great. Jason Kirby (12:57.672) Plus, we succeeded in doing it in one company, and we're doing it again. So it's also less of a question of time around. In terms of what it's like. Nick Desai (13:07.51) because we, Renee and I build health tech companies together. She's a doctor and she cares about clinical and making great products and serving patients and helping people and all that stuff is really important and I'm not saying this in a way to sound like I don't care about that, but I don't know how to do that. I'm not a doctor. I don't know how to treat a patient. I've never been wearing the white coat when somebody walks into an office hurting, right? I've been a patient, but I've never been a physician. So, my perspective is the outward facing stuff, raising money and managing engineers and creating innovation and keeping the perspective that we can't, you know, yeah, we may not build the perfect, perfect thing day one, but if we don't build something, we're not going to, there's not going to be a day two. Jason Kirby (13:55.892) Well, you clearly have the track record working together and it's impressive to kind of see these types of stories come out and be more of a normal and acceptable path for founders to build companies. Because I bring this up, I've seen this happen again in the past where VCs like that, that you experienced, kind of brought up these points. And I'm just like, you know, to counter, as you kind of said, like there's so much more cohesion and understanding between a married couple than there is the person you pick up on the Hackathon to start up a company. You have no idea what you're getting yourself into. So appreciate you sharing those insights and When it comes to you know back-to-back, you know, you went from Heal to now Well, actually you mentioned you had an interesting story about the angels I would love to kind of hear about that going back to Heal you mentioned that was a good story Nick Desai (14:47.998) Yeah. So the, the story is it's, it's only good in the way that it's a LA thing and it's a, it's a cool thing that happened. It was really fun, but we, when we wanted to start heel, I, I had a work contact and, um, he got a couple of like LA ultra high net worth types to invest and people started making introductions and they were thinking, Oh, these guys, there's this company healed the crazy money. And we met this guy through that process and he's like, he spends two hours on a phone with us asking every question, you know, just, not even a seed, it's an angel stage company, right? There's no, you know, every question under the sun. I mean, I was turning into jello answering his questions at the end of which he's supposed to be a prospective investor, wealthy guy, he's like, well, I have no money. But I'm gonna introduce you to people that do and we're like, what the hell did we just do here? And how do we spend our time? And Greg, my colleague and Renee and I were so annoyed. And so a week later, he calls and says, Nick, I need you and Renee at the Peninsula Hotel at four o'clock on Friday. The Peninsula is a famous hotel in LA. A lot of people meet there. And so we went, we waited and we waited and waited. And in walks Lionel Richie, the singer. Lionel Richie, you know, I guess there's only really one Lionel Richie and, and that's who we brought to the meeting. Right. And so we sit and we're talking and oh my God, I'm sitting with Lionel Richie. This is really kind of cool. And, and so after, you know, 20 minutes of intros and, and while this is really cool, he turned and said, you know, so what am I doing here? What, what am I here to listen to? And. I realized, you know, this guy seems like a really nice guy and a bright guy and passionate about what we're doing, you know, passionate about actually helping people. But he doesn't want to listen to a long story. So I was just like, it's like Uber for Dr. House calls. And I kid you not, Lionel got up out of his chair and he said, I love it. I'm in. How much can I invest? Right. And from that, Nick Desai (17:00.066) From that process, we grew and grew and grew as a company, but we also grew and... We also grew in the sense that we had a ton more celebrity investors over the, Matt Damon was an investor, Russell Westbrook, Derek Jeter, lots of people like that, right, we found investors. Jason Kirby (17:27.445) And did that kind of all come, so was that coming from that one person you were kind of concerned that wouldn't deliver any value or did it come from other sources? It sort of went out there. And you know, celebrities are sort of- Nick Desai (17:32.234) No, then the word got out there and, you know, celebrities are sort of, oh, my friend's in, so I'm gonna get in and you know what I'm saying? And for a lot of people, it wasn't that much money. You know, investing a million dollars or two million dollars when you have 100 or 500 million is not that big a deal. Jason Kirby (17:49.232) You know, good problems to have. And so, tell us about the journey of Heal. I think you mentioned you raised about 15 million for Heal or was it 200 million for Nick Desai (18:00.615) A heel was 200 billion. Jason Kirby (18:02.38) Okay, so talk to talk us about that journey of like initially raising that kind of early stage angel capital to kind of what was the trajectory from there in terms of growth and capital raises. Nick Desai (18:15.346) Yeah. So that was the company that Lionel got involved in, right. And then other celebrities. And then we raised ultimately then what happened is after that angel capital, we launched the product and people really liked it. And, um, we want, we went to a contest as the Montgomery summit down there. It's an investment banking and VC summit. They have a pitch contest. We won a hundred thousand dollar prize in the form of a convertible note that we put onto angel list. And that note grew. from $100,000 to $13 million over the next several months. Sort of a rolling close, money kept coming in and in and in. So that was just, that made the fundraising early part really easy. We then raised a, what was it, I want to say, $21 million A round, then Fidelity came in for 15 million in a B round. Then we raised more individual capital, brought in some strategic, stuff like that. But. Oh, no, sorry, our C round, we did a C round with IRA capital and the Taiwan sovereign wealth fund and people like that. And then we met the folks at Humana in October or November of, I'm just trying to get this right, 2019. And they really liked what we were doing and said look, this is something we're gonna dig into but at that stage of company and what I The the intensity of the due diligence that you man and does on a company they invest in or did on us is virtually Like I've never experienced anything like it, right? It was six months of exhaustive proctological digging, right? I mean, every employee we've ever had, everyone who's ever tweeted, everything, right? So it was a long process, but it was worth it to win them as a partner and an investor of $100 million. Jason Kirby (20:18.112) And so Humana came in and wrote the big check after six months of diligence. And ultimately, was it them that came in and acquired you? Yes. And then, in the next week, we're Nick Desai (20:21.675) Yes. Nick Desai (20:27.21) Yes, and then about a year and a half, almost two years later, they acquired the rest of the company they didn't already own. Jason Kirby (20:37.048) And so how big was the company at that point? And what were some of the major milestones, if you can share them, that allowed you to raise so much so quickly and lead to a successful nine figure outcome? Nick Desai (20:52.622) It was, look, it was a combination of three different things. It was a combination of ultimately the actual progress of the company in terms of revenue growth, you know, all those, the classical mechanics of a company, right? Growing revenue, we were a Deloitte fast 500 company. We were the 114th fastest growing company over a five-year period in North America. for privately held companies. We were CNBC. So that was one track. The second track was the fact that we had a really innovative product. Doing doctor house calls in a way sounds easy. You send doctor to patient's house. And that is true, except it's also extremely difficult to make that work in the sense that... You have to, you know, if a doctor in an office can see 40 patients a day, a doctor in a home can see 10 patients going house to house, can see 10 patients a day. Well, how do you make up for that revenue? Well, you have to cut operating expenses relative to an office. That requires real time eligibility verification. So that requires this. So all the technology we had built was also pretty incredible, right? Um, and then the third thing was the overall market timing in the sense that we executed well and had a really killer technology at a time when digital health was growing and doing well, and the importance of home-based care was being understood, partly because we evangelized it, but it really made it possible for us to get a great exit, and we had that sort of trifecta of market timing, great technology, product market fit, and pretty flawless execution. Jason Kirby (22:37.468) It sounds like you ran a tight ship and nailed the market timing and you know exiting in 2021 when you know things were hot and deals were happening you know sounded like it'd be you know it's a great outcome but when most people have you know big liquidity events they you know take time off they you know go and you know kind of live up a little bit but it seems like you went right back into it into a very similar industry with Together by Renee I guess what kind of led you to that outcome? and switching right back into a similar business right after the acquisition. Nick Desai (23:10.602) Yeah, so what happened is it was a couple of different factors, right? Um, the first was that it was the middle of the pandemic, right? Um, when Renee and I left HILA it was still early 2021. And there wasn't a lot you could actually do, right? Lots of things were still closed. We had three young kids. I mean, now our daughter is. uh four and a half but so if I take back to then she was like two she was a vaccinated even our boys weren't vaccinated in fact i don't think there were vaccines then but i'm not i'm maybe i'm mixing up the dates a little bit but the point is part of it was covid right part of it was when you sell a company at that price You know, you don't and to a public company, you don't suck you get your money the next day, right? It's not like you get that check that people always imagine. Oh, here's a check It is much more that you it takes time to actually get the payout so the bear wasn't immediate and Then the third factor was the company we started this company together is an app for aging people and caregivers. And between Renee and I, we are caregivers too for aging parents, right? So we were sort of living this experience. It was in the middle of COVID and didn't have a lot to do. But funny enough, I was just talking to my wife yesterday, right? And we were saying that, you know, if I look back, although this company has certainly, you know, been a great ride so far. Uh, the, if I look back, I think to myself, maybe I should have taken three months, even if it was just a three to sit at home and read and, you know, go to the beach near my house and COVID safe stuff and literally just sleep in and, you know, that kind of stuff, it would have been, it may have been good because it took me, it's sort of the, the exhaustion of building heel hit me not right. Nick Desai (25:13.67) after, not right after I left and I started this new company a month later and started raising money for it, but sort of six, eight months later and there was a couple months, I would say two, three months, maybe four months during the process of building this company where I was feeling it. And I know that I was operating at a solid B, you know what I mean? But I wasn't operating at a normal A plus level from energy or intellect, if you will. that is critical to the success of a startup. Jason Kirby (25:51.232) And so kind of that transition period and looking at making that decision. So you were living an experience, you know, you didn't have all the money come out at the end, which I do want to kind of go back to a little bit more on the story of the raises and the exit, just to kind of shed some light on that to founders. Because as you kind of mentioned, most founders think, oh, big payday, get a big, fat check, you know, go live your life. But life gets very, you know, more money, more problems, as they say. And it doesn't always come at once. But you know, Let's talk about a little bit more of the story of Together and where you guys are at with the business. How did you overcome kind of those challenges you just mentioned? And when did you guys go out and raise the first tech? Did you guys self-fund? Did you go out and raise institutional capital? Did you raise from existing investors from your past ventures? Nick Desai (26:35.338) No, we raised, for Together we raised money from institutional investors right away. Given that we were coming out of Heal, it wasn't particularly difficult to do that, right? We probably spent a month or two sort of ideating what the hell this company should be and then made a deck and then raised money for it. So was about a one month, you know, that was about a six week process overall. And then we did a second half of our seed funding, which was a literally eight day process, which was awesome. Right. That was just, um, that was really great, uh, from a process perspective. That was also the sort of peak of the health tech. market boom, which has significantly receded since then, as you probably know. But so it wasn't hard for us to raise money in either of the rounds. And I had the opportunity early in my career, I think after my first startup, to meet Trip Hawkins, who was founder of EA and he was founding a new company. And I said to him, I said, you're worth like $100 million, $500 million, I don't know exactly, but very wealthy guy, right? And he said. What are you out here slept in for a couple million bucks for? Right. I always thought, Hey, I'll do a company with my own money. And he said, you know, it is a test. If I can't find investors to invest in this company, that is itself a telling sign. It's easy to drink your own Kool-Aid to get high on your own. I'm so great. Right. Everything I do is going to be gold, but. Jason Kirby (28:11.96) Right. Nick Desai (28:14.97) The fact that you have to go raise money create a and it's also easy to be lax with your money. I know I know someone Who is taking a bunch of? employees To hawaii, right? Um for a junket to a really nice resort and they can each bring up A significant other and all expenses paid for a work planning thing uh, and the point of that is that When I first heard it, I'm like, this is how you're spending company money? This is okay. It's like, no, I have enough money, I'm doing this, right? And I was like, if you wouldn't do it with investor money, because you'd consider a breach of fiduciary duty, you should never do it with personal money. It's actually easier to be lax with your own money than it is with money investors give you because you're not accountable to anyone. Jason Kirby (29:06.436) I think that is a very valuable lesson to pass on. And I think a lot of founders kind of get confused by that as well. Like, why is this person raising money when they have all the money in the world? And I hear the exact same story time and time again. It's just like, it's a point of validation and that's why you go and raise. And I've also ran into people that went the opposite path. I just got off the phone with a company that founders came out of a very sizable exit and were self-funding the business to the tune of $13 million of their own capital. Nick Desai (29:13.45) Yep. Yeah. Nick Desai (29:20.204) Yeah. Nick Desai (29:34.882) Wow. Jason Kirby (29:36.97) and they're only at $50,000 a month in revenue. And now they're trying to go out for outside capital because they burned through all their own personal capital. And they probably could have got market insights and more validation and maybe made more progress if they weren't funding it themselves. Yeah, they were joking that they were buying a very expensive sports car every single month as far as burning cash. Well, ultimately, I would say this. Nick Desai (29:39.351) Wow. Yeah. Nick Desai (29:56.822) Well, ultimately, I would say this. There are two critical rules that I think are worth following if you are a repeat entrepreneur, and especially if you have money. If you're an entrepreneur, you are risking your time. Because you're not taking a market wage, right? People like me, who with the amount of years of experience and whatever I have that worked at Google, would be making a seven figure, mid seven figures a year, right? With bonuses and things. I don't, right? I'm a startup CEO, a seed funded startup. So either risk your time or risk your money, but don't do both, right? Entrepreneurs should be entrepreneurs and investors should be investors, right? And you should and the second thing is investors money will force you to act with the level of discipline right either the burn is too high or you nickel and diamond because it's your money or You go too slow or your indulgent of things or you chase flights of fancy or personal pet projects rather than what you think is the best Best company right and so that and that is a really important point. It will keep you honest Right. Heavy investors will keep going. Jason Kirby (31:11.445) I think that's probably why you've been successful in raising capital every single year. I'm sure that resonates, that message resonates with investors that have backed you and it sounds like those investors have come back to back you time and time again over the years. So we've kind of heard the story now from 1998 to now, but I would like to talk a little bit more about HEAL and Together in terms of just... you know, fundraising strategy. I know you make it sound like, oh, you're raising eight days, but like, you know, how did you go about structuring your materials? You have a track record, so people believe you. So it's not maybe difficult to get meetings. But who did you go to? Why did you pick those people? And what kind of capital did you want on your cap table? Nick Desai (31:53.878) Mostly I picked people that were people that I knew, right, VCs that I knew and wanted to work with, right? And so that was a critical aspect of how I, like. quiet capital that's invested in our company. It was Morgan Livermore was a partner then. And for Morgan, it was, I wanted to work with him. I knew him from when he was at Excel. Amit Garg, who was at TaVentures, same thing. And then people refer you and then it just grew from, it just grew very quickly from there. in terms of the structure and the pricing, just because you can command a premium because you're a repeat founder or whatever. And to an extent, we were in a position to do that. It's not always the best idea, right? Because you have to get future investors and there's a point beyond which nobody cares who you are. Before a company has performance or can be measured by objective metrics, it's measured in part by how good an idea is this and who are the people that are involved, right? As soon as you launch something, are remesured based on two things. How many people are using it and how many revenues do you make, right? And there's no amount of Nick is a great guy or Renee is an accomplished entrepreneur that's going to overcome, you know, wow, they haven't done crap with their money. Jason Kirby (33:21.748) And were there situations where funding maybe was more difficult than expected or maybe the strategy you took wasn't as successful or maybe terms weren't as favorable? What kind of difficult experiences did you have on the fundraising side? Nick Desai (33:39.254) Look, I would say, there's been a few. I would say that the most interesting one was with Heal. When we raised the round from Humana, we spent, before we met Humana, probably four months pounding the pavement. And everyone knew who Heal was and a lot of the VCs up here in the Bay Area use Heal, right? And they knew it and there was familiarity and the company was well known and people liked the product and the reviews were great and the revenues were there. And for one reason or another, we just weren't getting there. And then I remember we got a term sheet in December of 2019 at the point where we knew Humana wanted to invest, but their due diligence was just starting in that process was a six month process, right? Like, hey, we want to do this, but we won't give you a term sheet or anything binding until we finish due diligence, and they didn't finish, you know, due diligence took six months, right? They ultimately invested on July 16, 2020, after sort of saying they want to do it in December of 2019, right? So if you think about that, that's a long time. So Around that time we got a term sheet from another VC fund right after all that pitching and whatever and it was a weird thing We're we're not early. We're not late enough for this kind of round, but we're too early for this We had a lot of interest and no one was just biting was just in And then we get this term sheet from another VC and we think Humana is the right partner for us. They're a great investor. They'd be strategic. They can bring us customers. They're paying a much, much better valuation, et cetera. But also, look, we're spending a fairly high burn rate every month, and we don't have an investor right now. There's no guarantee Humana will invest, right, whatever in their due diligence. Not that we thought there was anything to find, but if for some reason they found something they didn't like or changed their minds. Nick Desai (35:44.976) the CEO change or the stock price fell or whatever it is. All of that stuff can affect an investor coming in and we had to make that decision. Hey, do we wanna take this less optimal term sheet or do we wanna bet on the fact that we will make Humana happen and ultimately we obviously made the right choice. Jason Kirby (36:14.264) So it looks like you gambled again, going back to the early 90s when you had the chance to sell and you kind of ended up getting the lower price. But this time, maybe not apples to apples, but a similar situation where you kind of waited and this time it worked out. They actually came through, which is super risky with strategic because senior management can change, things can change at any point in time. I had an experience where... Nick Desai (36:31.81) Yeah. Jason Kirby (36:40.92) Samsung was acquiring us and we were getting an amazing, everything was perfect and awesome and then management changed. There was corruption at the top and the day that the new CEO had signature authority, every deal on the table was killed, regardless of what it was. It was just like, ah, timing killed us. And so I guess what made, if you can share details, great, if you can't understand. Nick Desai (36:55.787) Yes. Jason Kirby (37:06.372) But like what made that term sheet back in December 2019 not attractive to where you were willing to take that risk? Nick Desai (37:12.062) I mean, it really was a lowball valuation. I think they got the sense that we were desperate. And while we were eager to get around, we weren't desperate. And we tried to take advantage of it. And so it was a good investor that would have brought good money in. And if Humana fell through, by the time Humana did fall through, we'd actually have money problems, right? Like, And so in that sense, it becomes, and you burden in, right? Hey, I can close this round in a week or so, and whereas this other thing I cannot, you know, is not for sure and it's gonna take six more months, that's a tough toast that you have to make. Jason Kirby (37:33.404) And so in that sense, it becomes a burden, right? Hey, I can close this around in a week or so, whereas this other thing I cannot, you know, is not for sure and it takes four months. Jason Kirby (37:50.356) and sounds like you made the right choice, brought the right partner in and you know, led to a successful exit. So, you know, you kind of get to have, you know, the, the wind story there. Um, so let's, let's switch back to, together by Renee, you've got to this point where, uh, you got conceptualize the idea, you went and raised money quickly. Um, I guess, what was the story here in terms of how much you were targeting on raising? Why were you targeting that much? And at what stage were you guys at? Was it just a pitch deck at this point? Did you have product built? Did you have the team assembled? Nick Desai (38:20.995) It was just a pitch deck A for the seed round. And it was then when we did the seed extension, we had done a pilot with some great data. Right. But again, this time around the process. for the seed and the seed extension were incredibly easy and straightforward. Obviously now we have to soon go raise an A round and that will take sort of a lot of, I'm preparing for, hey, look, Alphatech is hard and get as much progress as possible. One of the things that happens is in a good market, companies will get great term sheets despite their lack of progress. In a bad market, even companies with progress sometimes won't get term sheets, right? So. You have to prepare for the worst and hope for the best, but sort of prepare for the worst. And we've built around knowing that we have to do that. Jason Kirby (39:19.12) Well, I think that's smart of you, especially coming out of pretty much every major market up and down that we've had in the last 25 years. It sounds like you've managed your expectations well, because I'm still dealing with founders that come to me expecting to raise capital at absurd valuations with minimal to no substantial traction and just haven't had that dose of reality just quite yet. Albeit most of now kind of come to terms with current market forces, but it sounds like Nick Desai (39:26.797) Yeah. Nick Desai (39:38.359) Yeah. Jason Kirby (39:48.594) the company to be prepared. Nick Desai (39:50.722) Well, and one of the things that I would say, one of the mistakes that entrepreneurs make as we come close to the end of the hour here is they obsess over valuation, right? Valuation is important because you structurally want to show it going up with each round. Valuation is important because you want to protect your ownership. But beyond that, it really isn't that important. Whether you do your A round at a 30 pre or a 40 pre, we'll make. Jason Kirby (40:02.54) It's structurally want to show it going up with. Nick Desai (40:17.138) Ultimately not that much difference relative to did you bring in the right investor? And are they going to help you perform for the ultimate exit because the only valuation that matters is your last one, right? And the other the other part of that is that if you set yourself up and go I got I got the maximum possible valuation 100 million pre and everyone else was saying 30 million pre, it isn't like the 100 million pre is necessarily a good idea. It's only a good idea if A, the market keeps going up and not taking a dip between those two rounds and B, you perform the heck out of the money you raised so that you can command an even higher valuation in the next round. Otherwise, you're looking at doing a down round and that feels like you somehow failed even though it just might be that you raised your last round at too higher price. It's the last thing on my mind, right? The terms, the control, the board members, the structural changes, and of course, is it a good investor who has a good reputation in the market and can really help me grow and succeed? That is always gonna be way more important than the valuation. Nick Desai (41:32.956) So number of board seats is always important, right? Jason Kirby (41:33.143) the valuations. Nick Desai (41:36.714) Do they want truly independent board members or do they want, hey, where do we see and we're going to put on one board member but we're going to put, we're going to pick the independent and put them on and we're going to pay them. Okay, so if you work for XYZ venture capital firm and you're on my board and they're the ones paying your check, who are you going to vote with? You're going to vote with the people who pay your check, right? So that's an important term, making sure liquidation rights and pro rata rights and everything are very standard, right? Not. disadvantages to the investor, but not overly advantageous either, right? The stuff some investors will try to stick in their term sheet with. And the hallmark of a good investor is you get a term sheet or investment documents that are clean. I remember when we did the second half of our seed round, when Pi Capital gave us the term sheet, they sent documents, and I've had the same lawyers, corporate lawyers for the last 20 years across all these different companies, and I remember the partner saying, Nick, this is the first set of documents I have ever seen that I don't have a single comment on. They're perfect, right? That's a credible investor. That's a real person. So when your lawyer chokes all over the, oh my God, you're giving up this, and you're giving up that, Believe me, when you're starting a company and you're eager to raise money, you're gonna think, oh, fuck it, who cares? I got one more board seat, who gives a crap, right? The stuff comes back to bite you. It really, really does. So it is always worth spending the time to at least try. Yeah, maybe money is better than no money. those are your only choices, but it almost never is the case. If BCA is willing to invest, then the second BC is willing to invest. And ultimately, you'll find someone who wants to invest on your terms, right? And I think it is worth chasing that because it can be very demotivating when you all of a sudden feel like all I am is a hired help in my own company. Jason Kirby (43:28.085) and Jason Kirby (43:37.749) That's well said. It's also important for founders to keep in mind that whatever precedent is set in say your seed round or series A round is the precedent that will be the baseline moving forward for most investors. So if there's a Lickpreft term. Nick Desai (43:50.428) And if you make that too high, now you're operating from such an insane baseline, no one wants to come into the company. Jason Kirby (43:57.872) Exactly. So Nick, you've been sharing some amazing insights and stories that I think a lot of founders will benefit greatly from just the depth of experience and the length of time you can share capital. I'm sure there's a lot more interesting stories that we would probably unpack over time, but really appreciate you joining us. Is there anything else that you'd want to share? Maybe a final tip to founders that you want to leave them with? Nick Desai (44:22.206) Look, I would say three very quick things. One, do your homework, right? Don't just, oh, I'm talking to VC, but everything is easy, it's on the internet. I read the partners' LinkedIn, read the firm's bio, know their other investments, know what stage they're at, know who you're meeting, do all that homework, right? The more you do, the more impressed people will be and the better your round process will go. Number two, right? And these sound like completely contradictory things, which is have a real plan, one that you believe and one that you think you can sell and passionately talk about. And the third is the exact contrary to that, which is you sort of got to go for it and not give up. Because you don't know what combination of factors will bring a VC in versus out. You're never going to know that. So you may as well be extremely well prepared and don't hesitate to ask anybody. The worst thing, I always say this, the worst thing. An investor can do is say no, they're not going to spit on you or beat you up for pitching them. They're just going to say no. Jason Kirby (45:19.928) been on your. Jason Kirby (45:23.96) Gotta try at least. Great insights, I appreciate that. What's the best way for any listeners if they wanted to get in contact with you or learn more about you? Nick Desai (45:32.566) Well, if you want to learn more about our app, and we'd certainly appreciate all of you listeners trying out Together by Renee. It's fast, it's a free, secure health care assistant. I guarantee you'll like it. It's available on the app store at togetherbyrenee.com. Togetherbyrenee.com. Sorry, not rene.com, what am I saying? Together by Renee on the app store. Together by Renee, just the word together by Renee. And... If they want to get in touch with me, just LinkedIn. Look for me, I'm the Nick Decide that used to work at Heal. There's a few Nick Decides on LinkedIn, but I'm the one who used to work at Heal. Jason Kirby (46:10.856) So we'll make sure to link those in the description of the podcast. But just leaving with that note about Together by Renee, I guess what should someone expect as far as the usage and the value proposition of Together by Renee? Nick Desai (46:24.63) Look, again, not to sound like a shameless plug, but everyone should try it out. It's a really, if you have chronic disease like obesity, diabetes, hypertension, heart disease, or if you are caring for an aging loved one, or if you're caring, or if you have your own chronic health issues, try the app and you will feel like, wow, this is, I didn't know all this possible was possible in any app, much less all in one app. Jason Kirby (46:52.236) Awesome. I'm glad you got to share that and you know, having some elderly grandparents and parents that will be on that ship soon. It's important now and I'll be sure to check it out. Nick, again, thanks so much for being on the show. Really appreciate your insights and stories and look forward to getting this out to our audience. Nick Desai (46:59.222) Yeah. Nick Desai (47:08.882) Awesome. Thank you so much. I had a good time. Jason Kirby (47:11.248) All right, so we're going to stop. It's going to take a second.