How did he raise $11M when VCs weren't writing checks?

Jason Kirby (00:00.994) Hey Jeff, welcome to the podcast. We're so happy to have you. Happy to learn more about your background and Answers Now. It'd be great if you can tell the audience a little bit more about your background, how you got started, and kind of what the origin story is of Answers Now. Jeff Beck (00:16.686) Sure, so my background is as a licensed clinical social worker. So I spent the early part of my career as an in-home and outpatient therapist. I then spent some time in community-based services and then in value-based care. And across all those experiences, I saw two prevailing challenges. One is just access to quality therapy and that the therapy that was being delivered was incredibly expensive for either the individual or the payer. And so this was 2016, 2017, you know, admin of the top spaces and better helps of the world. And it seemed like in the special needs space, neurodiverse space, there could be some value to connecting families and parents and individuals with autism to directly to a master's level clinician. So at Answers Now, that is what we do. We connect families to their own personal master's level clinician called a board certified behavior analyst over a proprietary platform that we built specifically designed for the needs of this type of learner and parent. So that's what we do. And that's kind of quick, 30 seconds on how it all started. Jason Kirby (01:19.298) No, I appreciate that. And if you could kind of give a little bit more background, because I think the story is amazing. You're helping kids with autism and helping them with a solution that can immediately impact them. Kind of give us a little bit more about the types of customers you support and kind of how your business model works as well. Jeff Beck (01:33.902) Yeah, so in the very early days, 2018, 2019, it was really, we used like HIPAA compliance slack and parents would hit our stripe and they'd sign up for a month and we'd connect them with a clinician and we started to see some pretty awesome quality outcomes. For example, the first one, I remember my co-founder and I were pretty blown away. We didn't know if we'd be able to help these kiddos. We had a 12-year-old who was afraid of automatic flushing toilets. So he's a sensory issue for 12-year-old autism. It's pretty common. So he was afraid to go into public because he didn't know what kind of toilet they had. If you don't know what kind of toilet they have, you can't go to the bathroom. And so it makes some sense. And within a couple of weeks, one of our clinicians who I didn't even know was able to walk the mom through a couple of techniques over the course of a couple of weeks that she could do 20 minutes a day. And within a few weeks, he wasn't afraid of these toilets. We're like, holy smokes. You can certainly serve this population without ever seeing them in person. which was thought to be impossible. So then we initially went to payers in 2018, 2019. We were like, hey, we can save you a lot of money because we can take some of your less severe learners and improve their outcomes. And you don't have to pay a hundred thousand dollars a year, which is kind of the status quo for ABA services. And every payer told us there's no way you can help these kids without seeing them in person. They're not gonna be able to improve and slam the doors. Then roughly March of 2020, they were like, hey, what is it? how does this thing work again? And so that was obviously a huge, huge tailwind for us. And we went through the arduous process of getting in network with payers. It's a long road, but that's how our business primarily functions about 85% of our revenue is through insurance reimbursement and about 15% of it is cash paid. Jason Kirby (03:04.834) you Jason Kirby (03:21.122) So I'm going to pause the recording real quick. Your audio just freaked out for a second. Can you kind of just share your audio, kind of say something again? Jeff Beck (03:30.83) Yeah, yeah, it's so strange. Any better? That's my speed. Jason Kirby (03:34.946) Yeah, I think I... Yeah, no, it's good now. It just went like... It dropped pretty substan- But it seems to be working now, so I just want to make sure. It wasn't like a video choppy thing, it sounded like just the audio, so... Alright, well... Back in character. Jeff Beck (03:38.254) Weird. Huh. Jeff Beck (03:46.574) Strange. Jeff Beck (03:51.15) No, I'll get it. I'll get it. Jason Kirby (03:53.058) So it sounds like COVID was an acceleration for your business and bringing the realities that, yes, it is possible to service these kids, and especially because there's no alternative in this current state of the world. And that kind of helped accelerate your business, despite the drag that it is working with payers and large corporations and whatnot. So something I think, you know, what our audience likes to listen to and hear about is kind of what's, what's been the fundraising journey. So you kind of had the initial product or Stripe and kind of making things work. And, you know, now you're going to have some velocity. You've raised a successful series a, you know, kind of share with us, you know, the, the fundraising journey from like, kind of start to finish and kind of what's in the highlights. Jeff Beck (04:32.654) Yeah. Yep, so we went through a low, I'm from Virginia, we went through a local accelerator, it was grant funded, no equity. We went through that accelerator, we raised $200,000 in pre-seed. I'm very adamant about being pre-seed because there were no friends and there was no family. Right, it was just folks that I met in the ecosystem to scrap together five to $25,000 checks. And six months later, we went through Techstars. So that was kind of the second tranche of what I call our pre-seed. Brought the total pre-seed round to just under a million. We did that on a... cap on a note there, you know, without geeking out about the legal structures of notes now, maybe another podcast, but there's so much I wish I had known when we went through that process four or five years ago about how to structure a cap on a note and a discount and liquidation preferences. And we were able to clean a lot of it up in the series A, but in the very early stages when you're trying to cobble together some money and I didn't know the difference between a convertible car and convertible debt at the time. We just kind of threw it all together. So that was where my fundraising journey started. We then, so that was like 2019. We were very scrappy. We burned no more than 50 grand in a month through that year into 2020. And then as the pandemic hit, we raised a very small bridge. because we thought we could get insurance reimbursement. We proved that at the end of 2020, so the beginning of 21, we raised a price seed round. So we raised just under three million in a price seed under the belief that we could not only get reimbursed by insurance companies, but that we could scale this, right? And open a bunch of states and take on a bunch of new clients. Jeff Beck (06:29.582) Some things went according to plan, some did not. It took us much longer to get in network with many of the payers. There were fits and starts with our second state. We finally started to see some traction towards the end of the year. So we raised another very small, I think it was a $500,000 bridge in the beginning of 22. And then ended up, this really took off through through 22 for a variety of reasons, which I'm happy to get into and then close the A at the end of last year. Jason Kirby (07:06.85) Nice. That is quite the journey. And I know you kind of glanced over the convertible node structure. But I think having also had some similar mistakes in my first couple of companies in a similar regard, it'd be interesting to kind of maybe unpack that a little bit more and kind of what would you wish you would have done as opposed to what happened. Jeff Beck (07:26.542) Yeah, it's very hard. I try to remember. So with our series A, we were really fortunate, had a ton of interest, and I had to say no to a lot of investors. It's hard to put myself back in the place where you feel like you're outside of the Walmart with a hat, like, please invest in us, where you just will take any term you can get, right? So it's a little bit of an it is hindsight, but there was a mechanism that we learned about during Techstars where it's kind of a cap on a cap. like depending on how big your company gets, right? You can have a cap on how much upside that note can provide to an investor, which we did in our second tranche, which I think is really smart and very fair. Otherwise, the investor is kind of rooting against you, or you're rooting against yourself from getting too big, right, because you don't want $100 million valuation with a $5 million cap on your note because they're gonna take so much of the company. So there's like a cap on a cap, which I think is a really interesting and meaningful resource to use in a convertible debt note to make it fair for both parties. Jason Kirby (08:26.338) No, that's fair to, I'm glad you shared that. And I've heard some other stories where, you know, often people think of safes as like kind of the go-to and kind of prior to safes becoming standardized, there was a traditional convertible note that, um, you know, some founders don't realize that it's convertible and that there's a deadline on the convertible notes and that come that deadline, if you didn't close out the note through an equity round, like you might be. Jeff Beck (08:38.99) Yeah. Jeff Beck (08:46.318) Yeah. Yeah. Jason Kirby (08:53.474) have to pay that money and they have to have a renegotiation with your investors to kind of make them whole, especially if you don't have, I would say, friendlies as an investor. Jeff Beck (09:01.838) Yeah. So ours converted into equity at maturity. And I believe we wanted our first tranche, that 250K tranche to convert at maturity because of the way it was structured instead of a price financing. So I think we actually punted on our next financing a few months so that we could convert those notes. So, I mean, this is just, you know, the... the ins and outs of fundraising and financing your organization. And it's interesting. I mean, it's there's loopholes and things you have to be aware of. And I'm glad some of those those note days are behind us. The safe is clean. The safe can be very clean, I think, where people get tripped up. And even on the notes, right, are the pre pre post. Right. So when people are looking at ownership, when it converts and what, where's the safe convert and how, you know, I would encourage folks to to become savvy on how to have. conversation with an investor because it can really matter in terms of ownership. Jason Kirby (10:05.25) I would agree 100%. And then it looked like you said you also had a bridge between kind of the C and the Series A. What was that experience like and kind of what was the market feedback when you were going to market for that? Jeff Beck (10:18.35) Yeah, so we had a couple of insiders that were on our cap table who were really bullish on what we were doing. And we wanted to make sure we didn't get into a situation where we would go to raise the Series A and only have six months of runway left, right? That's they're going to bleed you out and you're not going to get a great deal, even if you find a good firm. So they, you know, we kind of came together like, all right, let's see how we want to raise to make sure if when we do go to market for the A, we're well capitalized and what's the number that makes a lot of sense. So that is the one time we did a thing. with a cap, no discount. It was just a cap on a safe and super clean. It was basically like a one page document. It's all internals except for one external. And that was a conversation because he didn't come to the table. He was a value add. And honestly, one of the main reasons we raised for Series A, so I'm very glad we did it. But we did have one investor who has continued to be this kind of investor where they pushed back. So this is... after the market had sunk, it was like April, May, June, some after the crash, after we had raised the bridge, and one more investor came in and said, I want the same terms as your bridge from four or five months ago. And I really liked him. I thought he would be a great app. And we wanted to that was like, I think we should look at, you know, it was like, I'm not adding a 10% premium on the safe for this 1% in collapsing. Jason Kirby (11:41.346) Yeah. Jeff Beck (11:43.246) during a war, like, let's just get him in, right? Everybody agreed except for one person. And I'm really, really glad that we did. So we closed, like, we closed the first part of that bridge towards January, February. And then I think he came in in April or May. It was a little over a million dollars. So, yeah. Jason Kirby (11:58.21) And so it sounds like you're pretty strategic in making sure you're well capitalized to be able to hit certain milestones to successfully raise a Series A. So kind of walk me through the capital rate and just like running the business, having to hit milestones to grow the business and then going out to market for your Series A. Kind of like what was that experience from kind of realizing, okay, we're now Series A ready. What was your process from there? Jeff Beck (12:13.486) Yeah. Yeah. Yeah. Jeff Beck (12:23.15) Yeah. God, I wish it was, I wish it was really clean science, right? Because I remember we had a founder con for one of our seed investors, like the conference for the founders. And I was finding anybody I could find who would raise an A. And like, tell me about your timeline. Tell me about how you did this. How you did that was in July. And I got one my favorite piece of advice, which I tell everybody is raise the round when you feel the best about the business. It's not 500K MRR, it's not a million ARR. You could ask one person who had to have 4 million ARR and another person who needed 100K ARR. There's not one special bullet number. It's when you feel the best about the business and you have a really clear idea of how much you wanna raise and what you wanna use it for. That is the key. And so the business really took off in the first half of the year. I started to reengage a few friendly investors in the third quarter, late August, early September. I had a list of about 25 who I'd either talked to before or somebody had said I needed to talk to them when I raised my serious A. And so I either asked for that introduction or I reached back out today, this is where the business is. I just want to learn if you think it's an interesting, you know, kind of interesting story where we are and where we want to be in a year. And pretty quickly I could tell five or six of the firms were like, we want you to meet a partner. We want you to make that just, you know, like there, you just know, I think it's Paul Graham or somebody says, it's like sex, like you know what is happening, right? You know when something's, you know, something's going on here. And so it's true, right? Like it just, we reached out to those 20 something friendlies and more than half of them were like, do you have a data room? We want to meet you, we want you to meet our partners and you know, what are you thinking in terms of numbers? And so, Jason Kirby (13:54.658) Yeah. Jeff Beck (14:12.43) I've heard this can be atypical, I've heard it can be typical. Our first conversation was late August and our term sheets all came in and then like the beginning of October. So it went pretty quickly when we went to market. Jason Kirby (14:26.21) No, that's fantastic. And I think you say something here that you kind of hit on very, very wisely of yourself here is like go to market when you feel the best about the business. VCs can kind of sniff out, you know, kind of like false confidence and like the projection of success, but not really like, you know, in success. And if you feel genuinely good about the state of your business, you just have a different energy about yourself when you come to the table that gives the VCs potentially like FOMO vibes if they don't take this seriously. And they're just like, okay, this guy's got something going for him, let's dive a little bit deeper, let's impact this. And it helps if your business is in a great position. It's often too many times founders raise money because they need money, not because they're worth the money and or, you know, in a position to really demonstrate a sexy story. And, you know, kind of, as you kind of said, begging on the out front of Walmart for change, as opposed to, you know, coming in with a lot more confidence and into the room of the right people. So that's incredible, insightful feedback. And it goes to show, you know, I'll ask you this question, like, what made you feel you got to that point in your business? Like what was it about your operating or sales or whatever it was that led you to that confidence? Jeff Beck (15:47.182) Yeah. We had to pick and choose what to do well because of the money inside of the team. So we have, you know, we have new clients coming in. We're a two-sided marketplace. We've got new clients coming in. We've got new clinicians coming in. We've got a technology that's, you know, handling more and more folks. We've got more insurance providers and more payers that we're tracking. You know, we've got revenue cycle management. So when you are 10Xing and 20Xing year over year, billables in AR, like that starts to grow. And so there are some, it's a very complex business. And we, you know, we had six, seven, eight full-time folks at the time of the A. And I like looked at a series A investor. I was like, once I get this money, I can open a number of states. I can rinse and repeat the way we went to market. And I can shore up this and shore up that. And this is where we're gonna be in three years. And this is the conservative estimate. And this is the moonshot. That's what you're investing in. So we just had plans for how we wanted to use the money. And it wasn't run, you know, it wasn't runway, right? Well, that's important. We knew our business really well. We knew where we made a margin. We knew how we made a margin. We knew what our lifetime value, cash to lifetime value is now and what it will be at a scale within reason. So the more you know about the business and the more you can teach the investor about your business, the more likely they are to perk up. because you're showing that you're gonna, you have a plan for their money. And so that was my goal initially, was to show up and have a plan for the money. And it ultimately worked out. Jason Kirby (17:27.169) So it's one thing that a lot of founders say, like they have their use of funds slides, it's like 35% marketing, 40%. It's just like, what you're communicating here is like, here are the milestones that we're going to hit. Here's the growth trajectory. Here's like the, and again, like kind of proving out a piece of your business. And then it's like copy paste. It's not always that easy, but it's like, okay, we figured out a system, we've proven something here. And Jeff Beck (17:32.27) Yeah. Yeah. That's right. Yeah. Jeff Beck (17:49.422) Yep. Yeah. Jason Kirby (17:56.322) when you talk about how quickly your fundraise went, you basically kind of spoke, spread the word around, had a couple conversations, and then people threw themselves at you, that's a clear sign that you're on the right track from both a product standpoint, proving out your model. And when you do that as a business, and you focus on that as your business, it's just so much easier to raise capital than it is. if you're struggling on any of those fronts. Not what every founder wants to hear. As they struggle, they'll kind of get to certain places, but it is possible. And I'm glad. Jeff Beck (18:31.31) I mean, what we did, Jason, I mean, we went internally and said, look, well, you know, you're gonna get a little bit of a deal or you'll get you'll get a discount on the next round. That's what we do with the safe. And we were like, you've seen us, we sent out a monthly update, you know, we meet with our board quarterly, you know, our business, you know, there's there, there, this is here. But we don't want to go out there as a series A when we have to raise money. Let's put a little bit of capital into the business. Give us a few more months. I'll never forget sitting in our board meeting in August, and we went to market just a few weeks later, and both of my board members were like, ah, I'm not quite sure if you're ready yet, and I'm bullish, right? Like, this thing's taken off, we got a wait list, like this is, and that's when I talked to a founder that was like, just go have some conversations in front of these, you're clearly excited about where the business is right now, and I'm sure we'll get into some detail around how the A itself went, but I'm really glad I did it one night. when I did that because we found a partner who really understood what we were doing and we're excited about it. Jason Kirby (19:34.53) I definitely want to unpack the A a little bit more, but I also want to acknowledge the fact that like previous to this company, did you have any entrepreneurial effort, you know, like entrepreneurial background starting a business? Like I feel like Jeff Beck (19:43.406) No, nothing. I never even had a lemonade stand. Like I know the stories, like I sold baseball cards, didn't see these, and I didn't do ads. Now, none of it, right? It was just, and it was something that came in my late 20s, I found myself drawn to the how I dealt discs and the Reid Hoffmans and the Zero to Ones and Chew Dogs. And the more I spent, the more time I spent in the kind of field of mental health. Again, this is before it had a huge, this is 2015, 2016. This is before it really got thrust into the mainstream from a VC perspective. I just felt like fundamentally that technology could improve the way that these families accessed care. So it all just kind of aligned, but yeah, no previous real entrepreneurial experience. Jason Kirby (20:29.186) Yeah, it's very fine to social worker go into raising tens of millions of dollars as an entrepreneur. So, it's inspiring to kind of see that. So, I just want to kind of acknowledge that because I find that to be a pretty interesting aspect to your background. I feel you also articulate yourself. You've been through the wringer. You didn't start this business yesterday. So, you've taken some punches, I'm sure. But let's go ahead and jump into kind of the structure of the Series A. So, it's like you... Jeff Beck (20:35.086) Yeah. Yeah. Jeff Beck (20:39.854) No, thank you. Appreciate it. Jeff Beck (20:46.894) Yeah, that's right. Absolutely. Jason Kirby (20:58.466) from prior to the term sheet, did you get multiple terms? She would kind of walk us through that process. Jeff Beck (21:03.182) Yeah, yeah. So we started to have conversations, like I said, late August, early September. And, you know, and it was, you know, I don't know if I ascribed it, like, you know, put it in the ether and it happens, right. But my thing was like, I want this done before Thanksgiving. I our business has seasonality in December, right? Families go on vacation, our clinicians go on vacation, it's not it's always going to be our lowest month. I was upfront with that with investors. But I did not want to be trying to move towards close in January when we've got a 10% dip in growth after month over month growth for whatever money, however many months, right? So I was like, this is going to be done by Thanksgiving. I really did take my eyes off the business. You kind of have to. My CTO, Mori, was terrific at kind of playing the operator role and trying to keep all the plates spinning while I spent 80 to 90% of my time focusing on the fundraise. and that's pulling updated data and updating the deck and flights or Zooms. I had over 100 presentations. I don't want to seem like I talked to 20 people, I got 10 term sheets. That certainly wasn't it. Then they start to talk. Investors start to talk to investors and I get an in from Andreessen to NEA. Then you also already talked to this person and that's how it happens. That was September. And I had three firms fly to Richmond to meet with me in person. I flew out to meet two in person. Um, I think in total I had eight meetings with partners, which is kind of like the final boss in my, my mind for this, the series a, um, and we ended up with three term sheets. So, um, I thought we'd end up with eight, seven, eight, and we ended up with three. Um, which I was super excited about one. Jason Kirby (22:40.77) Ha ha. Jeff Beck (22:55.278) One interesting piece was I had a few who I met with a number of times that I really liked. And this is just me kind of reading between the lines and putting on my therapist hat. There's a little bit of like, you got term sheets in this environment? We've all agreed to sit on our hands and wait for all the companies to run out of money and come begging to us with crappy valuations. Like how did you get three term sheets? This is ridiculous. We've all agreed to not do any term sheets. I had a couple of funds that were like, I need like four more weeks. And it was a five day, I got one term sheet on a Monday, the first one on Monday, and they gave us five days. The other two trickled in during that week. And then I had a number of funds kind of elbowing for more time. And we said no, and we stuck. I wanted to get the relationship off. I know that you can. You can negotiate these things, but I really liked the firm that, and brought us our first term sheet, which was Left Lane. I liked the team a lot. And so I didn't want to screw around. It was and continues to be a pretty tough environment. So I didn't want to play games either. I was really excited. I couldn't think of a reason why I would go with somebody else. They knew the industry. I will say I met with them a few times throughout the course of the year. And... I felt really good about it because they understood our industry. They knew all of our competitors. They understood our business model. They get what we're trying to do. So I think that I'm an N of one, right? But I've had a few series B conversations with investors, right? And if I find myself telling them what the letters ABA mean, I just don't think it's going to happen, right? Left lane had conviction that there is a bet to be won in the space and they wanted to back the winner and they believe that's us. And so that, you know, my job's half done. at that point, right? It's I give them the numbers, I show them I know what I'm talking about, they meet the team and they're terrific, I give them the plan and then we move forward, right? It's not me convincing them that first step that like there's a big opportunity here. I just, I personally feel like that would be really tough if you're trying to convince your series A investor independent of your company, that there's a big opportunity in the space that you're in, right? So again, that's my perception and that's my experience. Jason Kirby (25:04.706) Yeah. Jeff Beck (25:18.766) I felt like we had a little bit of a shortcut. And the three funds who flew to meet me, all three of them are, one is EdTech, one is HealthTech, and then Leftlane. So they all three really understood what we were doing. So I think that helped. Jason Kirby (25:34.594) And the, you know, from the point of getting that term sheet to the point of close, like what was that process like? So the conviction, you know, getting that conviction early and being able to align, you know, with the partner, but with, you know, what was the due diligence process like? Jeff Beck (25:45.262) Yeah. Yeah. Jeff Beck (25:53.454) Yeah, it was interesting. I mean, so we were oversubscribed. So there was a little bit of renegotiating on the terms. We ended up raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of a higher valuation than initially agreed upon and raising a little bit of together on that, right? Well, how do we want, let's not just bring in more money and how we use the funds, it won't make sense here. And it was to get a strategic in that we were really excited about that how to middle on threshold. So the partnership just out of the gate, right? Post term sheet where we're already working together on, well, we could punt and tell them to do a safe, right? We could close this, do a safe, just having those conversations about how we want to run the business from a financial perspective. So that was kind of a good, just out of the gate, let's work together. To answer your question directly, it was about 30 days. to close, even my legal team was like, do you really need to move like this fast? And I'm like, is there any reason we don't? Like, you know, and it was a ton, I will tell you Jason, the post term sheet to close was just as much work as getting to that term sheet, right? I mean, it is. And we had to be really transparent, you know, our revenue cycle management, we're in healthcare, it's not spectacular, right? We didn't have anybody in it. We were outsourcing it, we were doing the best that we could. We're obviously growing like a weed. And they brought in, you know, auditors on our books and see it. And we were very transparent. And we were like, hey, this is something that's on the roadmap for Q1. I'm comfortable talking about it now because it's now behind us. And we have it very much. If it's locked down, it was not locked down in September. Right. And so, um, I, you know, we just were as transparent and honest about where we were with different pieces of the business. Um, and, and that helped it. It went pretty smoothly. I mean, it was. There's a lot of legal stuff that we had to clean up and notes and missing signatures and backdates that we couldn't use because our legal team wanted to be really, really clean. And it was a pretty expensive legal bill and it's one of my least favorite parts of the job. But, but yeah, it took about 30 days. So I think we got the term sheet in the middle of October. And then close the first week of December. 45 days. Jason Kirby (28:03.234) The timing of that is one, there's so many questions around timing because one, it's like the bottom of the market when it comes to venture capital. There is trickling in a few deals here and there and you were one of those and accelerated deal like, and it just goes to your level of execution, the problem that you're solving. There's something you brought up earlier about the market size, convincing the investor of the market size and how you kind of immediately could. Jeff Beck (28:10.926) bottom. We're at the very bottom. Yeah. Jason Kirby (28:33.154) qualify a VC whether or not they're gonna be a fit if they couldn't understand your market or not. Because this is valuable feedback for a lot of founders. If you're chasing an investor trying to say, we're gonna be huge, the market's huge, and they're still asking questions about it, you can probably write that investor off as far as writing a check. Because they might still ask you questions, they might still engage with you, they might spin your wheels, but if they can't get conviction around the market, you're just not. you're not in a good place. So it's wise of you to kind of recognize that early on and kind of cherry pick the people to pursue with that in mind because I think that's an incredibly important note to be conscious of. Jeff Beck (29:15.758) I always ask about what they like about our competition. I mean, so this is back to the social work 101, right? I ask the investor as many questions as I can get, right? And the season ones pepper you. And I usually be like, you clearly know what you're doing. You've got a million questions. Can I just sneak a couple in really quickly? And they honestly respect that, right? They're used to zoom, zoom, zoom. I'm gonna hit you with my 10, 15 questions. I'm gonna jump down, move to the next, right? And so I found it really meaningful to be like, what did you like, who have you seen in the space? That's a question I always ask, who have you seen in the space, whether it's broader pediatric mental health, whatever it is, would you like about him, would you not like about him? Anything that they said they liked about him, I would amplify the things that we do that mirror the thing that they like. Then if they said, oh, we don't like that, it's an in-person blah, blah, blah, so it doesn't scale. That's the beauty about our model is we're 100% virtual. We could literally serve every learner. We are serving kids on mountaintops and out in rural Georgia. and everything in between. And you can just sense the little like, okay, I'm kind of like leaning, right? Tell me more about how you are, how you're, you know? And so I think try as best you can, if this is like advice giving corner, to ask them as many questions as you can, to try to understand what motivates them. It's the Dale Carnegie, it's all the books that you read, but it's really important to understand why they are on the other side of that call with you right now, right? That... And that helped immensely in navigating who I thought had the real potential to write a term sheet. Jason Kirby (30:47.81) And you control the dialogue so well with those questions. And like, if this is the key takeaway from the, you know, this conversation is asking that question, like, who have you seen in this space and what did you like and not like about them? That is such a profoundly impactful question to ask in that meeting to really, one, test their, you know, have they really done any research? Jeff Beck (31:08.654) They may just be ignored. Like, the colors, the brands, you know? Like, you just, yeah, sorry, Jason, I may cut you off, but you're exactly right. Jason Kirby (31:17.442) Yeah, so I think that's something that if a founder takes anything from this, add that to your question list in your next capital raise. And also you notice body language. Body language is a huge signal. Obviously it's not as easy as the virtual conversation as it is in person, but it's something that when I pitched my first company, it was like... You know, nothing, you know, we were, we thought we were the greatest thing ever, but it wasn't, you know, good market fit or whatever. And you can just see the body, like you can see like the VC just kind of like, yeah, okay, all right. You know, and you tell yourself like, I don't know, I'm awesome. Like, you know, like you just, you ignore the body language when in reality, you should be, you know, trying to like, what you do, you lure them in, like get them to lean in. If you see VC leaning in and engaging, you have much more positive signal. Jeff Beck (31:52.622) Yep. Yep. Yep. Jason Kirby (32:10.786) to kind of pursue as opposed to any kind of negative out of language or lack of questions or engagement. If you just pitched and you walked out, it's not going anywhere. Jeff Beck (32:21.838) Nine times out of 10, the only way to reverse that lean back is to ask them a question. It's the only way you have to get them to talk to you. It's very counterintuitive. But the smarter they feel and the more interested, it's how do they feel, especially in that initial call. Because you also have to be likable, right? Because you're going to spend a ton of time together. There's no escaping that. Jason Kirby (32:27.042) Yeah. Yeah, good. Jeff Beck (32:46.446) They have to like you, you have to have common interests, but that's gonna be in call two or call three. Like the first call hurls, you just need the one lean in, where they're like, you know, I'm gonna talk to other folks in the team, and like, I'm gonna socialize this. And usually that's BS, but sometimes it's real, right? And you'll know, I don't wanna advocate for don't send followups, but if you meet a VC twice, and they're like, I'm gonna talk to you, and I'll get back to you, and they're not getting back to you, you can go watch, she's just not that into you, and that's all you need to know about. Jason Kirby (33:15.778) Yeah, exactly. It doesn't hurt to follow up, but yeah, if you continue to follow up and hear crickets or you just kind of get, oh, we'll get back to you. It's dead. And, you know, add them maybe to your investor update list if you care to, but, you know, move on, stop, stop hoping that they're going to write you a check. I can't tell you how many founders I've spoken to. Oh yeah, we've got about 2 million soft circled. And I was like, that's a pretty soft circle. Jeff Beck (33:17.422) gonna be getting back to you or not. You're just gonna... Jeff Beck (33:32.238) That's right. That's right. Jason Kirby (33:45.634) Oh Jeff Beck (33:46.606) Yeah, when I told one of my board members, we got 40 people in the data room, he's like, okay, that's cool. He was just like, I don't know, I doesn't mean anything, I'm glad you're happy, but doesn't matter, that's just for fun for them, they're bored, they're not making any deals, they're just, you know, so it just, it was grounding, right, where he's like, none of it matters until that contract's in your hands, and then we'll talk business, but yeah, I mean, don't waste your time all the live long day, right? Can you get me this, can you get me that, where's that contract, did you just suck too, did you get this? Can you add this person to your data room? Will you be at health? You know, like, would love to grab coffee. They're gonna do that all day long. It's their job, right? So we try to be really focused on let's get from A to B as quickly as possible. Jason Kirby (34:29.057) That's an impressive story and just everything you overcame and just the market that everyone else was in, pretty discouraged and especially us, the old companies raised capital, we were dealing with just like crickets of VCs not even knowing if they have a capital call that's going to get, the capital is actually going to get called. It was pretty chaotic. So the fact that you found the right investors that, and also not waiting, not trying to create that bidding, because you lost it and you're right. Jeff Beck (34:36.846) Yeah. Jeff Beck (34:41.934) Yeah. Jason Kirby (34:57.378) going into nailing that timing before Christmas. Because basically two weeks before Christmas, in most cases, you got the term sheet in October, which was clutch. Because going into Thanksgiving to Christmas is just dead zone. People will work. Jeff Beck (35:11.918) Well, we used that. You know, we used that. Guys, we want this done before December 1st, right? Like, you want it done, we want it done. I don't care what lawyers say. No one wants to go into December. That certainly helped expedite things. At the time, it was a really good time to do it, because they didn't want to go into middle or late December. Jason Kirby (35:28.802) Yeah, no one wants, like, ABCs usually take those, like, full four or five weeks off and don't do very much unless they have a deal to get done and then they just work on that one thing, which is, which is. Jeff Beck (35:37.774) Yeah, you said something Jason that I want to make sure I touch on before I forget. Um, the, it seems very obvious, but make sure they have money. Like I know it sounds obvious, but I will tell you they're probably half a dozen to a dozen calls where I was like, what fund are you investing out of? How many deals do you have left to do this year? And some of them said zero, right? They're like, we're in the middle of, you know, raising the first chance and next one, right? I just cross them off. Like that's out. Like they have no money to invest. They're just gonna, they're just gonna wait, wait, wait. So it seems super obvious. But make sure the VC has money. before you go through a really deep process with them. Jason Kirby (36:21.826) And specifically net new capital investments. So like VCs always have like the reserves if they have a previous fund, but it's not for you. Yeah, it's not for the new deal. That's for the companies have already invested in. And so this has come up on every single podcast we've done. You know, the founders basically being and sharing this exact same advice, which I see is a huge issue is just like, when was your last deal? You know, like how many more deals do you have in the pipe? Jeff Beck (36:28.622) That's not for you. That's not for you. Yeah, yeah. That's right. Jeff Beck (36:38.702) Really? Jeff Beck (36:44.142) Yeah. Jeff Beck (36:49.262) Yeah, yeah, Tom. That's right. Jason Kirby (36:52.034) And that's such an important qualifying question, which in most cases can be answered just by going on a crunch base or other platforms and just being able to quickly identify, are they doing deals? Yes or no? And that's something we do at Thunder. We calculate investor velocity. What's their actual velocity of deal making and which of those are new versus existing and taking those into consideration because it's not worth chasing species that don't have checks to write. Jeff Beck (37:02.798) Yeah, yeah. Jeff Beck (37:17.966) I'm biased, but I'm going to plug the left lane. I mean, I know they're super active. They're an awesome fund. I've got to imagine they're on your list. Jason Kirby (37:28.962) Nah, I'm sure they're gonna love hearing that. So we talked a lot of good stuff. You know, you had a great success story. What were some of the... Yeah, what sucked? Jeff Beck (37:30.926) Yeah, get my plugin for him. Jeff Beck (37:38.926) What's up? Jeff Beck (37:42.99) Yeah, I mean, it's super nerve wracking. I mean, I wear a whoop, and I don't think my resting heart rate came below 80 during those two weeks of October where I wasn't sure. You really have to go all in. Like, it's an open and close, right? You can't just string it on and string it on and hope that maybe it's the F. Maybe, like, I was like, it's either gonna happen or it's not, and if it doesn't, we had a backup plan, right? Back to the internals. We need another million bucks. Let's get this to two million, three million, four million, five million. Like, then we'll go back out, right? So we had a backup plan. One of the bumpiest pieces was we had the term sheet and then we had another term sheet and that we wanted to try and get both of them. And the second one was more of a strategic investor. And there wasn't enough money for our pro rata was gonna suck up too much in the round. We didn't wanna over raise. The terms were terrific with left lane. And we had to go to a lot of folks who had pro rata, and especially early investors, and say, hey, we're not gonna be able to get you any of your pro rata. And then we had to go to some funds and say, and individual investors and say, and they legally have pro rata, right? Be like, hey, we can, you know, we really can probably only get you like 30 to 40% of your pro rata. And everybody said, that's incredible. That's awesome. that you've raised a series A in this environment. We could not be absolutely, where do we sign? That's terrific, we'll take whatever you'll give us. Except for one who was really, really frustrated about it and gave us the run around and even in an email said like, this is coarse for legal action. And that was really disheartening, right? Because you're... You're working long hours and you're grinding away. You finally get a piece of paper that says your company can live for a couple more years and odds say that you get past that series A stage and you're far more likely to survive than, I mean, you know, I've been doing this for four years, right? Just trying to survive five years and got this piece of paper. And then there's this person who's like kind of threatening legal action. In the end, it, it, um, they got full pro rata. Jeff Beck (39:56.11) And other people were not super pumped about it, but we had a difficult decision to make. And yeah, it was an uncomfortable period for sure. And, you know, I leaned back on my background as a clinician and tried to understand their motives behind it. And I think looking back, I could have done a better job of setting the table around why this was happening and why we wanted this. Jason Kirby (39:56.61) Yeah. Jeff Beck (40:23.086) this other investor to be a part of it because then people sort of feel like, well, why are they more important than me when I've been around longer than them? So I understand the two sides of the argument, but it was a pretty bumpy week or two where it went from like, this is a slam dunk, everything's amazing to like, holy smokes, this is really going to die on the vine because of this thing here. So we were able to get around it. It was probably the most uncomfortable moment. I think the other one was... You get to know people really, really well. I mean, I met with some folks 10 times where I was like, this person's going to be on my cap table and this is, they're going to lead it and it's going to be amazing. I'm going to go see him in San Francisco. And then for them to be like, yeah, we just can't quite get there. It's like, what the f- how is that possible? Right. And so like that does happen. Right. It wasn't like, you know, we met left lane and we got engaged a week later, like we, we met with a lot of people for a number of meetings. And I thought like, this is awesome. Jason Kirby (41:04.194) Ha ha ha. Jeff Beck (41:16.75) This is clearly a fit. They did all the lean-in stuff. We did the partner stuff. They did everything said green light. And then at the last minute, they're like, yeah, we just can't get there. So I think, you know, and yeah, there's the two. Jason Kirby (41:28.77) Yeah, no, it's... The unfortunate reality is, is like, you can't... I always like to say, you can't spend the money till you got the money. And a lot of founders get excited that, oh, we had such great meetings, how they keep meeting with us. There's so much behind the scenes on how VCs work and a lot of just human nature stuff that ends up blowing up deals more than anything or certain existing relationships or someone has like a blackball, basically like blackball you and like write you off, because for whatever reason, I was talking to another founder where a personal experience with their mother made them not decide to move forward. It's just like... Jeff Beck (42:05.902) Yeah. Jason Kirby (42:06.818) We're going to make you money. What does this have to do with anything? Jeff Beck (42:08.334) Yeah. I know for one of us, we were meeting with a fund that Prime Ailer does at Tech, and the whole time they're like, we're so excited to get into healthcare, you know, we could see an EdTech angle for you. And I think at the end of the day, they just actually weren't ready for healthcare, you know, and so even they themselves are valid, you know, like they don't, they think they do, and then they don't. So I, you know, I do my it's easy for me, like, I don't think personally, because we close the series A, but look, if my company was floundering right now, and, you know, my feet have a different feeling towards it. Jason Kirby (42:19.874) Thanks for watching! Jason Kirby (42:27.938) Yeah. Jason Kirby (42:39.97) And so you kind of brought up something a while back and I want to kind of circle back to it. You kind of mentioned you kind of had a deputizer CTO to take over the operations because you really had to go all in on this fundraise. How did you manage your time? What was that experience to kind of be able to solely focus on fundraising? Jeff Beck (43:01.678) I wouldn't say solely because at the time I had twins, six month olds and a four year old. So it wasn't just fundraising. It was caring for those kiddos too. So the day typically was I'd wake up, I'd sleep in as much as I possibly could. So like I was not getting up into getting in a ice bath, right? I would sleep until my four year old came into my room. Jason Kirby (43:11.65) Yeah. Jason Kirby (43:25.986) Thanks for watching! Jeff Beck (43:27.726) because every other night my wife and I would switch getting up in the middle of the night with the twins to feed them. So I would get every ounce of sleep I could get and then take him to school and work and then work ends at five. Like you've got two parents, three kids, you can do the math. Work ended at five, spent two hours with the kids and then I would spend from seven to nine p.m. That was like my email prospect time, right? That was. heads down, throw on an episode of Succession and an email for two hours, right? And that worked, right? That worked for me. And then I made it a rule if I was gonna travel, I only traveled once a month. And so, I'm in Richmond, fortunately there's a direct flight in San Francisco, so I would go to San Francisco, go for two days. I actually took my family one time, all of us went out to San Francisco. Jason Kirby (44:15.746) When six-month-old you took him to San Francisco, that's a handful. Jeff Beck (44:18.222) Yeah, I can find the photo. There's a photo of all of us at the Golden Gate Bridge and I can tell you in that moment we are not as happy as we look in that photo. But we did it, you know. We did it. We went out there. You know, the left lane is in New York, which is a 45 minute flight. So, I mean, it's awesome. I've got family in New York. I've got friends in New York so I can go up for a day or two and come back. It can happen. It can be really quick. tried to carve out half of my time during work hours to do investor pitches. Like from 12 to five, it was like, I'm gonna meet with investors. And so in the morning I would get like an update from Maury as to how things were going and where I was needed in the business to make sure that really it was drive growth. Like, do I need to meet with anybody to pitch on like a referral source or do I need to talk to a payer? You know, that was, that was, and then he was managing the team, right? If anybody needed anything on the team side. He was doing all that and then we had a part-time COO who was really eating all the crow from like a billing's perspective and getting me all the numbers that I needed for investors and running the pivot tables and that kind of stuff. So I'm really grateful that, you know, the team knew, right? They knew come August that this, this is what we were striving towards. And, you know, I try to give them updates on how things were going. But that was, that was how I split the day, tried to do the business in the morning. Jason Kirby (45:21.25) Thanks for watching! Jeff Beck (45:42.126) the investor meetings in the afternoon and then the prospecting heads down. Jason Kirby (45:46.082) So from what I can take from that is structure and just sticking to your structure. And also team, like being able to trust your team to execute while you go take on this other task is an incredibly important aspect of what you've highlighted here. And it also just shows that you have a good team, which is something also that makes it easier to fundraise. If they can handle the business without you. Jeff Beck (45:49.774) Yeah. Jason Kirby (46:11.426) That's a positive signaling to the VCs as well. So that, I'm glad. Jeff Beck (46:15.566) And things will drop, you know, like things are going to drop. You're not going to get every customer. You're not going to like, you know, you're going to mess up a billing cycle. Like things are going to drop. And so that's why I try to communicate with the team like, Hey, these next 60 days, just bear with us. There's I feel really good about where we are as a business. Uh, I'm very confident. But it's going to be hard for everybody. Everyone's kind of sharing. Jason Kirby (46:43.138) Yeah, no, it's a great story. And if we can wrap up here, you've already shared a ton of good nuggets here in terms of information that founders can take away and try to apply to their own business. But if you can kind of share either one main point or a couple tips to founders that are seeking to go raise in this coming market, what would you say? Jeff Beck (47:04.27) Um, I, so there's people are of two minds when finding a series a lead, it's, it's either relationship building, like you send them a quarterly or even a monthly update of we said we're gonna do this and then do it. We're gonna do this and you're gonna obviously got to do the things that you're gonna do. Right. So it's key. You can't not do it because they're not gonna. Yeah, they're not gonna love that. Or you just kind of do stuff, right? You don't send them anything and then like, here we are. I've never met you and look how awesome our business is. And let's are you interact? Jason Kirby (47:22.498) Yeah, number one criteria. Jeff Beck (47:34.062) Right. I'm the former that that's just who I am. I'm a relationship builder. That's my background. I found that worked really well for us. You know, the two the first two terms she said came in were two we had been meeting with left lane for over a year on and off. And then the other one we've been we've met three years ago and I had been chatting with them on and off for every six months. So that's me. Right. That's like, know which one you are. Right. If you're the big presentation person out of stealth or if you're the relationship builder, because if you're the relationship builder, it's a process that's going to take time. And I think that that was the thing that was really my biggest takeaway in the whole, the whole process was finding, finding folks who were interested about the, that's interested in the business and then giving them updates and nuggets over time to continue to peak the interest and, and, and build on that relationship and and hopefully it ends up in a partnership. Jason Kirby (48:35.554) I think that's fantastic advice to leave with founders. And I completely agree. I think there are those two paths and the relationship one, I think a lot of founders get antsy, they don't want to, they don't want to put in that time or they need the money now. And it basically removes their ability to, to execute on that front. So it's those, all those VCs you meet as a founder, you know, pick the ones that you thought were interesting or were interested in you and kind of keep them up to date. Jeff Beck (48:48.206) Yeah. Jason Kirby (48:59.49) and those will be your opportunities down the road when the time comes. So just because you always get the too early, you know, you guys are too early, you guys are too early. And it's like, OK, well, you know, test them on that. They can follow up when you're not early anymore and see how they respond. Jeff Beck (49:05.646) Yeah. Jeff Beck (49:12.238) Yeah, yeah, yeah. Nothing gets an investor interested in your business like saying you're not fundraising. So send them those quarterly updates and say, hey, this is where we are. We may raise at the end of this year, but we may not because things are going so well. We may not need to raise. Put that as a disclaimer at the end of every email, Ethan. Yeah, I mean, it's silly, but I actually think it does play a part. Jason Kirby (49:17.922) Yes. Jason Kirby (49:26.594) them. I don't need you. Jason Kirby (49:34.658) As long as it's coming from an authentic place, I agree. I think some founders try to gamify it and try to play those cards, but it's inauthentic, so it just doesn't roll off the tongue the same. It's a part of our strategy when we coach founders on these are you too past. It's always better to play the long game and manage a successful company to the point where you kind of have that, as you talked about, success and momentum in the business and your fundraise time cuts dramatically. Jeff Beck (49:37.774) Yes. Jeff Beck (49:44.558) Yes, yes, yes, that's a key caveat. Jason Kirby (50:03.33) If you maintain those relationships and you focus on the business, it becomes much, much easier to raise capital. Especially when you don't need the money, that's when the money comes, unfortunately. Well, I really appreciate the time today. I think we really got some amazing information to share with other founders, up inspire them. If any of the founders wanted to learn more either about Answers Now or Follow You, where would you tell them to go? Jeff Beck (50:12.654) That's right. Yeah. Jeff Beck (50:28.078) Yeah, just email me, Jeff at GetAnswersNow.com. Jason Kirby (50:32.994) Easy enough. Well, really appreciate the time today, Jeff. This has been incredibly insightful and look forward to following your journey some more and seeing what comes next. Awesome. So I'm gonna stop recording. Jeff Beck (50:43.182) Thanks, Jason. Appreciate it.