Her CEO Journey™: The Business Finance Podcast for Mission-Driven Women Entrepreneurs

Weekly show where my featured guests and I explore the financial and business challenges women face on the entrepreneurial journey to success. You'll hear them talk about the money side of their businesses in ways you've always wanted to know about, but wouldn't dare ask. They openly share their disappointments, failures, successes, and everything in-between as they grew sales ranging from 6 to 9 figures. Knowing where your business stands financially helps you make critical decisions with confidence. It's simply the best way to be sure you grow a business that fuels the life you want to live.

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episode 119: Ensure Your Startup Growth: Tips on Capital Raising Using Special Purpose Vehicle and Strategic Deployment - The Journey of Tara Spalding [transcript]


As a founder, you need to be strategic about your plans for startup growth. Capital raising alone won’t be the solution to your cash flow problems. Instead of focusing on this, you need to know if you’re building a sustainable and profitable business. Because no matter how successful you are at capital raising, it’s pointless if you don’t know how to deploy these resources.

BoomStartup's Tara Spalding joins us to discuss the important things you need to keep in mind when raising capital to ensure startup growth. She emphasizes the importance of communication and transparency between BoomStartup and its clients. Through quarterly business surveys, they can track their clients' progress and suggest improvements along the way.

Tara also shares the programs they have to help founders accelerate their startup growth. We also touch upon the importance of intellectual property and high growth potential. Finally, we learn the value of SPVs in the pre-seed round and CFOs in the seed round.

If you want to know how an accelerator can be helpful to your startup growth, then this episode is for you.

3 reasons why you should listen to the full episode: 

  1. Discover how BoomStartUp helps startups grow by giving them guidance and expert advice.
  2. Learn the different evaluation processes BoomStartup conducts to determine the progress and growth of its clients.
  3. Find out tips and strategies for intellectual property, capital raising, and when to hire a CFO.

Episode Highlights

- [06:18] Tara’s Background
- [10:28] What BoomStartup Does
- [12:59] What Low Barrier Means
- [16:20] How to Join the Accelerator for Startup Growth
- [19:17] Programs at BoomStartup 
- [24:53] Building an Intellectual Property Strategy
- [31:14] High Growth Potential for Startup Growth
- [36:37] Assessing Capital and Progress
- [40:59] Using SPVs at the Pre-Seed Round
- [47:13] What to Look Out for in the Pre-Seed, Seed, and Series A Rounds
- [50:15] Why it Makes Sense to Hire a Part-Time CFO Prior to and After the Seed Round

Enjoyed This Podcast?
Write a review and share this with your friends.

Connect With Me
Ready to transform your purpose into an impactful business financial story, profit, and joy? Schedule a chat with me at any time.

Resources

  • Visit Christina Sjahli’s website for more stories on entrepreneurial journeys to success on the Her CEO Journey podcast.
    • Episode 118: Using a Special Purpose Vehicle as an Option for Capital Raising - The Journey of Katie Neilson
    • Are you getting ready for capital raising? Identify the financial gaps that can stop you from building a profitable and sustainable business. Download this quiz!
  • Connect with Tara: LinkedIn
  • BoomStartup — An action-oriented and change-making accelerator that empowers startup growth. Check out their programs:
    • OpenUp
    • PitchUp
    • RiseUp
    • AmplifyUp
  •  Check out these Boom backers:
    • Assure


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 2021-06-10  1h1m
 
 
00:04  Tara Spalding
Most companies
00:04
are not fundable. But if they
00:07
can be self-sustaining because
00:07
they're in fact, finding the
00:11
right market that they should be
00:11
working with or coming up with a
00:15
smarter or a diversified revenue
00:15
sources, that's just as good as
00:19
getting it. Actually, I think
00:19
it's better than getting outside
00:22
capital infusion.
00:26  Christina Sjahli
If you don't
00:26
believe in raising capital,
00:28
that's okay. And if someone says
00:28
to you, "Your business is not
00:33
fundable," that's also okay. The
00:33
question is not about, "Are you
00:38
able to raise capital?" but more
00:38
so, "Are you building a
00:42
sustainable and profitable
00:42
purpose-driven business?" Let's
00:47
say you are successful in
00:47
raising capital, but later, no
00:51
accountability during the
00:51
capital deployment. Then this
00:55
effort of raising capital, may
00:55
eventually lead to waste
01:00
resources, both money and time.
01:00
Capital raising is not always
01:05
the solution to your cash flow
01:05
problem. It is a bridge from
01:09
point A to point B. At the end
01:09
of the day, a self-sustaining
01:13
business is essential for the
01:13
long run.
01:17
Last week, we started a new
01:17
podcast series, the capital
01:21
raising special purpose vehicle.
01:21
The goal of this series is about
01:25
expanding knowledge of the
01:25
different financing options out
01:29
there, so you can be strategic
01:29
with your capital raising, if
01:33
you choose to do so. In the
01:33
first episode of this series,
01:38
Katie Nielsen, the co-founder
01:38
and Chief Revenue Officer of
01:42
Assure, the special purpose
01:42
vehicle specialists, share about
01:46
the differences between venture
01:46
capital and a special purpose
01:49
vehicle or SPV. What's the
01:49
benefit of raising capital using
01:55
an SPV, and who are in the
01:55
ecosystem of SPV? If you miss
02:01
this first episode, Episode 118,
02:01
I invite you to check out the
02:07
first episode in this podcast
02:07
series inside
02:09
christinasjahli.com/herceojourney.
02:14
Today's episode is the second
02:14
part of this series. I am joined
02:18
with Tara Spalding, the managing
02:18
director of BoomStartup. This is
02:23
an accelerator that utilize a
02:23
special purpose vehicle to raise
02:28
pre-seed funding for startups.
02:28
Tara and I not only we talked
02:32
about capital, raising special
02:32
purpose vehicles from the
02:35
organizer perspective, but we
02:35
dive into details as well about
02:40
how to break through barriers
02:40
from pre-seed, seed, to series A
02:45
capital raising. In addition,
02:45
over the next few weeks, you
02:49
will also gain insight into the
02:49
legal side of SPV, and a female
02:55
founders perspective, who had
02:55
successfully raised capital
02:59
through a special purpose
02:59
vehicle with Assure.
03:02
You're listening to Her CEO
03:02
Journey, the business finance
03:05
podcast for mission-driven women
03:05
entrepreneurs, I'm your host,
03:09
Christina Sjahli. If you are new
03:09
here, a big warm welcome. If we
03:15
are not connected on LinkedIn,
03:15
please reach out and say hi,
03:18
because that's where I hang out
03:18
and share my business finance
03:22
steps. If you have been
03:22
listening to this podcast for a
03:26
while, and you are a regular
03:26
listener, I want you to know I
03:30
appreciate you. My podcast won't
03:30
be around without your support.
03:35
This is a free weekly show where
03:35
my guests and I want to inspires
03:39
you to balance between mission
03:39
and profit, to create an impact
03:43
in this world, and to achieve
03:43
financia equality through your
03:48
business for good.
03:50
Successfully raising capital can
03:50
be one step forward closer to
03:55
your dream. If it fits in with
03:55
your values and purpose for
03:59
starting your business in the
03:59
first place. It is exciting to
04:03
receive the funds in your bank
04:03
account. But then the real work
04:08
begins after receiving the
04:08
funds, deploying the capital
04:12
according to plan and grow the
04:12
business sustainably and
04:15
profitably. That's the goal.
04:15
When financial gaps are not
04:20
identified, it is possible the
04:20
capital deployment does not
04:24
result in the business growth
04:24
you have predicted.
04:27  Here's my challenge for you
Before you rush on capital
04:31
racing for the first time or for
04:31
your next round, identify the
04:36
possible financial gaps in your
04:36
business first. Really
04:41
understand why this need for
04:41
extra cash happens. If you don't
04:46
understand why you may enter
04:46
into a financing deal that can
04:51
hurt your business in the
04:51
long-term. Sometimes, it can be
04:55
complicated to identify this
04:55
financial gap. So I want to make
05:00
it simple for you. That's why I
05:00
created a quiz to help you
05:05
identify any financial gaps you
05:05
may have, and stop you from
05:09
building a sustainable and
05:09
profitable, purpose driven
05:13
business. I encourage you to
05:13
take this quiz. Then, take
05:17
action to fill in the financial
05:17
gaps.
05:20
And we are here to partner with
05:20
you so you can elevate your
05:24
credibility in preparation for
05:24
future growth. We get it.
05:28
Business finance can be
05:28
confusing, but it doesn't have
05:32
to be complicated. And we will
05:32
make sure you are making
05:35
business decision with your
05:35
purpose front and center.
05:40
Connect with us at
05:40
https://www.christinasjahli.com/let-s-chat.
05:45
Now, let's find out Tara's CEO
05:45
journey. Tara Spalding, welcome
05:51
to Her CEO Journey. It is a
05:51
pleasure to have you here today.
05:56  Tara Spalding
Oh, Christina,
05:56
it's an honor to be here with
05:58
you.
05:59  Christina Sjahli
I know your
05:59
journey is a little bit of a
06:01
winding road, but it's an
06:01
interesting one. You learn how
06:04
to code software, you became a
06:04
VP of Marketing, then co-founder
06:09
of a couple startups, and then
06:09
now you are the Managing
06:12
Director of BoomStartup. So tell
06:12
me a little bit what this
06:17
journey has been like.
06:18  Tara Spalding
Oh, my goodness,
06:18
my journey has just been
06:21
remarkable. I am actually an
06:21
American nomad, I've lived in
06:26
several states throughout my
06:26
life growing up. And my family
06:30
is, is definitely one that's
06:30
been hard-working as well as had
06:35
a very deep appreciation for not
06:35
only education, but the pursuit
06:40
of knowledge. I went to college
06:40
at a very early age, at 17. And
06:45
got my bachelor's, you know, in
06:45
four years, and really started
06:51
to appreciate the balance of
06:51
pursuit of knowledge as well as
06:57
career and just never have
06:57
looked back. My very first job,
07:01
believe it or not, was at a
07:01
winery.
07:03  Christina Sjahli
I like that.
07:06  Tara Spalding
Yeah, I began in
07:06
the in a sales role for two
07:09
years, which is a very humbling
07:09
and perfect job right out of
07:14
college, right? Because it's
07:14
merciless. You win or you lose
07:18
on the sales deals. And you also
07:18
get to learn a lot about the
07:22
inherent qualities of branding,
07:22
distribution, pricing, and all
07:26
that other good such. Now even
07:26
though I had a business degree,
07:29
it was this sort of, you know,
07:29
basic elementary information
07:33
that just really helped me learn
07:33
and appreciate marketing and
07:37
productizing. And it wound up
07:37
that one of the things that I
07:43
discovered there was that there
07:43
was an inconsistency of
07:47
distribution of these collateral
07:47
pieces to those that are in the
07:51
field from the winery. So,
07:51
believe it or not, myself and
07:54
this other gal named Pam Monroe,
07:54
we taught ourselves how to code.
07:58
And we built the winery's very
07:58
first intranet site back in the
08:02
day.
08:03
I was quite fascinated with the
08:03
whole technology and the
08:07
powering of data information and
08:07
sharing. Anyhow, long story
08:11
short being in wine country
08:11
wasn't nearly as fascinating as
08:15
the opportunity of going to
08:15
Silicon Valley. Eventually, I
08:19
became the very first employee
08:19
of a startup called SugarCRM.
08:24
That actually became the next
08:24
passion that I had, which was
08:29
for startups, for entrepreneurs.
08:29
So by blending the coding
08:34
fascination, and then the
08:34
passion of startups, I just felt
08:38
so alive, challenged as well as
08:38
empowered. That began my career
08:43
in enterprise software in
08:43
Silicon Valley.
08:46
I was also CMO at another
08:46
software company in San
08:52
Francisco. And that gave me my
08:52
first board exposure as well as
08:57
a more deep understanding and
08:57
knowledge of fundraising. I did,
09:01
as you mentioned, co-found a
09:01
very small software startup. It
09:06
was an app that had a really
09:06
quick life, about under a year.
09:12
Myself and my co-founder, came
09:12
up with a really great idea,
09:16
quickly had traction, got an
09:16
initial unusual investor for a
09:22
very small amount to build out
09:22
the MVP. And it wound up that
09:27
the company that invested in us
09:27
wanted to roll the technology
09:30
inside their company instead of
09:30
going public, which is an
09:34
interesting play. And so yeah, I
09:34
had my first you know,
09:38
co-founder raise as well as I
09:38
guess, technically an exit
09:42  Christina Sjahli
In less than
09:42
12 months.
09:44  Tara Spalding
Yeah, yeah. Some
09:44
people were like, "Why did you
09:47
do that?" I'm like, "Well, I
09:47
didn't know any better, and why
09:50
not?" So all of these things
09:50
have built into my story. And
09:54
you're right, today I am the
09:54
Managing Director of BoomStartup
09:57
accelerator. We're an open in
09:57
virtual accelerated platform.
10:02
Our parent company is Assure.
10:02
Assure is the leading SPV
10:06
vehicle which you mentioned.
10:07  Christina Sjahli
So before we
10:07
get into the SPV aspect of it,
10:13
let's talk a little bit more
10:13
about BoomStartup. What problem
10:18
that you are trying to solve
10:18
with BoomStartup? And then how
10:23
is this differentiate
10:23
BoomStartup from other
10:26
incubators?
10:28  Tara Spalding
Great question.
10:28
First, I'm going to correct you,
10:30
BoomStartup is an accelerator
10:30
instead of an incubator. And
10:33
there's a very important
10:33
derivance between the two.
10:36
Incubators, you know, usually
10:36
are more classified as service
10:41
providers and don't often take
10:41
equity upfront. Now,
10:45
accelerators, and let's look at
10:45
the market leaders just based on
10:50
volume and presence. We have Y
10:50
Combinator, 500 Startups,
10:55
Techstars, another great
10:55
example. These entities have
10:59
been created and formalized from
10:59
2005, 2008 and on, but they kind
11:07
of run like a VC firm. So they
11:07
have limited partners and
11:10
investments to their funds,
11:10
their funds, them have an
11:14
investment thesis, and they look
11:14
for companies that have some
11:19
sort of innovation or edge, but
11:19
need basically polishing and
11:23
maturity for it to become a
11:23
substantial partner. And so they
11:27
have, what I would call,
11:27
classically a high barrier to
11:30
entry.
11:31
As I mentioned, there's a whole
11:31
bunch of filters for founders
11:34
and startups to basically get
11:34
into these sorts of accelerators
11:40
like, and that's because there's
11:40
clout like, "Hey, I'm a Y
11:43
Combinator graduate." As such,
11:43
deservingly so. And it's just
11:48
been a very fruitful sort of
11:48
program. But of course, there's
11:53
many, many organizations that
11:53
don't classically qualify to
11:57
intern, yet, they still need the
11:57
same sort of support, guidance,
12:01
and reality checks. And that's
12:01
where BoomStartup comes in.
12:06
I'm not going to say we're the
12:06
anti-accelerator. But we're
12:09
certainly a different program,
12:09
creating our own, sort of, lower
12:13
barrier to enter, but higher
12:13
expectations, with transparency
12:19
and communication. And we also
12:19
have like an opt-in, sort of
12:24
drop-in sort of program. Instead
12:24
of a structured 6 to 24 month
12:29
stint. We basically run
12:29
analytics on how their
12:35
performance are and then make
12:35
suggestions as to the sprints,
12:40
the mentors, the service
12:40
providers, or what have you, to
12:43
help them grow their business.
12:43
And so that's why we're
12:47
different. And we do also have
12:47
an investment, but instead of
12:50
doing the investment in the
12:50
promissory notes and the
12:53
valuations in the beginning, we
12:53
do it at the end, it's a totally
12:57
different sort of paradigm.
12:59  Christina Sjahli
When you say
12:59
low barriers, what does that
13:02
mean, exactly? Are you opening
13:02
up this accelerator to everybody
13:08
that has a venture? Is there a
13:08
specific industry or is it just
13:14
tech? Is it consumer packaged
13:14
goods? Is that software?
13:18  Tara Spalding
Oh, my gosh, you
13:18
are asking the right sort of
13:21
questions, because I think this
13:21
is really important. We're an
13:25
open and online accelerator
13:25
program. And the reason why we
13:30
are open and online, thanks to
13:30
COVID, is that we can still
13:36
track and contribute to business
13:36
growth and maturation through
13:43
events that are hosted
13:43
virtually. And so yes, we
13:48
definitely allow and encourage
13:48
people from around the world to
13:53
participate. I started this job
13:53
in January of 2021, post-COVID.
14:00
And since then, I've been
14:00
serving our founders that are
14:04
participating in the program,
14:04
and only 78% of those founders
14:09
are actually based here in the
14:09
United States. The rest are from
14:12
Canada, and of course Asia, and
14:12
Africa are also very
14:17
significant.
14:18
And then going back to your
14:18
other point about the lower
14:20
barrier of entry, because we're
14:20
doing everything online, we're
14:23
not asking the founders to like
14:23
come to Salt Lake City, Utah.
14:28
And that's where our
14:28
headquarters are for BoomStartup
14:30
Accelerator. And so because of
14:30
that, it encourages people and
14:35
founders to keep their teams in
14:35
the original locations. Like
14:39
there's a reason why people are
14:39
in Asia, or Africa, or Canada
14:44
for example. And we're not going
14:44
to pull them out from their
14:48
native resources and from their
14:48
immediate networks. So that's
14:53
another lowered barrier to
14:53
participate in accelerators.
14:57
Now the other question you asked
14:57
was, who we serve and what
15:02
industries they're in. So we
15:02
definitely do have tech
15:06
companies, as what you spoke
15:06
about. But we also have
15:09
services. We have B2C companies,
15:09
health and wellness, healthtech,
15:15
fintech, travel and hospitality,
15:15
mobile apps, consumer product
15:20
goods, and marketing and media
15:20
companies, as well as medical
15:25
devices and transportation. So
15:25
we have and accept companies
15:30
from a wide variety of
15:30
industries. And the reason why
15:33
is because our accelerator isn't
15:33
focused on product-market fit,
15:38
or innovation development, such
15:38
as like what Techstars does,
15:43
right? What we're doing is we're
15:43
working on how to formalize the
15:47
business itself. And we have a
15:47
very, very strong emphasis on
15:52
improving the company's own
15:52
revenue source, or optimizing
15:56
business spends, or optimizing
15:56
go-to-market execution. And
16:00
those sorts of things are pretty
16:00
ubiquitous, you know, across all
16:05
of the different industries.
16:07  Christina Sjahli
If someone
16:07
comes in and interested in to
16:12
join the accelerator, can you
16:12
help me understand the journey
16:17
that you take them along in the
16:17
process?
16:20  Tara Spalding
So, we have
16:20
basically four programs that are
16:26
readily available, and they're
16:26
open on a rolling basis. So
16:29
there's always something in some
16:29
way for founders to engage at
16:34
BoomStartup. First is that we
16:34
ask them to basically complete a
16:40
scorecard, like, "How is the
16:40
formation of your business
16:43
going?" and we ask, basically,
16:43
seven different aspects, such
16:48
as, "What is your experience as
16:48
a founder?" to, "How far along
16:53
are you on developing your
16:53
product of service?" to, "How
16:57
well is it addressing or fitting
16:57
into a market need?"
17:01
What we do is we give them a
17:01
scorecard for absolutely free of
17:04
like, "Hey, here's your rating,
17:04
and here are your strengths in
17:08
here your weaknesses." And
17:08
sooner, what we do after that is
17:11
we make suggestions as to how
17:11
they can improve the performance
17:15
in those we set up simply as
17:15
tasks. Now it's up to the
17:21
founder to follow our tasks or
17:21
to do whatever they want on
17:26
their own. But we do encourage
17:26
them to give us what's called a
17:29
quarterly business survey,
17:29
because then we can track the
17:33
rate of change that their
17:33
company is having, and then
17:37
adjust the tasks accordingly. So
17:37
it's always new and always
17:41
fresh. Most companies are not
17:41
fundable, but if they can be
17:45
self sustaining, because they're
17:45
in fact, finding the right
17:49
market that they should be
17:49
working with, or coming up with
17:52
a smarter or a diversified
17:52
revenue sources, that's just as
17:56
good as getting it. Actually, I
17:56
think it's better than getting
17:59
outside capital fusion.
18:02  Christina Sjahli
I like that.
18:02
Yes, I agree with you. Because
18:07
not all business is fundable.
18:07
And then not every founder has
18:13
this goal of exiting. Maybe they
18:13
want to grow the business bigger
18:17
and then leave a legacy. And
18:17
maybe they want to grow slower
18:20
than the others because they
18:20
have a different purpose.
18:23  Tara Spalding
Christina, I
18:23
don't know if I told you this or
18:25
not, but we are planning to work
18:25
with 1,000 founders this year
18:31
from around the world.
18:32  Christina Sjahli
No, you didn't
18:32
tell me that. But that's good to
18:34
know.
18:36  Tara Spalding
And, you know, to
18:36
us like, even if they
18:40
completely if a founder comes
18:40
in and completes this the
18:43
scorecard, we're forever
18:43
grateful, because it also allows
18:46
us to understand on a macro
18:46
level, like, where is
18:50
entrepreneurship going, etcera.
18:50
It also allows us to help and
18:54
fix and pool in better mentors
18:54
and experts and programs, you
18:58
know, according to what we're
18:58
seeing going on in the market.
19:01
So it's very reciprocal, when
19:01
they share this time, and this
19:06
insight and being honest with us
19:06
as to where they're at.
19:10  Christina Sjahli
So after the
19:10
scorecard, and then they get a
19:12
feedback from the mentors. And
19:12
then, what's next?
19:17  Tara Spalding
So that's
19:17
traditional accelerators have a
19:20
very structured timeline and
19:20
program as to what they put
19:27
their founders through. And this
19:27
is where we're completely
19:30
different. That scorecard which
19:30
I was talking to you about
19:34
before, is what's in what's
19:34
called the OpenUp program at
19:38
BoomStartup. Now, you asked
19:38
about the other programs. We
19:42
also have a really, really fun
19:42
one that we run a few times a
19:45
year called PitchUp. And PitchUp
19:45
is the competition that's
19:49
highlighting rewarding companies
19:49
who are improving the future. We
19:52
have like nine different
19:52
categories. And people come in
19:56
and they give us their business
19:56
plan as well as a demo video.
20:00
And then we take the top for
20:00
each of the different
20:03
categories. And then we
20:03
broadcast them to the general
20:07
public, just like what you're
20:07
doing here with your podcast.
20:11
And this gives them the
20:11
exposure, as well as we give
20:14
them a cash prize.
20:16
And we invite in fact,
20:16
investors, and just really like,
20:21
media really, really good
20:21
influencers that can help propel
20:26
their startup. Now, we also have
20:26
RiseUp, which are more intensive
20:32
sprints. So if a company has
20:32
like a shortcoming, such as the
20:36
cash, "I think we're going to
20:36
run out of cash in the next
20:39
three or four months." Then, we
20:39
would strongly suggest that they
20:43
go into a one-week sprint,
20:43
RiseUp sprint called Extending
20:47
Your Cash Flow. And during that
20:47
one week, this founder is going
20:51
to meet other founders. And
20:51
you're going to work for like
20:55
one to two hours each day, and
20:55
be led by an expert on how to
21:00
basically go through your
21:00
contracts and work on payment
21:04
terms and look on how you can
21:04
control your outlying cash, and
21:09
as well as pool in some of your
21:09
payments, so that you can extend
21:14
your cash flow beyond, you know,
21:14
the immediate limitation that
21:19
you're experiencing right now.
21:19
And that's just one example, by
21:22
the way, of the RiseUp sprints
21:22
we're doing. I was in fact,
21:25
working with another expert
21:25
right now, that is going to do
21:29
like how to hire your initial
21:29
employees by creating really
21:34
strong stock option to offset,
21:34
you know, the lower salary. And
21:39
so, it's like all of these sort
21:39
of fantastic expert-lead
21:45
intensive online series of like,
21:45
basically homework to solve
21:51
these real business problems.
21:54  Christina Sjahli
So what about
21:54
next? I know you have another
21:56
one.
21:57
Yes. That's, that's the juicy
21:57
one. That's the AmplifyUp.
22:02  Tara Spalding
And the reason
22:02
why it's so juicy is this is
22:04
where we're going to fund the
22:04
high growth potential startups
22:07
with pre-seed capital. This is
22:07
the one that leverages the SPV,
22:13
which we were talking about.
22:14  Christina Sjahli
The one that
22:14
enter or join OpenUp, you
22:19
continue to follow up with them?
22:21  Tara Spalding
Yes.
22:22  Christina Sjahli
So they are
22:22
always going to be part of the
22:24
community, if they choose to.
22:26  Tara Spalding
That's correct.
22:26
Because the whole idea is that
22:30
we'll keep track of their
22:30
business growth. And as you
22:33
know, you always need to sharpen
22:33
the saw, regardless of whatever
22:37
age or stage, right? And our
22:37
topics, like for example, last
22:42
week, we held discussions about
22:42
intellectual property.
22:47  Christina Sjahli
I love that.
22:49  Tara Spalding
Yeah, that's not
22:49
just pre-seed that you need to
22:52
know
22:52  Christina Sjahli
Yeah.
22:52  Tara Spalding
like all of this
22:52
IP control and knowledge, you
22:56
know.
22:57  Christina Sjahli
Oh, my God, I
22:57
cannot believe you are so
22:59
aligned with me. And the reason
22:59
I was like, I'm like, "Yeah."
23:03
Because I just interviewed an
23:03
IP-backed financing expert here
23:10
in Canada.
23:11  Tara Spalding
Oh, really?
23:11  Christina Sjahli
Yes.
23:14  Tara Spalding
I have to say,
23:14
it's a wonderful stratagem. And
23:18
especially because of how it can
23:18
offset- I mean, IP?
23:23  Christina Sjahli
Yes.
23:24  Tara Spalding
Especially if
23:24
it's a technical patent can be
23:27
like $100,000.
23:29  Christina Sjahli
Yes, we kind
23:29
of like moving away from SPV.
23:32
But okay.
23:32  Tara Spalding
It's okay. It's
23:32
okay. This is fun.
23:35  Christina Sjahli
So because the
23:35
reason I wanted to have that
23:38
interview, and then creating
23:38
this whole podcast series about
23:42
intellectual property, because
23:42
I'm always looking for unique
23:46
type of financing. SPV is one of
23:46
them. It's a different way,
23:49
right? Intellectual
23:49
property-backed financing is
23:53
also not very common. And the
23:53
reason that this founder
23:57
basically created this
23:57
alternative borrowing model is
24:02
because she had an issue before.
24:02
She was in a packed company. And
24:06
then she went, it was, you know,
24:06
successful, but they need
24:09
capital. And because they need
24:09
it's capital, they went through
24:12
the bank, the bank always wanted
24:12
hard assets like land, building,
24:17
equipment, even equipment
24:17
sometime it's not, but land and
24:21
building are the majority one.
24:23
And then she was thinking like,
24:23
"I have all this intellectual
24:26
property, why I cannot use
24:26
this?" So the interesting part,
24:31
she created this unique software
24:31
to basically be able to value
24:36
the intellectual property,
24:36
because that is the key, right?
24:39
When you have an asset and then
24:39
you need financing, you need to
24:43
be able to value that asset. And
24:43
valuation between the lender and
24:48
what the company really values
24:48
can be completely different
24:52
methodology.
24:53  Tara Spalding
I can't agree
24:53
with you more. Now, here's a fun
24:56
data point for you to add on to
24:56
this series. Back in 1975, the
25:03
components of S&P 500 market
25:03
value, only 17% was based on
25:09
intangible assets. In '85, it
25:09
went up to 32%, and now in 2020,
25:15
it's 90%. Those intangible
25:15
assets are the IP. Now,
25:20
Christina, you are doing
25:20
something very important in my
25:23
world, because what you're doing
25:23
is educating on how to diversify
25:27
your investment and asset base.
25:27
So I applaud your effort. And
25:32
when you look at now, the lion's
25:32
share of S&P companies, 90% of
25:37
their valuation is based on the
25:37
patents they hold. You better
25:42
get that out of the gate.
25:43  Christina Sjahli
Exactly. Yeah,
25:43
that's my whole point.
25:46  Tara Spalding
Yes, yes, yes.
25:46
And then here's my perspective
25:49
as BoomStartup Accelerator,
25:49
which is, start with the end in
25:53
mind. And if 90% of your
25:53
valuation with your pre-seed and
25:58
seed round is going to be
25:58
associated, or correlated to
26:02
your IP reach, and now IP
26:02
doesn't necessarily only mean
26:06
patents, it's also like
26:06
branding, secrets like
26:11  Christina Sjahli
Yes! I am so
26:11
excited for this, because you
26:14
are so aligned with what I'm
26:14
thinking, because that is
26:17
exactly another topic that I
26:17
want to bring up. Because I also
26:21
invited a lawyer to talk about
26:21
trade secret, talk about
26:25
industrial design, talk about
26:25
trademark. Because all of them
26:29
are IP, you just have you need
26:29
an IP strategy to be able to use
26:34
this as financing. If 90% of
26:34
asset valuation of a company is
26:39
from intangible assets, you
26:39
better have an IP strategy and
26:43
use that to the maximum to grow.
26:46  Tara Spalding
That's absolutely
26:46
right. And at BoomStartup, we
26:49
have a strategic partner called
26:49
Stoel Rives. The person who did
26:53
this webinar for me, his name is
26:53
Mark Rasich, he's a partner
26:56
there, right out of the gate,
26:56
he's like, "The IP drags a large
27:00
segment of today's global
27:00
economy. And if you don't get
27:03
your arms around this
27:03
beforehand, you won't have
27:07
strong agreements, and
27:07
licensing, and revenue sources.
27:11
Plus, you could be infringing on
27:11
other IP." And so, I guess what
27:15
I'm saying for BoomStartup,
27:15
again, you may not be fundable,
27:19
but we're going to work and
27:19
structure on getting you to be
27:23
self-sustaining in revenue.
27:23
We're inserting these sort of
27:28
high expectations and standards
27:28
out of the gate. That's how come
27:31
like our scorecard has an IP
27:31
section on it. And that's kind
27:35
of my invite people like Mark
27:35
Rasich from Stoel Rives, to work
27:40
with, you know, our founders,
27:40
and then our community. And
27:43
again, like I said, we're an
27:43
opt-in, drop-in so if I'm
27:47
annoying, if our program's
27:47
annoying, you can leave, it's
27:51
fine.
27:52  Christina Sjahli
There's no
27:52
requirement.
27:55  Tara Spalding
I'm gonna be
27:55
surprised if you make it without
27:58
us.
28:00  Christina Sjahli
Okay, here's
28:00
another thing that I haven't
28:02
mentioned. Is there a cost to
28:02
join the OpenUp program?
28:07  Tara Spalding
No. No, there's
28:07
none. But I must say there are
28:10
certain sprints that there are
28:10
costs associated, which
28:15
basically a pays for the expert.
28:17  Christina Sjahli
That is for
28:17
the RiseUp, right?
28:19  Tara Spalding
Indeed, indeed.
28:19
Yep.
28:21  Christina Sjahli
I really love
28:21
the fact that even though
28:24
BoomStartup is actually under
28:24
the umbrella of Assure, which is
28:28
doing the SPV capital raising,
28:28
but the fact that you are even
28:34
informing them about
28:34
intellectual property and then
28:37
how a startup can start thinking
28:37
from the very beginning, how to
28:42
build their IP strategy, to me
28:42
that's amazing. Because you are
28:45
giving them tools and knowledge,
28:45
going back to your passion about
28:51
knowledge, and learning about
28:51
things, I think it is very
28:54
important. Which is so much
28:54
aligned with this podcast,
28:57
because that is my whole goal.
28:57
You need knowledge. You need to
29:00
understand what are your
29:00
options, becaue there is no one
29:04
size fits all out there.
29:06  Tara Spalding
I can't agree
29:06
more. There are so many things
29:10
in this world where education is
29:10
a peaceful protest. Yeah,
29:15
inequality. And it's just one of
29:15
these things that, like I said,
29:20
we're trying to create a very
29:20
transparent and also accountable
29:26
sort of a platform. And I think
29:26
those are frankly, often that's
29:31
the combination of a winning
29:31
startup, you know, those that
29:34
are humbled, those that are
29:34
willing to be honest and take
29:40
critique, and think about things
29:40
different. All too often and
29:44
I've worked with hundreds of
29:44
startups as well, as of course
29:47
within them, throughout my
29:47
career and, and sometimes
29:50
there's like a fascination or an
29:50
obsession around the innovation
29:54
itself or around the sales and
29:54
in that whole chase. But the
30:00
truth is, is most people think
30:00
that like running a business is
30:05
about those two components,
30:05
whereas it's not. It's really
30:08
looking at the revenue plan and
30:08
the structure around it. And it
30:12
doesn't mean that you have to be
30:12
like a bean counter, right? But
30:16
it means that you have to look
30:16
at things and say, like, what is
30:19
sustainable? How exactly can I
30:19
grow this business with the
30:23
least amount of exertion?
30:25  Christina Sjahli
Yes,
30:25
absolutely. When I prepared for
30:29
this interview, and I looked up
30:29
AmplifyUp, so that is your last
30:33
program. One of the things
30:33
thats mentioned in there that
30:36
AmplifyUp funds high growth
30:36
potential startup with the right
30:41
capital and investor support.
30:41
When I hear the word, or when I
30:45
read the word high growth," the
30:45
first thing that I thought about
30:50
is the Silicon Valley model,
30:50
which is get capital and build
30:57
your business. Use that capital
30:57
as your fuel. I really want to
31:01
get an understanding, what is
31:01
BoomStartup definition of high
31:06
growth, and how is this
31:06
definition different from
31:10
Silicon Valley building rocket
31:10
using capital as the fuel?
31:14  Tara Spalding
Well, I'd like to
31:14
make one point of clarification.
31:18
It's not just high growth, but
31:18
it's high growth potential. And
31:23
the reason why potential is so
31:23
important is at this pre-seed
31:27
round, if they're already at
31:27
high growth, then they're going
31:31
to need a bunch more fuel than
31:31
what a pre-seed can often do.
31:36
That's when they go for like a
31:36
million dollar seed round to $2
31:39
million seed round, or even
31:39
possibly jump up to a series A.
31:44
The reason why I'm finicky, in
31:44
particular, about the word
31:48
potential is because they have
31:48
the right elements, yet they
31:52
need a little bit more funding
31:52
to prove the hypothesis correct.
31:58
So the funding needs to have
31:58
clear designation at the pre
32:04
evaluation as to what the
32:04
expectation will be from the
32:08
contribution or how it will be
32:08
applied.
32:10
And then what you do is you also
32:10
measure the valuation upside.
32:12
But the thing is, is that they
32:12
gave us the money to execute on
32:15
And this is no longer looking at
32:15
valuation compared to the
32:18
marketplace, it's really about
32:18
turning inwards and saying
32:23
what's the internal performance
32:23
capability. And so that's why
32:28
high growth potential is very,
32:28
very important. Now, let's go
32:33
back to when I was co-founder at
32:33
BenchPick, we only raised
32:38
35,000. That was it because t
32:38
at's all we needed. And that h
32:43
lped basically build an MVP wh
32:43
ch we took to market. And th
32:48
n, within two weeks, we had o
32:48
er 500 users. That was the i
32:54
dicator that we were on to s
32:54
mething. And that is also what s
33:00
ared the investors because they
33:00
ealize that they might have
33:03
ust fuelled a competitor, like
33:03
new market shift and change. An
33:07
that's why they wanted to rol
33:07
it in, which is really, reall
33:10
funny
33:16
the plan because we had all of
33:16
this like market analysis and
33:20
data and interviews and
33:20
pre-signups and all that such
33:24
that all we have to do is build
33:24
the product and apply it and
33:26
then all of a sudden, it just
33:26
started to happen. That's the
33:30
importance of pre-seed. It
33:30
doesn't need to be a ton of
33:33
money. But it needs to be that
33:33
designated amount for a very
33:37
specific application with an
33:37
expected and measurable outcome
33:42
or hypothesis that you're
33:42
measuring it on.
33:45
AmplifyUp is going to do just
33:45
that, and AmplifyUp is a cohort
33:50
program. It is going to be
33:50
invite only and the companies
33:55
that we're going to invite are
33:55
those that are participating in
33:58
the OpenUp, in the RiseUp, as
33:58
well as the PitchUp competitions
34:02
that have been transparent with
34:02
us as to where they at and where
34:06
are the growth. You know, lucky
34:06
for me, I work with Assure, and
34:11
other investors as well, that,
34:11
you know, we can see sort of
34:15
trends depending on the industry
34:15
that the company is in that
34:21
says, "Okay, you know what, they
34:21
just need a little bit more
34:25
juice to formalize and to
34:25
potentially rapidly grow the
34:30
business now." Christina, you
34:30
know that pre-seed investment is
34:34
the highest risk but it's also
34:34
the highest reward.
34:37
Also, you have to have very long
34:37
patience because on average
34:43
pre-seeds don't exit for like a
34:43
decade, right? But they could be
34:47
observed. Instead of like
34:47
pre-seed investments going to
34:52
basically, into independent
34:52
angel investors, now it's coming
34:56
in through Boom, I as
34:56
BoomStartup accelerator can
34:59
actually vouch for their
34:59
business and vouch their
35:03
participation as well as their
35:03
ability to be, basically
35:08
mentored and coached. And you
35:08
know, we expect pivots, we
35:13
expect that sort of clarity, you
35:13
know, at such an early stage,
35:17
but these aren't just cold deals
35:17
going to angel investors. These
35:22
are deals that are assessed and
35:22
basically handpicked by
35:26
BoomStartup.
35:27  Christina Sjahli
You mentioned
35:27
earlier, when we were talking
35:29
about OpenUp, that the ventures
35:29
are basically submitting some
35:34
kind of report to BoomStartup to
35:34
continue the relationship,
35:38
right?
35:38  Tara Spalding
Yes.
35:40  Christina Sjahli
Are there
35:40
certain metrics that you monitor
35:44
from the BoomStartup side to
35:44
identify, "Okay, this one
35:49
venture or this two venture need
35:49
just a little bit of juice of
35:54
the right capital?" Because the
35:54
reason I'm asking this,
35:58
sometimes when accessing capital
35:58
too early and too easy, a
36:04
venture can depend on it. It
36:04
could have a mindset that, you
36:09
know, "Because the capital may
36:09
be there, it's easy for me to
36:13
get let me just rely on the
36:13
capital." But that is not the
36:18
right way to grow, in my
36:18
opinion, like you really need to
36:23
be strategic in the type of
36:23
capital that you're getting,
36:27
when you need it, how you want
36:27
to deploy it. Because accessing
36:33
the capital and then receiving
36:33
the fund, that is not the
36:36
success.
36:37  Tara Spalding
No, you're you're
36:37
absolutely right. And that's
36:39
become our platform makes them
36:39
accountable. So you know, and
36:44
you just explained the answer.
36:44
But the part that I didn't
36:48
finish, is once they get the
36:48
capital that's managed from
36:52
them, and we know how they're
36:52
supposed to deploy it, and we
36:56
know the hypothesis that they're
36:56
going after, well because we're
37:00
doing these quarterly business
37:00
surveys, and yes, we do look at
37:04
the financials, but we also look
37:04
at like traction, number of
37:08
customers, number of loss
37:08
customers, average sale price,
37:12
we look at just a whole bunch of
37:12
different aspects. And that's
37:16
how we see if they're deploying
37:16
the capital as per se.
37:20
The hard part is not getting
37:20
pre-seed capital. Oftentimes,
37:24
founders have the capital within
37:24
reach within their friends and
37:28
family. That's a kind of like,
37:28
it's usually called friends,
37:30
family, and fools round. And
37:30
that's not hard to close. It's
37:35
the next round, that's very,
37:35
very difficult because the
37:39
friends, family, and fools don't
37:39
know how to hold them
37:41
accountable and say, "Did this
37:41
work out or not?" Or they give
37:46
them capital with an absurd
37:46
valuation so that the second
37:49
round is like, a $10 million
37:49
valuation on probably like
37:53
$130,000, you know, that math
37:53
just doesn't work at all, like
37:59
in most industries and sectors.
38:02
So yes, you're right, we are
38:02
looking at them and scanning and
38:07
tracking them by sector because
38:07
there are different valuations,
38:11
etcetera. So yes, we do watch
38:11
the pre-seed environment pretty
38:16
darn closely. We also know that
38:16
like valuations are much higher
38:20
on the coasts than they are here
38:20
in the central part of or the
38:25
heartland of America, as I like
38:25
to say. And, you know, secondly,
38:31
we're going to set up these
38:31
sorts of terms, by leveraging
38:35
the SPVs, which, by the way,
38:35
SPVs can go into safe agreements
38:40
or convertible notes, especially
38:40
for these pre-seed rounds that
38:44
are pre-revenue, and we can't
38:44
establish evaluation clearly
38:48
yet. So we can still do that and
38:48
collect those sorts of
38:51
investors, but keep the cap
38:51
table. So.
38:54  Christina Sjahli
But you don't
38:54
always only do pre-seed, right?
38:57
If you think that if a business
38:57
are ready for the seed round,
39:03
and then they have all the right
39:03
metrics in place, and then they
39:08
have all the right direction
39:08
from BoomStartup, they can jump
39:13
into seed round, right away can
39:13
they?
39:17  Tara Spalding
Yes. But Boom
39:17
Accelerator, we're not going to
39:19
be, great question, we're not
39:19
going to be the ones that are
39:22
syndicating that deal. There's
39:22
actually a different group that
39:26
does those sorts of deals
39:26
syndications called a Assure
39:28
Syndicate. And then the head of
39:28
that person, head of that group
39:32
is Landon Ainge. And I work very
39:32
closely with him. The second
39:36
that it starts sniffing over a
39:36
million dollars, or there's
39:40
cheque sizes that are, you know,
39:40
$200,000 plus, that's outside of
39:46
the angel investment community
39:46
that I'm activating.
39:49
The thing is, is that because of
39:49
our open platform accelerator
39:53
and in that we're still asking
39:53
for quarterly updates, etcetera,
39:57
and I'm watching them
39:57
participate in work with our
40:00
mentors and service providers,
40:00
I'm still a solid voucher of
40:05
their commitment to business
40:05
growth and stability, right? And
40:09
so, I just become one of those
40:09
due diligence checkpoints of
40:14
like, "Yeah, actually, they did
40:14
work with Stoel Rives on the
40:16
IP," or, "They hired now CFO to
40:16
run their pro forma and their
40:22
unit economics." You know, like,
40:22
I'm still there to say, "Indeed,
40:27
this is legit." which you know,
40:27
is oftentimes the problem, you
40:32
know, with deals is that they're
40:32
just the source is sketchy. And
40:37
I'm hoping to de-sketch the
40:37
source.
40:42  Christina Sjahli
So, let's get
40:42
into this AmplifyUp. And then
40:46
how Assure comes in, SPV comes
40:46
in. What intrigued you about
40:52
using SPV at this early stage
40:52
for pre-seed?
40:58  Tara Spalding
Well, I'm just
40:58
gonna date myself. So back at
41:01
the turn of the century, when I
41:01
am in the startup world, like
41:07
SugarCRM raised $1.2 million for
41:07
their series A, and it was from
41:13
Draper Fisher Jurvetson. I was
41:13
the first employee at that
41:16
place. And it was great because
41:16
DFJ basically gave me a salary.
41:22
Yay. So $1.2 million was a
41:22
series A is 20 years ago. And
41:31
now you have like pre-seed, or
41:31
angel, or friends and family
41:34
round. SPVs are really great,
41:34
because then it's like, "Okay,
41:38
we can get more people to
41:38
support your company. And they
41:41
can write bigger checks, but
41:41
they don't have to be ginormous,
41:44
hurtful checks, like 5 to
41:44
$10,000 to start." And, you
41:50
know, if you get like five or 10
41:50
of those together, instead of
41:53
like clogging up your cap table,
41:53
gosh, just put it in as one line
41:58
item. And so that's the massive
41:58
advantage that SPVs have, and
42:03
like, why it's so appealing for
42:03
like these angel and pre-seed
42:08
rounds.
42:09  Christina Sjahli
Why does a
42:09
one-line ownership better than
42:14
having a long list of investor
42:14
on a cap table?
42:19  Tara Spalding
I'm so glad
42:19
you're asking this, let's just
42:22
go through the basics. What a
42:22
cap table is, it's an Excel
42:25
spreadsheet, that puts down
42:25
every single name of an owner,
42:30
and the percent of the company
42:30
that they own in the form of
42:33
shares and share price. That's
42:33
it. So it's a massive
42:36
spreadsheet. Every single time
42:36
that you get a cash infusion in
42:40
exchange for equity, you're
42:40
adding on more lines. Now, in
42:44
the beginning, it's super cool,
42:44
because it's like, hey, it's
42:47
you, your founding team and then
42:47
stock option pool of like 15%,
42:52
per se. And then if you have
42:52
your mom, your grandfather, that
42:58
rich uncle, then there's three
42:58
more lines to help you with like
43:02
that initial $100,000 in cash.
43:02
But the next time you go out,
43:06
all of those six lines that you
43:06
had at that very initial round
43:09
of funding, stay there. And then
43:09
that next round adds more lines
43:15
on to it.
43:16
Now when you come to, what I
43:16
call an institutional investor,
43:21
like someone that has limited
43:21
partners or answers the other
43:24
fund managed funds, they don't
43:24
want to see 6, 12, 24 people on
43:30
it, because then all of a
43:30
sudden, the perception is that
43:34
there's 6, 12 or 24 other people
43:34
that have the founder's ear and
43:38
attention. Whereas, they want to
43:38
be number one on that list. And
43:42
so, you can only do this before
43:42
you close the funding round. You
43:47
can't do this after. But by
43:47
leveraging an SPV. It's like
43:51
saying, "Hey, my business
43:51
entity, Smithson is one line."
43:57
But that business entity, which
43:57
is created by that SPV, could
44:02
have 10 people in it. But when
44:02
the institutional investor looks
44:07
at it, they're like, "Oh, I just
44:07
have to handle Smithson. That's
44:10
it." And so8 that's how cool and
44:10
easy it is because it doesn't
44:15
screw up your future investor
44:15
appeal.
44:19  Christina Sjahli
The reason I'm
44:19
asking this, because, you know,
44:21
I work for public companies, and
44:21
I know that long list of cap
44:25
table, right? And we had to
44:25
manage it through a specific
44:30
software to manage the long list
44:30
of cap table. So your point
44:35
though, in terms of an
44:35
institutional investor coming
44:40
in, and then they want to be
44:40
number one because they don't
44:44
want to deal with the other
44:44
investors. As long as they are
44:48
the majority investor, they will
44:48
have a board seat anyway. And
44:53
they will have the say about the
44:53
direction of the company or
44:59
whatever voice that they want
44:59
to I've dealt with this before.
45:03  Tara Spalding
You're absolutely
45:03
right. I have no disagreements
45:07
with what you're saying. Like,
45:07
especially if they're what's
45:09
called the lead investor for
45:09
that round. That's where they
45:13
can do those sort of voting
45:13
rights and representation rights
45:18
with the decision of the
45:18
company. But they can be like
45:22
add-ons or bridge, which then
45:22
can also look messy. And that's
45:26
how can the SPV just kind of
45:26
collapses it. And it also
45:31
simplifies things, for example,
45:31
like taxes, you know, and
45:36
distribution or dissolution, for
45:36
example, it's less stuff for the
45:40
founders to do. They don't have
45:40
to worry about handling that.
45:44  Christina Sjahli
if we're
45:44
looking at it from the founder
45:47
and CEO perspective, because
45:47
BoomStartup is the organizer,
45:51
you are matching the investor
45:51
with the founder, and then you
45:55
help create the look for the
45:55
investor and then create this
45:59
SPV.
46:00  Tara Spalding
Exactly. And we
46:00
also invest too.
46:02  Christina Sjahli
What I'm
46:02
curious about, is there any
46:06
risks from the founder and CEO
46:06
perspective, if they raise
46:11
capital through an SPV?
46:14  Tara Spalding
It's the same
46:14
level of risk as with any sort
46:19
of equity sort of deal. There is
46:19
a negative: SPVs do take a
46:24
minute to set up. And it is like
46:24
herding cats because you're not
46:29
collecting five checks. Now
46:29
you're collecting 30, you know,
46:32
15, checks or whatever. And you
46:32
know, you can't do another hail
46:38
until basically, the SPV has hit
46:38
that committed cap. So sometimes
46:43
it takes longer to create and
46:43
collect the funds to get the
46:46
payout.
46:47  Christina Sjahli
What I read on
46:47
the website, it's that that
46:49
BoomStartup help ventures find
46:49
the flaws in their business. I
46:53
am just curious, what are the
46:53
common flaw that you have found
46:58
so far, at the pre-seed round?
46:58
And does those flaws basically
47:05
changes throughout the journey
47:05
of this financing from pre-seed,
47:10
seed and series A? Can you share
47:10
a little bit on that?
47:13  Tara Spalding
For the early
47:13
pre-seed, it's oftentimes
47:17
finding and getting commitments
47:17
from the early team. It's very,
47:26
very difficult for people to go
47:26
from like a solo entrepreneur,
47:31
to a team entrepreneur, on that
47:31
pre-seed. It's really about the
47:37
team, and who are you
47:37
attracting, and how are you
47:39
incentivizing them not to just
47:39
be a contractual contributor,
47:46
but to really ingrain themselves
47:46
strategically? Including like
47:52
their network. The other aspect
47:52
on unseed is to stop looking at
47:58
the fascination of how cool your
47:58
widget is, but to look at the
48:03
market. And like, oh my lambs!
48:03
This just drives me bonkers,
48:07
crazy. And so, this is a really
48:07
cool widget. But if you can't
48:12
find a market that is just
48:12
chomping at the bit to get it,
48:15
and they have to be chomping,
48:15
especially if it's your first
48:19
time at the rodeo.
48:20
Seed is getting tricky nowadays.
48:20
In seed, we're seeing things
48:25
such as impact that's popping
48:25
up. So you've got a business,
48:30
but what else can you do beyond?
48:30
What is the sort of impact or
48:34
influence that it can have that
48:34
hasn't been basically tested or
48:39
materialized yet? That's where
48:39
you know, the 1 to $2 million
48:44
funding just really starts
48:44
helping out because it's like,
48:47
okay, time to hire five people,
48:47
time to start investing in those
48:53
patents, like what you mentioned
48:53
earlier, time to start bearing
48:57
down on the unit economics. So
48:57
get a fractional CFO, and all of
49:01
those sorts of good things that
49:01
just really figure out what is
49:07
needed to really start
49:07
formalizing a sustainable
49:11
business. And then the series is
49:11
all about optimization, how to
49:18
improve your market penetration,
49:18
how to improve the internal
49:23
aspects, operationally, and
49:23
culture.
49:29  Christina Sjahli
You brought up
49:29
an interesting point here that
49:32
gonna lead to my next question.
49:32
I think you are the first person
49:37
that told me in the seed round
49:37
is they can start thinking about
49:43
hiring a part-time CFO. They
49:43
don't have a product market fit
49:49
yet. Their ideas are still
49:49
changing. So at that point, they
49:55
don't even include paying a CFO
49:55
as part of their fundraising. I
50:02
never heard that. That's why I'm
50:02
curious. Is that the right time
50:10
to hire a CFO on a part-time
50:10
basis? And if so, why is that?
50:16  Tara Spalding
I like fractional
50:16
CFOs. It's because they should
50:20
be a consultant that basically
50:20
helps that whole controlling and
50:25
operational aspect. And to
50:25
predict the sort of growth. The
50:30
problem is in like, last year, I
50:30
worked with a company who didn't
50:34
have one. It was killing it in
50:34
sales, but she had no idea of
50:40
how red she was. She thought she
50:40
was just a little bit in the
50:42
red. But she was bleeding in
50:42
cash. And we had to go through
50:47
an entire post-mortem exercise,
50:47
which then like pulled in her
50:51
runway, like how long, how long
50:51
does she have before things just
50:56
are unaffordable.
50:58
And so the thing about a
50:58
fractional CFO is that, based on
51:03
this information, they'll help
51:03
with the forecasting, and
51:06
they'll help with the cash flow.
51:06
Cash flow is king in this
51:11
pre-seed and seed. And the
51:11
reason why I'm saying fractional
51:15
is like, you may only need them
51:15
like an hour to a week, at most,
51:20
because it's not an intense job,
51:20
but it needs guide rails. And if
51:25
you don't have that, sort of
51:25
like fiscal backbone, like if
51:28
you don't have that accounting
51:28
experience, don't assume you
51:32
know how to do it, because you
51:32
know how to balance your
51:34
checkbook, right? It's actually
51:34
really, really tricky, because
51:39
the smart CFO is going to come
51:39
in and and look through, like,
51:43
for example, your days of
51:43
standing and figure out how to
51:47
pull it in, so that you get more
51:47
cash. They can also push you on
51:52
the agreements and contracts to
51:52
have longer payment terms. And
51:56
then make sure, like, if it's
51:56
like 60 days, the check goes out
51:59
on the 59th.
52:01
Because, again, when you're
52:01
looking at up to like $100,000,
52:06
for an investment round, like
52:06
you've got to make every single
52:09
dollar count. And it's just
52:09
really, really important. You
52:14
need them too, for your pitch
52:14
deck. You need them to say like,
52:19
"Yeah, if we get this sort of
52:19
cash infusion, this is how we're
52:21
going to" and all of this other
52:21
good stuff. Like, it's very,
52:25
very important for this whole
52:25
investment rounds too.
52:28  Christina Sjahli
The reason I
52:28
provoke this question is because
52:31
I am in this part of community
52:31
where the founder would come in
52:36
and then pitch to all of us. And
52:36
then after that we did a due
52:40
diligence as a group. But it's
52:40
always dawned on me when I
52:46
looked at the cash flow
52:46
projection, and the founder is
52:51
basically showing growth, okay,
52:51
"I got to grow to 10% 20%,"
52:55
whatever it is the percentage my
52:55
curiosity comes in, because I
53:01
said, "How are you going to
53:01
grow? Because there's got to be
53:06
a logic behind it. Having done
53:06
enough research to understand
53:10
your market? And have you done
53:10
enough research to understand
53:14
your customers?" And I'm pretty
53:14
sure you agree with this, Tara.
53:18
Because that's where you need to
53:18
communicate with your investors.
53:23  Tara Spalding
Yes. This is how
53:23
come I think like that
53:25
fractional CFO almost plays like
53:25
a analytical role in the very
53:30
beginning. Because that cash
53:30
flow forecasting, and like
53:33
really like peeking at these
53:33
contracts or these
53:36
subscriptions, and as well as
53:36
like the licensing and
53:40
agreements, to really make sure
53:40
what they're forecasting isn't
53:44
just based on units out the
53:44
door, because that's not how
53:47
things are paid for it.
53:49  Christina Sjahli
Another basic
53:49
thing that I noticed is the
53:53
difference between accrual
53:53
accounting and cash. There is a
53:57
big difference between cash flow
53:57
and profit, because the one is
54:04
measuring how you going to
54:04
manage your working capital, but
54:09
the profitability is actually
54:09
measuring your how successful
54:12
you are with your business
54:12
model.
54:14  Tara Spalding
Yes.
54:15  Christina Sjahli
And it's
54:15
measuring like, do you have the
54:18
right strategy for your pricing?
54:18
What about your supply change?
54:22
How do you manage your cost of
54:22
goods sold? What I want to bring
54:25
up as well, when you have the
54:25
right CFO, that CFO gonna
54:28
understand your business and is
54:28
gonna look at the big picture
54:32
from every aspect of your
54:32
business. I mean, understanding
54:35
a business model and
54:35
understanding how the business
54:37
operates is so key and I'm just
54:37
bringing my experience. Like,
54:41
when I look at even like illegal
54:41
documents, when you enter into a
54:45
contract with a suppliers,
54:45
sometimes there is an ins and
54:49
out that founder don't realize
54:49
the implication in the long
54:53
term, and sometimes even it has
54:53
like an accounting implication
54:57
in it, and then how you supposed
54:57
to report it and communicate
55:00
that to the investor?
55:02
So, Christina, I told you, we do
55:02
that quarterly business survey.
55:06
One of them is the financials.
55:06
And we just asked like, "What
55:10
was your past quarter
55:10
financials?" We do have like,
55:13
for example, add backs and cap
55:13
backs on there, because we want
55:17
to track those sort of aspect.
55:17
But to your point of like how
55:21
you're doing the general ledger,
55:21
like journal entry, once you get
55:25
past that seed round, things
55:25
have got to be accounted for
55:30
correctly. Because going back to
55:30
my statement before, it's going
55:36
to really show the optimization
55:36
of the unit cost economics or
55:40
the unit economics and you know,
55:40
the contributing profit margin
55:45
and all that other goods such.
55:47
The earlier you set these
55:47
habits, the better you're going
55:50
to be. And like, like I
55:50
mentioned before the founder
55:55
that I worked with last year
55:55
that had no idea how bad she was
56:00
bleeding, because it was
56:00
miscategorized. But yet, she's
56:03
looking at your bank account,
56:03
like, "Hey, this is sweet." And
56:07
it's actually not, because it
56:07
requires that sort of mental
56:11
mode. And that's because I'm
56:11
like, not all founders have to
56:14
learn this, but they have to
56:14
have the right people around
56:16
them early. So they don't get
56:16
derailed, and just run out of
56:21
cash unexpectedly. And that, you
56:21
know, again, that's, that's what
56:25
we're trying to do.
56:26
Interesting enough, Tara,
56:26
because I know, in one of your
56:30
interview, you mentioned you
56:30
were a VP of Marketing in a
56:35
startup. When the founders that
56:35
you just mentioned earlier, her
56:39
revenue was growing, but she
56:39
didn't realize she didn't have
56:42
enough cash, especially for
56:42
those that receive money in
56:46
investment, and then get that
56:46
pressure to grow, and grow, and
56:50
grow. And their focus is on the
56:50
revenue.
56:54  Tara Spalding
I have to tell
56:54
you, you're absolutely right.
56:56
Because when I was the marketing
56:56
executive, I was tracking like
57:00
leads and exposure and awareness
57:00
and all of the top-line growth,
57:04
but not the cost of growth. And
57:04
the thing is, is like,
57:08
Christina, that is also
57:08
indicative to the location that
57:12
I was in. Realize I was two
57:12
blocks away from Stanford. And
57:16
surrounding Stanford is a swarm
57:16
of venture capitalists who
57:20
either went there and/or invest
57:20
in there. Because these kids are
57:25
so dang brilliant, they have
57:25
these massive funds that can
57:29
basically say to those people,
57:29
"I don't want you to worry about
57:36
cost right now, I want you to
57:36
worry about market penetration.
57:40
And so I'm going to keep on
57:40
fueling the fire as long as you
57:45
have rapid adoption and low
57:45
churn."
57:49
BoomStartup is only going to
57:49
make one investment. And what we
57:53
want to do is make the
57:53
investment known to be very
57:57
purposeful, with expected
57:57
hypotheses, and then pool in
58:00
other investors alongside of us
58:00
that are going to support that
58:03
startup to get there. When they
58:03
get there, then we have an
58:07
expectation as to what the new
58:07
valuation is going to be. And
58:10
then we'll make introductions to
58:10
new and bigger check writers,
58:16
where they can take it away. But
58:16
I am that very first, authentic,
58:21
real step of like, "Nope, this
58:21
is kind of how life is," instead
58:25
of just like collecting checks
58:25
and not being held accountable.
58:29
We're dropping the hammer, and
58:29
I'm gonna put them in the shoes
58:32
that I was in when I was an
58:32
officer or co-founder, because
58:36
it's merciless, man. We had
58:36
these quarterly meetings and
58:41
like "Dude, like, Oh, God, I saw
58:41
if I have a job," you know.
58:46  Christina Sjahli
The pressure,
58:46
right? I know what you mean. I
58:51
felt that too, because I work
58:51
for public companies before. To
58:54
be in a meeting and then with
58:54
lenders and then when things
58:58
didn't go well, you better have
58:58
answer
59:00  Tara Spalding
You better have
59:00
an answer.
59:03  Christina Sjahli
how you gonna
59:03
turn this around? I completely
59:06
understand where you're coming
59:06
from Tara. Fun talking to you
59:10
about all of this. But where can
59:10
people find BoomStartup and
59:14
connect with you, Tara?
59:16  Tara Spalding
Yeah, of course.
59:16
boomstartup.com, that's our
59:19
website. All of these programs
59:19
are right from that page.
59:24
PitchUp is the pitch
59:24
competition. OpenUp, is that
59:28
pre-open platform that gives the
59:28
scorecard and recommendations.
59:32
RiseUp are those intense sprints
59:32
that help you fix aspects of
59:35
your business. Anybody can sign
59:35
up for any of those sprints. And
59:39
Amplify Up is the the funding
59:39
program which we were talking
59:42
about using the SPVs and we're
59:42
accepting pre-applications now
59:47
for for that program. So just go
59:47
to boomstartup.com. And
59:51
Christina, if people like to
59:51
hear me babble, want to know
59:55
about all of my other weird
59:55
adventures and takeaways they
59:59
can just follow me on LinkedIn.
59:59
I'm always doing and saying
1:00:04
crazy things over there.
1:00:07  Christina Sjahli
They will
1:00:07
follow you as Tara. Tara, it has
1:00:10
been a pleasure to have you
1:00:10
here.
1:00:11  Tara Spalding
Oh my gosh, thank
1:00:11
you so much for having me as
1:00:14
your guest, Christina, you're a
1:00:14
doll. So smart. I love what you
1:00:17
do.
1:00:19
And that's bring us to the end
1:00:19
of another show. Thank you so
1:00:22
much for listening to another
1:00:22
episode of Her CEO Journey, the
1:00:27
business finance podcast for
1:00:27
women entrepreneurs. If you want
1:00:31
to create a proactive financial
1:00:31
plan and process for your
1:00:35
business so you are ready to
1:00:35
weather the financial storm over
1:00:39
the next few months, let's chat
1:00:39
and see what's possible for you.
1:00:43
Book in a time to speak with me
1:00:43
at
1:00:45
christinasjahli.com/let-s-chat.