The Entrepreneurs for Impact Podcast: Transcripts

#141:

Ask Me Anything (AMA) — How to raise VC, Helping female founders, Six books, Where you should work

PODCAST INTRODUCTION

Chris Wedding:

It's also a really terrible time to be raising capital, certainly venture capital, the second given broader economic conditions. This is a little dated, but I haven't seen Q2 data from Carta just yet. As of Q1, venture capital investment was down, I think 80% year over year. Many investors are saying it's one of the worst capital-raising environments in decades.

PODCAST CONTENT

Chris Wedding:

Welcome to the Entrepreneurs for Impact podcast. My name is Chris Wedding. As a former environmental private equity investor, four-time founder, climate tech CEO, coach, and professor, I launched this podcast to share the entrepreneurial journey, practical tips, and hard-earned wisdom from CEOs and investors tackling climate change. And if you like what you hear, please leave us a review on your favorite podcast player. This is the number one way that listeners can learn more about the climate CEOs and investors that I interview. All right. Let's get started.

Howdy, folks. It's Chris. So today, a little different episode. You're stuck listening just to me. Don't turn off the podcast just yet. I’m trying a new format, which I've certainly enjoyed from other podcasters that I like to learn with, the Ask Me Anything format. So, I've got five questions here from listeners to the pod and readers of the newsletter. Let me tell you the five questions in case you didn't see them in the summary of the podcast, then we'll go through them. Lots of resources, books, podcast, tools, et cetera, jam-packed in this one. All right.

The first one is from Casey says, “You always ask your guests what books they're reading or would recommend. Well, how about you? What books are you reading or have found to be useful?” That's number one. Number two, Nick asked, “What are some of the best non-financial resources that are available to entrepreneurs, in parenthesis, and I'm blushing here, aside from badass cohorts like Entrepreneurs for Impact referencing the climate CEO peer groups we run here.” Blushing, mostly gone. Number three, from Tyler, “I'm looking to make a bigger impact in climate. Should I work for a bigger company or a smaller firm?” A common question that comes up as I talk with my grad students at Duke and UNC for sure.

02:54

Number four from Helena, “I want to work in climate more deeply, especially helping female founders. I would love to start off by working pro bono and helping them raise funds and learn as I go, but where do I start?” The last question I'll get to today, number five is from Brooke, “If I'm raising VC capital, in this case, seed stage,” but really applies to all, that's all in parentheses, “what do I need to create for investors to look at, to review, et cetera, besides a pitch deck?” So, I have 10 suggestions there. We'll get to that one last. All right. Let's go back to the first one again.

Again, this is Casey asking what books I'm reading or have found to be really useful. I have six books. Let’s see, I'm reading two of these. Now the others are more books I love to recommend. The first bucket, if you will, that comes to mind, I'm looking at my shelf over here, these are non-business books that I think helped me keep some perspective on the kind of work that we all do or share this perspective with the climate tech CEOs that I work with and the stress and roller coasters they are on, which are bigger, taller than mine for sure.

The first one is called Road to Heaven: Encounters with Chinese Hermits. In this case, Zen and Taoist Hermits. This book was written, I didn't check, but probably 10, 20 years ago, it's pretty recent and it is just what it sounds like. This is a translator. His name, his literary name is Red Pine, translating lots of work from, usually, Chinese to English. He gets some funding and goes tracking and sometimes quite dangerous mountains in China, not in Tibet, but in other parts of China to have conversations with, again, Taoist and Zen. I say monks, but really living as hermits, isolated, not with a community.

Second one, quite related, is Zen Masters of Japan: The Second Step East, tracing the lineage of Buddhism as it goes from China, really in this case, through Japan. Goes from China to Zen and really from there to the US and that's important to me because one of those teachers was, or emissaries, if you will, Shunryu Suzuki brought Zen form to San Francisco Zen Center, which is where I studied for six fun weeks. Actually at their Tassajara Zen Mountain Center right after college a couple of decades ago.

The third somewhat related, The Abundance of Less: Lessons in Simple Living From Rural Japan by Andy looks like Couturier and it is what it sounds like. He profiles, maybe it's 10 or 15 Japanese who show us a different path than a more traditional say, salary man, if you will. Many studied in India and Nepal, came back and bought these old, well, usually rural homes in the mountains of Japan. By the way, two-thirds mountainous the country, but I think what it does is it reminds us what we really need slash don't need as things are quite stressful. Getting back to the basics can be refreshing. All right. Three thoughts there.

06:28

The next three are more business books, but you'll see they're not entirely business strategy. It’s often how to get more of the important work done. The first is Essentialism: The Disciplined Pursuit of Less. It has, again, the recurring theme you see by Greg McKeown. Great book. I think one outcome from the book is it had me creating a not to do list and getting excited about things I was not going to do in order to focus on things that I did want to do, do want to do. And this is good to revisit a couple of times per year, at least.

Second one, Building a StoryBrand: Clarify Your Message So Customers Will Listen by Donald Miller. Very simple, seven, I think step process to making sure you're communicating in the kind of words and orientation that your customers care about. Really putting them as the hero in the story versus thumping our own chests about all of our accolades and such. The sixth and final book here that I'd love to recommend and many find useful is called Deep Work: Rules for Focused Success in a Distracted World by Cal Newport. Cal Newport has written a number of bestsellers in the productivity section of the bookstore. I think a story that stood out was talking about Carl Jung and many of you would know that he had built or built really himself in lots of ways, a castle of sorts, a mountain retreat in I think the Swiss Alps. And my thought was, he became this successful psychoanalyst and therefore had the resources to build such a wonderful second estate, if you will, to retreat to.

The real story is actually the opposite that, he had some success to be able to have the time and resources to build this, but it was because of the deep work time he had without distractions at this mountain abode that allowed him to have the breakthroughs to become the Carl Jung that we know today. Okay. Let's go to number two.

This is again from Nick, “What are some of the best non-financial resources that are available to entrepreneurs?” So, I've got three buckets here and they really refer to eight or 10 apps or subscriptions sometimes, super affordable. The first category is mental fitness. So, many of you already use meditation apps like Calm, like Headspace. There's another that I just came across and actually put out in our Entrepreneurs for Impact newsletter called COA, C-O-A, which describes themselves as a ‘your gym for mental fitness,’ I believe it is. So that's pretty refreshing. It makes a lot of sense and this topic also came up at our climate CEO retreat we recently had in Boulder with our peer group. I'm going to go to this album we put together with some of the highlights.

09:41

So, in this mental fitness bucket, a few more things that our CEOs thought were useful. One is a book called The Body Keeps Score: Brain, Mind, and Body in the Healing of Trauma. The footnote, if you will, or maybe the summary here, we may not see the score for 10 years or 20 years, but our body will eventually show us the results. Second idea, this is more of a perspective, giving people the benefit of the doubt until they prove you wrong. So, definitely assuming the best in folks versus assuming the worst as kind of your default mode.

The third is a technique called box breathing that the Navy Seals and others use. This particular breathing method is not so much about spirituality, more about switching the modes in your body from fight or flight to rest and recharge and pretty simple. You're breathing in four seconds. You're holding your breath for four seconds. You're breathing out for four seconds and then holding your breath again for four seconds. Those exact numbers can change a little bit, but the idea is you have control over your breath. There is this rhythm. Maybe it's a box that is four equal sides, maybe not, but in that slow and controlled breathing, you're telling your body that you don't need to be anxious. You're in a safe space, solid ground, et cetera.

Another practice that came out from the CEOs was a gratitude practice. We've heard this before for sure, but one member in particular will at the dinner table with their young kids, every member I say has to or gets to list three things they're grateful for each day. This member even does this through text or phone when traveling, which is a great way to build that consistency. I do this most nights where I'll count off 25 good things from the days I'm falling asleep. So, a way to train the brain to look for good things throughout our days.

The last is again, a perspective shift, but if we think it's important to spend five hours per week working out, shouldn't you slash isn't it also a good idea to spend the same amount of time on mental fitness? I think it's certainly true. Most people don't view it that way, but again, a thoughtful way to think about it. That's bucket one here in other non-financial resources. Again, I think Nick's talking about beyond investment capital from strategics or venture capital investors, high net worth individuals, angels, et cetera, what else can help entrepreneurs grow?

12:26

Second bucket here, I phrased it as learning from the greats and some of you have used apps like Blinkist, which I used to use. Blinkist, let me see what they say these days. They summarize books, I think it's thousands of books, in call it 15 to 18 minutes, let's say. So, pretty easy way to quote unquote, read a lot without reading a lot. I think another way to think about apps like Blinkist is you try a book out in 15 minutes, and if you find some value, then you make the investment, you read the full thing.

Another one, which again came from a member in the CEO group, thank you, Brian, is called getAbstract, so summarizing books, I believe it's in five pages on their site. I don't see the five pages referenced here, but they're talking about 25,000 summaries so far. Then apparently Facebook, which I almost never go on, but I realized that is the one method to communicate to some family members not living close, Facebook tells me that another related app is called Headway: Daily Book Summaries. Similar vibe, 15-minute book summaries, and they talk about 1,500 books summarized. So, a little earlier, perhaps it made me more visual as well than the other groups. All right. So those are three resources apps, if you will, to learn from the greats.

The third non-financial resource is around physical fitness. So, I'll tell you that the tracking device that I use is the Oura Ring and many of the CEOs in our group also use that, but clearly not the only solution out there to track things like exercise, that's pretty simple, but sleep as well as other markers, blood oxygen, your breathing rates. What else? HRV, some other things. Let's see, where do I want to go with this?

Let’s see back to the summary from our trip. Our retreat at the Boulder with the CEOs, some more ways that they stay physically fit, a couple of apps that some of the members like. One is called Down Dog, as in like the yoga pose, which is an app with, well, as you would guess yoga and some other things to make fitness easier, let's say on the go. The other is Alo Moves, A-L-O Moves, which is yoga, fitness and meditation. Other members talked about the benefits of things like spirulina or a psyllium added to smoothies for micronutrients, extra fiber, et cetera, gut health biome.

15:28 

Another talked about a very simple way to think about better grocery shopping. It was to buy more food on the outside shelves, whole foods, typically, versus the interior of the grocery store, which is more often processed foods or to search for food labels with just one to five ingredients. So, a good way to simplify super complicated health recommendations, Jeff, appreciate it. Okay. I think that's enough on number two, so thanks Nick for the question.

Number three from Tyler, “Should I work at a bigger firm versus a smaller firm if I want to make bigger impacts in climate?” So, let's see, one way to think about it is are you, or do you want to be, this is too simplistic, a purist or a realist? Let me explain what that means. You could choose to work for a small, 15, 20, 30-person B Corp that's focused on a climate solution as their core business offering, think a solar installer, wonderful, right? Everything about that is in line with, I think Tyler's goals here. The realist approach might be, and this is not saying one's better than the other, but the realist approach could be saying, “If I want to have a bigger impact, maybe I want to go work at Walmart or BP.” Or pick your Fortune 500 company who maybe is doing some things when it comes to climate, but in general, lots of negative impacts or brand friction, shall we say as well. But if you move those ships 1% or whatever, 0.01% given their scale, your impact from pure numbers perspective could actually be larger. So again, two paths, not saying one's better than the other.

Second idea would be to look at people in those two types of companies that are maybe five or 10 years ahead of you and ask yourself, is that the kind of job slash lifestyle that you would want? I say lifestyle because sometimes jobs at places like consulting, like investment banking look at traveling and working a whole lot. You certainly can make lots of good impact in those professions, but that's a lifestyle choice as well as a profession, for sure.

Now you may ask, “Well, how do you find these people to ask really what their life is like, what their job is like if they're 10 years ahead of you?” One way would be through informational interviews where you're working your network, your friends of friends through your university, through LinkedIn, et cetera, to not try to get a job at those places. But again, the informational interview, much lower stress or pressure, certainly by the recipient, the counterparty, to want to take your phone call and ask you questions that may even be atypical in a job interview.

18:53 

The third consideration here would be, I mean, there are some benefits to going big and then going small. Maybe you would choose to go work in strategy consulting or investment banking or something, or for, again, a larger corporate with all those with recognizable logos on your LinkedIn profile or resume. Then do your quintessential, stereotypical two-year stints at these places and then go do whatever the hell you want, because now you've told the world, “See, I can do that. I can pass that hurdle, that filter.” Again, I’m not recommending it per se, but that is one path that I've seen to work as well in the big versus small discussion. All right. Two more to go here.

Helena asks again, “I want to work in climate, especially with female founders. Would love to start off by working pro bono and helping them raise funds and learn as I go, but where do I start?” Luckily, Helena, lots of great resources. The first that comes to mind is called Climate Rais. So, some friends started this three, maybe years ago and I'll tell you how they describe themselves. “It's a way,” here it is, “to meet the best women-led climate tech companies. We curate a newsletter that showcases early-stage climate startups led by all founders who identify as women, gender nonconforming, and individuals of marginalized genders to help them get access to the network they need through warm introductions. Our mission is to enable founders from overlooked backgrounds, including women, BIPOC, LGBTQIA+ plus people living with disability, veterans, and more to access capital and network.”

So it started, I believe, maybe just focused on women. It looks to be a little broader now, but certainly other represented minority founders. And the cool thing is, I mean, they make it easy to connect with, to have introductions between the founders and investors and they also have this great air table, which has a hundred plus companies. I'm looking at it right now, and you can see where they're based. You can get the LinkedIn profiles of some of the founders, a link in CrunchBase if they have one, a brief company description, the stage of their company. Think seed, pre-seed, A, et cetera, categories, industries. What else we have here? Yeah. I think that covers it. But again, I’m going to scroll to the bottom and see how many we have in all. All right, so we looked at like 173 companies here. So maybe some of those would be some that would like the kind of expertise, Helena, you're looking to contribute.

Another group would be Women in Climate Tech, whose co-founder, Helen Whiteley, also in our climate mastermind peer group. Women in Climate Tech I think represents something like two or 3,000 women around the world, both in startups, as well as at larger firms say they work in the sustainability departments all trying to figure out, how do women play leadership roles in the climate tech space, in the solutions that we need to find and can do it with just us dudes?

22:35

I've got four other incubators, mostly accelerator programs for startups and I'm not sure whether these four necessarily look for external mentors and advisors to contribute on a volunteer basis. Probably they do, but if these don't, there are dozens of other startup accelerators, many energy, climate, sustainability focused, many in other sectors as well. But four that come to mind, one is Elemental Excelerator. Excelerator is in this case spelled E-X-C-E-L. Greentown Labs, which is Boston and now Houston. I think Elemental is Hawaii, maybe California, I forget. Sorry, Dawn. Gener8tor with an eight in the middle of that word in Chicago, so gener8tor has lots of accelerator programs. In this case they have one, or maybe I think it's grown now, maybe it's three funds in sustainability. So, you can ask Ryan more about that. There's a pod with Ryan not to long a go. Third derivative, which is a program at RMI, so I guess lots of great startups coming out of that group, so thanks to Brian and Ryan and Josh and others. So again, lots of places to look, Helena for sure and thanks, we need more help for sure.

Then look, you know this obviously, Helena, but just to remind everybody of these depressing stats, I'm looking now at the PitchBook, what is this called? US VC female founders’ dashboard as of July 3rd of this year. Percentage of all venture capital dollars going to female. Well, they have two buckets here. All female founders it looks like about 2% and that number has been pretty much consistent since ’08 so that's depressing. The story is different where there is at least one female co-founder, so female and male founders, that percentage has gone from six to looks like 18%, again, of all VC capital going to those companies. So, some improvement.

From a deal count perspective, so VC dollars going to any deal for all the female founders, looks like 4% going to maybe 6% or so, which I don't know the public math, but I believe, shout out to my first man, but I believe that suggests that smaller deals for female lead. For the female male founders, the deal count has gone from about 8% in 2008 to something like 16 or 17, 18% today. So, again, some improvement, the slope of that line looks very different than the all-female founder list.

Actually, this is a pretty good resource from PitchBook. It shows you the number of deals by metropolitan area with female founders and maybe no surprise, San Francisco, New York, this is in order, by the way, LA, Boston, San Jose, Seattle, they’re pretty predictable here. And this is pretty important too I believe, the stage where we have all female founders or male-female that is 50% of it is angel and seed. I think what we all know is that in earlier-stage companies, there's much more diversity in the leadership and later stage, growth stage, Series B, C tend to be much less diverse in terms of the founders. All right. So, there's some data and some resources for those wanting to help out. More female founders in the space.

26:36

Final question here from Brooke, “If I'm raising VC capital, what else do I need to create for investors besides a pitch deck?” Well, luckily for Brooke, I teach a course through Maven.com. I think it's called Fund Your Climate Tech Startup or Climate Tech Startup Funding, something like this, and that's terrible marketing to not give you the exact name, but anyway, it's on Maven.com. These are live cohort-based courses with founders, usually at the idea stage or pre-seed or seed, looking for help, for resources, for peer support, for group coaching around this super hard part of growing a company of impact, of any company really, by raising capital. So, there are 10 items here that I would suggest that we all need to create to be ready for raising capital.

The first is bios for the team. “I mean, duh. Thanks, Chris, rocket science,” but there’s really an art to writing bios to make your co-founder, your early hires, your advisors, your board members as well, I think include those for sure. There's plenty of guidance online on how to write great bios, but again, imagine you're the recipient. Why does reading the bio make you trust the credibility, the ability really overall for you to succeed in this startup?

Number two is the blurb. So, think four to five sentence summary of what your company does. Again, there's plenty of guidance out there, beyond the course, just for free on how to write a good blurb, a good company summary. So, you're thinking that you're incorporating clearly who you're helping, what problem that you're solving, and then some of the benefits or emotions they feel. Maybe you mention the features, but it's really the first that matter the most.

Number three is a manifesto. Now this is maybe optional, and you could look at what Nike or Apple do for their manifestos. It's really putting the mission front and center, and it's telling the world who's on your team and who's not. And by telling the world who's not on your team, you strengthen the magnet to pull those who could be on your team, to your team.

29:06

Number four is a one-page business plan. A great resource or two great options to do that would be the Business Model Canvas, or I think even better, the lean canvas more geared toward startups. It's got, I think nine different blocks on a single sheet, and the point is that, business plans change a lot. And so, in a few words, why bother creating a 50-slide deck around your business when it's going to change?

Now there are benefits of course, because in the process of creating a narrowly 50-page business plan, you have to think very clearly about execution. So, there's improvement in strategy in the process of creating a business plan. In this case, the Lean Canvas works quite well.

Number five is something showing your unit economics. So, forget about a fancy financial model that rolls up how many customers, market share, really total profit, total revenue, total cost, and total profit over the years. This is saying per unit, for every, whatever, heat pump that you sell, what are the fixed costs, the variable costs, et cetera? What do you sell this sucker for and are you making profit, growth profit or operating profit or net profit on each unit? Now look for startups, you're probably not making profit. You’re certainly not making net or operating profit. Hopefully you get close to making growth profit sooner than later.

Number six is a teaser deck. So, six and seven are both pitch decks, but different versions. A teaser deck, maybe this is 10, maybe it's 15 slides, highly visual, not much text. You're not requiring an NDA, which most investors hate anyway, but it's like an appetizer. Do you like the restaurant? Do you want to eat here again or do you want to order a big entree? If yes, the second type of deck, number seven here, would be the long deck or sometimes a post-NDA deck. Again, if you're in venture capital land and you mention an NDA, most investors will vomit a little. Not a great look early on to be asking for NDAs. Oftentimes early-stage investors have seen lots of relevant permutations of what you're pitching and so much of their confidence is in how you can execute versus whether your idea is absolutely unique. All right. Three more to go here.

Number eight is a financial model. This does not need to be super complex. You don't need to have an MBA to create the kind of model for raising certainly early-stage venture capital. By the way, all financial models are wrong. The question is, how wrong are they and do you know why they are going to be wrong, the most likely reasons they'll be wrong?

32:00

Number nine is a data room, so a fancy word for saying what used to be used was like Dropbox or Google Drive or something. Now there are more maybe secure options box or others, and you're putting all sorts of files about your company. So, the investor gets to be on the pitch deck and now they want to see employment contracts, customer contracts, your pipeline of projects or customers that you're nourishing, nurturing, intellectual property, perhaps, or charts today versus tomorrow. You get the idea.

And number 10 is a tracker, an investor outreach tracker of some sort. Any spreadsheet would do, maybe one you could share with other team members and you're tracking things like last outreach via phone or email, interest level, next steps, et cetera. Ideally, conditional formatting, so you can see pretty quickly who’s in, who’s out, who do you pay attention to?

Now, I suggest these 10 things, great, hope they help. However, it's also a really terrible time to be raising capital, certainly venture capital right this second given broader economic conditions. This is a little dated, but I haven't seen Q2 data from Carta just yet. As of Q1, venture capital investment was down, I think 80% year over year. Many investors are saying it's one of the worst capital-raising environments in decades. I've heard two or three decades. This is a long time. No, we've also seen better headlines, less doom and gloom and some, both investors and those out raising capital now that the hope slash expectation is capital flows more freely in Q4. Certainly, more confidence in Q1. Q4 is always a hard time to raise capital with those pesky holidays. How dare we have a life outside of work? All right.

Hey, listen, this is a wrap. I hope this was helpful. If you found this format helpful, drop me a note on LinkedIn or via the newsletter. You can subscribe through our website or through Substack, it’s Entrepreneurs for Impact and if you respond to a newsletter you get in your email, I see and respond to those emails via the newsletter that comes to you. Anyway, that's all I got. Have a great week. Talk soon.

Thanks for listening and if you want more intel on climate tech, better habits and deep work, then join the thousands of others who have subscribed to our Substack newsletter at entrepreneursforimpact.com or drop me a note on LinkedIn. All right, that's all y'all. Take care.

ABOUT OUR PODCAST

We talk about #ClimateTech #Startups #VentureCapital #Productivity and #Leadership.

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Learn about our guests’ career paths, founder stories, business strategies, investment criteria, growth challenges, hard-earned wisdom, productivity habits, life hacks, favorite books, and lots more.

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Dr. Chris Wedding is a 4x founder, 4x Board member, climate CEO peer group leader and coach, Duke & UNC professor, ex-private equity investor, ex-investment banker, podcast host, newsletter author, occasional monk, Japanophile, ax throwing champ, father of three, and super humble guy (as evidenced by this long bio). 😃

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