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The Foreign Language of Fundraising

Jason Yeh
September 21, 2021
52
 MIN
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September 21, 2021
52
 MIN

The Foreign Language of Fundraising

Parker Treacy had to become fluent in two completely foreign languages, Portuguese and Fundraising, on his path to building Cobli out of Brazil.

Episode Summary

Parker Treacy created his first successful company in the United States without raising venture capital. For his second company, he would need to learn two completely foreign languages to be successful as he set out to launch a company in Brazil and fundraise. Eventually, Parker became fluent in both Portuguese and the language of venture capital as he built his business Cobli and raised over $40MM.

Topics Discussed

  • Early struggles with Portuguese
  • Learning he would have to raise venture capital
  • Lessons he learned about the fundraising process
  • Differences between the Series A and Series B
  • Landing the Series B

Resources Mentioned

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Episode Transcript

Hey guys, I'm going to ask for the same help this week. If you enjoy the podcast, please take 30 seconds to rate, review, and subscribe wherever you are. If you drop a review with your Twitter handle, I'll follow in DMU, quick facts.

Uh, we're too small for the Americans and too big for the Brazilians. So where do we go?

This is Funded- the show where founders who raised millions in venture capital share the gritty side of what actually took to get that money in the bank. Not too long ago, I was trying to get my ideas funded. And back in the day, I was a VC listening to founders pitch me for money.

Nashville is the home of country.

Wall street is the hub for global markets. And Silicon valley is the center of tech and VC, right? Not always. And especially not as much today, according to our guests, Parker, Tracy who grew up in Boston, but raised over $40 million, almost 5,000 miles away from home in Sao Paulo, Brazil, most US-based VCs, historically haven't invested in.

Their logic. It's too far to help. It's too different to understand an overall too risky. And that put Parker in a Goldilocks situation, meaning he was considered too big for Brazilian VCs and too small for some American VCs today's episode is about how he navigated that dynamic to bring on some of the world's most prestigious firms and a killer series.

A and B Parker is one of the biggest risk takers. And if you listen to the end, you'll hear how his adventurous side rubbed off on me. But even though he has one of the highest risk tolerances out of anyone, I know my first reaction when we were in grad school and he told me he wanted to start a company in Brazil was it's already hard enough to start a company.

And a place where we speak the language and our networks are super established, but his instinct was right. Kobly the fleet management platform. He founded ended up raising millions and now has over 200 employees. And he now speaks Portuguese fluently, which was not the case when he first landed in Brazil.

But I remember when I first arrived and like the guy who's trying to help you at the airport with bags, he said this phrase III Malecki, which is a very slang way of just like, Hey man, can I help you? Right. And I didn't know of any of those words. And so, I mean, I remember just like the coldness that went into my stomach upon that first I'm like, I just went over through in the first three words.

Yeah. Wow. So. Uh, starting a company down in Brazil without full fluency. So you you're trying to create this company. And at some point you, you figure out that you need to raise money to really get it going. But when you started Kobe, Did you know, from the beginning that it was going to be venture back.

Cause I know you've had experience building companies without venture capital. So I'd love to hear a little bit about how you thought about Kobe in the beginning and whether or not venture capital was always going to be part of the plan. I definitely came with a highly biased perspective, my first company, which just started out of university now 15 years ago as an auto financial.

And it's a company that we basically can do better underwriting at the dealership level to enable kind of different types of customers who typically harder to finance get financed. We compete against banks, credit unions, other finance companies in the United States. And all of the challenge was much more about how to create the debt facilities, to create the balance sheet, to be a lender, right?

Because you have to hold them on your balance sheet until you get really big, then you can securitize them or get them off your balance sheet in some sort of way. But you have to have. And so given the fact that all of my challenge was always historically based around debt. And obviously if you're raised debt, your, your cap table stays pretty awesome.

I had a huge bias against, against venture capitalism was coming down. I obviously made a little bit of money from, from, from that company. Her head had a little bit of liquidity. And so my idea was I would love to kind of get to big scale without having. What it quickly realized though, Cobra is a SAS company, right?

And SAS is when you buy a contract, it's kind of like buying a bond, right? You're investing today for a series of cash flows for tomorrow. And the faster you grow, the bigger that whole of cash becomes. And that was not immediately obvious to me until we started really kind of figuring out the, go to market motions and start understanding the, the cashflow implications around those that it became very, very obvious.

Like if we want to create a big company very fast, the only reliable way for us to do this is to do the venture model. Yeah. I mean, so made that decision in 2018 to start bringing in outside capital and obviously the rest is the rest is history. I think this is like a very interesting part of most conversations that I have with founders, which.

Okay. So at some point you had this realization and it sounds like for you, you were working for few years before you even believed that you needed venture capital, but once that thought entered your mind and what was it like thinking about raising venture capital? How did you think about learning what to do?

And especially as a Brazilian company, that there had to have been a ton of decisions to make or things to understand where you wanted to raise from types of investors you wanted to raise from. Can you bring yourself back to like 2018 thinking through what does, what does raising venture capital mean?

And some of the thoughts that went into that. So, I mean, obviously it started out with chatting to some of the other Americans who had come down and started companies and raised man. Just because I need to demystify this, this entire process is extremely foreign to me. A lot of my biases against it were certainly in the fact that it was foreign.

And I liked doing things that understand, and this is something I don't understand that therefore, I don't like doing it. So I chatted with a lot of, a lot of friends who had gone through the process. Many of them had kind of either come from VC or come from PE or come from some sort of worlds where. The auction dynamic of fundraising.

It was very, very clear. Whereas to me it was zero clear. And so, and I definitely remember it just kind of through friend network, like reaching out to a few and then, you know, just being horrified that they didn't like, think my vision was just going to be a unicorn overnight, because that's how you feel as young founder.

Right. And, you know, feeling a little bit scarred, scarred from it. But it's a, I dunno, I remember some of the. Especially some of the more social dynamics I literally didn't believe were true. Right. And so I kind of ignored them just on like, I'm sorry, you know, Dan, your, your hypothesis is just too preposterous to be believable and, you know, you walk through and you start to just see like all of the incredible insights and what they were telling.

And it certainly does operate in a very counterintuitive way to an outside. Let me pause you right there. Just cause you kind of glazed over a few things I think are worth pointing out. And when we talked a little bit about your background, but successful entrepreneur MBA from Harvard business school, a lot of experience.

And yet what you were telling me was, as you were thinking about starting to raise money, You have this feeling like, wow, it's a black box. Right? You don't really understand it. And then what I think you were saying was the next layer of trying to shed some light on this black box was talking to people that had been there before.

And the first things that you heard from these people, you couldn't believe that it was true. So if there are one or two very specific instances of things that you heard that you remember, it would be, I'd love to hear it. Yeah, sure. So, so remember, all of my experience had been on the auto finance company called first health financial.

And all we'd done is tried to raise debt, right? And, and, uh, revolving debt facilities and all these things that are a lot more complicated, but it's a very sober experience. Like a bank doesn't care about deal competition. They don't care about terms. They just care that they have enough asset protection or to get.

That's it. Yeah. And so it's a very sobering experience. So it's a sprint to achieve the minimum threshold of approvability. Once it gets that minimum threshold, typically everyone wants to do it. It's a completely sober, there's no social dynamics to it. There's no option dynamics. It's just much, much more straight forward process.

And so. That was all my background. I would say that the first thing that I was just kinda miss mystified by was like the impact of introductions. It makes sense now, but at the time I'm just like, I it's unthinkable that literally, I don't know, fancy education. What I think is an incredible business, great traction, you know, millions has been invested in personally by the founder.

It was unthinkable that the power of the introduction could in some way completely you serve all of those awesome positive trends. Yeah, just because it at the other end is now, I mean, got through it a bunch of times you don't understand kind of the funnel dynamics of the VC, right. And that, you know, funnels all about taking tons and tons of leads in a very efficient filtration systems.

At the end of the, at the end of the funnel, you've got a few good deals that are really profitable. Come, come out the other end. And the fact that I had no idea on the other end, it was like, that's too preposterous. I can imagine that. Like, just because an LP introduces me versus. Our shared accountant that this guy would have, or Galvin any different.

It does seem so ridiculous, especially with people that feel like they have the background that should be trusted. That something as simple as a different introduction could literally color the perspective and the evaluation of an investor's evaluation of a. But it's totally true. And the things that I tell people are, there's just not a lot of time and not a lot of data in order to make the right calls.

And so they are looking for the biggest shortcuts into figuring out, is there something here? Is there something worth spending time on, so love that you pointed that out? Yeah. It's the exact same thing as any sales funnel. Yeah. Right. At the end of the day, like with, uh, with us, it said we're always just trying to understand kind of probability of close.

Potential money that we can make off of this market fit within, within our product portfolio, et cetera. And if we have a better filtration mechanism that can automate those things and minimize the work done, we'll do it as well. Right. So I think it's just the human nature of managing a funnel. Any other ones that come to mind?

Oh yeah. So I think the one that's much more impactful that I honestly think you have to go through it once, hopefully successfully to really understand it, but is. Creating competitive dynamics and a deal was one that also, I hadn't, I understood it at a very conceptual level, but I certainly had not internalized the importance of that.

Right. Because at the end of the day, it's like, I love, I love our receipts. They're all awesome. I have incredibly good things to say and say about all of them, but like at the end of the day, I'm selling a good, I don't want to sell for the highest price and they're buying together. They want to buy it for the lowest price.

And the only way to force hand is your BATNA, right? Like. Best alternative your, your VC wants to look at what is your best alternative and put one more incremental dollar value on top of that. And that's how they're going to price it. So your job is to get your pet as high as. To have the best negotiating leverage possible when you actually get to, you know, get offers, get to term sheets, et cetera.

You know, I think the last thing or the very specific thing, I would point out about that, which is just to your point, you kind of have to see it done badly. One time to be. Oh, my gosh. Like I need to spend time on actually setting it up in the system because the small correction I'd make is it's almost not even your best alternative, it's the perception of the best alternative, right?

Cause you might not even have the best alternative in hand. So, um, I wanted to quickly transition to something else as, as you think about, you know, remembering going to raise money, which is actually. Just asking you what it was like being a south American startup and wanting to raise money. So they're obviously local VCs, and I think you have some of those on your cap table now, but your history has been actually getting leads or getting the majority of your money outside of south America.

It's an interesting conversation because the startup world, the investing world is going very global right now. So certainly when we're getting started back in like 14, 15, there were. Um, four or five, very reputable funds. And obviously, as you can imagine, they would focus on like seed and series a and then they would basic nor series B because their intuition was that at series B, where you're now validating you 20 plus million dollar raise, you should go to the Americans who have more money in lower cost of the capital.

And that's true. And also they would give you terms dramatically worse, like half the multiples that, that the Americans would give. And a lot of them, certainly at the beginning, I think a lot, lots of changed since then. But like at the beginning, they're really just creating this very profitable bridging mechanism to get you to raise us money as soon as possible even today.

So nowadays there's a few south American firms that have over a billion of assets under management. It's still the same strategy, right? Because at the end of the day, they still, even the best brands still have lower smaller brands then SoftBank tiger Andreessen of the world. And obviously the brands still does, does have a lot of really positive signal effects that are really impactful for.

Um, and so they still really focused on that seed and seed and series a to me, I think being an American certainly helped me present gap a little bit better just because it's, I have more friends in common. I naturally had a bigger network through, I dunno, things like business school. Um, as I was able to bridge that gap and have an American firm leader series a, which was great, but that is pretty uncommon up until very, very recently.

And typically the ones you see. Raise American series. A's jury they're very big series A's or are companies that have gone through YC or something like that. So they've already had tons of exposure to these. W well, let's, let's, let's spend a little bit more time on that at the time, when you raised from fifth wall, amazing from in LA, that was 2019.

I mean, you really threaded the needle in terms of raising right before the pandemic. So some of those dynamics are going to be different, but how were you able to get it done? Because you would have had to spend a ton of time in the United States in person. But if you were, if you were able to diagnose.

Your success there. I mean, you talked a little bit about being an American, but what do you know if you were to give yourself a post-mortem and extract the things that helped make you successful? What was it about being a south American firm and you in particular? You think allowed you to actually get it over the finish line?

First thing is that, look, you have to take a lot of swings, right? And just obviously the vast majority are going to be misses and you have to align them to understand that you can manage the deal process pretty effectively. So, I mean, that's the first one. I didn't do that very effectively. I just had it.

It was just a series of errors, but we had one really awesome one hit the really excited plane. Luckily we did have a little bit of deal competition. Um, the, there, which was positive for us, but look at the end of the day, the connection kind of one-on-ones I was looking for someone to say at the time, IOT was not nearly as hyped up as it is today.

Right? So even three years later, if guys like samskara and keep trucking and platform science and Lytics and all these like incredibly massive unicorn type companies are raising tons of money, super validated the model. And so we're very lucky that the partner of fifth wall, uh, Andre Michelob skews also won, who was also one of our board members.

He had seen, he had invested in telematics. Pass like private equity world and he totally understood. He understood the go to market. He understood the technology. He saw just the incredible blue ocean that like Latin America is the same size, the United States from a logistic standpoint. And it is just blue ocean city.

And so he's just like that narrative completely resonates with me, like the same narrative we had way back when in the private equity space, et cetera. And so I think there was certainly serendipity in it, but look, it's. Serendipity is just a, is a measure of how many repetitions you get. And so I think it was just about repetitions and hitting on something that really resonated with people.

Certainly before technology became more than. Well, a couple of things that I just, I really appreciated your level of honesty around the number of mistakes you made. Um, because if you go to Crunchbase and you type in Copeley and you Google a little bit about Cobra, it's like one, the 2016 HBS new venture competition, $10 million from fifth wall.

And then we'll talk about $30 million from SoftBank it's it looks like. We're walking on water for the last five years. And so some of that vulnerability and honesty around, yeah. We really EFT up like that. You know, there was some serendipity in there, but found something is just, I think, really refreshing to hear something that you always love hearing.

And the thing that I am surprised at, or. Surprised that, but it makes sense now is I thought there was going to be something very specific about south America or something that you were going to tell me. Then I was like, oh, that's what, that's what a founder coming from a country outside of the annulus needs to do a little bit differently.

Touch these things here, cross these wires, but it turns out the story you're telling is the same story. Everyone goes out, who is successful at, which is finding a great story, being very specific about that story. And then going to find the person that really understands that story. Right. So yours happened to be very specific around IOT.

I don't know how much, um, you know, your lead investor from fifth wall knew about south America. You know, it's the same numbers game. There is a slight, additional complication of being in south America, but there must've been something about the investor from fifth wall that made him amenable to taking a bet in south America.

It really is about a numbers game with a very specific story and finding the person that thinks like you, I think there's some work you can do to make sure that other investors like get up to speed and see your vision. But you know, when you land on the one that understands it, Interesting thing it's going to happen to, to build on a point a little bit.

It's that? I mean, it's an additional complexity. Latin America is that 95% of VCs don't do international. So you have a very, very small pool to pick from. And then it's really important. Like the narrative is of the utmost importance, right. And just like they needed. The destination that you've defined, is that an attractive destination first and foremost?

Right? So it's like that vision is an attractive vision. And then is it a believable vision is the division that we want aligned financially, culturally from a narrative, from the VC standpoint. And then their evaluation is saying, well, we'll show me the pathway to get to that destination. And they have to have conviction around every point of breakage on that pathway to that.

And that's basically what, what they're going through in that point of break, it should be like, I don't believe Parker's capable of getting there. I don't think he can hire a team. I think the technology and a cramp out, I think they'll run into a regulatory disaster. I don't think there'll be able to raise a series B.

I think competition will come up and bite them in the ass, et cetera. And they're basically just saying again, coming back to like, you were just managing a yield loss funnel, and they're just trying to save this time that you lost funnels and starting position is right this very moment. And position is a beautiful.

I need understand was like, what are all the different holes that they can fall into? And what is kind of some sort of probability of them finding the holes and conviction that all of those things are, are surmountable problems. And so it it's, it's the, just the absolute importance of having a believable destination and a very clear journey of how you're going to get there, uh, is the most important thing.

When we come back, Parker explains why he thinks the series B game is all about your data room.

I spend most of my days, one-on-one with entrepreneurs, helping them understand strategies that make a difference in fundraising. Some things vary from founder to founder because not everyone's story is the same, one thing I'm super consistent about no matter who the founder is, making sure they send their decks and materials using a document sharing.

And for that, I always recommend DocSend DocSend lets you know, what's happening with your deck after you send it along with real-time analytics and notifications that the VCs actually open it. What slides did they spend the most time on? And if you think it got shared with the wrong people or maybe you made a mistake and sent it to quickly, DocSend lets you control access and Nick updates.

Even after sending sign up for a free two week trial at docsend.com/funded that's D O C S E N d.com/funded. Okay. Back to the show.

Your series a is so much about your vision, but your series B is all about how well you've been executing that vision, improving that through data Parker figured that out and a bunch of new elements of the process brought on by a post COVID world.

At the very beginning of like our series eight, we had revenue and we were certainly marked to revenue multiples and stuff like that. But it's, you know, it's probably 90% vision, 10% reality, whereas kind of the series B moves to maybe a 50 50 split. And then as you go on, it's. Tell me your reality and let's see how much white space still sits in front of you.

And so your narrative certainly adjust for that, right? Uh, some of it is just saying why, what you built is so foundational for future narrative series, age, just narrative, and your foundation is me, right? And tiny little things that we have that are minimally functional. The COVID dynamic. I actually love the COVID dynamic.

So I remember during the series, a man, it's obviously a super long flight to get the San Francisco. Being first-time and not having any seed. Hadn't done YC. My network was business school kids and just random connections and just me just hustling. And we were lucky to get like one pitch in a day and then VCs would cancel and you're taking Uber's from the city down to like mountain view, wherever they might be placed.

And you're just losing everything. You're getting no work done because you're just grabbing Starbucks internet and it's just complete chaos. Right. And so I remember I spent two weeks with my COVID. I dunno, maybe eight pitches. It was just, it was just terrible because it's just so hard to get on the schedule so hard to physically get there, et cetera.

And then it's also draining, you know, you're not in the best state of mind when you show up. Like it was just, I just have nothing but bad things to say about. But the physical process, obviously the zoomed in that dynamic changes dramatically. Right. So I remember one day at nine pitches in a single day, it's much easier to get on people's calendars.

Right. Just because there's no switching cost at all, you just kind of jumped from one zoom to the next. I thought that was incredible. It was much easier to get feedback on pitches. Right. So I would always have my co-founder right there in the pitch because VCs do not give you clear feedback. Right. You know, like.

Best case scenario, they're going to be like, here's what we liked. Here's what we didn't like. But typically they're just going to be like, this was awesome. Let's stay in contact, right? It would just that incredibly euphemistic, no, right. That so many people get it. And so having my co-founder out there and having to be so repetitive and having him sitting there and afterwards you can do a recap is.

When you, when you're sitting there, I mean, you're just in this like isolation booth, and it's mostly a one-way right. You kind of give this this one way pitch to another person. They sit there and digest. You're trying to read social cues of trying to read anything that give back to et cetera. But I mean, a best case scenario, you're getting like 20% through just kind of that passive feedback that you're actually getting ingesting and using to improve the pitch.

So having a co-founder there was, was, was, was really awesome and I think super necessary. Um, so really big dynamic that. During this thing where you have higher velocity, greater access to the VCs. So what you saw historically is you saw that look, let, let me just loosely define the different stages of fundraising you have.

First off, you have to ask, get someone to try to make an intro. That's that's the point of breakage that VC can get to a yes or no. Great. You're now on the VCs books, after you make a pitch, typically the best outcome is, Hey, do you have any. We'd love to just dive right in, right there on the call. The answer to that next would be, Hey, let's stay.

You know, and I know it would be like, let's stay in touch and medium would like data room two days later. Anyway, assuming that that is then a conversion, they would get to the data room. And the only next step after a data room, other than kind of, um, any sort of questions or QA they might have is a term sheet.

And what you find is during the series, a, it was much harder to get to data room. So basically the pitch to data room conversion was low, right? Because these VCs. They have to say of, of their data rooms. They have to give a high, a high percentage of data rooms into term sheets just to use their time.

It's much harder to get pitches in the door, just because you've lowered bandwidth in the COVID area era. They were much quicker to go into the data room because they've hired like an army of analysts now because they've so many pitches coming in, they want to see almost everything, but that the data room to term sheet conversion has never been lower.

So pre COVID the complexity is getting to date. Postcode, the complexity is getting determined and we saw very, very similar dynamics that is like, people are much part willing to jump into data room, but less willing to throw a term sheet out quickly, which is the opposite of experience in the.

Interesting. You're an incredibly technical founder and very steeped in sales processes, obviously. And you sort of color the, uh, your views on fundraising with, with that lens. Um, it's fascinating to hear you describe it because, you know, I obviously believe that fundraising is a. It's a solvable problem is a process that you can run.

But hearing that a level of rigor is mind blowing. Honestly, wanted to hear a little bit more about the emotional side of the series B. It sounds like you learned a lot between series a and series B, probably both your fundraising jobs and sales jobs. So it kind of all colored how you actually executed the series B.

Does this mean, you know, zero stress super easy, the second time around, how did it feel gone there, man, quit quite the opposite. So let me just first kind of jump over kind of mistakes we made during the day that we didn't make during the B still lots of mistakes were made. So the first massive mistake is we did not have our data room ready when we started pitching.

So I didn't, no one had explained to me that like the conversion from pitch is that. And so if that guy's like, this is awesome. Do you have the data room open? And you say, yeah, give me two to three weeks that guy's forgotten your first same in two to three weeks. Right? Because this is just like such a, you know, drinking from the fire hose type situation for almost every VC, especially nowadays.

And so that was a huge mistake is that we didn't have the data. And so we had a bunch of funds that just kind of lost, just cooled off and you kind of got back in contact and the funnel is already full again. And then the second is that this time we invest in the data room, understanding that dynamic, that your data room should be as glistening as your original deck.

It should be as glistening as your pitch, because it's so important. Member of the data room term, she conversion has never been. And the data room that answers the questions in an easy way, tells the narrative in an easy way, as opposed to like, oh yeah, here's like a blind HubSpot funnel, data dump and Excel.

Good luck. That's like a quick pass. Right. And so that was one really big thing that we did apart from basic timing things. Right. Trying to get everyone on the same page. Yeah. But yeah, on the series, First off a series being Brazil is still really hard. Why? So, like I said before is local funds don't want to do a B because they're like, you know, there's moral hazard here, right?

If, why are you coming on us? The foreigners have better brands and more money, et cetera. If you're coming to ask means they've already rejected you. If they've already rejected you, why would we accept you? Right. There's all this like insanely circular signaling, which is by the way that the social diamond dynamics of VC overall, not just south America, but really completely like when you were, when you were dealing in systems with incomplete information, it that the social dynamics just fill that information gap.

All right. And that's exactly what you see a hundred percent. And so the series. 'cause uh, so there's first that dynamic that locals don't want to lead series based because of the potential negative negative signal you've already pitched the United States and the United States is something we really saw as that funds have.

Massively. And so today what you find is Brazil is becoming Latin. America is becoming hotter and hotter, but you typically find is that funds want to put big checks into international, right? Because they're like, look, we get growth, right? Growing coldly versus growing Sam and the United States pretty similar, but probably the first two years of Kobe, what our challenges were versus Sam Star's first, two years are probably dramatically.

And we don't understand that we're not Brazilian. We've maybe been there a few times, et cetera. And so first off, if them seeing you have to be a growth mode, and then the second that the front, the rounds have gotten bigger, they're typically looking at like, honestly, the sweet spots, like 50 to 80 for what a USB-C would want to lead for like a BCD, et cetera, in Brazil.

So w w we were under that, we started asking for smaller some than the 35 million that we ended up being. Obviously we were able to manage the process well and push that check size. And in terms up a bit, which was probably one of the successful parts of what we put in. Well, you kind of fell into this gap or too small for the Americans are too big for the Brazilians.

Where do we go? And so it was either, we certainly have discussions of doing co-leads, which are increasingly popular thing, which has positive and negative signaling built into it. But it's certainly it increases the buying power of some smaller funds. So we had some of those term sheets. You, the founder, you have to cobble those together.

The VC doesn't pop out of nowhere. There's like an insane level. Between VCs and these guys aren't like trying to pat each other on the back pulling deals. Cause they're trying to kick each other at the same time. And so the co-leads can be a really good option if you're trying to get a bigger round done with smaller.

And then for the bigger funds, you really have to shut that. Look for the series C for us, it was the next round. This round is going to be hot. Right? We have an incredible market. Our go to market is bumping. There's very few things out there that that can, right. This is kind of getting back to that, the journey that connects the, the outcome to the reality, that has to be very, very tight.

And you have to show them how you can deploy more and more capitally tests. Three, $5 million. SoftBank is not meaningful, right? They have to be deployment hundreds of millions and then have an outcome that, that will support all that. And so you have to build that narrative around to get some of these guys to come down.

Market. Number two is the only come down market. If they see it's unclear, if we'll be able to participate in the seat. So guaranteeing that they've prorated rights of 15, 20% or however much of their coming in. That can be extended for. Yeah. So I'd say those were the big dynamics that changed for us. And then, like I said, the Latin America part is that there are gaps in just the, let's just say VC stack of check sizes.

Sure. And you need to be very smart about how you navigate. I've seen some really, really good businesses that are super healthy, kind of. Get whacked from a cap table standpoint cause they fit in. They just jumped into that, you know, the Bermuda triangle of the series B of Latin America. You obviously got to a great outcome.

Do you remember the most stressful time of, of that fundraise? So to be honest, I find that you kind of need to be a little Santa find to all of it. Like yeah. Just getting really comfortable at knowing it's a numbers game, kind of getting over that because. Uh, we S we had a few, we had a few funds that we either had a term sheet for the series a, or we were like centimeters away from, from having a term sheet.

They were like quick notes during the beat. And we're like, oh my God, everything's gotten better with, so what's happening. Like what's going on, et cetera, just because look, a lot of it is you have to manage two things. You have to manage process and you have to narrative. Narrative is marking processes, sales.

And for both of those things, there's a lot of reading between the lines of kind of your confidence, your ability to pitch your, your, the speed with which you're like diving into your own data stream in your mind and pulling out metrics in a really dynamic and fluid way. And so the theatrical part is really important.

Yeah. Right. And just being on being forums and kind of getting like, if you want a really bad pitch and you've got four more of that. You need some sort of way, right? Go walk the yard, take a walk, smoke a cigarette, whatever it is, your vice you, you gotta do it just because it's performance time. And, uh, and I have to get through that.

I know, I love that you pointed something out around. Your own levels of stress one. Um, so your ability to control that is really important. And you talked about something that I think could be really destructive to someone's confidence that I think you were able to defend against, which was, you know, you had these funds that.

It felt like teed up for you, right? Like they were really interested, you know, they seem to be better for the B anyways. And when you talk to them, you probably went in there being like, ah, this is going to be great. And when they were quick nos, that feels like a punch to the stomach. Right? Like that is like, uh, take the wind out of your sail.

It brutal. Right. Especially, probably had them early on because you thought they would be good. But when those nos come in, I think this is what I tell founders a lot is like those nos aren't going to feel good and you have to figure out a way to be able to not brush those off and move on. One of the ways you do it though, is by creating a process that kind of doesn't let you stew on one, one MIS you know, if you're doing one pitch a day, Or a one pitch.

And then two days of gap time where someone passes, that's going to feel real bad for two days. But when you have eight pitches in day, it's like, man, that did feel bad, but look like giddy up. Like we have seven others to go there. Last we're going to keep going. So great job setting up that process and kind of finding your Zen blaze for fundraising.

Yeah. The, having someone kind of there on the pitches, even if they're not like participant during the pitches is important, just because they can. You know, just like the emotional backlog that, that it crazy. It can help load balance of just kind of like what is actually a real positive signal that you should process and get better at and what is just you overthinking things, et cetera.

And so having that person by your side, you can kind of cut through a lot of that's really important. Do you remember where you were when you heard. Or when SoftBank reached out saying we want to lead this round. Do you remember that? Yeah, I mean completely it's um, I mean, so there's a shocking, I was in the second bedroom, my home that is now home office.

They had said, Hey Parker, can you chat at, at 6:00 PM? It was a Friday night. I was like, sure. I'm like, ah, fuck, man. Like. It's either like, Hey, we went really far in the process and we really love you guys. And we really think really in series C, but we got to say no, but guys really stay in touch, send us data.

Like let's really do the things that most people say they don't do right. Is either that I, and I thought that was the more likely one and or it was, it was, Hey, let's do some as do a term sheet. And it was quite funny because the guy who's leading our deals, a junior partner, there's three main partners.

There's a Carlos Paolo and Shu who leads. The $10 billion Latin American soft bank fund. It was a, there was a junior partner named Matt. And it was funny because Matt and shew Perry, Sr, uh, kind of sent that message, et cetera. And then at the last second, I had to move. My chat with Matt back an hour, but she didn't know that.

And so she sent me a text at like six, 10, assuming that the act had been done, just be like, dude, welcome crew grass, welcome to the family, blah, blah, blah. And so he totally ruined the surprise. Like she was just kind of like completely jumped the gun. So w w ruin the surprise, but obviously it was, it was really great.

I remember just jumping up and down with them, you know, with the fiance immediately called Rodrigo. My co-founders, it was incredible. It's like, come over and, you know, we obviously just had like, kind of a mix of celebration and retrospection, right? I've just been like, you know how far we've come look, how much we have to do.

And also it's like, enjoy this moment.

When we come back, my producer interviews me about the interview. Um,

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They integrate with your cloud provider and other tools you already use to automate the super complex and time-consuming process of preparing for an audit. Anyway, if you'd like to drop a months long process down to weeks, like I would have back then and actually signed those major contracts, you should check out.

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Hello? Hi. Um, okay. So that interview was rather straight-laced it was all business, but I happened to know something which is that you and Parker are like tight. Yeah. I guess reality is Parker's my best friend. He and I met in business school, uh, happened to be in the same class, same section. Um, and then just like, In fact, I'm, I'm the best man at his wedding and, uh, just a, a little under two months from now.

So yeah, it, it is a, there, there a little bit of background there. I remember first meeting him in business school. Ah, yeah, it's funny. Like maybe some of this will go into my speech, but, um, he has said that he, he noticed like I used to go to the class at business school. Um, it's a skateboard declasse and you know, and business school is like a very straight lady.

Yeah, or can be a very straight laced place if people are coming from banks and consulting firms and everyone wearing suits and stuff. Uh, yeah. I mean, w you know, it was certainly polos, uh, and I would roll it up in like t-shirt and like skateboard declasse and he, he says, I remember seeing you come in and be like, Who's this guy, like what w how cool does he think he is or something like that?

Um, but yeah, I mean, uh, early on, I think we went on a fun trip together that like ended up being a reason. We, we hung out quite a bit, but funny enough, the trip that we got close on was we went to Brazil. Our first year of school together, um, that his first time in Brazil, do you know, I think it was his first time in Brazil.

So like the, the background is that his first company happened to have a large portion of its customers who were, uh, Brazilian immigrants. And so he even had employees that were Brazilian and it was always fascinated with the culture, started studying language. And then when we went down, you know, had such a fascination for.

The country and the people and the opportunity there that he was just, so gung-ho about starting a business down there. Yeah. Do you remember when you were in Brazil? Like, did he talk about, I think I want to live here, like, did he say stuff like, yeah. I mean, there's definitely comments about. Just how exciting it was to be in a different country.

That was much more adventurous. He's always been a really like rigorous business mind and, and would talk about things like, you know, all the opportunities are already done in the states. Like it's all, it's all priced in. And like, you know, that term of like all the opportunity is priced in the United States.

Whereas if you go abroad and you go to places like Brazil, There's so much opportunity. There's so much upside here. So, um, yeah, I definitely remember him just being fascinated with the country and the opportunity from day one. And did that make you think differently about VC at all? Because I know most of your work.

I mean, I don't know your whole resume, but I think has been domestic. Um, so did being so close to someone who has like international ambitions or ambitions abroad, did that make you rethink? I don't know, opportunity or. Yeah, where opportunity lives a hundred percent. You know, I didn't expect the conversation to go here, but yeah, that was our first trip to Brazil was over new years of the first school year.

And, and the summer between years in business school, you take an internship. He went to Brazil and I went to China. I went to Shanghai thinking, Hey, you know, I, I really took it hard. Parker are we saying? And I agreed with it. I was like, there would be way more opportunity if I could land abroad and, and capture a bunch of upside.

I definitely thought about it. I think if I were to describe why I came back to the states is that Parker has a super high risk tolerance and he's incredibly adventurous and like landed in Brazil, didn't know the language and was, was like, Yep. I'm just going to make this work. Whereas I landed in China and I'm Taiwanese and I speak really bad Chinese.

When I got there, like my Chinese was bad and they weren't like excited about it. Like I thought they would be, I thought they would be like, oh my God, look at this. Look at this American born Chinese, like he's trying. And instead it was like, we all speak English. And your Chinese is terrible. You're going to have to work really hard to actually make it here.

And I think I came away from that summer being like, uh, I don't know if I have this in me and went back to the states and eventually became a venture capitalist. Whereas Brazil, Brazil for Barker. I think over the summer, I was like, man, I'm really bad at Portuguese and this is kind of hard, but he's like, I'm going to run towards the difficulty.

I'm going to run towards the opportunity. So that's why he is he's doing when he's doing. That's cool. That's really cool that he rubbed off on you. Question that, what do you mean when you say Parker said that all the opportunity in the U S is like priced out or whatever? What, what does that mean? And why do you think there is more opportunity abroad?

Like in places like China or Brazil? The simplest way to think about that concept of like all of the opportunity is priced in is the United States in a lot of ways is on the forefront of a lot of innovation. And so we've done things like push e-commerce forward. We have done things like put telematics into cars in the United States.

That's the space that parkers in. Everything is expensive. Like you can't come in and be like, I'm trying something new and people go, oh, wow. Like, you know, there's so much upside here. I want to invest. It's like, no, that's all done before. Whereas in Brazil and China and Pakistan and all these like up and coming startup opportunities zones, you know, you can go there and being like, wow, like the infrastructure isn't here yet.

Like, you know, they haven't built out. FinTech. They haven't built out great internet of things, technologies, and infrastructure. And so if I go there, I can be the first to do that business and capture all this upside that hasn't been quote, unquote, like priced into the country or, or the. Interesting. So one question.

So Parker ended up getting investors who were both in America and in Brazil, right? That's correct. So in both cases and the series a, he had a firm called fifth wall ventures, which is based out of the Los Angeles. And it's like fancy, right. I Googled it very fancy, very fancy, no, fairly new a newish fund, but well-respected pretty fancy.

And then the series B was soft banks international fund, which is like a giant international fund. But in both cases, those leads took up the vast majority of the round and then Parker, um, squeezed in some Brazilian investors. Okay. Got ya. Okay. Tell me about. International funds. So I know Parker said this statistic, which I'm sorry, Parker.

I am skeptical of just like, it's a very clean number. Yeah, exactly. He said something like 95% of VCs don't do international, but you just told me about something called SoftBank or whatever. So it sounds like there are funds that do specialize in investing abroad. I mean, I think what's, what's fair to point out and I do believe.

The 95% statistics is just something he dropped as hyperbole, but like directionally sound. So especially, especially given the timeline of his starting Kobly and raising the series a, so it's interesting to talk to a founder who, across the last two rounds, straddled pre COVID versus post COVID world.

And, and I, what I would say is as recently as. Three years ago, certainly five years ago. Um, most investing was done very locally to, to where funds were. Um, and because a lot of funds were in San Francisco, San Francisco, then maybe New York and LA, most of the biggest companies were. Centered and San Francisco.

And it was really difficult for people to even imagine investing outside of those geographies, their city geographies let alone internationally outside of the United States. So what he's saying is very true and I mean, I think the simplest way to describe this is, you know, you're, you're investing. In the early stage and you just don't know what's going to happen.

And so you need to feel comfortable with as much of the potential variables that will come your way as possible when you're putting this early stage capital at risk. So if you find a fantastic entrepreneur and, and Olivia and she lives in San Francisco and her network is local, you can say a few things.

You're like, well, I can diligence her. You know, she's worked in this. City for the last five years. So it's very easy for me to call five people and say like, Hey, I haven't heard this woman, Olivia, um, it's easy for me to see what her experience looks like. It's easy for me to be like, okay, I know the companies that she worked at and I know they're credible, and that makes sense to me, that would develop these skills.

And then it's really easy for me to be like, okay. And I know what her network likely is. So her ability to hide. Her ability to hire is probably going to be great. Uh, and then understanding the local dynamics of how the business is gonna run makes you believe like, okay, I can kind of see how this will work, or it might pivot.

Now you move outside the geographies and, you know, and like I said, move outside the city that, you know, and it becomes a little bit more difficult than you're like, well, I'm not really sure how this is going to happen. Then you move international and all of a sudden, yeah. Different sets of laws, you know, completely different networks, different venture capital firms.

And so all those new variables make it be like there certainly will be winners in international markets, but the comfort level of investors going abroad historically has been quite low. Now, I think things are changing for a variety of reasons. One of those being post COVID zoom capabilities, like Parker talked about this ability to.

Meet founding teams and meet investors back to back to back super easily. So now if I do need to diligence Parker at Kobly, I can probably do a bunch of zoom meetings to meet his former investors. Some of the companies that he works with down in Brazil, and that's more possible. And then everyone is looking for upside opportunity.

Now that everyone's so excited. Early stage investing that they are starting to take on more of this geography risk and this unknown by going to different countries, like there's been a spate of, uh, Of companies out of Pakistan that are getting heavy amounts of funding because people are, are sort of getting comfortable and excited about that geography.

So, um, certainly was, you know, the, the round number of 95%, um, was directionally accurate over the last few years. But I do think especially in 2021 post COVID people are getting a little bit more comfortable with going outside the borders. To go back to your business school class was Parker. One of the only Americans who ended up doing very few did what he did.

I would say he's definitely. Wasn't the only one. He definitely was not the only one, because there, there are a lot of easier opportunities. Lower risk, lower reward opportunities in the United States for people graduating from business school. And I think a lot of people took those, but I mean, I knew people that started fish farms in Mexico and started businesses in Spain and over in China and a couple in south America.

So he's not the only one, but he is one of the other more successful ones, just so you know, fish farms are one of my biggest.

It's actually, my biggest fear is being thrown into a fish farm anyway, but that is cool that someone started fish farms in Mexico. I'm sure it's a great business.

There's a learning curve with everything that includes languages. But it turns out Portuguese isn't that different from a Boston accent, but Parker in Rio, they have very thick accents that Brazilians have mixed feelings on what they think about the Rio accents. Some people will be kind of like mean in a Boston New York rivalry dynamic and be like, oh, it sounds criminal.

Others would be like, it's super beautiful. It's similar to the Portuguese accent. Cool. So irrespective of where you fall on your opinion of the Carioca accent, it's very strong. So basically I spent my business school, summer internship and relearning Portuguese from like zero. And obviously my professors Carioca was from Rio.

And so I remember I get some Paulo with this terrible Portuguese, but this like super thick Rio accent. And so do the equivalent of like, you know, like a, a German guy coming over. He can't speak any English at all, but he's got like, Oh, wicked had Boston accent, but all horrible. And so people would tease me to this day.

They'd be like, ah, ah, bucket, which is like the loopy way of pronouncing my name and the Rio accent. That was the biggest one that people still tease me about this this day. And it's like an awesome icebreaker anytime. Especially a business person from Maria.

Thanks so much for listening. There are tons of insights that each founder recover on funded has around startups, fundraising, and life. And we don't have time to cover it all. Especially in this episode where we touched on things like data room setup, we could have talked for hours. Instead. We put those things into our insights back.

If you'd like to hear a bit about Parker's amazing data room and what a great data room. Grab that@fundedpod.com slash . If you're looking for more insights, strategies, and support around fundraising, here are a few things you should do. Definitely subscribe to our weekly newsletter@fundedpod.com slash newsletter.

And find me on. I'm at J Ja that's J a Y Y E H on almost every platform I respond to newsletter replies and DMs. So hit me up.

This episode was produced by Olivia Rheingold. Hi, thanks also to Jonno Lee from adamant ventures. Hello. And thanks to Parker for showing us that we can all learn foreign languages like Portuguese and foreign processes like fundraising case in point, gotta wonder if he could  as always one last thanks to our sponsor.

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