AI Engineer World's Fair 2025
The AI Engineer’s Guide to Raising VC — Dani Grant (Jam), Chelcie Taylor (Notable Capital)
Read the talk
The AI Engineer’s Guide to Raising VC
A first fundraising round starts with a credible founder and a clear opportunity, then advances through relevant outreach, two-way pitches and materials an investor can carry back to their team.
From a talk by Dani Grant and Chelcie Taylor
Do you need revenue—or even a product?
When should you raise venture capital: as early as possible, or when you need to scale? Dani Grant opens with that question, then makes it concrete with a show of hands: Do you need revenue to raise VC? Chelcie Taylor’s answer is no, provided you are approaching the right kind of fund.
| Fund focus | What the investor may expect |
|---|---|
| Later-stage and some multi-stage funds | Annual recurring revenue, or ARR, and its growth |
| Pre-seed and seed funds | A founder and opportunity worth backing before revenue, sometimes before a product |
The distinction changes what you need to prepare. A pre-revenue company is not automatically unready to fundraise; it may simply be a poor match for a fund whose investment criteria require operating metrics.
The next audience poll removes another apparent prerequisite: a finished product. At the earliest stages, Taylor looks at the founder, the team they can assemble, their recruiting ability and their vision. She expects the product at an eventual outcome seven to ten years later to look dramatically different from the original pitch. That makes the founder’s ability to recognize a market insight and adapt more consequential than having a beautiful first version.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Commitment and raising before you are raising
Must you leave your job before raising? This answer is more dependent on the firm and partner. Some investors will consider a founder who has made progress on a side project and needs funding to make the leap. Taylor explains the underlying incentive: venture investors seek companies capable of returning their funds, so they value conviction. Leaving a job can signal that conviction, but it is not a universal admission requirement—and building a company solely to satisfy VCs is the wrong starting point.
Grant’s own experience makes the distinction tangible. Jam raised before it had a product, while her co-founder was still employed elsewhere. Their early conversations concerned what they were about to build and the prototype they planned to show. Grant found that potential easier to fundraise around than the much later task of producing a product impressive enough to make an investor immediately want in.
That leads to her recommendation to begin investor relationships before launching a formal raise. Asking for advice invites someone into the work while it is still taking shape; the earlier they participate, the more connected they can feel to its progress. The familiar advice-versus-money maxim captures that dynamic, but the practical action is simple: explain what you are about to attempt and ask for relevant input. On team structure, Taylor says co-founders are typical among the businesses her firm backs, while solo-founder exceptions exist.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Cold outreach works better with a warm signal
What is the first step toward a pitch? The audience offers pitching, solving a problem and finding someone in an elevator. Grant brings the discussion back to access: a warm introduction is preferable, but many engineers do not know investors. Cold email remains an option because finding promising companies is part of an investor’s job. Taylor describes her own role as a kind of sales work: she is trying to get capital into the hands of excellent founders.
Taylor says that, when she asked colleagues about the cold emails they answer, those messages usually contained a warm signal: a relevant connection to something the investor was already thinking about. Taylor says she posts ideas on LinkedIn two or three times a week. Those posts are invitations to learn from people working directly in a market. She reports almost always replying and taking a call when a relevant builder responds with a request for a 15-minute exchange of ideas. Establishing that relationship early is easier than arriving for the first time with a fundraising process already underway.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Make the response easy
The first real outreach example begins with a prior meeting and the question the founder asked there. It then gives a compact progress update: the co-founders are taking time off from their company, have built an MVP and have begun beta testing. The request is bounded—15–20 minutes to discuss go-to-market and, if appropriate, get pointers to other investors.
The audience identifies the small time commitment and personal context. Taylor adds the most useful property: she knows exactly how she can help. The founders understand that she is not a consumer investor and ask for pointers to someone who is. Before replying, she can already picture the conversation and prepare for it. Specificity removes the work of figuring out what a vague request actually means.
The email’s job is to earn a response. Grant recalls advice from one of her investors: “Don't think selling in email. Think be compelling.” Her own mistake was trying to put the entire pitch into the first message. Enough information to create interest is more useful than a long explanation of everything the company might become.
The next message links to a Notable blog post, connects its argument to what the founder is building and includes a GitHub repository. Taylor says the message arrived at seed stage; Notable followed the company for multiple years before leading its Series B. The repository gave her something concrete to inspect, while the response to the article established shared interests. Even when the business was not yet an investment fit, the founder was someone worth knowing.
Two further examples reduce the pitch even more:
- Share related thinking. A founder responds to an investor’s post with their own earlier writing on the same topic and asks for feedback. Taylor confirms that the relationship led to investment, despite the opening message saying nothing about the startup.
- Connect founding theses. Another founder explains that an investor’s observation is exactly why they started their company, and expresses enthusiasm for discussing the space with someone who has thought seriously about it.
Both messages make the likely conversation useful. They establish a shared baseline and offer an exchange of information, rather than requiring the investor to evaluate a complete company from an unsolicited message.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Make the investment decision understandable
Once the email produces a meeting, what happens? Audience descriptions range from building a metaphorical Jenga tower to matching theses and getting to know one another. Grant proposes a role reversal: imagine you have a limited pool of money to invest in founders. What would make you choose one? An audience member supplies the central questions: Why you? Why now?
Engineers can over-focus on technology because it is the part they know best. Technical ability and a strong product still matter, but the early investment decision also depends on a distinctive insight into the market, distribution, product or customer segment. Taylor’s questions probe how the founder thinks and where that perspective comes from: lived experience, reading or observation. The goal is to make an unusual approach understandable and grounded, rather than simply assert that the technology is good.
A useful pitch starts with the core problem, then explains how the founder arrived at a particular solution. Taylor uses vertical voice AI as an example. The broad opportunity—automating phone-dependent work—is already familiar. The more revealing question is why a founder chose logistics and transportation instead of restaurants. Does that industry offer a workflow the product can become embedded in? Could the resulting data create a durable advantage? Those choices expose the reasoning beneath the product. A well-known problem can still support a compelling company if the founder identifies an opening they can address especially well.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Connect today’s starting point to a large business
The audience next raises return on investment. This exposes a second pitch mistake: explaining the present in detail without showing how it could grow into a billion-dollar company. At pre-seed, the useful question is often how future revenue could emerge, not how extensively a founder can describe a product or revenue stream that barely exists yet.
Taylor sketches a hypothetical answer built from buyer conversations: four prospective design partners have expressed interest, and those discussions suggest a possible range for annual contract value, or ACV. That is enough to begin reasoning about the next phase. Even without formal design partners, customer interviews and research can supply evidence of willingness to pay. Distinguish what customers have actually said from the revenue hypothesis it supports; together, they help an investor see a possible path to returning a meaningful portion of a fund.
Jam encountered this problem when its small MVP prompted investors to ask whether it was a product—or a company—rather than just a feature. Grant came to understand the question as a request for the expansion path. Her answer was: “This is the first feature of our future product.” She would then explain what that future product could become and how the company would get there. The small starting point became understandable once it had a place in a larger plan.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Give a good meeting, then get better with practice
Would you invest in someone smart if you did not enjoy meeting them? Grant’s next audience poll draws few affirmative hands. The room’s ingredients for a good meeting include next steps, laughter, focus and a two-way conversation. Sometimes an investor’s question merely checks whether you have considered an issue. A long go-to-market monologue can overwhelm that purpose. Give the likely approach briefly, acknowledge that you have considered alternatives and offer to go deeper.
Taylor confirms that she often asks questions to understand a founder’s thinking. In a recent investment-committee meeting, a founder declined to invent an immediate answer and said he wanted to be thoughtful. The response impressed the investors because a persuasive answer is not necessarily a considered belief. Founders should know the basics of their own business, but they can pause on an unresolved question and ask what prompted it. Understanding the investor’s thinking can reveal what the conversation actually needs to address.
Pitching strangers under a perceived power imbalance takes practice. Taylor recommends putting less likely or less preferred fund matches earlier in the schedule. Use those meetings to become comfortable with the narrative and the questions it attracts. Then meet the more desirable partners—perhaps a pre-seed investor already interested in your category and in AI engineers—with some repetitions behind you.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Prepare hypotheses about the product, customer and team
The expected questions form a practical preparation sequence:
- Problem and timing: What are you solving, why are you suited to solve it, and why now?
- Solution and iteration: What could the product look like, and how will you maintain development velocity while learning what works? A coherent explanation can precede both a product and mock-ups.
- Customer: What is your ideal customer profile, or ICP? Two or three candidate profiles are acceptable if you can explain how you will test them and narrow your focus.
- Monetization: What do customer or design-partner conversations suggest about willingness to pay, price range and the basis for charging?
The point is to arrive with a reasoned position and a way to learn, rather than pretend every decision is settled.
| Monetization hypothesis | Basis for charging |
|---|---|
| Seat-based | Users or seats |
| Usage-based | Consumption of the product |
Discussing these alternatives gives an investor something specific to respond to. Taylor describes bringing in examples of similar companies and their deal sizes, helping the founder refine a possible revenue trajectory.
Recruiting capacity is part of the investment case. Taylor calls the team probably the most important early-stage consideration. Expect questions about the first people you would hire and how you would attract them. Her example is a founder who knows five engineers at a particular company who might want to join. The useful evidence is a credible recruiting network and the ability to build momentum; those people are prospective hires, not a team already secured.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Acknowledge competitors and explain your position
Competition is a question engineers may have less experience answering in their day jobs. Start by acknowledging competitors, including adjacent products that do not do exactly the same thing. Then map the market along meaningful dimensions and explain the opening you intend to occupy. Claiming that no competitors exist makes it harder for an investor to trust your understanding of the market.
Taylor’s example begins with ZoomInfo’s established role in data enrichment. She then characterizes Clay as entering with a thesis of aggregating the most data sources, and points to its fundraising and momentum as evidence that the positioning was compelling. The lesson is the structure of the answer: identify the existing category, describe a different approach and explain where your company sits. The aggregation superlative is Taylor’s characterization of that thesis.
Investors focused on a category may already have spoken with the companies you are discussing. Hiding them risks turning a positioning question into a trust problem. Acknowledge the activity in the space and explain how your approach differs. When the conversation permits, reverse the question: what did the investor like about another company, or why did they pass? Taylor welcomes that kind of exchange because it helps the founder understand her reasoning.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Describe the commercial motion and evaluate the partner
For an early go-to-market answer, bring a directional plan grounded in comparable companies. Taylor initially mentions usage-based pricing, then distinguishes monetization from a product-led growth, or PLG, approach to reaching and growing customers. Explain which comparable businesses inform your plan, why their approach seems relevant and what initial pricing tiers might look like. Ask what the investor has seen work with PLG companies. Pricing and distribution still need experiments; the pitch should show how you are thinking about them.
Choose technical depth based on the person across the table. Research whether the investor is highly technical; otherwise, an initial pitch that spends all its time on implementation can leave no room for the founder, product vision, go-to-market or future business. Taylor says her firm sets aside a separate one-hour session with its VP of technology for technical diligence. That separation gives the first conversation room to establish why the company is worth investigating.
The meeting is also your opportunity to decide whether you want this investor involved. Taylor respects founders who can explain what they need to reach the next phase and what they are looking for in a partner. Define those needs so you can evaluate the investor’s fit while they evaluate yours.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Equip the investor to carry the case forward
As the meeting ends, ask about next steps if the investor has not offered them. Get a concrete explanation of the firm’s process and what to expect over the coming week, two weeks or month. Have materials ready to send immediately. A pre-seed or seed raise does not necessarily need a full later-stage data room, but the deck should cover the business questions discussed, how much you are raising and what the capital will fund.
Grant points to Jam’s original 2020 fundraising deck at deck.jam.dev, also identified in Jam’s public seed-deck announcement. She says it remained online because they had never removed its Cloudflare DNS rule. Her advice is to save the slides for the follow-up: screen-sharing a deck can send people into passive webinar mode, while the meeting itself benefits from conversation. The deck becomes a brochure for the investor’s teammates.
Whether you meet a general partner who can write a check or a more junior associate, the person across the table must still explain to colleagues why capital should go to your company. Send a compelling deck together with a short, forwardable blurb. Those materials help your contact advocate internally and can also travel to other seed or pre-seed investors. Taylor closes by making the outreach advice actionable herself: she invites founders to contact her by email.
Suggest correction
This note stays in this page until you copy or download it. Nothing is submitted; reloading clears the draft.
Resources
Further reading
Jam and Dani Grant introduce the company’s original seed fundraising deck and link to it.
- Jam’s Series A announcementArticle
Jam’s founders describe their product, customer adoption and $8.9 million Series A.
Chelcie Taylor explains her investment thesis for voice agents built around particular industries and workflows.
Clay describes its combination of integrations and AI agents and announces a $40 million Series B expansion.
Read the complete timestamped transcript
- 0:00
[upbeat music] Leave 100% armed and ready to go.
- 0:17
So, r- starting a company, raising VC, when do you raise VC?
- 0:28
Always? [laughs] When? As early as possible. As early as possible. How ear- how early?
- 0:39
When you need to scale. When you need to scale. Well, let me ask you a question.
- 0:42
Do you need to have revenue to raise VC? Show of hands, yes.
- 0:46
Show of hands, no.
- 0:49
Okay. Um, I love that we're making this interactive, and I'm super excited to be here. Um, I think what Dani said is right, and I think this group is already well ahead of, um, other groups of folks.
- 1:00
You do not need revenue to raise VC. As you can imagine, most VCs, as... Well, not all. I think maybe if you take a step back, there's obviously different types of VC funds, as you guys all know.
- 1:10
There's definitely funds that are maybe multi-stage, later stage, who are gonna be looking for certain things like ARR growth, um, or ARR full stop. Um, but if you know the types of funds you're looking for, particularly I'd focus on pre-seed and seed funds.
- 1:22
Those folks are well-versed in investing in companies pre-revenue and, and sometimes pre-product. They're really just gonna be backing you. So, the short answer is, you're right, you don't, you don't need revenue to, to go out and raise a round.
- 1:34
So how about this? Show of hands, do you need to have a product to raise VC? Show of hands, yes. Show of hands, no. [laughs]
- 1:44
Spicy group. What do you think? [laughs]
- 1:47
I feel like I... That was a layup since I said it right before, but yes, you do not need a product either to raise VC capital. I'd say the most important thing, which I think a lot of folks know in this room, but maybe if you don't, at the earliest stages, what investors are banking on is you
- 2:01
as a founder, the team that you can bring around you, the team that you can ultimately recruit, but importantly, the vision that you have for what this company can be.
- 2:10
When you're investing at pre-seed and even seed, a good investor knows that the outcome in, say, seven, 10 years, that product's gonna look dramatically different than what you came in and pitched them, um, at the moment.
- 2:20
So I'd say what I would overemphasize on, rather than do I have the perfect product, because again, the likelihood that that product works and is gonna be sustainable across multiple cycles is unlikely, I'd really focus on, like, what is it about me, my team, and my core abilities to kind of see a unique insight in the market
- 2:39
versus ne- being hyper-obsessed with, like, having this perfect, beautiful product on day one.
- 2:44
What about this? Do you need to leave your full-time job to raise your first round of VC? Who thinks yes?
- 2:53
It's such a show of the state of the market that only a couple people hesitantly were like, "Yes, you do need to be full-time to raise millions of dollars."
- 2:59
Who thinks no? And?
- 3:03
I actually think that's a little bit more mixed. I think it's gonna be firm dependent for sure. Um, I think there's a lot of firms that are comfortable with folks who are like, "Look, I have a...
- 3:13
I'm out of a reputable tech company. I'm not ready to make the jump, but I've been working on this as a side project. Here's what I've done, and this is why I want this funding to kind of take that leap."
- 3:22
I would say, however, if, you know, everything about venture capital is, and again, you should not be only building a company for VCs. I should say that first. But if you are raising from VCs, it's helpful to understand their psychology.
- 3:34
What we're doing is we're trying to back, obviously, companies that can return funds, and as a result, we want people who have tons of conviction about what they're doing.
- 3:42
And so one way to have a signal of conviction is you left your full-time job. Um, so again, everything is gonna be partner and company specific, but I would definitely say, um, it's never a bad thing if you've decided to leave your company and go fully in on building the business.
- 3:58
I'm gonna say something a little spicy, which is, um, when we raised, we were, uh, pre-product. My co-founder had not yet left his job, and so everything was potential.
- 4:08
When we did our first conversations with VCs, it was all, "We're about to do blank. We're gonna show you a prototype." But it was very early, and I think it was a lot easier for us to raise our round when everything is potential versus, like, it actually took us a really long time to build a product that's
- 4:23
so wow that a VC would've joined the call, been like, "That is wow. Let's go." And so, like,
- 4:29
i- the earlier you can go, the better. Um, and one, one way you can do that is raise before you're raising. So who has heard, "Ask for advice, get money.
- 4:40
Ask for money, get advice"? I think there's something true to that, where people want to be part of something, and the earlier you bring someone in, the more a part of it they are.
- 4:49
And so when you start reaching out to say, "I'm about to do blank, I'd love to get your advice," or I, I think that's... It can lead to conversations, uh, so you can raise without raising.
- 4:59
Who thinks you need to have a co-founder to raise VC?
- 5:04
Everyone's right.
- 5:05
For the mo- I... Most of the businesses we back have co-founder relationships. There are unique cases where there's a solo founder, um, so I wouldn't say never, but yes, typically co-founder is standard.
- 5:17
So, okay. So, you know when to raise VC. What's the first step? What do you do?
- 5:27
Pitch. Okay. How do you get to a pitch?
- 5:32
Solve the problem. Solve the prob- Okay, so have a company. What else? [laughs]
- 5:40
Find someone in an elevator. Find someone in an elevator. And what if you live in a one-story building? [laughs]
- 5:47
What's the first step? The name of your story. Sorry? The name of your book. Create a strong name of your book. Yeah, okay. Yes. Yes. You, you need some- something that you're starting.
- 5:59
Cold email. So the best, of course, is not a cold email, right? It's a warm intro. But most- Engineers don't know VCs, and so what do you do if you don't have a network?
- 6:10
So how many people here think that VCs read cold emails sent to them? [laughs]
- 6:18
Do you read cold emails sent to you?
- 6:19
I do. Um, so this is-- Again, I think the intuition is correct here. VCs, like anyone, anyone, like, who has capital to sell, I suppose, is getting a lot of emails and getting inundated.
- 6:32
However, it is also my job to hunt for deals, right? So like, I am a salesperson just like any other go-to-market person, but I'm trying to, I'm trying to sell money that I have to amazing entrepreneurs.
- 6:42
So I definitely read cold emails, and I would w- I'm sure we'll go into these examples. What I will say is the cold emails that actually get answered by myself, and I actually surveyed my team, um, across other kind of investment categories, they're usually cold emails that are prompted by some kind of warm signal.
- 6:58
So it's exactly the same playbook you would see in any type of go-to-market, um, process, right? So I'm constantly, for example, on LinkedIn putting out content probably twice, three times a week on topics I'm thinking about, very early ideas.
- 7:12
This is me as a signal to say, "Hey, I'm in this space of ideation. I wanna talk to smarter people than me." So the entrepreneurs that reach out to me in those moments saying like, "Hey, I'm building something somewhat relevant.
- 7:23
Are you willing to spend 15 minutes to chat? I'd love to share ideas," I almost always reply and hop on the phone. Um, versus waiting and then saying, "I'm running a process right now."
- 7:32
That's much harder. So I think what Dani is suggesting is right. Getting in early, having casual conversations, making it much more, um, relationship building, I think actually yields, yeah, um, the outcomes folks want.
- 7:44
Oh.
- 7:45
The country music- Some music ... is for us because what we're saying is very heartfelt.
- 7:48
Yeah. [laughs] It's like, where's the music?
- 7:51
So, um, Chelcie shared with me actual cold emails she has received,
- 7:58
um, and we're gonna share them with you. So I'm curious who here would answer this cold em- or DM, which is, "Hi. It was great meeting you at blank.
- 8:08
I asked you this question. My co-founders and I are taking time off from this company to build this thing. We've built out an MVP and started beta testing. I'd love your take on our go-to-market, and if, and if it feels right, any pointers to other investors.
- 8:22
Do you have 15 to 20 minutes to chat?"
- 8:25
Who here would answer? Who here would not answer?
- 8:30
Actually, no one raised their hand for not answer. This is, this is an answer. What makes this so good?
- 8:35
They're not asking for a lot of time. Okay.
- 8:39
It's personal.
- 8:42
Yeah, and I'd also say they have a very specific ask. They wanna talk to me about go-to-market, and they wanna talk to me about any pointers on either what my feedback is.
- 8:50
I'm not a consumer investor. They know that, so they're like, "Could you give me pointers on other consumer... an, a consumer investor I could know?" And so it feels very tangible for me.
- 8:59
I know exactly going into this response, okay, they wanna talk to me about 15 minutes. I can go in advance thinking about what I'm gonna help them with. I think the challenge in cold outreach is keeping it very vague.
- 9:08
Um, oftentimes again, it just does... It's like, and, and again, I don't mean to say things people already know. It's like anything in go-to-market. You just wanna be hyper specific so the person immediately knows when they reply what they're gonna get from you and what they can expect in that conversation.
- 9:21
One, um, one of our, uh, VCs says to us, "Don't think selling in email. Think be compelling." The job of the email is not to make the sale. It's just to compel a response because then you get the opportunity to make the sale.
- 9:34
And so, um, one mistake we've made as founders is trying to put the whole pitch up front because being like, "Look at this thing we're building. Here's everything you should know about it that should compel you," actually is just like, who likes long emails?
- 9:46
Um, and what's better is just to give enough to compel the reason to answer. Okay, what about this one? So here's a link to a blog that you all have written at Notable.
- 9:55
"Enjoyed reading this, and this is exactly why h- I have built blank. Would love to chat. Here's a link to the GitHub." Who here would answer this?
- 10:05
Would anyone actively not? Okay, interesting.
- 10:10
So this is really funny because we actually led the Series B in this company. [laughs]
- 10:15
Uh, but this email came when he was still at the seed round, but we tracked it for many, uh, for multiple years. And we, um... So the reason this one was compelling is, as I mentioned, we're constantly in market hope.
- 10:27
Like, as much as it may appear, and I don't, I don't know if this is totally true, but it may appear that VCs are just, like, putting things out in the ether and they expect no one to really read it.
- 10:35
We do, and we really hope that people read it and give us tangible feedback because again, like, I'm just trying to ideate and figure out what's happening, but there are people on the ground like yourself who know so much more than me.
- 10:46
So when someone actually engages and says like, "Oh, this thing I read in your article actually is relevant to what I'm... literally quit my job to build right now, and I'm gonna send you the GitHub so you can take a look that I'm serious," that to me illustrates again, okay, someone at the very least that is, like,
- 11:01
thinking about things similar to me, someone that I should spend some time with, even if their company today is not the right, the right business for me to invest in.
- 11:09
Two other quick examples. Um, this went to one of Chelcie's colleagues. "Hey, loved your post. You might find the one I did a while back on this topic interesting.
- 11:17
Uh, would love to hear what you think." This led to a round.
- 11:22
This also led to a round, which is funny.
- 11:23
Isn't that crazy? It says nothing about their startup. [laughs]
- 11:26
Yeah. [laughs] Which I think Dani is pulling out good points. Um, as much as it may appear that you wanna, like, really sell the business, and we've already said this before, again, a lot of the re- the VC relationship in the early days is about information sharing and gathering and less about pitching.
- 11:42
Um, and so exactly, this person didn't even really tell us what they were doing, and we did also invest in their company.
- 11:49
Um, one last one. Uh, "Wow, this thing you said is exactly the reason, the thesis that we founded our company on. I am genuinely excited to have a conversation with someone who has clearly been thinking critically about this space."
- 12:03
Who here would respond to this? Y'all are a little shy, but there are a lot of hands. Anyone, like, actively would not respond?
- 12:14
No one, right? And, and why?
- 12:17
I think in this case, again, and, um, maybe these-- I could have found maybe a little bit more unique ones, but I think this is one, um, where you, as a, again, investor, wanna go in and talk to folks who are thinking and talking about the same topics as you.
- 12:29
And so it was clear this person did their research, they wanted to talk, and they were building a company in the space. Um, and again, I, I want all of my conversations to be super productive.
- 12:39
I wanna leave and have you feel like you learned something too. And so this kind of email illustrates that, okay, we're gonna start from a baseline of understanding on what we care about.
- 12:47
Yeah. So, uh, you send an email, you get a meeting.
- 12:54
What, what happens in the meeting? What, what do you imagine the pitch meeting is like? What happens in it?
- 13:05
You build up a Jenga tower.
- 13:08
A Jenga tower metaphorically? [chuckles] What happens?
- 13:15
You ask for your thesis.
- 13:18
Okay. Yes.
- 13:20
In order to know if we are, we have too much.
- 13:23
Yes. So you pitch essentially.
- 13:25
Yes.
- 13:25
But what is it like?
- 13:30
I feel the first pitch is kind of relationship building. It's about what you're interested in, what's the problem space, and just getting to know each other. I feel it's about pitching [inaudible].
- 13:41
Imagine, um, that, uh, we gave all of you
- 13:48
some amount of money to go invest in a couple of founders, and you're like, "Cool, money to go invest." So you start meeting with founders. What would you want to-- what would you want these meetings to be like?
- 13:59
What would you want to hear to be excited about someone, to give them some of your limited amount of investment capital?
- 14:07
Why you? Why now?
- 14:08
Why you? Why now? So I was asking Chelcie before this talk, what are the biggest mistakes that AI engineers especially make in pitches? And the top thing she said was, "Engineers are so good at technology, so they over-focus on it.
- 14:21
But as an investor, I wanna hear, why you? Why now?"
- 14:24
A thousand percent. That's the exact answer. Um, again, I don't wanna negate the importance of technology, right? We're building software. You need to have strong technical abilities. You need to build a really strong product.
- 14:35
But in the early days, what I'm betting on is vision, and I'm betting on you. And so I wanna hear, and typically what works very well, is I wanna hear why you have a unique insight about the market, or you have a unique insight about go-to-market, or you have a unique insight about product, or you have a
- 14:51
unique insight about w- a customer segment. Because again, there can be tons of companies that are doing the same thing, but there will always be one, typically, or multiple, that are going to win, and they're gonna win for very unique ways.
- 15:02
And so to get kind of that asymmetric outcome, I have to really believe that you're thinking in untraditional ways. And so that's what the pitch I'm looking for. I'm o-often asking questions and trying to poke to see, like, is this a founder who's thinking about things in a very unique way, um, and is telling me why their
- 15:18
unique perspective is grounded by some expertise they have from their lived experiences or something they read or something they saw, um, et cetera, so.
- 15:26
What does a good answer look like? Like, how does someone do that in a way where you're like, "Wow, got it. I get why them"?
- 15:32
Yeah, that's a great question. So I'd say probably the best way to do this is to usually start with the pitch, grounding it in, like, what is the core problem that you've identified that exists in the world today that either people already know, and if they already know it and you know that it's a well-known problem, then
- 15:50
beginning to explain to them what got you to the point of seeing why your unique approach could be different. Um, so for example, I'm trying to-- A, a good example for it is right now, um, we've been spending some time for in kind of the vertical AI application space, and in particular looking at voice AI agents.
- 16:08
Everyone is very familiar with the idea that voice AI likely will drive automation efficiency for industries where they really relied on phone calls. Um, that's pretty known. But what I think is interesting when we meet founders who are trying to go after, say, a different industry, there's things like, what is-- why is this vertical segment or industry
- 16:28
more unique than another? Like, why did you choose to go after logistics and transportation versus after restaurants? And if you chose one, like, why did you choose that? Why is that industry so interesting?
- 16:37
Oh, there's really good kind of workflow. You can be embedded in the workflow here. Oh, there's great data modes. Oh, like you start like unpacking in all of these layers of why a person has chosen a particular path.
- 16:49
Um, and so it's actually not-- I wouldn't say it's even that, um, bespoke necessarily. I think it's really about kind of telling, and someone said this earlier, it's about telling that narrative particularly well, such that when I end the meeting, I feel like, okay, you have a very cohesive vision around how this works.
- 17:04
And like, even if we, again, know the core problem is very well understood, that's okay. What we care more about is that you have identified something in that well-understood problem that you can tackle very well.
- 17:16
Okay. So you're meeting with founders, you're, uh, figuring out who you're going to invest in. What else do you want to hear in order to decide this is the person?
- 17:28
Return on investment.
- 17:28
Sorry?
- 17:29
Maybe return on investment.
- 17:31
Return on-
- 17:32
The-
- 17:32
You said return on investment?
- 17:33
Yeah.
- 17:34
Okay. Yeah.
- 17:35
Yes. So that was actually-- So I asked Chelcie what are the biggest mistakes engineers make when they start companies and pitch VCs, and so the first one was over-focusing on technology, under-focusing on the, the you and the now.
- 17:46
Um, and the second is, um, talking too much about what's happening right now, but forgetting to pause and sort of share how this goes from what it is today to how this could be a billion-dollar company.
- 18:01
Exactly. And again, because we started this conversation saying you don't need revenue to raise, you don't need a product to even raise, um, there's no real reason to go so deep on either of those things in early pitches.
- 18:14
What I would, again, focus on is why do you think that you can achieve kind of larger revenue milestones down the line? Some ways to signal that would be, "Hey, I've spoken to X number of potential buyers.
- 18:27
I have four of them raising their hand to be design partners. We're in very early ideation stages, but I'm, you know, I'm guessing that maybe ACVs could look in this range.
- 18:37
So with that as an understanding, you know, I'm thinking we could get this far. Like I think as Dani started with, thinking a lot about like what's the potential?
- 18:45
What does that next phase look like? Is that exactly what folks are betting on? And I think design partners in particular are a really great kind of anchor. And again, you don't have to have a product.
- 18:55
And so maybe you're thinking, "How, how am I gonna get a design partner when I don't even have a company or a product yet?" Um, so if you don't wanna call them design partners, you can even say like, "I've done some customer interviews.
- 19:05
I've done some research." Having some of that stuff in your back pocket to say like, "Hey, this is real evidence I've heard in market. This is not hypothetical, I'm making it up, that people would spend this much," I think again gives you some opportunity to talk about potential, but then also, like you said, begin to help the
- 19:21
VC craft a narrative of what return on investment could look like. Like how can I see this person basically scale this company to a phase where it could, again, return a portion of my fund or become a billion-dollar business?
- 19:33
When we went out to raise for the first time, Jam was so small. And so, and because we tried to build like an MVP, and so the question we always got from VCs is, "Why is this a product and not a feature?
- 19:45
Why is this a, why is this company and not a feature?" And so what they were really asking us was not that. They were asking us, "What's the path from where you are now to a billion-dollar, uh, company?"
- 19:57
And so we always used to say, uh, "This is the first feature of our future product." And then we would explain what the future product could look like and, and how it gets there.
- 20:05
Um, but so, uh, but I think that was helpful for being able to raise the round. Okay, what else do you wanna hear in a meeting in order to give someone money?
- 20:14
If you did not enjoy the meeting but they were smart, will you give them money?
- 20:20
Show of hands yes. [chuckles] Like very few hands. In sales, you know how they say in sales you are in the business of giving a good meeting? When you go out to raise, you are selling, and so you are in the business of giving a good meeting.
- 20:32
What's a good meeting? Next steps. Laughter. Next steps. You kn- there are next steps. Focused. You're focused.
- 20:44
Bidirectional. Bidirectional. That one's huge. So, uh, one of the best pieces of advice that I got when we went out to raise is, um, oftentimes VCs will ask you something just to see if you've thought about it.
- 20:54
And then the mistake founders make is then they talk for 10 minutes about it 'cause there's a lot of information. So if someone asks you like about your go-to-market, instead of doing the whole go-to-market, you can say like, "We've thought about it a couple ways.
- 21:06
Happy to go into it more. Most likely we do blank." And just l- let it be a conversation.
- 21:11
Totally. That's actually a great piece of advice. I would say that we are, again, I even alluded to this earlier, I'm constantly asking questions just to see how a founder is thinking about something.
- 21:22
And so I actually, this week we had a, we took a company to investment committee and we asked the founder this very, like one of the partners asked the founder a question and he literally said, "I could make up an answer right now for you, but I don't wanna do that.
- 21:35
I wanna be thoughtful." And we all were like, "Whoa. That's amazing." Like that actually is the type of founder we would want to work with because all of you are competent and smart enough to come up with any good compelling answer on the fly.
- 21:48
But like is that actually what you believe? Is that the path you wanna take? Probably not. And so I'd say there's obviously moments in time where you wanna like, you know, if it's a very basic or a question very related to your core business and you know the answer obviously.
- 22:00
But I think feeling comfortable, as Dani is saying, making it bidirectional, pausing, asking the VC questions back like, "Oh, what's at, like why are you asking me this question?
- 22:08
I'm just really keen to understand your thinking about this category." It actually can create a lot more engagement and then get you closer to the heart of like what you need to be talking about.
- 22:18
And then one other thing I'll add, which I'm not sure if I'm previewing it too early, um, but I'll also say when you're pitching, as Dani said, you want it to be pleasant, you want it to be exciting, but we're all human.
- 22:28
Like it's really hard to be pitching a com- a person that you don't know and also the power dynamic in some ways does feel a little bit warped. So I always say to founders, especially the ones I work closely with, like maybe put some of your early pitches with funds that you know probably aren't gonna work with
- 22:44
you or maybe you don't wanna work a lot with them, put those at the front. Practice, get excited, get reps in, become really comfortable selling your story and getting those questions back so that when you go into those later pitches at the back half of the week when you're like, "Ugh, this could be my ideal partner 'cause
- 22:59
they're talking about my category, they like do pre-seed, they love AI engineers," then you're totally ready and you know, um, exactly what they're gonna ask. So again, I think it's all about making yourself comfortable and coming in with that sense of confidence.
- 23:13
So on that note, Chelcie, what can an AI engineer expect to be asked? [chuckles]
- 23:20
Great question. Um, so it's gonna range obviously, but I think there's obvious- there's gonna be a few core areas where we're gonna really focus on. So one is like I mentioned already, what is the problem that you're trying to solve and why you, and in particular someone already alluded, why now?
- 23:36
Um, then we're gonna wanna dive into like what is that solution or at least broadly what do you think that solution could look like? Um, you don't need to have the product, you don't even necessarily need to have mock-ups, but we do wanna hear from you of some cohesive narrative as to what I think this product could
- 23:52
look like and then how do I intend on keeping product velocity and iterating on the product to get me to a point, um, where it is working and I think we can go to market more broadly with it.
- 24:03
We then wanna, are gonna ask you about like who's your customer? What's your ICP? I'm sure you guys have all maybe heard that. If you haven't, ICP is ideal customer profile.
- 24:12
Every VC will ask you this and the idea is come in with a good sense. Even if you don't know if that's factually it, you can say, "We're thinking it's two ICPs," or, "We're thinking it's three.
- 24:22
This is how I'm gonna test and learn to be able to really hone in and focus." Then we're obviously gonna ask you about where do you think revenue goes for this?
- 24:29
And so again, another way to back into these things, because most of your companies aren't gonna have revenue, is just ask yourself and explain to the, the VC, "So I don't know just yet what, how we're gonna monetize the product, but I have a hypothesis that based upon conversations with customers, design partners, that they wanna buy a
- 24:48
product in this range. They're thinking that they want it to be seat-based. Oh, actually they want it to be usage-based." Start to use some of these words that also signal to the investor that you're thinking about different monetization models so that they can also give you feedback.
- 25:01
They can say, "Oh, you know what? I've seen companies like yours who have tried this approach. This is typically the size deals they get." And then now you can start building momentum with them to say like, "Okay, this is where I think we can go from a revenue trajectory."
- 25:13
And then the, there's a few, there's obviously more, but the last one I'll talk about here so as not to be, um, to overwhelm [chuckles] is, uh, team. Team is so, so, so important, as everyone says.
- 25:24
Um, but being a VC and being on the inside, it is probably the most important thing that we do in the early stage. So do not, uh, like overlook what your unique per- like, who you are as a person and the people that you can attract, how important that is.
- 25:38
So we will ask you, like, you know, who are the first folks you wanna hire? How do you attract them? Because we want people who can attract the best AI engineers.
- 25:46
So if you know you have an amazing network of your friends who are also engineers at top companies, say that. Say, like, "I know five engineers from X company that I know would wanna join me."
- 25:56
Even if they don't join, it's okay. Like, talk about what you could do and how you can build that momentum of attracting the best people to your company. Um, so there's a longer list of things we ask, but I'd say those are like the four or five core things.
- 26:09
We, um, wanted to focus on what does a good answer... 'Cause VCs hear a hundred answers, uh, to every question, and so then you're kind of stack ranked. Like, was that a good answer or an okay answer?
- 26:19
And so we want you to hear exactly what a good answer might sound like to a couple of questions that usually engineers don't get asked in their engineering roles.
- 26:26
So, um, Chelcie, how, what, what does a good answer sound like when you're asked about competitors?
- 26:32
Great, um, question. And yes, competitors, I didn't mention that, but obviously will be a very important question that we're gonna ask you. So typically, the best answers for competitors is, one, to acknowledge that there are competitors.
- 26:44
Like, let's start there. Whenever we go into a pitch and we ask competitors and the founder tries to convince me that there's no competitors, [chuckles] it doesn't usually end well.
- 26:55
So I would say acknowledge that there are likely competitors, even if you don't think they're exactly the same. Then I would say begin to, and it's often what folks will do, is kind of, um, you know, kind of, uh, I guess aggregate where competitors sit on a spectrum compared to themselves.
- 27:11
You've all seen this. Um, but I would say really focus on that. So you can maybe think of different axes in which your competitors work upon, and then help VCs understand, like, why you're filling that white space that is different than those competitors.
- 27:23
And then this all goes back to, like we said at the very beginning, why you? Why now? What's your unique insight? It's okay to acknowledge if you are building something in, I don't know, AI go-to-market, saying like, "Okay, there's already tools like ZoomInfo that exist for data enrichment."
- 27:39
But then Clay comes along and says, "Well, we think it's gonna be different because we're gonna aggregate the most data sources, and no one's been able to do that."
- 27:46
Like, that actually was pretty compelling. They raised a lot of money. They have a lot of momentum. So again, I think acknowledging competitors, level setting for people how you see those competitors sitting in the market, and then how does your company in relation to that is typically the strongest answer.
- 28:01
One thing I've heard Chelcie say in the past is, like, as a VC, your job is to not only know all the competitors, but also to have talked to all of them.
- 28:08
And so they, they know who the, they've had conversations with them. And so if you try to hide it, suddenly you become a person that's untrustworthy to work with versus acknowledging and saying like, like, "It's a really exciting space.
- 28:19
A lot of people are chasing it. Here's how we're doing it differently." Right?
- 28:22
I'd also say use it if the VC's, again, read the room with the VC, but like, like Dani said, I've likely met all the competitors when I'm meeting a company.
- 28:31
So try to get information from me. The best founders ask, "What did, why did you like that company?" Or, "Why did you pass on that company if you'd met them already?"
- 28:38
Like, help me understand, and I actually really like that question.
- 28:41
That's cool. Um, how should, uh, how should an AI founder answer a question about go-to-market when they're raising their first round?
- 28:49
Yeah. So the best thing to do here is, again, because go-to-market is gonna be very nascent, is to talk about your vision of what you think go-to-market could look like, and also provide some, I would say some frameworks of how you're thinking about it based upon other companies that have similar models to you.
- 29:05
So for example, if you know that you're gonna go after kind of a usage-based model, say, you know, "I think our company is going to follow a go-to-market," or I'm thinking more monetization, but maybe, "We're gonna follow a PLG approach.
- 29:17
We wanna follow other PLG companies like X. We think this is successful for Y, and we wanna pursue this with these kind of tiers, understanding pricing's gonna change a lot, but this is what we're directionally thinking of how it will work."
- 29:29
And then ask for, like, "How have you seen this work? Do you work with a lot of PLG companies?" and get feedback. So I'd say try to come in with some sense of, like, what the motion will look like, have some directional sense of what you think pricing could look like, but then obviously then anchor it on,
- 29:44
we need to experiment and test, um, versus saying that you're gonna know exactly what it is.
- 29:49
We've been hijacked. We're un-hijacked.
- 29:52
We're back. [chuckles]
- 29:56
Um, last question for you on this. What do engineers specifically, when they're pitching AI startups, tend to get wrong in the pitch meeting?
- 30:05
I think we've addressed a few of these points already, and so, um, I won't belabor it. I think the biggest thing that I would recommend n- you not do is get so in the weeds around your particular product or technology.
- 30:19
I think it's super important, but typically what VCs will do is they're using the VC pitch meeting with the investor, unless you're meeting an investor who's highly technical, which do your research beforehand, but if you're meeting the average VC who's probably not super technical, what they're, again, betting on is person vision, product vision, um, future state.
- 30:38
And usually what we do at our firm is we set aside an entirely different hour session with our VP of technology to do a deep dive on the tech.
- 30:46
So don't spend that first meeting, where you're really trying to hook them and sell them on your vision, going so deep on the technology that you never even talk about the vision, the go-to-market, the future.
- 30:56
So I'd say that's probably the biggest. Um, and then the last thing I will say is not using this time to really test if you wanna work with them.
- 31:03
I know it does feel like early on that you want to make sure you're just getting as much opportunities as possible, and you just wanna speak to VCs potentially.
- 31:11
Um, but I always respect the founders who have a firm sense of like, "This is what I'm looking for." And when I ask them like, "Hey, tell me what you're looking for and who you wanna work with," they're like, "These are the things I need to get to this next phase."
- 31:23
So you've just done your first pitch meeting, you're raising your first round, you're doing... You just- you've been through the whole meeting, and now the meeting is wrapping up.
- 31:30
How do you end it? Do you ask about next step? What do you say?
- 31:34
Yes. If the VC is not, um, asking next steps, definitely prompt them. Say to them, you know, "I really enjoyed this meeting," if you did, and if you wanna work with them. [laughs]
- 31:45
Um, and then ask them, like, "What does your process look like? Help me understand what I should expect over, you know, the next week, two weeks, month, as we go through this process."
- 31:54
And they'll walk you through their bespoke process, and then I would say ha- be prepared to provide materials. So we didn't talk about this, but, um, at the pre-seed and seed stage, you don't necessarily need, like, a full data room like you would at later stage rounds, but you should have some materials prepared and ready to send
- 32:10
immediately after. So exactly, you're gonna want your pitch deck ready to send to them, and in that pitch deck, obviously include all the elements we said, but also include how much you're raising and what you're hoping to use that capital for.
- 32:23
Our original pitch deck is still online, um, from 2020 when we raised our first round. It's at deck.jam.dev. So when you go out to raise, if you're like, "What does another, just another example look like?"
- 32:34
You can reference it. Uh, we just haven't deleted the DNS rule on Cloudflare. [laughs] Um, so I think there's something important. I think a lot of founders imagine when they go out to pitch that they're gonna share the pitch deck during the meeting.
- 32:46
But have you ever been in a meeting where sh- someone shares slides? You, like, go into webinar mode, like your eyes glaze over. And so in order to have a good meeting, I think you save the pitch deck for later.
- 32:56
You send it afterwards. And, uh, the VC you met with probably isn't the one reviewing the pitch deck. The pitch deck is the brochure for all their teammates. Are you saying time like wrap it up in one minute or like five minutes?
- 33:06
Like yesterday. Okay. Okay. [laughs] That's all we got. [laughs]
- 33:12
Yes. I will just say, last closing thing, um, as Dani mentioned, the VC in the room, most likely, hopefully they're a decision-maker, hopefully they're a GP, someone who can write a check.
- 33:22
Sometimes they're not, sometimes they're a more junior associate. But no matter what, everything that you're doing is give equipping the VC who you're speaking to, to go back to their team to sell why the pool of capital should go towards you.
- 33:35
And so like she said, having that deck ready, prepared, super compelling, having even like a quick blurb that you put in addition to the deck that you send that they can forward along to their colleagues or even forward along to other excellent seed or pre-seed investors, is a great call to have, like, ready to go.
- 33:51
But yeah.
- 33:51
When you do start your company, here's how you reach Chelcie. [laughs]
- 33:54
Yes. Uh, you can reach out to me. This is... I think this is my Twitter, my X, but also my email is [REDACTED:email_address]. Feel free, as I said, uh, to, to cold outreach. [laughs]
- 34:07
Can't wait to see what you build. Have a great day.
- 34:08
I love to meet all of you guys. Thanks everyone. [outro music]