Hi. This is James Currier at NFX Headquarters in San Francisco, and we do a lot of work to try to let you see what others do not around startup fundraising, including blog posts that address various aspects of fundraising. We've built out [email protected], which allows you to the top VCs and connect with them. And we've built out the company brief.com, which allows you to package up your start up pitch and share it with venture capitalists in the most effective way possible.
Now we've begun a series of podcasts around fundraising and today we've got a very special opportunity to speak with Aman Abuzay, who's the CEO and founder of incredible Beller. The top hiring marketplace in the nursing industry. We were the 1st investors in Aman's company two and a half years ago. She then raised a seed round with obvious ventures and precursor and NSX.
And most recently, she has raised a series a round from Jeff Jordan at Andreessen Horowitz with participation from NSX obvious and precursor as well. We're gonna hear today from her about what that process is like and all the things that she's learned. So let's jump in. My name is Imana. I am the CEO of Incredible Health, which is a career marketplace for Beller care workers, and we're based in San Francisco.
We're the fastest growing hiring platform Morgan nurses in permanent roles in the US today. Today, we're talking about fundraising. So just in terms of our fundraising history, we raised a $400,000 seed round in the summer of 2017, led by James Joaquin at obvious ventures with participation from NFX Currier venture's Ginger Bird Capital, and a few angels.
And in the fall of 2019 announced our $15,000,000 Beller A, led by Jeff Jordan and Andreessen Horowitz with participation from our existing investors. So give us your framework on whether a startup or founders should go out and raise or not. Okay. So my framework, which it's not mine, actually. It's Mark Andreessen's framework from one of his blog posts from way back in the day. Right?
If you are considering, you know, building a category defining Morgan leading company, and you think you need external capital for it. You're there's usually 2 phases that you need the capital. You need it before product market Flint, and then you also need it after product market fit. In terms of before product market fit, do you need some capital to get your initial team together to work on a problem and a product to get it to your initial customers in order to to get to product market fit.
And then if it's after product market fit, do you need to raise additional capital to take advantage of the market opportunity that is there for you. And so that really determines if you are in one of those two buckets, then you raise the other considerations about whether you should raise or not is, you know, financing is strategic and you have to decide if external capital makes sense for you or not. And external capital does not have to be part of your financing strategy.
You may be financing your company through debt or through just simply through revenue or your bootstrapping, and there's nothing wrong with any of that. You just need to make sure you pick the right strategy that's right for you. And honestly, fundraising is also a very personal decision. As a founder and CEO. Not everyone wants to run a venture backed company. It's crazy. You know, the expectations are high. It's high stress. The growth expectations are high. Not everyone wants to do that.
And so if you personally feel like you do not want to have expectations set by others, then you you may wanna consider not raising on a personal level. So you are well known for being very precise and creating very, structured thinking around problem solving. Walk us through if you can the framework you created with your knowledge. On fundraising. What would be the right framework that in your mind that people should think about going through a fundraising process?
So your decision's been made that you are gonna raise. What framework I have is process and content. So let's talk about the process first. Process side, you need to decide, is this even the right time to raise? For example, if you have month over month consecutive growth that's been happening for several months, that may be a good time to raise. Right?
If you have a particular business goal in mind, like, for example, I need to expand naturally and capital will help me do that, then that may be a good time to raise. So just be very intentional about the timing of when of when you raise because you want to you want the fundraising to happen quickly. And successfully, and you gotta have all the ingredients to allow that to happen. In terms of the process as well, really important to identify who are the right investors for you.
It's just like sales. You gotta identify the right targets.signal.nfx.com is a fantastic database for that, which I have used I use during the seed and during the series a, and it keeps getting better. And the advantage of a database like that is you can go in and you can literally add your filters. In my case, it was SF Bay Area, you know, marketplace investors who are able to write a specific check size and so on and just look like literally spits out a list for you.
And so you know who to target. Another way to populate this target list is you wanna ask other CEOs too and your existing investors. About who to go to, who who you should pitch, who you should avoid, actually, as well. That's also important information. And so that way you have, like, a pretty robust target Flint. And, the more nuance and information you can get about each investor and the more you can tailor your pitch to what they wanna hear.
You know, one investor may care a ton about network Right? And so you gotta make sure that's where that's in your pitch. Another investor cares a ton about community. So you you wanna take that into other information that is more process related is, like, can this partner actually get a deal done? They maybe they don't have buy in from their partnership and they're not able to get any deals done. That's the case, then you need to avoid them.
Are you starting with the most powerful partner in the firm versus the weakest? All of these are important considerations with deciding who to target. I'm curious. Did you actually create a model, almost like a financial model or a ratings model for this process? I wouldn't call it a full blown model, but definitely had a Google spreadsheet with multiple columns, including things like check sizes, name, email, and, you know, insider information about them. And and who can introduce me?
That's the other part of the process. 3rd part of the process is you gotta have warm introductions. So the warm introductions are absolutely critical. There's no other way to go in the door. Look, I always hear of examples of people reaching out cold with with an with an extremely well crafted email. But in general, it's usually warm introductions.
Some of the tools, I used in addition to signal by nfx.com, I used Crunchbase, which has some information, also use pitch book quite a bit to find out, more about what are the valuations that are out there currently? Because the this environment is changing, like, every 6 months. You know, how much are people raising? What are other companies in my category doing, in terms of financing and fundraising? And then so in terms of actual, like, software tools.
Those those were the main ones I was using. I would not ask for a warm introduction until I knew what I was walking into. I knew Which partners can get a deal done, which ones can't. I knew which ones had power, which ones didn't. I know which ones were toxic and you might need to avoid, or which ones are gonna be huge advocates and love by CEOs. I did a lot of this research ahead of time. And then the other thing in the process okay.
You have your target list ready as a CEO would really need to control your process. So what one thing that I do and many CEOs do is I start with tier 3, then tier 2, then I end with a tier 1. It is just like job interviews. Like, you know, when you're trying to get a job and you, do some practices on a job on on companies that you don't really care about that much. And you're just trying to, like, hone your interview skills. It's the same thing.
You're trying to hone your pitch trying to get better and better and more comfortable with it. Make sure your first few meetings are sort of like throwaway meetings that you don't really care that much about, and make sure you're ending with the people you really, really because they're gonna see you at your peak pitch performance. Could you give me an example of something surprising you found out during this process?
Something that you you were kinda like, wow, I would never would have thought of that. There's several surprising things about this process, which are completely these are these are all things that are not intuitive. And they're not common sense. First is the importance of FOMO of fear missing out. What I noticed is FOMO is more powerful than anything you Beller in the last 2 years sometimes. And FOMO sometimes is what gets deals done.
FOMO is the leverage that CEOs have to drive up valuations and, you know, raise more capital. The amount of competition and the level of intense competition among VCs, especially in a concentrated area like the Bay Area Morgan concentrated tier like the top tier firms is intense. And and I understand why that is. There is a lot that, you know, there is capital out there and there aren't that many startups that may be worth funding.
So the competition is very intense, and you can work that to your advantage as a CEO. So that's definitely one non intuitive thing. The second non intuitive thing is traction does not get deals done. Back to what I had said earlier, you need so much more than just traction. You know, you could have, revenue growing and 10, 15% month over month, which is amazing.
But if you don't have, a very strong vision, a strong long term strategy, detail about how you're going to fulfill this 10 year plan and insane amount of ambition, and and that that's conveyed in the pitch, then the deal is not going to get done no matter how amazing your traction is. How did you realize attraction was not enough? What made you realize that? Oh, I mean, I just kept getting rejections.
Okay. So the thing is the way I discovered some of these non intuitive things is just honestly through trial and error. Right? So it is super important this goes back to process that when you are you you are starting to do the pitches, you are paying, like, very close attention to how the investors are reacting. Do their eyes light up? Do they sit up when you say a specific statement? Do they are you getting feedback?
And it could be new very nuanced feedback that improve your pitch for example, things like, oh, y'man, I think you're too capital efficient. So that's one which is a criticism. Another one is, I'm still not understanding your or I don't understand how you're different from your competitors. All of these are questions that basically indicate that as a CEO. I have not convey the story correctly and clearly enough.
And as CEOs, we do need to take that information and iterate on the deck, the pitch, the content after every single meeting. Can we talk about that a little bit? Tell me about the content iteration process start to finish. What did you start with? Yeah. How did you evolve it? What tools did you use to build it? Did you use outside help? Yeah. So, like, the content is, like, 70% of the work. Say process is 30%. Content is 70%.
In terms of what I did and in hindsight, I've learned a lot of lessons here as Beller, is there's a certain order that worked well for me and seems having advised other CEOs, it seems to be working for them as well. And that is that actual order is vision of your company. The market really is your job as CEO to explain the market, the size of the market, what the problems are that customers facing in the Morgan. And then introducing your product. Right?
And then when it comes to your actual product, try to highlight differentiation that is in the case of a tech company software enabled. Right? So don't say, oh, our differentiation is our UX and design. Like, that's not a diff thing. You know, that's not strong enough. If your differentiation is algorithmic or data network effects, then, yeah, that's a lot more compelling. Right? And so your product section needs to have, like, hardcore software differentiation.
Again, all of this is in the context of assuming you're building a software company and then explaining your go to market initially and then also how you are going to get, you know, the millions of users or thousands of businesses or whatever it is on your platform over the or whatever it is on the over the next you know, 10 years and then ending with, well, of course, your business model, what you're gonna do with the capital, your team, and then you end. That that outline seems to work well.
The common errors or whatever that I've seen I did it and CEOs did it, is not pitching big enough. That's definitely my number one piece of feedback, but especially for female CEOs and minority CEOs, we're just not pitching big enough You have to understand really, really clearly understand the incentives of the VCs. They are looking for insane multiples. On their capital. And so if you are not pitching something that is massive or is it going to be massive, then they're probably not interested.
So understand their incentives and what they're looking for and make sure your ambition matches their model. Another common error I see is what I mentioned earlier about pro about the product sections like, hardcore software, network effects, algorithms, like, these are these are all things that are that differentiate you and explain your defensibility not soft things like brand or design. What metrics did you use in your pitch and why?
Or how did you evolve the metrics you included in your pitch? Okay. So on the topic of metrics, it is super important that almost every single slide you have has a number on it. K. So don't just say huge market. Say $3,300,000,000,000 market. Don't say my customers struggle with this. Say, the, you know, this impacts 50% of their cost structure or whatever it is. Don't just say we're growing really fast. Grow say we're growing at 18 percent month over month or whatever it is.
So the more numerical and metric driven you can make it, the more believable it is it shows that as a CEO, you have your act together and and, like, you know, your numbers. Keep in mind that, like, this is you're probably the 11th or 12th meeting that day, that investors having, and your competition for that check is the other 11 meetings that happened that day.
And so, you also wanna there is a element of competition here and you wanna differentiate yourself from other CEOs, and that's pitching big. It's being metric driven. It's really clarifying your differentiation and so on. Yeah. As your pitches evolved in the beginning, did you include metrics like that, or did that something you had to learn? Or I'm I think, I it's something I learned from the NFX team actually. So I I did have metrics from the beginning.
I think the areas where I struggled is really explaining the differentiation and, had to work a lot on improving that. I have worked a lot on improving how I explained the product. Those were some of the areas I had to work on. And then, yeah, the comment about capital efficiency was also thing. And so I had to address that as well. Walk me through the process blank slate. What did you start with? Google doc? Did you start with, you know, like, keynote that was blank.
What was the were you in a room with your cofounder? You know, how how did this start and then how did it evolve? It was definitely a deck. I'm not a fan of pitching without a deck. The deck is your prop. I mean, you can't fully rely on it because it's nothing without a narrative and without a story, but you you need that prop to guide the discussion.
If if the discussion goes off the rails, it's also a way to, you know, focus people back on, back on the story because it also has grass and numbers and so on. It's important to display these things visually in a deck. Filled out the different sections that I knew were gonna be required. Vision, market, go to Morgan, team, problems, so on. Yeah. So if you could turn back the clock Mhmm. To, like, day 1, to don't know when it was day 30, day 50. What would be a milestone? How was it different?
Yeah. So the deck was changing after every meeting. So, I mean, by the time I'm getting term sheet, I'm on version 30 something. Right? That that's the amount of iteration that I'm talking about that has to happen, because there's always a slightly better way you can phrase something, or there's something that keeps coming up and that's confusing them. My deck specifically for seed and series a changed dramatically from the beginning to the end.
The reason the deck was changing was based on VC feedback. Sometimes it's hard to figure out what to change, though. Right? So you're getting some of this feedback and you're just like, I have no idea. I'm like, how the heck am I supposed to phrase this? Right? And so what I would do in those cases is I would either discuss it with my CTO because he I'm not technical. He is. So him and, in fact, some of the lead engineers on his team Beller me clean up that product section, which was great.
Sharing the deck or the concerns that were coming up with other CEOs, especially CEOs who've already successfully raised, they can, you know, having that, like, different perspective on it or is super helpful. And then the 3rd category is the existing investors, like getting their fee back as well about what can change and what cannot what what should stay the same.
I will say, like, honestly, I love my existing investors, but The people who definitely made the biggest impact on my deck were other CEOs who've successfully raised recently just because they're they were the they were in the market the most recently. And They know, you know, I my existing investors are fantastic, and almost all of them are former operators. But, honestly, they haven't really raised in, like, 10 years, you know, some of them. Right? So, and the market has changed a lot.
What investors care about has changed a lot. So you wanna have, like, the newest, freshest information in my case. And I think I I would say this to everyone you need to get get the advice of CEOs who've already raised. How did you decide how much you needed to raise and why? When it came to this deciding how much to raise, there were probably 2 or 3 different inputs. The first is our financial model. In addition to a deck, that is another prop that is required.
You need to have a financial model ready. Before you pitch. And so I I knew that some of the goals that we needed to hit in terms of market expansion and so on and headcount, and that like, back solving could determine how much capital you need. The other key input is looking at pitch book and seeing where the market is. In terms of valuations and the amounts that are raised. So you're raising a series a in 2019.
You're raising anywhere from 10 to 20,000,000 in the bay area, excuse me, bay area specifically. 10 years ago, that amount was actually a lot smaller. So it's really important to get market information. I found pitch book to be the most robust in terms of that. And then the 3rd input is you do have to do a little bit of modeling around how much dilution you're willing to tolerate. Right?
At the end of the day, if you're doing a a or whatever it is, like, giving up 15 to 20 percent of your company, right, right off the bat. And so you can do some modeling around dilution and how much to raise okay. So when it comes to let's say you are in a fortunate position of choosing from multiple term sheets, which we were at the a and also the seed. First of all, that is an extremely fortunate position to be in.
Like, it's sometimes, you know, majority of the time you don't even get any term sheet Sometimes you just get 1, we were lucky to have several, and including several from top tier VCs. It's just, you know, that's where the the negotiation starts. Some investors have different tolerance for negotiation, but that's where the FOMO kicks in.
You don't really reveal who who else who you got term sheets from because you don't want conversations to be happening behind your back, but you can certainly reveal some of the terms and see if they can match that or exceed it. Having said that, like, during this entire process, please, like, you have to make sure you're maintaining your relationships. You you don't wanna do this in a overly abrasive way or in a way that burns any bridges.
At the end of the day, look, whether we let even even if you were the CEO of some hot company, Some of these investors are pretty powerful and you don't wanna piss them off, and they all talk. And you have to maintain your reputation as a CEO in the VC community as well. Cause chance it's possible that you're gonna be raising again. Right? So just maintain your reputation, maintain strong relationships, even if you are negotiating or turning someone down.
And the other thing is, like, I'm I'm big fan of empathy. So I know that the CEOs always want the VCs to have more empathy for the for operators. Right? But I also am a fan of operators having some empathy for VCs too. In in many of these cases, they're working pretty hard. The VCs are working pretty hard. They may have gone months without finding a single company that they wanna invest in. And they finally found your company, and they wrote you a term sheet, and they really want the deal done.
Because it's that's not just a term sheet. That is months of work that happened ahead of beforehand of just, like, you know, saying no to companies and so on. Just know that there are the especially the top ones, they are working pretty hard as well. Did your model change from the beginning of the when you went out for funds to the end? And if so, how? In terms of my financial model, I'm actually very embarrassed to say this, but whatever. I'll just say it.
Yes. Morgan financial model did change in the beginning. From the beginning of the process to the end. I and honestly, I think other other capital efficient CEOs gotten this comment where let's say you're out there and you're raising you're trying to raise 9 to 10,000,000, but your financial model shows that you're only spending for. It is a very valid question. For the VC to ask your model shows that you're only spending for why are you asking for 10?
Like, why would I write you a check for 10 if you're only gonna spend 4? So either two things need to happen. Either your ask needs to go down to match the model, or you change the model so it fits the amount you're actually trying to raise. In my case, I probably wasn't being aggressive enough on the financial model. And ended up increasing our expenses and increasing our revenue in a shorter period of time in order in order to better match the ask that I was making.
I think almost all of the CEOs have a rough idea of what should go into a model, but are there any things that you learned which were surprising, which you hadn't expected, you should put in a model or things that, you know, that really moved the needle Morgan just any kind of special advice for for for people that are CEOs that are raising. Yeah. Okay. So when it comes to the specialized advice for the financial model, It needs to it needs to have a few things that are important.
Number 1 is, make sure to include your historical financials, all of your historical financials. As well as, like, at least 3 years of projections. Make it really clear what your assumptions are because that is really what they're trying to figure out in that financial model. And make sure you've got you've got reasonable assumptions. Like, don't accidentally put, like, sales rep salary for 70,000 for for that's just not accurate in the Bay Area. Like, this is just not an accurate number.
Include a summary page at the beginning of the model. That's just the summary Pete and l. And ideally, that summary p and l is screenshotted and put in your deck as well. And then make sure you have both a p and l and a balance sheet and those 2 things link. You're communicating a lot in that financial model. And one of the things that you're communicating is I am a, You can trust me with your capital.
I am going to be a steward of this capital and these and these and I'm going to manage this business financially very Beller would say this, like, you know, a top tier VC once said to me, he disagrees with the whole backlash against MBAs in Silicon Valley. And one of the reasons is in business school, you do learn the basics of finance and accounting. And if you have that, then it it should shine in your financial model.
And to know understand what a balance sheet even is, to have the balance sheet and the Pete and L tie together. Like, these are all re really important when you're trying to get when you have external capital and trying to manage a finite amount of cash. And so if you don't have that background, you you just need to I mean, there's a ton of online information. You can ask other CEOs. You can you know, hire a controller just as a contract or Morgan finance CFO is just as a contractor.
Like, you just need you just need, pretty strong financial discipline that is going to show up in that financial model? There's so many people talking about different SaaS metrics. I was curious what you learned out of the VC process. Yeah. In terms of metrics, what I learned is Whichever industry you're in, or whichever type of business you're running, whether it's SaaS or marketplace or, you know, e commerce or whatever it is, There are, like, a set of 5, 10 metrics that you just need to have.
Make sure you know those and they're in your deck and you know how to talk about them and you're not confusing things, like, you know, ARR is annual recurring revenue. It is not annual revenue run Pete. Right? Like, like, just no no, don't get mixed up with the jargon and the acronyms, like, know know your stuff. And there are a set of metrics that is needed for each type of in terms of just, like, final words for founders, I we haven't talked much about the psychology of fundraising.
And, It is generally a very difficult process. Just know that fundraising is a skill that can get you can get better at it over time, just like, I don't know, public speaking, or product management or whatever. There is even even the best founders and the best companies go through a lot of rejection. So, you just you just have to be really determined and continue iterating, continue improving. Don't be dismissive of VC feedback that you're getting, just try use that to your advantage.
The rejection at the end of the day doesn't matter. You just have to get through it. It's just it's part of the process. That was Aman Abazay, the CEO and founder of incredible health at the NFX headquarters in San Francisco. To learn more about fundraising and network effects, growth and building iconic companies, you can read more essays at nfx.com. You can also find us and 9000 other investors at signal, that's atsignal.nfxdot com, the number one place to connect with the world's best VCs.
Also, make sure to use the company brief dotcom, which allows you to package up your pitch deck and your communication with VCs to get the maximum number of meetings in the shortest amount of time and make sure to follow us on Twitter at nfx.