Diverse Perspectives on Fundraising.
Raising capital often sounds like a daunting task, marked by many complexities and uncertainties. For entrepreneurs, the process entails crafting a compelling business proposition and also effectively communicating its value proposition to the right investors. From identifying appropriate funding sources to navigating negotiations and due diligence, every step demands meticulous attention. Similarly, investors face the challenge of discerning promising opportunities amidst a plethora of potential ventures, assessing risk factors, and ensuring alignment with their overall investment objectives.
Despite the inherent challenges, a successful capital raise serves as a catalyst for driving innovation, fostering growth, and actualizing
on meaningful returns. Through interviews with entrepreneurs and investors, gain a comprehensive understanding of raising capital. Learn from the challenges, strategies, and successes experienced by individuals on both ends of the funding spectrum in this insightful Q&A.
01
What advice would you offer a company that is preparing to raise capital?
“Have all the materials prepared in advance so the process can go very fast. Schedule all meetings in the first week or two so that you have multiple people interested at the same time.” – Wardah Inam
“Try to anticipate the questions that you are going to get from investors and be thoughtful about how you can start to address them in advance. Talking to a constructive founder-oriented Private Equity partner early on in the process, even before you are ready to raise capital, is a great way to get this kind of feedback early and learn quickly. At Thurston Group, we have conversations like this all of
the time, because we know that we also have a lot from founders in these conversations.” – Dr. Dana Fender
“Ah, the thrilling adventure of raising capital! Embrace the word ‘no’ like a badge of honor. It’s actually a good thing because it tells you that you still have some work to do before you’re fully ready. Trust me, you will hear it. You won’t like it, but you don’t want to take money from anyone before you are ready. Now, get ready to push your boundaries even further. As a founder/CEO, you’re probably already working long hours, but brace yourself for a whole new level of sleep deprivation. When you dive into conversations with investors, and they start their diligence process, your workload will skyrocket. This intense phase, let’s call it ‘hell month,’ will test your mental and physical stamina. So, remember to fuel up on good food and snatch moments of sleep whenever you can. Oh, and make sure to have a heart-to-heart with your loved ones, because for the next few months, you’ll need their unwavering support and understanding. Let them know you might be MIA for a while.” – Weston Lunsford
“Start early and add prospective investors to your monthly investor update letters. Get close to people in the industry who are respected and have access to thought leaders who will advocate for the product and the team. This could be through an advisory team.” – Doug Brown
“Ensure that every work product they see has a high level of polish. This is a ‘where’s there’s smoke there’s fire’ situation, and you need to look the part. If not, you won’t be able to position the situation for both parties to have to earn the respect of the other. Even
better, have the systems and processes already built so that anyone can step into any document or process and think, ‘Wow, that is a high standard they keep to themselves, even for internal documents’. If you can show that nearly everything in the company is to a certain standard, you will slowly start to see counterparty diligence take your statements with higher confidence.” – Nick Mahalec
02
What are the most common mistakes that entrepreneurs make when pitching for investment, and how can they avoid them?
“Know what type of business you are in. Some businesses are meant for venture, and these require large amounts of capital and can be worth $1B. Others are better not raising venture capital. Know your objectives and goals. Common pitch mistakes include not clearly articulating the product features and benefits at the start of the pitch, not including key colleagues in the pitch to show leadership depth, not anticipating and preparing for questions and challenges that come up during a pitch, not sharing future exit options and the expected timing, and failing to show market traction, TAM, stickiness, and customer satisfaction.” – Doug Brown
“It seems simple, but make sure to cover the details. All investors love to see a big vision, and that is truly important to a successful pitch. But don’t forget the basics, either: how do you make money now, day-today? How well do you understand the individual moving parts that make your business tick? A lot of this comes down to operations and maintaining a focus on the small things that make a business run well. If you can show me that you really understand your business, I am going to walk away impressed by you.” – Dr. Dana Fender
“When entrepreneurs pitch for investment, there are common mistakes that can hinder their success, although the specific challenges may vary based on the stage of funding (Seed, VC, or Series A-C). One common mistake is the lack of a clear path and forecast. It is essential to have a well-defined plan of execution that aligns with the projected budget. Additionally, if there are assumptions due to the early stage of the business, it is crucial to provide sufficient evidence to support those assumptions. By addressing these potential pitfalls,
entrepreneurs can improve their chances of securing investment. Good ideas are in abundance. Good ideas with a solid foundation and accurate plan that matches a forecast are lacking today.” – Weston Lunsford
03
What are good questions to ask investors before securing their capital?
• Do they position themselves as a value add beyond investment dollars? If so, what is it, and how do illustrate this to companies before
closing a deal? – Nick Mahalec
• Get references from them and talk openly with the companies they have funded on how they like to work. – Wardah Inam
• How do they like to be involved with their portfolio companies? – Nick Mahalec
• What do they define as success for their LPs with the fund they’re currently investing out of? This tells you whether your growth vision matches with the fund’s requirements. – Nick Mahalec
04
What are the most important elements you look for in a pitch by the C-suite?
“The details are important. I like to see a management team that is in control of its business. Leadership and empathy are so critical, too. I need to see that you understand your people and what matters most to them so that you can build and sustain the lasting team you need to achieve your goals.” – Dr. Dana Fender
“When evaluating a pitch from the C-suite, there are two key elements that I prioritize. First, I assess the product market fit to determine if there is a strong demand and measurable benefit for the prospective market. Second I closely examine the track records of the management team. The success of startup companies often hinges on the determination and experiences of the founder and management team. It is crucial to ascertain their willingness to persevere and their past achievements that demonstrate their grit.” – Weston Lunsford
“Domain expertise. It doesn’t necessarily require experience (check out Relu as an example), but it’s about knowing the customer and understanding the problem deeply. I also look for the founder’s confidence and a history of having persevered in prior situations despite encountering challenges. Start-ups are hard, and the founder must convince us they are ‘all in’ and will run through walls to succeed. Teams that focus on uniquely solving the most complex problems are favored over those that have come up with ‘cool technology’.” – Doug Brown
05
How do you keep investors interested and focused on your company and its growth plan?
“Tell them what you’re going to accomplish, execute on it, and keep them updated along the way. If you hit what you set out to, you have something great to speak to. If you don’t, can you communicate a cohesive after-action assessment about what went wrong and what corrective action you’re implementing to close the gap? If the investor touts a value-add such as GtM expertise but isn’t engaged with this process, you just learned a valuable lesson on that specific investor’s ability to provide incrementality to the business.”
– Nick Mahalec
“The more positive the customers are, the more interested the investors will be. Trying to serve customers really well is the most beneficial for all parties.” – Wardah Inam
06
What is your advice for an entrepreneur who wants to build a network to improve their access to capital?
“Here are two of my favorite methods. Connect with other CEOs and founders in your market: By networking with other successful entrepreneurs, you can gain valuable insights and advice on accessing capital. These individuals have likely been through similar
experiences and have investors who are actively seeking new opportunities in their same market. Once an investor has made a sizable investment in a business that serves a specific market, they are always looking for other non-competing solutions in that same market. They
understand it now. Seek mentorship from experienced investors: Find mentors who have extensive experience in the investment field. They can provide guidance, introduce you to their network of investors, and help you refine your business strategy to attract capital. Remember, building a network takes time and effort. Be proactive, genuine, and persistent in your networking efforts.” – Weston Lunsford
“Have something to talk about and put yourself out there. I am always interested in meeting new people with interesting perspectives, and
if you can establish yourself as someone with a unique, insightful perspective on a popular topic, I will want to work with you.” – Dr. Dana Fender
07
Does the current environment have a good amount of capital to invest, or is it a tighter, more selective market?
“The market is much more selective and valuations are lower. Raising at too high of a valuation just because a friendly investor will give it to you can also be a mistake for future financing. Nonetheless, money is always available for great concepts and teams.” – Doug Brown
“With private market investors and buyers hyper-focused on fundamentals and underlying unit economics, tech operators and owners continue to scramble to optimize operating performance and efficiency in the face of lower overall revenue growth – in some cases with strong profitability, and in other cases with negative EBITDA in favor of efficient growth. As a result, there are fewer companies with consistent
or increasing growth that meet the criteria for market entry. Meanwhile, the gap between bid and ask valuations is narrowing, and with a lack of liquidity and a large amount of available capital, I anticipate a resurgence of deals involving private equity firms, venture capitalists, and strategic investors. In summary, there is a significant amount of capital waiting to be invested, but the challenge lies in finding the right opportunities.” – Weston Lunsford
“Good, growing businesses with strong leadership will always be attractive to investors, and private equity firms with strong track records and access to capital will always be looking for them. Markets today might be tighter than they were in the past, but Thurston Group and firms like ours are open for business. If you see an opportunity to do something better than the competition, don’t be afraid to reach out.” – Dr. Dana Fender
08
What are the top 2-3 elements investors look for?
“At the early stage, it’s total addressable market, team, and product vision. You’re selling a vision in the earlier stages. It’s pretty simple…is the market large enough, does this team have the chops to make the necessary pivots to achieve an outsized exit, and can they clearly communicate where their vision is now knowing it may pivot along the way? Later stages come down to hard numbers as you should have the data to back those three things up.” – Nick Mahalec
“Market size, current revenue, and growth rate.” – Wardah Inam
09
Where do you expect to see significant innovation over the next 2-5 years?
“Machine learning and AI is already beginning to take off, but it’s only going to get better and come out faster. I also believe we live in a world where the upcoming generations are not as loyal to their service providers, especially dentists. There is a huge opportunity to create convenience and an experience for the new generations of patients. I hope to see something innovative and beneficial in this area in the future.” – Weston Lunsford
“There have been so many changes in our industry over the last decade. Consolidation, changes to the market, and other forces have changed the game for healthcare businesses, forcing them to adapt and improve. There is a great opportunity for businesses that add value to healthcare companies and providers. One area I am very focused on is advanced education which helps doctors stay at the forefront of innovation and improve patient care and their practices. As technology rapidly evolves, by offering more ways to serve patients and grow their businesses, there is a huge opportunity to train and educate doctors and their teams. This can take the form of anything from hands on in-person training to innovative online education, and everything in between.” – Dr. Dana Fender
“DIA evaluates companies across nine thematic vectors ranging from clinical outcomes, upskilling GPs, FinTech, Labs, and devices. For example, the Dental Innovation Alliance VC Fund I, LP recently made its first AI investment in Pearl, a leading innovator in AI solutions for dentistry, particularly for clinical outcomes. We have closely monitored the AI sector, particularly for pathology detection and the evolving standard of care for dental practices worldwide. Innovation in dentistry is ripe, and we’re honored to be at the forefront of it!” – Doug Brown
Dr. Fender serves as Partner of Thurston Group, a strategic investor and dedicated partner focused exclusively on the healthcare industry. He is responsible for development and relationship management of their physician practice management companies, including clinical leaders, research endeavors and practice growth opportunities. Dr. Fender also provides strategic oversight to Thurston Group’s portfolio companies’ clinical integration and affiliation programs. Prior to joining Thurston Group, Dr. Fender co-founded Smile Doctors. He also serves on the board of directors for National Dental Healthcare REIT, SGA Dental Partners, and Gen4 Dental Partners.
Wardah is the co-founder and CEO of Overjet. Before Overjet, she was the Lead Product Manager at Q bio, focused on simulation and quantification of human physiology. She completed a postdoc at MIT CSAIL focused on Emerald, a machine learning-based device that uses wireless signals for remote monitoring of vital signs and tracking of physical movement. She received a PhD from MIT focused on autonomous microgrids. She co-founded a startup, uLink, to build technology that lowers the cost of electricity access. uLink was recognized by National Geographic as one of the tech breakthroughs that could help power the world.
Nick is the co-founder and CEO of Pulse Equity, a platform that helps healthcare partnerships attract and retain top-tier talent. We help DSOs recruit, retain, and improve the performance of its clinicians by “operationalizing” cap tables and incentive programs. Before co-founding Pulse, Nick built an e-commerce enablement company that he sold to Klarna, the largest Buy-Now-Pay-Later company. Prior to tech, he built and sold a solar development company based out of California.
Weston Lunsford is the managing partner at Kaizen Investments Group, LLC. He also currently serves as the CEO of Plansight, a company that offers an employee benefit RFP to Employer Presentation solution. Its mission is to reduce healthcare costs in America by transforming the renewal experience of employer healthcare plans. Weston has had a diverse range of work experiences throughout his career. Before Plansight and Kaizen, he was the CEO of Dental Intelligence Inc., a leading provider of business intelligence software for the dental industry. Weston used data obtained from the practices’ management and financial systems to monitor their economic health and streamline their decision-making processes.
Doug Brown is the Co-Founder and Managing Partner of Dental Innovation Alliance (DIA), a venture capital firm that funds, advises, and propels the success of early-stage companies building the future of dentistry and health through technology. During his career, Brown has invested in and advised a dozen early-stage technology companies, as well as four dental support organizations. Previously, he led and successfully grew two national dental support organizations, most recently as CEO and Vice Chairman of Affordable Care LLC, which now affiliates with over 450 practices in 42 states. He is also the Founder and Chairman of Local Start Dental, a nonprofit dental clinic and learning center in Durham, NC.
