Mat Vogels (00:10)

Hey everybody, welcome to another episode of Fundraising where we interview top early stage investors and ask them all the questions that you as a first time fundraising founder want to know about this very intense, crazy process known as fundraising. You got to do it. And today we have an incredible VC, Harrison CTO and partner at HackVC. We'll probably dive into why some of that technical side can make Harrison a good

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partner to have on your team. But before we dive into some of these fundraising questions, Harrison, can you give a quick rundown on who is HackVC? What do you invest in? Average check size and maybe some of the stages that you invest in.

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Harrison (00:51)

Absolutely. Yeah, thanks Matt for having me. Gonna be fun. Yeah, so we sort of go between incubation and a sweet spot is really seed. And then we spend time between FinTech, AI and crypto. And as of late, actually lot of it's sort of been focusing on edge compute and maximizing intelligence at the edge in an energy efficient fashion.

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been, we're on our fourth fund and I should clarify because it has asked, yes we are actively deploying.

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Mat Vogels (01:15)

There

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you go. It's a good question to ask. It's one of the ones we'll talk about later that founders should be asking of their VCs as well. Do you have an average check size? What's that check size look like usually?

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Harrison (01:17)

Okay. Yeah.

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about three to five, but we're very flexible. mean, like the smallest we've gone is like a 250k check. Largest we've gone is, you know, in the tens of millions.

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Mat Vogels (01:33)

Okay, perfect. So there's a lot of flexibility there, is great. All right, the first bit before we jump into the fundraising process, we have some questions. A lot of them were nominated by the founders that are listening. And the first is, why did you choose to become a VC? And then what were you doing before?

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Harrison (01:35)

Yeah.

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Great question,

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yeah. The short answer is I just wanted a different set of problems. I've been a founder multiple times before, always focused on data pipelines and so forth. And I just didn't want to do another data pipeline. So.

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Yeah, and then wanted to learn a bunch of the lessons as to like, you know, the pattern around like what makes a successful company. So I was fortunate enough to be in a couple firms along the way. And it's really privileged position. Like I think I've spoken to something like 4,000 companies now over the past four or five years that I've been doing it. And it's really cool. It's really, really cool just to see like the pace at which the space is moving. You know, the commercialization of research, especially now.

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that there's essentially AI proliferation and maybe we could talk about it later, but execution no longer being the moat and more being around taste and distribution stuff. It's good. It's good.

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Mat Vogels (02:39)

It's a good time to build and it's a good time to be a VC in some ways. What is your favorite part about the job being a VC and then what is your least favorite part about the job?

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Harrison (02:47)

I'll start with the least favorite part. mean, we're lucky enough to have a really significant back office, which helps from, I mean, all I have to do as someone doing a deal is like, all right, get to the term sheet stage, define the terms, whatever. But fully half the job in terms of both effort and time is everything that happens between term sheet and wire. It's like all the red lines, all the back and forth, whatever. The auditing, tracking, then quarter over quarter, how the portfolio's doing. That said,

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As the C2M, and you know, I just said I didn't want to do data pipelines anymore, but it's a labor of love. And so I'm like doing a lot on our financial data pipelines right now around like reconciling like historical transactions, like since the beginning of the fund and making sure that like the investor dashboard is, you know, like accurately tracks like all the metrics. Very sensitive stuff and necessary, but yes, logging through financial data. Not that exciting. then favorite part of the job as of late, it's just like been meeting folks who are

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Mat Vogels (03:18)

you

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Harrison (03:41)

science fiction fact. It's just like the craziest stuff from the past, probably in the past like two months, just like really taking an uptick which is like if you put this on Twitter like two years ago people would say that you're crazy but now it's like no there's a demo like that's legit like we are gonna enter this this crazy era of abundance.

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Mat Vogels (03:58)

that. What are some of the areas specifically, maybe within that, or could be problems that you've seen or companies that are most exciting for you right now? Maybe not HackVC, but for you personally.

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Harrison (04:06)

Hmm.

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Yeah, so my background is AI, studied under a lot of the greats. And I was really fortunate because I have a really deep first principles understanding of how models work. And we all know about LLMs, cloud, et cetera.

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Where I'm particularly excited is where folks have replaced, so there's the front end of the model, which is a tokenizer and a better, which just like the semantic understanding of something. And then there's the backbone. And I'm very excited about folks that are switching out the tokenizer. So it's no longer reasoning about words or so, but it's chemical compounds or like peptides or like laws of physics, all that good stuff. think that like that is one of the, there's just gonna be so much

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exponential growth in that area. It's a very exciting time to be looking at all these companies.

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Mat Vogels (04:53)

One of the questions that I have for you specifically because of the CTO label, what are some of the things from like a CTO perspective that you would do in a VC fund? You mentioned some of those already, but what superpower does that give you essentially? Cause I feel like it's a rare or more rare role in a VC fund.

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Harrison (04:55)

Mmm.

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Yeah, the major aspects. So of course, it's like, you know, I do a lot of the technical deals, but the major aspect is sort of taking the principles of building an engineering team and applying that to venture and plus also like AI enablement. And so we have a pretty robust agent framework, which we use. We've been able to, you know, like move faster as well as like be better in our decision making and more thoughtful. And it's very good.

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It's very good. I know everybody's trying to do this but like ours is very good and it's private and compliant. good stuff

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Mat Vogels (05:39)

Yeah.

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Harrison (05:41)

And then the other part of that too is I've been a founder enough times to know that you just get smoked on GCP and AWS credits. So a big part of that is also building up a portfolio support platform. And I think I've been able to get folks probably about $3 million in credits since October, ⁓ which that goes very quickly when you're talking about GPUs and stuff. But it's enough to get you to the next round.

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Mat Vogels (06:00)

Look.

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Absolutely.

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Yeah, three million they don't have to spend on anything else is great. That's awesome. I feel like a lot of the best VCs I talked to right now are actively building whether it's internally or externally. So I feel like it's a new wave of VC right now. Yeah.

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Harrison (06:09)

Yeah. Yeah.

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Yeah, one thing if I may too, ⁓

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because it's just popped up on my radar, but just the proliferation of vibing. And Chrome got popped four times yesterday with remote execution. So security also, especially if you're building agent frameworks and building internally, security is highly, highly important. Could not stress that enough.

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Mat Vogels (06:38)

Yeah. Yep. Agreed. All right. Last question here before we jump into the fundraising process. Why should founders pick hack VC to be on their cap table?

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Harrison (06:46)

Great question,

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yeah. We focus a lot in trust systems within AI. And that can mean many different things. That's maybe game theoretic. That's verifiability, all this good stuff. These are not issues that you're not going to raise $100 million on a $1 billion in stealth by throwing more Transformers at the thing. But these are almost existential things that we need to think about.

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We are some of the best in the space at that. Very, very technical folks on staff. The team that we've built is incredible. And oftentimes, we'll be there when you want. We won't be there if you don't want to be bothered, whatever. But if you want to help out with the technical aspects of building the thing and weaving cryptography into the forward pass on a neural net, whatever, we can help out with that. And I've done it before and pretty good at it.

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Mat Vogels (07:33)

Yeah, I told a lot of founders, think that you obviously not having a non-technical VC on your cap table is totally fine. But when you can get VCs on your cap table that are highly technical, especially today, it's a huge value add for sure.

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Harrison (07:45)

Yeah,

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totally. Yeah.

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Mat Vogels (07:48)

All right, we're now to the meat of this, the fundraising process itself, which we break up into three different parts. The first is a lot of the folks listening, they have never talked to a VC before. They don't have any connections. So the first is how do they create a compelling pitch deck or a cold email or something to get it in front of people like you? How can they do that in an effective way? Second step, they've done that successfully. They're now going into a very first meeting with VC. How can they make sure during that 20 to 30 minutes, they can knock it out of the park and then

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And then third, they've had some successful meetings. How do they hurt cats and essentially push it over the finish line and close out the fundraising process. So we'll go through each of those. Starting with the first one, what we see a lot of founders do is they kind of create this list of VCs that they want to reach out to. What feedback would you give these founders on the characteristics, the sizes, types? What should these founders be looking for in the VCs before they reach out?

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Harrison (08:25)

Yeah.

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Great question. I think a lot of it has to do with making sure that the folks that you're talking to, mean, fundraising, can be incredibly painful. Probably everybody says that, and you probably hear that all the time. It sucks. It's terrible. So just out of respect for everybody's time, and your time as a founder, right? You should probably find folks that are very much deploying into the thesis in which you are.

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Mat Vogels (08:50)

It sucks.

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Harrison (09:00)

building in. And so like what I suggest to folks, even just as a friend or whatever, is to like look at

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companies that are somewhat similar in a similar domain and who has written checks into that and then go after them. Even better if your friends are at those companies. Because we are always hunting, we're always actively sourcing. And it's the relationships, we can talk about this maybe later ⁓ about how in some way going to demo days is almost commoditized, but the relationships is really now the differentiator. At least we're really leaning in that direction.

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So getting in front of us that way, just like a referral or so. I've also had a lot of like high conversions from just being in sort of more intimate events at conferences where it's like, okay, like I know that this is an event that like we both care about. At least I try and show up like I put on like my VC wear, you know, like a firm logo or whatever. ⁓

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Mat Vogels (09:50)

Yeah,

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your Patagonia vest, yeah. Yeah, norrfax. Yeah.

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Harrison (09:51)

Yeah, exactly, North Face, but come up and say hi. ⁓ So

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then the second part of crafting a compelling pitch deck and making it interesting.

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I think telling the story is underrated skill. And oftentimes, when I see pitch decks, like, I don't get it. It's like, just didn't understand the story. But if I were to sit down with the founder of something, and part of that, too, is how well are you able to effectively communicate the vision to your team, to your customers, that sort of thing. So storytelling is a big part of it.

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And I know that there's a formula of team and problem and solution and TAM and all this good stuff. more so, mean, all the playbooks are being written right now, rewritten. So yeah, it's about telling a compelling narrative. But not in a memetic way, but in this is a problem that needs to be solved kind of way. Yeah.

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Mat Vogels (10:36)

Yeah. And there's kind of two

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ways I think where we have to tell this story. The first is in the cold outreach, you know, email message, LinkedIn email, whatever. The second is in the pitch deck. How can founders write a compelling, whether it's cold outreach or just capture you even before they get into a pitch deck, before you look into a pitch deck.

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Harrison (10:44)

Yeah.

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Good question.

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Mat Vogels (10:55)

Like if it's three bullet points, basically, what are those three bullet points that you want before you'd even open the pitch deck?

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Harrison (10:57)

Yeah.

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Yeah, mean, depends on the stage, right? You know, if it's later stage and like, you know, the valuation is such that like there should be an expectation of commercialization. It's like, okay, this is a bullet point of the traction. It's earlier, like this is the team. This is like, I don't wanna say credentialed, but like this is like sort of their heritage and like where they come from and that sort of thing. Yeah, yeah. ⁓

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Mat Vogels (11:21)

Yeah, it's like one team and background for sure.

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Harrison (11:26)

just thoughtfulness around why they chose to solve this problem and that it's a real problem that people have. Yeah. Like having done the work, I think, rather than just be like, oh, I saw this cool thing on Twitter. I'm going go out and build it and then try and raise from VCs. Yeah, but we see this all the time. It's like, that's not a problem that people have. Or the institutions are going to eat that, not from an execution standpoint, from a regulatory standpoint, or how expensive a banking license is, or something as boring as that.

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Mat Vogels (11:30)

Yep, the Y. Yep. I like that.

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Yeah.

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Yeah. And YC is, famous for saying that build something people want. You have to convince us that there's somebody that actually wants this, ⁓ and, give us some proof and data behind that. From the, from the pitch deck side, they have a little more freedom. There were a lot more slides they can kind of cover to do this. Are there, you know, one or two or three slides? mentioned team, you mentioned kind of the mission or the story. What are the slides that you gravitate towards the most during, that first initial glance of the pitch deck?

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Harrison (11:56)

Yeah.

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Yeah.

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For sure, yeah, yeah.

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Yeah, I was born an engineer, so I gravitate towards the how, and I really like it when it gets really in depth in the appendix section. Because that's the part I go to first, actually, and then, OK, how does this work?

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Mat Vogels (12:31)

Maybe talk about that.

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What is an appendix section should founders, cause we see a lot of pitch decks that don't even have an appendix section.

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Harrison (12:35)

you

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Yeah, I mean, there's the formula, right? Seven slides, 10 slides, whatever. But oftentimes, especially for where I think we both play is ⁓ there is a technical component and there's a little bit of a technical edge. And so being able to reduce the round trips in terms of how many meetings we have to have by attaching the appendix at the back, which gets really into the weeds and answers the first initial questions. ⁓

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⁓ And you did touch on something that I want to come back to which is like how does a founder sort of like reason about their own pitch deck and I think it really takes You know, I'm guilty this to like you get lost in the sauce. Yes, this bullet points really really important But if it doesn't add to the story you kind of have to like, you know do a lot of reps on it and just be like, okay What is the maximum for me information density? That's that's accessible and like not get married to it too much

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Mat Vogels (13:28)

Yeah, I like that. Be flexible whenever you can, I think is an important piece of feedback there. What's a wrong way that you see founders try to get in touch with VCs that maybe they should either avoid or think of something else?

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Harrison (13:30)

Yeah.

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I think hitting me up on LinkedIn 12 times in 12 days is probably not the right way to go about it.

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Mat Vogels (13:45)

No, it's funny. I'm surprised at how many VCs I talk to that have a preference of like, some of them have a strong preference for LinkedIn. Other ones have a strong preference for email, obviously. ⁓ So it is tough, but for you, not being a spam on LinkedIn is not the right way.

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Harrison (13:54)

Yeah.

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Yeah,

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and like I read all my messages, know, but it's, you know, don't have time to reply to them. but sometimes it's like, you know, just not in thesis or something, you know, it's not personal. It's just like, my job is to, to take information from, you know, founder projected through low dimensional, pitch to then I see in all, and if I can't bring the rest of the folks along, like we're extremely busy.

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Mat Vogels (14:07)

Yeah.

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Yeah, agreed. What are your thoughts on warm introduction versus cold outreach? How strong is that for you? Do you need a warm introduction? Are you working with a lot of companies or have you invested in companies that have done cold outreach? How does that work out for you?

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Harrison (14:34)

I think that highest, I think in order of like conversion percentage, when conversion, mean like happy path. It's actually like when I cold outreach at Founder and that's ironically on LinkedIn when I've like seen what they're doing on Twitter and, or like they've published something I'm like, that's sick. I want to learn more. And then it turns out to be like really good product and company. Then warm intro. And then, and then cold outreach from Founder to me.

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Mat Vogels (14:56)

Yep, yep.

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But it's not impossible either way. It's more that I think a lot of times founders think if I can't get a warm introduction, it's not worth sending an email to Harrison or something like that. Okay, okay. All right.

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Harrison (15:05)

Yeah, yeah, it's probably fair, yeah.

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Mat Vogels (15:08)

Let's say they've done all the right things. They have a meeting coming up with you. It's such an important part of the process founders don't realize because it might be the only time they can actually show all their cards. It goes by very fast. The meetings are typically, it feels like it's two minutes. And in some cases they are. I've seen meetings where they only have like five minutes and you have to get all of this out. Let's assume you have a good 20 to 30 minutes. What are you looking for? Maybe it's for HackVC or just you personally. What are you trying to get out of that initial

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meeting with the founder.

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Harrison (15:39)

Well on that first point, I think it's important for a founder to have like the 30 second blurb of like, what are you doing this white matters? Maybe there's a five minute version and then there's a 30 minute version. I love the hour long versions, but also I don't get time to do that too too much.

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What am I looking for? mean, I'm looking for like, is this a problem that exists and that's worth solving? Does the team have a right to play? And by that, mean, well, I don't want to give anything away, but does the team have the right skills and the right network, all that good stuff?

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Like is there a reasonable business model? Have they thought critically about what they're doing? How they're going to make money?

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And then the last thing that's always at the back of my mind is like, can we get venture scale returns from the entry point, from the valuation? And it's kind of nice being in a downturn where valuations have come down a little bit. So it's a lot more reasonable versus raising when the market is hot. It's like, man. And it makes sense for firms who are a lot larger than us, but that's just not the game that we're playing.

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Mat Vogels (16:39)

Yeah, it's so tough. feel like we'll have meetings with founders where they're raising it, you know, $5 million valuation first check in, and then we'll have meetings right next door and it's like 50 million, a hundred million first checks in. So there's a wide disparity I think right now. yeah, it's so true. It's so true. Any feedback do you have for founders as they're thinking about valuation, almost setting that going into fundraising?

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Harrison (16:50)

Yeah. Yeah. And the same company too, like across market cycles.

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One thing that I could not stress enough, and this is also rooted from being a founder like many times myself, is just don't optimize for the wrong metric and don't be greedy on the cap table. I've seen a lot of companies blow up because the founding team is just too greedy, like I have own 90 % or something. But.

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Mat Vogels (17:14)

Mmm.

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Harrison (17:21)

You know, by like lowering the entry point, like you'll probably, it's more about growing the pie than getting like a larger share of the pie. And, and it's like a binary outcome either, you know, either you hit or you don't. And like, it's all about increasing the lock surface area. like a lot of ways, a lot of ways to do that is like using your cap table as leverage and like really thinking about the composition of like who's there and why, and what did they all bring? Like you don't want everybody like who can help out with distribution and like nothing else. You don't want everybody that's just like, oh, we can do like legal advice, but

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like no distribution or whatever, know? yeah, cap table is leverage.

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Mat Vogels (17:52)

Yep. Yep.

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Yeah, I agree. These are a couple of questions, some smaller questions that founders wanted to know as they go into this initial meeting too. One was, how do you feel about multiple founders on the call versus just the CEO? Because sometimes I think they get some weird feedback on that.

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Harrison (18:08)

think it depends on how much time you have. CEO, early stage, probably non-negotiable. If you want to bring your CTO as well and some other person. there's fundraising and then there's company building. so I don't feel strongly one way or the other. Yeah.

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Mat Vogels (18:24)

Okay, good.

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I think that's a good answer. Some VCs I know do, they look at it as like, oh, it's a red flag. Shouldn't you guys be working? Why aren't you guys all fundraising? But then I think especially highly technical products, if your CEO can carry water and be technical about it, sometimes that's okay. But having a CTO or somebody very technical on the team that's there can be helpful, I think as well.

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Harrison (18:31)

Yeah.

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Yeah.

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Yeah,

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yeah.

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Mat Vogels (18:45)

Next question was pitch deck or no pitch deck? Sometimes founders go through and they read through their entire pitch deck over 20 minutes. Sometimes they have no pitch deck and maybe they feel like they should have had a pitch deck. What are your thoughts on pitch decks in that initial meeting?

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Harrison (18:57)

⁓ Having been on both sides, I hate it when the VC and pitching doesn't do their homework. So I try and put it together as context. And then the inverse of that is whenever I get a pitch deck, I try and do my homework and have a couple questions, which really double-click on what is the highest leverage thing I need to de-risk at this moment in time on this company. So I find the pitch deck to be extremely helpful, even as a context setting for the meeting.

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Otherwise, like you kind of start from scratch and like round trips are expensive. I mean the act of scheduling I don't know how many hours I spend a week like I'm just here's my cowl, oh that doesn't work. Can you, you know, we were doing it right before this right before this podcast.

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Mat Vogels (19:34)

Yeah, yeah, I mean, it's so true. And I think that there's still no good AI for that. I've tried all the tools for calendar organization. It does not exist. So maybe founders listening, if you make one that actually works, we would we would pay for that.

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Harrison (19:38)

Yeah.

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But then anthropos

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can eat it so I don't know

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Mat Vogels (19:47)

⁓ What? man, that's crazy.

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Anthropogiz, the new Google is going to do it in a lot of ways or open AI. What are questions that founders should ask of VCs or should they be asking questions of VCs during the initial meeting? So the very first meeting.

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Harrison (20:02)

Dude, I love when founders ask me, what's your thesis on this one particular thing? ⁓ Yeah, or like just in the domain.

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Mat Vogels (20:07)

the thing that they're building, yeah.

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Harrison (20:10)

that they're building in. We're in a pretty privileged position where we see a lot and we get to develop very nuanced views on things and see things that founders themselves made that are adjacent, but they may not necessarily see it. honestly, when I need customer wraps, it's not like the highest value questions I tend to ask are like, are the thesis, or what's the customer thesis in the domain that the company is building in?

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And it just shows that every relationship, it should be kind of two ways. There's a lot of information gain. And it's really, mean, the founder should also be interviewing the VC. Are they value-add? Are they going to further the aims of the company?

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Mat Vogels (20:45)

And also to your point earlier, it shows that they did a little bit of homework. If you ask them a question about the industry and they just have no idea what to say. Again, not that it's, I don't want to say that it's binary and that if they can't answer that well, they should end the call now. ⁓ But I agree that when you have a VC that feels engaged in what you're building, it's going to make the process that much easier for sure.

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Harrison (20:48)

Yeah.

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Yeah.

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Yeah,

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maybe just on funnel metrics. I only have so many bullets in my clip, right? ⁓ And I only have so much airtime in IC. And so if you get me talking about what I'm seeing,

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whatever, I love a soapbox. don't get to use a soapbox, but I love a soapbox. Oftentimes that's the thing that's gonna turn, and I schedule calls 30 minutes apart, like 30 minute call, 30 minute break, where I help clean up notes, whatever. That's the kind of thing where I'm like, oh, we can talk about this for a long time, and if it's a really engaging discussion, and it turns out we have a lot in common, and think very much the same way around what's valuable, that might be the thing where I'm gonna deprioritize other things than I see, and really fight for this one company.

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Mat Vogels (21:42)

Yeah, I like that. That's one of the questions earlier that we didn't really get into as much was understanding the process on the VC side. And you kind of nailed a good one there. We have to take your pitch and usually carry it through a process on our own. You need to give us the ammunition to take that back, ⁓ which is why your energy and the expertise, everything you bring, especially to this first meeting can mean a lot to us to then have to translate that back.

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Harrison (22:01)

Yeah.

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Yeah.

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Mat Vogels (22:11)

to the rest of the team.

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Harrison (22:12)

And I guess also in the spirit of reducing round trips, if you have a data room prepared, that helps a lot. Where I double click quite a bit is, OK, you might have some revenue today. Maybe not. Doesn't matter, depending on stage. But what is your path to getting revenue? And what's the quality of that? Is it one-off services? Is it recurring? Customer concentration, that sort of thing.

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are really good about preparing company financials and the decks and whatever. An investment memo that probably like GPT cooked up or something. But having that, so I can make the defensible argument around the financial modeling of yes, they are on a actually very positive growth trajectory. The $3 million clip or whatever that we'd inject, that just takes it to the next level and throws rocket fuel on a fire, which is a good problem to have.

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Mat Vogels (22:57)

Absolutely. Any other common mistakes or feedback that you'd give to founders during that initial pitch or meeting before we jump into the rest of the fundraising process?

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Harrison (23:06)

I would say that like I operate on your timeline like on the founders timeline, right? So I'm not gonna house you for materials or anything. But like if I ask for something there's probably a reason it's not just like You know like suck up both of our times. and so just like being responsive on that

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There's been a couple things as of late where it's like, I've asked folks for like one particular thing that's like not that different. Like you're building a company, like fundraising is sort of like a sidecar activity to that, even though it soaks up four months at a time or whatever. But just like having that, and I've built companies before, you So it's like having like those, I don't know, like those dashboards or whatever, or just like analytics. It's like, okay, you know, like easy to get, but.

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you if you drag your feet doing that, it's tough. It's gonna cool the process quite a bit. then I speak to, I don't know, like, I don't know, like, you know, 20 companies a week or something. And so it's like, gotta reprioritize a little bit.

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Mat Vogels (23:55)

All right, so let's say that they've done everything during these initial meetings. They have a handful of them lined up. They've gone through them. Now they're into the meat of the fundraising process, which I mentioned earlier, feels sometimes like herding cats. You mentioned it, VCs are busy, you're busy, everybody's busy, but you have to try and get momentum and priority into this process. Speed kills all deals in a lot of ways.

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What's some feedback you give to founders to maintaining some of that momentum and keeping things going when it's easy for some of those things to fall to the side?

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Harrison (24:25)

Um, that's a question. mean, you know, if, if I asked for something like, I'm going to do my homework and like follow up a week. If I don't follow up in a week, just, uh, just pinging me. like, you know, really I'm bounded by at least at hack, um, you know, we meet like once a week. And so that's sort of like the touch point, which is like, okay, what's the next step on this deal? Cause I can't just do a deal in isolation, you know, um,

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The other side of that though is like saying you have no commits but you're closing by the end of the month, like, mm, like hard no.

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Mat Vogels (24:53)

Yeah, yeah, yeah, you're saying that it's like they're trying to create FOMO when there's no FOMO to have, is that what you're saying? Yeah, we see that all the time, which is, you know.

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Harrison (24:58)

Yeah, yeah. Like there's only, you can only play

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the FOMO card one time.

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Mat Vogels (25:04)

Yeah, that's true. The other kind of mistake there is that you don't say that you have VCs that are investing when you don't, especially if you name drop them. ⁓ We say this a lot on this podcast, but VCs are very like we connect with each other all the time. If you say that hack or Harrison are on a deal, like I'll just text you. And if you say no, then it all falls apart immediately. It's don't do that.

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Harrison (25:11)

Yeah.

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Yeah, I credibility is everything,

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man. Yeah.

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Mat Vogels (25:26)

It

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is, it is. The other thing too, this is maybe a kind of a warning for founders as well. Sometimes VCs will also feel like overconfident about it, or they'll feel maybe optimistic about it. So they'll say to a founder, we're really excited. We're hoping to get this wrapped up by Friday. A founder hears that they go to the other VCs and they say, Hey, hacks in, and they're going to get us a term sheet on Friday. And it's like, well, it's not really what they said. And then that can also create this like telephone game that happens too. So clarity is important throughout this process as well.

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Harrison (25:51)

Yeah.

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Yeah, absolutely.

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That's also the quarter-cent company building.

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Mat Vogels (25:58)

Yeah. You guys are investing in a lot of technical stuff. What is the diligence process look like for you as you, as you go through that? Your background probably helps a lot in that, but maybe just a quick overview of what that looks like.

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Harrison (26:11)

If a founder comes to us and says, know, we've beat benchmark by such and such, I want to see if they actually did. And then, you know, one thing and another, you know, if there's like research, okay, like does the research make sense? And I think it probably culminates in like verifying claims of like where the company is against the GitHub.

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And you know, like you don't even have to give me access, but just like screen share, you know, we spent an hour going through it. which also like secretly I'm looking for like code aesthetic, especially now that like everything's being vibed. It's like, is this maintainable? And like when you scale from maybe one CTO to a team of 10 engineers, like will, ⁓ will you get bogged down and just like stepping over each other? Like, is there like good modularity? mean, like all this stuff around like object oriented programming and stuff, right? We do, we do a lot of software. I don't know what that

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look like for Adams, we don't do that. probably a factory tour, which is always fun. It's always fun to do that.

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Mat Vogels (26:58)

Yeah.

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Yeah,

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yeah, this is the benefit of hardware is you get to do some diligence in real life, which is fun. It's a good problem to have, but one of the problems that we see a lot of founders go into is the moment when they become, I like to call it slightly oversubscribed, where they might have like one or two VCs that are on the fence. And if they came in, they're oversubscribed, you kind of have to start.

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Harrison (27:06)

Yeah, yeah.

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Mmm.

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Mat Vogels (27:21)

picking and choosing who to keep on your cap table. Sometimes you have to like get people to lower the amounts that they're bringing in. What feedback would you give to founders that are maybe in that position where they actually have to start making decisions, hard decisions on which VCs to keep on or off?

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Harrison (27:37)

I'd say think critically about like using the cap table as leverage and like what is the the probability weighted outcome of like one person's I mean at the end of the day man like we're selling money and it's a very weird place to be and so what is the value out of that money? Also you know we're every VC around the room is probably gonna be then be like I want to size up I want to size up and if we can't I'm gonna withdraw it like probably not so just like being level-headed about that and like

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bc is very much a sales job this is just like being aware that like you're else we're selling our money at that point well you should take my money all the vendors in the call you should take my money of everybody else's

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Mat Vogels (28:06)

Nope, agreed. Are there any mistakes? Yeah. Yeah. Everybody else can get pushed out, but, not in hacker

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Harrison. Yeah. Any other common mistakes you see founders make during this kind of final stage where they are closing up and getting on their cap table? Maybe it's related to valuation or the type of investors that they let in or anything like that.

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Harrison (28:27)

I would say ⁓ just being respectful. I've been on the deal side a couple times where we've had a great process and happy path and then the founder all of a sudden becomes a jerk and it's like, wait, all of a sudden you get some power and you're someone I don't want to work with or for? I very much view my job as working for my portfolio. If you tell me what's in your stack, I will chase that sales team and I will find you discounts. ⁓

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Mat Vogels (28:42)

Hahaha.

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That's

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Harrison (28:53)

But don't want

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Mat Vogels (28:53)

awesome.

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Harrison (28:54)

to do that if you're not going to be respectful of me or my time, or just like generally unpleasant. So just be respectful, be nice.

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Mat Vogels (29:00)

Yeah, and this is kind of where tensions get highest, kind of towards the end and on both sides. So as a founder, VCs will kind of start showing their cards a little bit more during this phase two. And likewise, we see founders typically show their cards more. This is a relationship that'll last years if you're lucky. And if you don't like them or if those things start to shine then you should listen to it for sure.

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Harrison (29:15)

Yeah. Yeah.

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Yeah, yeah.

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Mat Vogels (29:23)

All right, let's say they've gone through it. They closed the round. Everybody's celebrating. You get five minutes to celebrate. Everything's great. Then you get back to work. You mentioned working for your portfolio companies. What are some of the things that you then do ongoing or that HackVC does ongoing to support your founders?

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Harrison (29:40)

you know, we'll be there when you want. And a lot of it is around like strategy or positioning or like telling the story. I like to dig in and like help on the technical side where I can. And like really, you know, might feel, and it is a milestone, like closing a fundraise, but like the point of company building is not to fundraise, it's to build a company. And so like taking, you know, your foot off the gas is probably, probably a mistake. Everybody going on vacation for a month, probably not ideal.

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But we're in this for the love of the game and the love of company building. So I love sitting down with the tech team and be like, all right, what are you struggling with? Or how are you thinking about different customer segments or something, Everything I do is to get you to that next level and get a happy outcome for everybody.

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Mat Vogels (30:23)

Yep, agreed. What are some of the mistakes you see founders make immediately after fundraising or even just the three to six months after fundraising that they should try to avoid?

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Harrison (30:31)

They lose the hunger and they lose the focus. Fundraising is like, it's such a painful process. I don't know we can stress that enough on this call or certainly on the podcast, but it is terrible. But that's not the point of company building, right? But although it can feel like that is the focus, but the focus should still be the company. So yeah, losing the focus.

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Mat Vogels (30:50)

Any other things that you want to cover or give to founders about the fundraising process itself? Anything that we missed?

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Harrison (30:56)

I just want to say to all the founders that I see you, know, it's tough. It's tough. It's good that it's glamorous. Cause if it wasn't like, I don't think people would do it. It's starting something as hard and then convincing VCs to fund it. It's hard. So it's, yeah. mean, kudos to everybody out there.

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Mat Vogels (31:03)

No one would do it.

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Yep. Appreciate it. Harrison, this was awesome. There's a lot of information packed into here. Where can folks continue to follow along with you and hack VC?

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Harrison (31:21)

You can find me on Twitter at is the Baron I put a couple Yeah, I a couple essays out on the on the hack blog post the hack Twitter Well, yeah, I mean all the socials are on hack VC The blog is pretty good. It's a blog hacked out VC

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or can find me on LinkedIn, but don't blow me up 12 times in 12 days. Or send me fractional CTO services, I really don't like that.

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Mat Vogels (31:46)

do it.

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Yeah, don't do that either. Don't do that.

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Harrison, thank you so much. I'm sure that we'll be seeing each other in person hopefully soon. And I appreciate you being on.

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Harrison (31:57)

Dissert.

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Thanks for having me man, was a lot of fun and cool to pull back the curtain a little bit on the mysterious and painful, distress that again, process of fundraising. It is not fun, I don't know why you call the podcast fundraising. Oh, all right. Here you go, a little heart. You too dude, see ya, bye.

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Mat Vogels (32:06)

Agreed. Well, you because you put the fun in fundraising. That's why we do it. All right, buddy. Have a good one. Bye.