Mat Vogels (00:10)

Hey everybody, welcome to another episode of Fundraising, a podcast where we interview early stage investors to give you, the fundraising founder, all the tips and tricks that you need to hopefully close out a successful round. And today I have a special guest, a fellow Matt. Matt Logan, general partner at Earthshot Ventures. Thank you so much for being on today. I'm excited to hear what you have to say on some of these questions.

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Let's start a little bit with a brief overview of what Earthshot Ventures is doing, what's sectors are you focused on, stages, and then maybe your average check size.

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Matt (00:47)

Yeah, sounds great. Thanks for having me, Matt. yeah, Earthshot Ventures is an early stage investor in climate tech. and so to put some details on that, when we say early stage, we've done everything from pre-seed through series B as our entry point. So a seed in series A is the sweet spot, but we can go a bit earlier, a bit later. Our check size target is half a million to two and a half in initial checks, and that tends to be correlated with stage. So at a pre-seed, we're more likely to be

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Half a million at a series B, we're more likely to be two and a half. and we've invested particularly heavily at the intersection of AI and climate, and we're specifically calling that the clean intelligence stack, and I think maybe we can get into some more details on what we mean by that later in the conversation.

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Mat Vogels (01:32)

Yeah, in fact maybe we dive a little more on that now because I do think when I hear climate tech now, I think that founders sometimes hear that and they think of, you know, wind turbines or or clean energy solutions, which can be factored in there. But yeah, maybe dive a little deeper on some of the specific problem sets that you would put into that category. That way if somebody's listening to this, they could kind of rope themselves in there too.

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Matt (01:54)

Yeah, absolutely. So what I mean by the clean intelligence stack sort of runs across the supply chain of AI because just up and down that supply chain, we've seen tremendous market pull and really think that's where the vast majority of power law winners are gonna come in the next decade. So we're really staying focused there. So starting all the way upstream, that it all starts with critical minerals. so we've invested in

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several companies in that space. Kobold metals is is probably the most well known, using AI to find the metal deposits, driving the energy transition. Mariana Minerals is another one that I think folks are gonna be learning more and more about, sort of picking up where cobalt leaves off and sort of taking an AI first and software first approach to actually operating mining assets. then moving one stage downstream.

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we're also investing heavily in energy abundance and solving the data center energy puzzle. Emerald AI is a company in in that bucket that is getting a lot of attention recently for their solution to bring energy flexibility to data centers so that data centers become an asset rather than a liability to the grid. then moving one step further downstream, we're also investing heavily in compute efficiency.

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So, how do we get the most intelligence per watt per kilowatt hour of energy consumed? we just had some very exciting news in in that bucket in the portfolio today. we invested in originally in the series A of a company called Etched, which is building compute from the ground up for for inference. And so yeah, they just announced a big series C today. so really excited about what they're building.

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Mat Vogels (03:18)

yeah.

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Matt (03:28)

So those three components of the clean intelligence stack are sort of the inputs into AI. And then the next two are kind of the outputs of it. So the next bucket is climate-positive AI native applications. one we're really excited about in that bucket is a company called Unlimited, which is an AI native engineering procurement and construction company. specifically starting with automating design engineering for a lot of the energy projects that are powering data centers.

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so what would traditionally be a very manual process and take a legacy EPC a year, they are automating and and can do in a week and seeing just really great traction for for that product. And then lastly, we're also investing heavily in physical AI. So that's robotics and computer vision and all these sorts of instantiations of AI in the in in the sort of physical world, the world of atoms rather than bits.

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Mat Vogels (04:22)

Yeah. Those are incredible categories that I agree with you. There's gonna be so many defining companies that unlock so much potential as well. Not only would those companies succeed and do very well, but it's gonna unlock completely new categories of of new businesses that will have their own breakthroughs. So we're we're in some exciting times. And I do love I mean you mentioned climate, like I mentioned earlier, I think climate

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The same way that American dynamism speaks to so many things, it's so broad, but you can kind of still put it behind these main categories, which I think is a is a fun narrative as well.

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Matt (04:54)

Yeah, for

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sure. I mean, climate is much bigger than what I just mentioned. but you know, we've just seen that's where the biggest market pull is. So that's where we're primarily focused. But, you know, we want to see anything and everything that moves in climate. And and so yeah, I think that'll in f in fund one, eighty percent of our investments were or rather eighty percent of the capital deployed was in that clean intelligence stack. And I think it'll be similar in fund two.

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Mat Vogels (04:56)

Yeah.

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Matt (05:20)

but you know, I I always love a yeah, a a wacky new idea that convinces me we should be investing in something that I ha have never even thought of before.

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Mat Vogels (05:29)

Yep, I love it. Well before we go into the fundraising pieces, there's a few questions that that founders always want to know about the investor themselves. We'll love a quick background on what you were doing maybe before jumping into the world of VC.

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Matt (05:41)

Yeah. yeah, so I've really known for my whole career that this is what I wanted to do and have had kind of a variety of experiences leading up to it. I had two formative experiences i in you know twenty ten, twenty eleven timeframe that exposed me first to venture and and you know got me really excited about it. one of which was sort of as the

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you know, sort of first business hire for a solar water heating startup, where I was just doing anything and everything I could to pitch in and and and and try to help the founder. one of the one of those things was was fundraising. And you know, candidly I just thought it seemed like more fun to be on the other side of the table. and you know, it it's like some people are more natural investors, some people are more natural founders and and operators and

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you know, as soon as I sort of had that exposure to it, I just thought that you know, getting to learn about new technologies and industries every day, getting to meet and partner with exceptional people and getting to have real skin in the game, is just seemed like the best, best possible job. And I I've kind of had a few different venture experiences along the way, a couple different kind of internships during grad school and then had a stint in in corporate venture.

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and then Urshot over the last five years has been kind of my first you know, just sort of standard vanilla, non corporate venture full time role.

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Mat Vogels (06:59)

Yeah, yeah, love it. I think that the yeah, that from an operator, the empathy buildup that you get from from being in those trenches. and we have a lot of folks that are on that have founded companies, that were working at companies. I think the empathy still carries over when you're investing into these founders and you've been on that side of the fence for sure. ⁓ so

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Matt (07:16)

Yeah, for sure. And and I I did

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another one. The last last startup I worked for, Advanced Microgrid Solutions, I was on the finance team there, so I was kind of like the right hand person to the CEO helping them raise their Series B. And it was, you know, a l year long grind of a raise. And so I have e experienced the worst of what of V C behavior and I ha you know, ha ha have vowed not to

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To to repeat those mistakes.

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Mat Vogels (07:42)

That's all.

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That is so it's so funny you mentioned that on a a recording I did a couple weeks ago. A founder mentioned the exact same thing where they became a VC because they actually had such bad experiences and they were a s a fairly successful company during their own fundraising processes and wanted to become a VC so that they could kind of hide that or to remove more of that from from the founders that they invested in. So it's it's not uncommon to feel that way. And a similar question, one of the the things the founders always want to know is what is your favorite part about being a VC and then

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least favorite part about being a VC.

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Matt (08:15)

Yeah. I truly enjoy everything fr from the sort of sourcing through diligence through, you know, actually making the investment. there there's also a lot of fundraising and operations that come with being a VC that I you know, I I would say I'm learning to l enjoy fundraising and you know the operations just kinda are what they are.

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But yeah, everything sort of in that deal process I I really do enjoy. And especially you know, when you meet a founder who just opens your eyes to an opportunity that exists in the world and just convinces you, you know, this needs to exist in the world, and when you believe that they are the right team to actually make it happen, that sort of like excitement when you've just

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sort of met that team and and believe they're going to sort of create that dent in the universe. that's like yeah, I just think that's like the most fun you could possibly have in a professional setting. Yeah. Yeah.

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Mat Vogels (09:13)

It's so true. It's infectious in a way too.

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You can kind of it's palpable the the energy that you get from that for sure. is there anything that you wish that founders maybe better understood in the world of VC? You kinda hinted at one of There's this whole operational side that can take up a huge percentage of our of our energy and time. Do you wanna double click on that a little bit, or is there anything else that you think founders, just by understanding this, might have a better appreciation in the world of a VC, which I think could help them in the fundraising process?

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Matt (09:19)

Yeah, absolutely.

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Yeah. you know, I think I would just say that VCs aren't monolithic. You know, I mentioned some of my bad experiences with fundraising, but on the flip side of the coin, there's some folks out there who are really kind, who have integrity, who even when they pass will tell you why they passed and you know, do it with

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With with honesty and empathy. one of our firms that r recently raised a really strong round did so from a from a firm that b passed on us back at the back in my AMS days, you know, the last startup I mentioned I worked at. And

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you know, as soon as the founder told me who was leading, I was like, yeah, I really like them. Like they they were one of the best passes. you know, they told us why. In hindsight, they were probably right, and they just like actually acted with sort of honesty integrity throughout the process. So yeah, that's what I would want to sort of express is that you know, be just sort of be on the hunt for.

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Mat Vogels (10:29)

Mm-hmm.

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Matt (10:40)

for good people through the process because you know there are jerks but there's also a lot of a lot of really quality people on this side of the table as well.

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Mat Vogels (10:48)

Absolutely. Yep. All right, last question here before we go into the fundraising process. Why should founders pick you andor Earthshot Ventures to be on the cap table?

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Matt (10:58)

Yeah.

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a big part of this stems to our origin story, which really stems from an organization called Elemental Impact, which is one of the longest running nonprofit funders of climate innovation. so they've been operating for over fifteen years now. My partner Dawn is

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the the founder and and still very much the CEO of Elemental. Elemental has 40 people. and so if we have a partnership with them, so we're we have a service agreement with them, you know, where we we sort of pay them for some of their services and then they also have a slice of our carry. So their people are sort of very much incentivized to to help our companies as well. And so

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you know, that that manifests itself in a lot of different ways. most recently they announced what's called the Data Center Innovation Initiative. So it's a partnership with Microsoft, Google, Meta, and Amazon to pilot lower carbon technologies in data centers. and so, you know, we have a couple of our portfolio companies that are applying, but you know, whether or not they actually are sort of formally a part of the initiative

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we have access to these customer relationships that I think is really compelling. Elemental is also a major convener. So you know we get our CEOs up on stage at Interactive which is one of the biggest events at San Francisco Climate Week every year and so it's just a great sort of microphone for them. Elemental also has done a lot of work in policy.

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and you know, across all of those sort of sectors that I mentioned that we're most investing in most heavily, there's a lot of policy overlap. so we we tend to look for companies that don't rely on subsidy, but still there is a a huge policy component that can either be a headwind or or tailwind for you know, most of our companies. And so the the

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The sort of policy work that Elemental does and bringing that to that sort of network to bear for our portfolio companies is is another big aspect. So yeah, so Elemental is really focused on being as catalytic per dollar invested as possible. they do a lot of work funding, first of a kind projects. And then Earthshot is kind of a spin-off from Elemental.

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still very much focused on limiting the universe of things we would possibly invest in to those that are good for the climate. But then beyond that just trying to make as much money as possible. So kind of two sort of mutually reinforcing strategies in our sectors.

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Mat Vogels (13:27)

Yep, I love that. And you mentioned policy. I think policy is one of those things that will be can it'll continue to be more important for a lot of these companies, especially as they intertwine with government or obviously the various programs or groups that are gonna be making some of these decisions that could be the difference maker in and how they can succeed as they go forward. So that's an incredible value add. Yep. All right, yeah. a hundred percent.

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Matt (13:48)

Yep. Yep. Yeah, especially with data centers right now, right? With the way that you know, New York just banning

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data centers and so, anything and everything in that world. We need to we need to be telling a different narrative about how well first of all, we need to like set the rules in the right way and then we need to tell that narrative of how this is such an economic opportunity. and you know, peop unfortunately just so many communities aren't seeing it that way right now.

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Mat Vogels (13:55)

Yeah.

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Matt (14:13)

but that's why things like the data center innovation initiative I think are so important.

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Mat Vogels (14:18)

Agreed. All right, let's jump into the fundraising process. We break it up into three different parts. The first we kind of call getting in the room. A lot of folks listening, maybe they don't have the VC connects that they need or the relationships. It's hard for them to get just the email read or their pitch deck scene. So the point of this group or this section is to try to help them to do that. One of the things that we find founders doing right out of the gate is building a list of VCs or investors that they want to have on their cap table.

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What advice would you give them as they're kind of making this list on who they should actually reach out to, whether it's the volume, the type, or any tips or tricks on how they could start building out that initial CRM essentially?

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Matt (14:59)

Yeah. you know, folks who are listening to this who maybe don't already have the built-in network, I do think just being as targeted as possible on sort of sector and stage is is really valuable. You know, there are the sort of bulge bracket multi stage firms who are doing a lot more seed now. I think they're good investors at seed. but if you

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don't sort of if you're not already legible to capital, it's much less likely that that they're gonna be the types of firm to lead you around. So I think the less legible you are, the more focused you need to be on the firms that sort of specialize on your stage and sector.

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Mat Vogels (15:39)

And is that I mean obviously some of there's resources out there in doing that. Finding content I find now, podcasts like this, like investors are doing a very good job of putting themselves out there. And if you can find some of the content that they're creating, that's I think how you kind of cheat the system a little bit and get exactly what those VCs are looking for as well.

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Matt (16:01)

Yeah, sure. And I mean, you know, the beauty of another beauty of AI is that the LLMs know. so ⁓ I've you know, a couple rounds for our companies recently. I've seen the sort of target lists and fed into Claude and asked, you know, who else should be on this list and it's it's very good. So ⁓ yeah, the it i it is easier than it's ever been to to

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Mat Vogels (16:06)

Yeah. Yeah.

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Yep. Yeah.

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Matt (16:26)

know who the right investors are.

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Mat Vogels (16:28)

Yep. What are some of the best ways that you've seen founders get their pitch in front of VCs? And if there are any wrong ways that you've seen or mistakes you've seen during that, I'd love to hear your feedback there too.

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Matt (16:41)

Yeah, I'm afraid I have probably not great news for most of the people listening to this. so I have sourced seventeen investments in our first fund. Nine of those I sourced through Cold Outbound. so you know I keep my own CRM of eight hundred or so companies that I'm tracking. and that's probably where I would say I

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Mat Vogels (16:46)

Ha ha.

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Matt (17:04)

differentially spend more of my time than the average VC is is going outbound. and that's led to a lot of our best investments. all eight of the other ones that I've sourced have been from someone in the network who who we're close with. so I wish it wasn't that way. You know, I've been the founder sending the cold emails. I read them all

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I used to respond to them all. I no longer respond to them all. you know, I mentioned before we before we started recording, I have a a a five-month-old son. And you know, I I've come over time to sort of see that time, unfortunately, like so much of venture is positive sum, and that's a big part of what I love about it, but time is zero sum. And I owe more to my

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Mat Vogels (17:37)

Yeah.

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Matt (17:51)

portfolio companies, my partners, my LPs and my family, than I do to you know, sort of founders sending cold emails. So if it, you know, if it's just like not a sector fit or not a stage fit, and I know they didn't resort re research me at all, like I no longer respond to those. I still do respond to a lot of them. If I can, you know, if I can tell that the the founder really was thoughtful in in their out and targeted in their outreach, I will still respond to those.

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and you know, I've definitely taken meetings. We've gone pretty far downfield with some of those that have come cold. and I want to get off the schneid with this, like because like I said, I wish it did it didn't work this way, but but it does. So but anyway, so the the t the the takeaway then I think is you know you need to do the types of things that make me want to reach out. So that's about you know, building early traction, that's about

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putting a great team around yourself, and just any sort of other early signals that you can put out out into the world that that you're building something interesting. And then on the network side, I would say, you know, if you don't already have the sort of like, you know, embedded in Silicon Valley network, do what you can to sort of get small angels on your cap table who are

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you know, knowledgeable about your market and who you know, a ten K check from I don't care, a one K check from someone who I think it is smart in a market I like, like I'll if I get that referral I'll I'll take that meeting. Or just like other founders too for sure. so if you're a founder in our portfolio and you tell me, Hey, I think this person is sharp, you should you should meet them, like I'm gonna take that you know, a hundred times out of a hundred. So

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Yeah, unfortunately, like I just don't think cold emails really work particularly well. So I would do you know, just focus on the things that that that you can do to make yourself sort of attractive for me to reach out to you and to just sort of, you know, get those light touches into the network.

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Mat Vogels (19:50)

Yeah, I I completely agree and I wish it was any other way, but it is the most common response that we get certainly for for that question. So it's gotta be right. Find those relationships where you can. In fact, one of the piece of feedback we always hear is the fundraising process starts

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Far earlier than you think. It's usually not when you've started fundraising, it's the months before, years before of relationship building. So start now. it's it can it can save you a lot. Is there anything in if you are receiving some cold inbound, is there anything that you would recommend founders to to write or to put up front, including a pitch deck or a memo, or maybe it's just the one liner? What are some of the things that you that catch your attention in that brief moment of time when you might be glazing through an email?

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Matt (20:32)

I mean just keep it concise. do include a pitch deck. And then the actual text, you know, can be four sentences like this is who we are, this is what we're working on, this is our traction to date, and here's our deck link, or you know, s something along those lines, right? So keep it short. and and and similarly in the deck, like I should be able to

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flip through and get the moral of the story just by reading the the headlines of the slides. So like you know yeah, I I think just like ex concisely express how interesting you are.

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Mat Vogels (21:05)

Yep. Mentioning on the on the pitch deck, is there a particular slide that you find yourself gravitating towards? Any favorites in there?

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Matt (21:13)

Yeah. I mean I think the team slide is the is the most important and you know it's it's not necessarily like what are the logos, but it's like w it it's more of the sort of narrative and the voiceover around like why do I have why does this team have great product market fit for this? you know, why are we really

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just like so intensely motivated by this problem that we're gonna you know, spend the next decade or more of our lives working on it.

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Mat Vogels (21:40)

Yep, it's the why and it's yeah, obviously we want to show that you have the experience. You know, if you were building something for space and you worked at SpaceX, that is nice. But I I find more often than not that VCs care more about or just as much about the why you're doing it versus the how you can do it type of thing. Are there any any slides that you think are overrated that founders maybe spend too much time on?

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Matt (21:55)

Yep. Yep. For sure.

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I would say probably most don't have this. so maybe this isn't needed advice, but just don't put an exit slide. like it i I

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Mat Vogels (22:10)

Most don't have

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it, but when I see them I do the same thing. I'm like

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Matt (22:13)

Yeah.

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You just like if we would only invest we only invest in companies where we think that the i if the world breaks in a certain way, you can go public someday. and so it's just like not very interesting to say that. And if you're like listing strategic acquirers, you know, it's just like not you're not thinking big enough. Not and that's not to say that you that that like if you are thinking that way.

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Mat Vogels (22:22)

Yeah.

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I find that founders do that.

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Matt (22:39)

that you shouldn't be honest about it. You should, but then you're probably just not not gonna be raising from the the right sort of capital fit for you is probably not the sort of traditional venture mold then.

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Mat Vogels (22:52)

Yeah, agreed. Yep, for sure. All right. Let's go into the next phase of the fundraising process, which is crushing that initial meeting. Usually these happen in like a whole phase where you've sent a bunch of emails and you get a handful or more, hopefully, that are interested in that first meeting and you start lining up these initial meetings. Thirty minutes or so to spend with the VC could be the only time that you have a conversation with them, so it's very important. But let's flip it a little bit.

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What are you looking for as a VC in those initial meetings where you're meeting the founder for the first time?

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Matt (23:25)

Yeah. Yeah, it's if I'm taking the meeting, I'm probably interested in the market and the product. so again, I think it signific most significantly comes back to just our read on on the founder. a couple of things that we rrely love to see are clarity around the business model.

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Mat Vogels (23:33)

And yeah.

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Matt (23:47)

So you know, not just sort of clarity on the product and the technology, but actually like how is it going to be delivered to the customer and how are you going to price to extract value from it? and then also very much, you know, also to that last point, just to focus on unit economics. or, you know, it depends, right? So like i if it there are certain companies where

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either unit economics are not good in the early days, and that can be fine. you know, there's a lot of great examples of businesses that didn't have great unit economics in the early days and still built massive businesses. But if that's the case, I would rather you sort of be honest about it and then proactively address how that's gonna change over time. Otherwise, it's just sort of sort of like sitting there as the elephant in the room. so yeah, those are those are some of the sort of like

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you know business specific things and then back to the founder point it's really I I've found that a lot of the founders that we tend to gravitate towards the most are are just like very intense people. they have sort of an intensity like bordering on obsession that's magnetic. you know you don't have to be sort of charismatic in the classic sense but I I think there's a certain you know intensity that

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is just really helpful for attracting talent, which in turn is a is really helpful for raising money. And then, you know, if you've got the money and you've got the talent, then you're gonna be able to build a product that enables you to sell, you know? So just that sort of core founder sort of intensity

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Bordering on obsession is i i it it has been a really common theme across our highest performing companies.

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Mat Vogels (25:28)

Yeah. One of the I was like founders kinda hear too when they go into these meetings, w if you could guess roughly what percentage of deals that you are seeing, you know, an inbox that you're you're seeing, a pitch deck that you're opening up versus hopping into a meeting, what do you think the percentage is of just that first leap or threshold change of deals you're receiving on a monthly basis versus how many meetings?

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Matt (25:50)

Probably

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Less than five percent for sure. Yeah.

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Mat Vogels (25:53)

Isn't that crazy? So I think when founders

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see these meetings, it's a very common answer. It's usually like five percent or less. so founders going into this should at least go with the energy that they've made a pretty considerable cut or they you know on that. And and everything that you just said there and explaining those things is what gets you to that next level. But you should go into it, I think, with some confidence, knowing that I I guess what I'm getting at is a lot of times I think founders in these meetings spend way too much time trying to convince them of the things that the VC has already like agreed to. We're already kind of interested.

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in

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what you're doing. We're already interested. But they spend so much time trying to convince you again to do it. So I always like to call out that that you've already won a little bit there.

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Matt (26:35)

Yeah, totally.

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Mat Vogels (26:36)

What are some of the red flag things that you see? It could be the opposite of some of the things that you've just said. Is there any, you know, it's an attitude, it's the questions or demeanor. What what is it a founder can come to these meetings and completely wreck their chances with?

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Matt (26:48)

Yeah. D you know, definitely to an extent. So that's a flip side of of what I just said. Like if you're low energy, that's g definitely gonna be a red flag. but then also I think you know, somewhat more unique to us probably is if you're not focused on a cheaper, better, faster value proposition. so you know, I I mentioned like

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everything we do is sort of climate positive in one way or another. So there has to be like greener or sort of a green enabler is i is a part of it, but that's almost always the byproduct of the core cheaper, better, faster value proposition versus the main value prop itself.

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Mat Vogels (27:31)

Yep, yep, I agree. Any questions that founders should come prepared into the meeting with? not questions so that they feel impressive or that they show they've done their homework, but actually questions that show that they want to take ownership and control of this, because they should have some control in the fundraising process too. What are some of the questions that you would recommend founders ask so they can kind of get better at next steps and moving through the process?

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Matt (27:55)

Yeah, I mean it's definitely fair to ask about the process itself. Like if someone is squirrely or vague about that, that's probably a pretty bad sign. and then, you know, I think the most important thing is like you know, you they're they like are and should be in, you know, nine cases out of ten in cell mode.

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like with the vast majority of the time on the call. But then ultimately, once you've made the sale and before you let someone on a cap table, I do think you should reference very aggressively, you know, both the talk to the people who the VC tell you to talk to, but then figure out, you know, who are the s some of the companies that have gone under that they've backed and talk to those people too. you know, I think

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That's that's really ultimately the the most important thing because you know, people can VCs can say a lot of the right things, but what they actually do when the chips are down I think are is what i is what really matters.

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Mat Vogels (28:54)

Yep. Any other advice that you give founders, not necessarily on the call with you, but as they're in this phase where they're lining up a bunch of calls and they're doing a bunch of back to backs, it's you know the first part of that process. Any feedback or advice or pitfalls, mistakes that you see commonly made for founders that are just navigating that part of the fundraising process?

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Matt (29:13)

Yeah. an just another one in the pitch process itself, I think, is just too much focus on product and technology and and and not enough on the sort of business model and unit economic aspects that I mentioned. So yeah, just like the more granular you can be on who the exact buyer is and what their incentives are to buy your product, the better. and

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you know, I think sometimes that comes at the expense of just going really deep on the tech.

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Mat Vogels (29:40)

Yep. All right. Let's move into the final phase of the fundraising process that is quite broad and it can almost be, you know, a little bit of all these pieces together. But I'd always say it's it's like herding cats. You're trying to maintain or build momentum, build a little bit of FOMO. You gotta get those checks and term sheets in the bank, so that you can close this thing out. Could you give a little background maybe on what your diligence process kind of looks like? you know, from the first initial meeting, let's say, to where you are

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signing some sort of a term sheet or agreeing to terms.

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Matt (30:12)

Yeah. our process is pretty simple. It's typically three meetings. Typically one of us will take the first meeting solo. we'll bring that back to a sort of weekly top-of-funnel investment meeting where we'll debrief with the team. If if you're advocating for that and then there's interest coming out of that meeting, there'll be another call with

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a a second partner. then if there's kind of momentum from that group of two, we'll bring it to our partner meeting. if we're able to kind of keep the momentum through that, then the whole team will get on a call. and then throughout that process, whoever's running point on the investment is

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kind of you know doing the work in the background on the data room and at the end of the process references, that sort of thing. So yeah, it's it's a pretty simple process. three meetings with the company, two sort of internal meetings to move it, like sort of stage gates through the process. sometimes those get compressed if there's time pressure on an investment. so you know the way we

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kind of think about things as having an extremely high bar for what we'll invest in, but once we see it, you know, o oftentimes you do just need to move fast and and and and get to yes quickly. So there have been you know multiple times where we've gotten to yes in in in under a week and kind of expedited that process just when the process call when the sort of timing of the round calls for it.

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Mat Vogels (31:39)

Yeah. W what do founders typically get wrong during this phase? Whether it's common mistakes or they go into it with a different mentality or wrong mentality. What are they getting wrong when they've had a bunch of initial meetings and again they're just trying to kind of herd cats get final yeses or no's? What are founders doing wrong in this phase?

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Matt (31:56)

I think you know, it it i it goes back to you know, what I said earlier, like I th about me reaching out, like you need to be doing things so that I'm seeing or or maybe you need is too strong, but it's is definitely a positive if I'm seeing you you know, just have a bunch of good news.

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throughout your fundraise process. We I have one of our portfolio companies raising right now and they are doing a you know very concerted effort through their fundraise to make sure that investors are seeing their name every single day on the timeline. And I you know I think it works. So and you know it's like the the company actually has good stuff to be talking about, right? So it's not just like saying the same thing over and over, but it's like

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here's this new customer, here's this new partnership, here's these like cool pictures of what we were doing from way back in the early days when no one believed this technology could possibly work, or you know, so it's just like just like tell a a real genuine story, but do figure out ways to stay top of mind other than just like pinging with the follow up to say, Hey, just checking in.

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Mat Vogels (33:04)

Yeah, yeah, that's a smart move. Really smart. Although it's a it's a nice problem to have, founders might find themselves in a position where they have to pick and choose, whether it's the lead, they have three leads, they can only pick one, where they have maybe one spot open for another angel check or you know, a three hundred, five hundred K check, and they have a few investors they could choose from.

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This is meant to be kind of a question of what should founders really care about when they get to pick and choose who should be on their cap table. because a lot of times you'll have founders a lot of regret in what they've done in that very first f round of funding. And we're trying to hopefully mitigate that for the folks listening.

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Matt (33:40)

Yeah. Yeah, I mean always prioritize clean terms, you know. so just s you know, s keep it simple. Like especially I think, you know, a lot of the folks listening to this raising their first round, just you know, just do the standard YC safe docs. Like, you know, don't just don't let especially if you're sort of outside of Silicon Valley and raising from like local angels or something that are gonna like try to take half your company. just like crap like that, you know.

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Mat Vogels (33:45)

What do you mean by that? Yeah.

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Matt (34:06)

So just do you know, I don't think you should like optimize for valuation for the most part, but just like you keep it simple, you know. If you if you raise you know, I was gonna say two on ten, but that that that that maybe that's like y yesterday's pricing, maybe that's just wishful thinking, but you know I mean. Like just like sort of standard terms, standard docs, keep it keep it clean. So that's one thing. Like avoid anyone who who's not doing that.

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and again, like maybe that used to be like dark n like dark arts or dark knowledge or something, but like now you can just ask your favorite LLM and it'll tell you if this is market or not, you know. So so that's your friend. And then I I would prioritize complementary skill sets. ninety percent of our portfolio companies have a generalist tech investor on the cap table.

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Mat Vogels (34:32)

Mm-hmm.

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Yeah.

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Matt (34:50)

We want to be the climate investor of choice to add to that network when you're raising from a generalist tech lead. we've co-invested with Sequoia as of today, in that etched round, Founders Fund, Andreessen, Index, Kosla. they're all great investors. We're probably not gonna beat them to lead the round, but I think we're able to bring complementary skill sets and networks to the markets that we invest in. so so I would I I would try to do that.

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Mat Vogels (35:00)

Yeah, that's right. Yeah.

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Matt (35:18)

and then also, you know, the numbers that that folks tell you are are often flexible once once they've gotten to yes. So not always. and you know, probably some of those bigger funds are probably gonna be the ones that are less flexible. the more money you have, the more I think ownership targets matter. but generally speaking, I think you know, people can have some some flexibility once they've gotten to yes.

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Mat Vogels (35:39)

Excellent advice. All right. Let's say they've closed out the round. A lot of times it feels like you've just won a marathon and sometimes fundraising can feel like a marathon, but now the real work begins. And I find that founders have this really hard mode of going from fundraising mode back to to building mode and almost go back to founder mode. Any advice that you give founders to kind of have to to make that switch and start going back into the business after spending, you know, weeks or months in in fundraising?

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Matt (36:06)

Yeah. Yeah, I mean so usually then, you know, that's the time to build out your team. so you really go into hiring mode after raising. And I think maybe one mistake that I've seen there is hiring for resume over hunger and trajectory. so you know, there's there's certain types of companies where you really do want someone who's been in the

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in the in the industry and you know some t some some things are just relationship driven or you know there there's reasons why sometimes you're you need your hires to do that or to sort of have that experience but I think for the most part hiring for hunger and sort of trajectory over you know the the sort of years of experience is the is the right decision.

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Mat Vogels (36:55)

Yeah, we see I think one of the more common mistakes on that exact point is that they find some, you know, AI engineer that was working at Google and they bring him in. And the difference between somebody who's very good and working at a large organization and then coming into a startup if they don't have that experience, even if they think that they want to have that experience, it can be very different and expensive. so it is hard, you know, going to your point of resumes or just looking at resumes can be a very hard thing to grade on for sure.

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Matt (37:20)

Yep, hundred percent.

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Mat Vogels (37:22)

What are some other mistakes that you see? Hiring obviously being a big one. What about on the spending of capital? Any advice you give founders there as they're thinking about that as they go into, you know, from pre seed they raise a little bit of capital and then building towards a seed?

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Matt (37:35)

Yeah, I mean I I think

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You know, there's a there's a ⁓ yeah, there's a moment to really spend to grow once you have product market fit, but until that moment I think I do think it's good to be you know, just on the on on the stingier side of things. We have seen seen companies sort of spend ahead of product market fit and

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Mat Vogels (37:37)

Or C to series A, yeah.

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Matt (38:02)

If you do that, you just end up in permanent raise mode and just end up with a ton of dilution.

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Mat Vogels (38:08)

Yep. Yep. what are the the most common reasons that you've seen startups you've been doing this now for years, you've seen some startups not make it and ultimately fail, which is in many cases the majority of companies. It's the expected outcome, unfortunately. What are some of those main reasons so that founders at the early stage can start to think and and how to avoid them?

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Matt (38:28)

Yeah. you know, I think that the the as I think about kind of our lower performing tier of portfolio companies in there there was a a co-founder breakup. So, you know, that does happen. you know, there's the the sort of burn issue we just talked about is another one that can go wrong. There was one I would say that was kind of like the wrong technology architecture choice.

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But I bla so there are like other reasons that startups fail, but like the vast majority of the time I just think it's lack of product market fit, you know? Like if you can make any other you know, you can have co-founder breakups, you can spend too much money. Like if you have product market fit, it covers over any number of other sins. and so I just think, you know, how to find it is a is a much harder question, of course. I don't have any

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Mat Vogels (39:14)

Yeah.

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Matt (39:17)

magic advice there unfortunately. I'd probably be a a a a a founder rather than an investor if that was my area of expertise. But yeah, I mean I think that's just the the cold hard truth is that that's the reason that most startups fail is not having product market fit.

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Mat Vogels (39:22)

Yeah.

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Yep, yep.

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Absolutely. All right, wrapping up here. Any last minute feedback, motivational speech, you know, halftime in you know, locker room that you would give to founders that are in the trenches right now trying to raise capital, what advice would you give them at a high level?

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Matt (39:47)

man. I mean, you know, if you're struggling to raise, then just go back and build the business. You know, that's what in that first company that I mentioned that that solar water heating startup where I was kind of trying to help help raise some money to get it off the ground. We should have like in hindsight it just wasn't sort of absent traction. It wasn't

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going to be a fundable business. It's just not what people wanted to fund in the wake of Cylindra in twenty eleven. and but if we had put up the numbers that the business was growing, I think, you know, we would have b we pr like the traction, you know, again, product market fit covers covers all sin. So

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You know, if you're trying to build like a fusion startup or something, like that's not prac that's not practical. you you're gonna need capital from day zero. But you can do so much again, just back to the AI point, building with AI, with a small team today. So you know, I think like i if you're not the kind of founder who's gonna be able to raise a hundred million dollars out of the gate for a fusion company.

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you know, just be realistic about that and you know, fo focus on a a a problem that's more tractable with a a smaller amount of capital and build the business and you know, once once you have traction, it's that's undeniable.

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Mat Vogels (41:05)

Yeah. We had a Paul Graham visit our

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Matt (41:06)

And it but it doesn't have

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to be like a million dollars of ARR or something, right? It's like traction relative to the resources that you've had to date. So it's like i if you can show, you know, we have raised zero money and we've gone from you know, we've grown a hundred percent every month for the last four months or whatever, like someone's gonna do your pre seed, you know what I mean? So it's like it's just that it's again, it's about the inflection more so than like the absolute point on the graph.

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Mat Vogels (41:10)

No, of course.

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Yeah, we Paul Graham come to our batch back in you know almost a decade ago and he mentioned the same type of question of when in doubt, just go talk to your customers. So if you're struggling on the fundraising, just go talk to customers. It's it's a free thing that you can do, and it is arguably one of the more valuable things that you could do at any point in time. so yeah, go back and if you to your point, if you can't work on the business 'cause you need capital to build a reactor or a drone or a factory, obviously you need capital for that, but you can always go talk to customers and a lot of times they will listen and you might learn something that can then

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benefit you on the other side as well.

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Matt (42:02)

Totally agree.

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Mat Vogels (42:04)

Matt, this was awesome. Thank you so, so much for being on. Lastly, where can folks continue to to follow you and in Earth Shop?

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Matt (42:12)

Yeah. I'm easy to find. I'm mad at earthstrat.vc. Like I said, if you reach out to me there, I will definitely read the email. and yeah, you know, on all the socials too, so I'm easy to find.

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Mat Vogels (42:22)

Love it. Appreciate it again. Hopefully this isn't the last time that we get to to catch up, but congrats on on the new little one, as you mentioned. Hopefully you're getting some sleep. And we'll talk again here soon. Have a good one.

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Matt (42:30)

Thank you.

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Sounds good. Thanks, Matt. You too.