The Money Wake-Up Call You Need With Kelley Arena, Golden Hours Ventures

0:00Hey, business besties. Welcome back to the Female Founder World Podcast. I'm Jasmine. I'm the host of the show and the person behind all things Female Founder World. Welcome to the show, Kelly. We've got Kelly Arena from Golden Hour Ventures here chatting with us today. You are now entering Female Founder World with your host, Jasmine Grinsworthy. For people that don't know Golden Hour Ventures, what are you doing? What's happening over there? What are we doing over here? We are investing in female founders and really trying to get more women on cap tables generally as well. Okay, so more women investors and more women invested in.

0:34Definitely a two-prong approach. And I think the lever we're pulling is aggregating more women investors to identify as capital deployers with the broader mission of getting more capital in the hands of founders that are women. Amazing, because we all know the stats. We do. Less than 2%. And it's going down. It's getting worse. Investor money is going to women-owned businesses. And yeah, we're not seeing improvement. So the work that you're doing is very important. This is a community of women-owned, women business owners. And so I think everyone's got a lot that we can learn from you today. These are definitely my people.

1:10Yeah, these are my people. Talk to me about like the background. How did you get into this kind of work? Yeah. The short answer is like through the side door. The longer answer is I, you know, traditionally had worked in male-dominated fields. So it's like such a hashtag right now. You were an investment banker? I was an investment banker. I worked at a professional football franchise. I worked for a big pharmaceutical company. So really had experienced what it was to be one of like the only women on a trading floor, the only women in a sports franchise. And it started to become a little bit disenfranchised with how cultures were built for women and, you know, really started to think about why that was the case.

1:51And I left investment banking when I started a family for obvious reasons, the culture wasn't compatible and started to consult. I like to say that's what we do when we don't know what to do with our lives. And was really working with founders who are product folks and creative folks, building their business plan and financial forecast and modeling. And through that lens, started to see the difference between how our male founders were accessing capital and how our women founders were accessing capital. And again, started to see like things were starting to come together. Like, oh, no wonder there aren't cultures built for women because the earliest stages that get funding are generally men.

2:28So the hypothesis that I develop now and has guided my work since is that it's really a fragmented network. And the capital deployers of the world really kind of look like one type of person. And by capital deployers, you mean investors? I mean investors, yeah. I mean, and more than investors, I mean people making the decisions around who gets capital. So I use that term because you don't have to be a professional investor to be a capital deployer, right? They work with angel investors all the time who are writing small checks, but it's not their primary job. But they still get to choose, you know, what companies get access to their capital.

3:06OK, so the person who is deploying this capital, making these decisions looks like a very specific kind of guy. Yeah, typically, typically white men. Yeah, right. So that's solving for one kind of problem. You know, we all we all have biases in what we see in the world. And, you know, my hypothesis was that if we had more women that were capital deployers, they would be looking to solve the kind of problems that they identified with, which would kind of naturally use bias to kind of shift the way capital moved around the ecosystem. And if you also look at the, I'm not going to, I'm going to butcher the number if I try to remember exactly what it was, but the way that women control consumer spending and then the money that's going into women-led companies, it's like the disparity just does not make sense.

3:50Exactly right. Right. So women control over 80 % of consumer spend. And yeah, the products that they're buying are largely developed by men and marketed to them. I hate this so much. I hate this so much. So much. You know my other thing that I hate that really, like, let's just talk about everything that pisses me off. But one of the things that really pisses me off is when I see, and like, I have a son. I love men. I love you. if there are any men listening, I love you. But please do not create a beauty product for a woman that is targeting some insecurity that they have and you're going to profit off it and you're going to like build this big company and get investors from other men and then leave the space for, leave the space, like leave the space for women to be able to innovating to solve their own problems because there are enough of us out here trying to do it who just like don't have access to the capital that we need to be able to scale and compete at that level a lot of the times.

4:47And so every time I see a beauty company raise$10 million and they have like three men on the founding team, I die a little bit inside. Yeah. I think the better cause, if you see an opportunity in that space, invest in a women building in it. Yes. If you think it's a great opportunity, go be an advisor and give them some money. Exactly. Exactly. And let the women be the leadership team, be the consumer, drive the innovation and the space. And also because they'll just like do it better than you will. I was just talking to Barbara from Ceremonia just before this conversation and she was talking about how, you know, she is the customer for her business and what a superpower that is.

5:26And I think so many women in our community are building for people just like them, solving a problem that they've experienced. And she was saying like, if you're looking at data to make all of your decisions as an innovative business, you're already behind because you're looking at something that's like already happened. Whereas if you can also bring in a level of like intuition and personal experience, then you can be the one setting the trends and moving forward. And I was just like, that is such a great way of like clarifying why we need women to be building in these spaces. It's such a great take.

5:58And I'm a huge believer in using data-driven approaches, like with your decisions. However, data is a terrible marketer, right? What you need to market it is real human connection, identifying with a problem, understanding that there's other folks that also identify with the problem. And you can't do anything with a consumer business unless you really have strong marketing and storytelling and a why, right? Data can give you numbers, but it doesn't give you that point of connection, which is your why. I want to talk about your actual business now, like Golden Hour Ventures. How does one start a company like this?

6:32Right. Well, going back to my hypothesis was that we just need women to make more decisions. I started to put my own money where my mouth was. And so, you know, through my own investing experience, investment banking and just, you know, kind of building my own financial literacy, carved out a bucket of my own capital that I wanted to invest in women. And so I started to do that just as an angel. I really kind of caught the startup bug when that happened. I became obsessed with being a part of early stage companies and being part of the builders and working alongside of the founders in the branding and the naming and the customer acquisition strategies and the focus group.

7:12And it all became so intoxicating and wonderful. And then from there, as us women do, you know, kind of got my friends involved like, hey, have you seen this deal? Have you seen this deal? And like, again, I was learning that we're so socialized as women to talk about like, I love your boots. I love your hammock. Where'd you get that lip gloss? Oh, my God, your hair looks fantastic. But it was more gatecapped to talk about what we're doing with our money or is our capital going? What are you investing in right now? Are you looking at this? Like, what do you think about crypto? So the private markets was another space that just felt like we weren't talking about it.

7:45So as I was like getting my friends involved in different deals that were all like high net worth women and accredited and really empowered in their careers, but yet felt really hesitant to write checks. I was like, how could I tackle this? It became like this really sticky problem for me that I wanted. I knew I wanted to spend my life working on it. So from that was the genesis of Golden Hour, where I was just dedicated to really building up a network of angel investors that were accredited. I can define that if that's helpful. Being an accredited investor means that you make$200 ,000 a year,$300 ,000 as a household, or have a net worth of over a million dollars.

8:24Then you are accredited by SEC standards. There's no, like, test one has to take. It's kind of just a definition test. And then you're able to invest in the— You don't get, like, a certificate. Exactly. There's no, like, yay, I'm accredited now. It's just you kind of self-attest, check a couple boxes, and then you are empowered to invest in private companies. So I really started to build out that network and focused on sourcing what I believe to be really high quality deal flow and then essentially syndicating out that deal flow to my network. So that's how it started. And it's still how I deploy capital today.

8:58It may not be how I do it tomorrow, but I'm really attached to this model because it allows me to do those two things that we talked about at the same time. I can build education around angel investing and being empowered with capital. And I can divert that capital to founders that I really believe are building companies that are making the world a better place, which generally happen to be built by women. Yeah, amazing. Yeah. Okay. If somebody is listening to this and they want to raise money and they just want me to get straight to the questions about how does someone get a check from something like Golden Hour Ventures or a firm like this, what are you looking for in the companies that you invest in yeah I mean that's there's that's such a big question um in fact Annie who you know and has been on the podcast before Annie Evans from Dream Ventures and I have like built content around this in the form of an accelerator because there's so much to the fundraising process that is also gatekept right you know like how do I know what note to raise on?

10:03And how do I build my investor's CRM? And what's a cap table? And how do I think about delusion? Well, I'm going to ask you all these things. Oh, great. So you're going to have to go through them. Perfect. That's great. That's great. But I'll start with my mandate for myself. And then I can talk generally about the fundraising process if that's helpful. But for Golden Hour specifically, I'm really looking at companies that are about C plus to series A. So a little bit de-risked on the early stage side. A reason for that, again, it's like It's not my assets under management. It's my precious, precious network of accredited investors.

10:36So I really want to have something that has a little bit of product market fit or honing in on product market fit that has some real revenue under its belt. Like what? Like what does real? I'm looking for a five plus. Yeah. And our last few investments have been like closer to 10 at the Series A stage. But in our C plus, we're looking around five. Yeah. I'll take some flyers on things that are earlier stage, particularly if there's like a tech component and like looks a little bit different. But I like to see 5 million ARR. Really, it's about the founder always first and foremost. And if we talk about what I look in founders, it's someone who is a product obsessed, really someone who needs this to be their job and their role in the world.

11:20I know there's founders that identify this white space and now I would like to fill it. that's often not the founder for me. I want a founder who is obsessed with the product, who wants to iterate on it, wants to make it the best in its class and almost doesn't feel like work. Like we all know that being a founder is the most work always. But if you're not obsessed with it and need this to exist, like you will burn out. You have to have a really strong why. So I look for that first and foremost in my founder. Like you can, you can, you just can tell. Yeah. You're talking to someone, they're like, oh yeah, they've got it.

11:54What are some companies that you've invested in that we would know? Yeah. Most recent was Brightland. Yeah. Yeah. Which is California olive oil. Hey Jane provides abortion care and digital health platform. Amazing founder. Within, which is a acupuncture studio here in New York City with three locations. We had them at Summit last year. Yay. That's right. Doing ear seeds. Yeah. Right. Exactly. They also have a consumer brand as well. You should get their body magnets. They're amazing. Yeah, they just launched. Vareo, which is neuroscience-backed fragrance, my first beauty investment, actually. So you can spray scents all over you and also change your mood, manifest while you smell amazing.

12:37I can never list off my portfolio companies. By the way, I have 26 now between Golden Hour and my personal investment. And I always feel like everyone's like, name your portfolio companies, and a blank. We can go to your website. We can go to my website and check them out and shop all of them. I'm going to ask you about the process of fundraising and how people do this and your advice. But first I want to, you mentioned the type of founder and the stage of business that you invest in. But for people who are at idea phase, like what do you recommend to them to get the cash that they need to get this thing off the ground?

13:15Because I hear this so much in the female founder group chat and if you guys listening if you're not in it download the app on um it's on ios now and it's free during the group chat but one of the conversations i hear a lot is like but i'm just starting i'm not eligible really for many grants yet because they want to see traction no investors want to invest in me yet because they want to see traction and i don't have a network um and like i'm not really sure how i'm going to fund this thing so like for someone who comes to you with an idea what advice do you give them on how to get the money they need to get it off the ground.

13:44Okay, business besties, let's switch gears for a second. Real quick, I want to talk to you about this season's presenting sponsor, Vistaprint. They are sponsoring this entire season of the Female Founder World podcast, and we love a supportive sponsor. So much so that we're actually working with Vistaprint ourselves to create the merch and all of those beautiful event perks that you know and love from our in real life Female Founder world events. If you haven't heard of Vistaprint, here's what you need to know. Vistaprint helps all kinds of business owners print all kinds of marketing products like super professional business cards, fun merch, eye-catching flyers and brochures, and a whole bunch more.

14:27And it's all completely custom, so you can do whatever you want. Whatever you're imagining right now, Vistaprint can print it. And if you're wondering if you're ready to be a designer girly, their easy to use website makes it super simple. Plus they have designers on hand to help you if you really need it. Right now, Vistaprint is giving all female founder world podcast listeners a little something, 25 % off your first order at vistaprint.com. Use the code FFW25 at checkout and step up your branding game. We put a link in the show notes if you want to learn more. yeah i'm gonna give a little bit of a hot take here yeah i think part of that unlock of getting the capital to fuel your business it's almost of a little founder test it is difficult to access capital if you don't come from privilege or generational wealth or have you know i call it like rich uncle money you know like if you've got a rich uncle i highly recommend you hit them up.

15:31Yeah. Right. That's the first. If I want to be pragmatic about it, I would say the first thing is like go to your friends and family. They call it friends and family, but it means, you know, essentially. Professional network. Go to your professional network. Bosses that you used to work with, they can like believe in you and have a solid pitch ready. Like start your pitch deck. There's like plenty of templates out there. Like we've got one. Build a pitch deck. Really flesh out your storytelling and your why behind the vision of your brand, what it could be. Understand the market. Like understand the market really, really well, be able to pitch to how big this could be and go to everyone that you know that believes in you and that has cash and see if you can cobble together$30 ,000 to$50 ,000 to get a prototype, right, to get to formulation, to get to anything that's tangible.

16:12Once you're tangible in some way, it becomes like easier to sell. I will acknowledge that there is such a gap in privilege in that early stage in whether you have access to initial capital to get your funding off the ground and it frustrates me to no end. There are grants available, but again, as you were saying, so often they want to see you post revenue and they want to see you attraction. But part of the game, if you want to have an investable business, if that's the dream for your business, not saying everyone has to, there's lots of bootstrapping ideas out there. Part of the game is like being resourceful.

16:46If you can be resourceful enough to find the money to get your idea off the ground, then that's a really, really great signal, even for me as an investor, to know that you're going to be resourceful enough to actually take this business the distance. So it's a little bit of a litmus test. Like just tell yourself that I'm going to do it and start there. And then pragmatically, grants, friends and family, debt, credit cards, loans. There's a couple of, you know, venture funds that are kind of pivoting to like the loan space too. Also, debt is a little bit sexy right now because there's actual real return from the investor side.

17:20there's syndicated debt platforms out there like the kick brothers of the world fearless fund has a loan program right now um and i would say there's also you can look to your equity or not your equity your product crowdfunding sites you know to see if you can sell your vision that way to people there i think there's a there's a group of people who are real junkies for the innovation stage and like tap into that reddit community start with social media um i think that that's a great way to prove traction when traction doesn't exist in the form of product sales. Do you have social proof, right?

17:55Do you have people that are engaging with your ideas? Can you start to create content? And everyone's a content creator now, but it's meaningful. Do people care? Like if you can show people care, then you can get capital. There is money out there. There is money out there. Just remember that. There's going to be so many people telling you that. Touch it to your hand while you're fundraising. So much money out there. And And whenever you feel stuck, this is if you take nothing away from all of my blathering words. Whenever you feel stuck, expand your network. Get out from behind your computer. Get out from your Zooms.

18:26Go places. Go to South By. Go to Basel. Go to places where the money is. Like stay with a friend. Get in rooms. Join a tennis club. Join a tennis club. Just get out there and shake up your network. I promise you things will start to break and move. Just expand your network if you feel super stuck and frustrated. Okay. Right. For people who are new to the fundraising process, walk me through what that looks like. Yeah. Well, it looks different for every founder is the annoying answer. But I would say meaningfully, if you think, okay, here I am, I need to raise capital right now. Where do I start?

18:58I would start with building a business plan or a financial model. I'm saying this because I come from a financial background. It's really important to me, but I think numbers are a crucial, crucial way to storytell. So obviously, if you've got, if you are post-product and you have, you know, financial reporting, you want to have really tight reporting around your P &L, your balance sheet, what you owe, what you have. But I really want to see from a founder a nice thorough set of like three to five year financial projections, acknowledging that it's totally made up, but it will show me, one, what you think the capability of your business is.

19:36And ideally, that can be a starting place to be like, well, why do you think you're growing from here to here? And like, why do you think your expenses are this? Where do you think you're going to acquire customers? Like, how is that accounted for in the numbers? Like for me, that's kind of a nice, it's almost just like a poster for talk me through how you're thinking about your business, as opposed to asking 1 million questions. I can see it in the numbers. So I would say, start with a financial plan that you can really understand, like what levers you'll pull to grow a business. The other thing I would say, if you're fundraising, you better be really clear on how you're going to use that capital, not to just fund the operations of your business, but how you'll scale the business.

20:14I see this as a big mistake when I look at Dex all the time. It looks like, okay, so we're burning$100 ,000 a month. We're raising a million dollars. So here we go. We've got like 12 months of runway and like, that's great. And I'm like, okay, But as an investor, when you put that hat on, when you're investing in a company and your valuation is X today, I want that to be 2X in 10 to 18 months when ideally you're going to be raising again or you will have grown in some way because that's how I get my markup and set the trajectory to my eventual exit and liquidity and my payday. So when I see founders just saying like, well, I need to raise money so I can fuel the operations of my company, but they're not thinking of how I can parlay this investment into another$5 million of value for my company and my shareholders.

21:04And so what are some of the ways that a founder might be saying that they're going to do that? Is it through like securing a retail partnership or like what are some of the things that that might look like? Yeah, I would say retail partnerships is a big one. if you're a consumer brand, really thinking through your channel strategy, right? If you're like going into a retail partner, but that means your margins will decrease significantly from your D to C presence. How are you also kind of funneling marketing dollars to build those relationships with your customers in a D to C way? Or how are you going to manage velocity once you get into that retail partner, right?

21:35Getting into retail partners is only one small part of it. How do you support that once it's there? Are you thinking through the costs associated with that, including marketing, the sales. Maybe it's team. I don't like to see a ton of dollars going to team early on. It's one of the fastest way to burn through capital in a hurry. But if you're like, I know if I bring on one salesperson that maybe is making a flat fee a month and they're getting a percentage of every sale made, then I can increase my sales by, you know, 10x. And like that, that's a very clear way of saying investing a little bit is exponential in its return.

22:11Like I want to see that formula happening. Maybe it's, you know, maybe it's marketing. And even if it is marketing, like, please don't give me a pie chart that says like 20 % marketing, 10 % team. Like, I don't want, I don't want that. Or like 20 % product development, because that shows me nothing of how, again, you're going to get that exponential return. If it's marketing, I want you to say, okay, where we're spending$2 ,000 a month on our ShopMy platform and we brought someone in freelance that's going to engage and all of our influencer and organic content creation and we predict that that will give us the da-da-da-da and TikTok shop.

22:49So get more specific about the tactics that you're using for this growth. Granular growth is what I want to see. And are you putting all this in a deck, all this detail? No, but you better be able to speak to it really, really clearly. So if you've got that pie chart, when you get to that slide in a conversation, I want you to be able to really, really speak to it. Yeah. And I think I see that a lot that will talk me through like what you're going to do with this money. And it feels unclear or it feels really just high level and nebulous as opposed to someone coming in with like a like a really precise plan.

23:23And this plan is going to change 100 times, too. I know it and you know it and the founder knows it. But that's OK. It's the having a plan and the roadmap to get you to the next stage, which is really impressive to me as an investor. Amazing. My next question for you is for people who don't have that network. You mentioned like trying new things, getting out there and expanding a network so that you can get introduced to more investors. How do you think that once you've made a connection or you've identified who you want to invest, how do you reach out to them? What's the process? What does that look like?

23:57and what materials do you need to have ready? Yeah, that's such a great question. I feel like someone could do a course just in like networking 101 and staying in touch. Every investor is going to have a different preference. So again, start with that annoying answer. One thing I will say that I think is really, really important is that just like every other industry, the venture capital, the investor networking, it's relationship first. it's relationship first. I beg of every founder listening, if you're an investor event, don't walk up to someone and just start pitching them. I find it to be a little bit rude.

24:37Yeah. But also it's dehumanizing and it puts this power imbalance in place right away that shouldn't exist. Right. There should be no power imbalance in a conversation just because I'm an investor and you're a founder. We're two humans. Yeah. So if you see someone that you're interested in connecting with, go and just have a conversation. Like, hey, introduce yourself. Sure, tell them where you're from, but then it's like, what are you investing in right now? What's interesting to you? Maybe you get in that way, right? If they're like, well, I'm investing in B2B SaaS, well, then you're going to save them the conversation by pitching them.

25:11And instead, learn about what they're investing in and hear from them and be like, oh, cool. I actually have a consumer brand and this is what we're building. And then say, anyone here you think I should connect with. Use your relationships as just a way to get more relationships in a really authentic way. It's a generic answer, but I find that the folks who do the best, it's the skill set. It's a little salesy, it's a little schmoozy, but be likable and get to know a person as a human before you pitch and start making offers. As far as like a professional system of fundraising, I'm a big believer in having a tight CRM.