Jason Gray | Pioneer Fund

0:00Pitch, pitch, pass, iterated fast. Story beats data when the storyline's vast. Vision's the ignition, but the numbers steer the ride. Conviction and precision, watch investors collide. Hey, everybody.

0:11Jason Gray: Welcome to another episode of Fundraising, a podcast where we interview early stage investors to talk about all things fundraising, which, like the title insists, is actually not any fun at all. And I couldn't think of a better investor to have here today, Jason Gray, the founder and managing partner at Pioneer Fund. I am sure that you have seen them around. Certainly if you've been to a YC demo day, I think it is one of the more unique funds in the ecosystem, especially in the early stage. Jason, thank you for being on. Could you do a quick introduction on yourself and then maybe dive a little bit deeper on what Pioneer Fund is?

0:53Jason Gray: Because like I said, it is a unique fund. Great, great. Thanks. Well, thanks for having me. So So Pioneer Fund is a big, big group of YC alumni. The origin story started when I went through YC in summer 15 with a startup. And like many YC alumni, I started to become an angel investor, but quickly realized I was sort of trapped in my area of expertise and my node and growing YC network. And so started chatting with other YC alumni and said, hey, why don't we just aggregate our capital and our expertise so that we can write larger checks into YC companies and in a more methodical way, support them as they grow.

1:28My YC startup was in the renewable space, so an energy startup. Prior to that, I was also at another startup called SunEdison. I was early team there and that grew to eventually a public company, which is a long story for another day, but really enjoyed the founder journey. And have just been thrilled that, you know, through Pioneer Fund, I've been able to support a lot of YC alumni.

1:52Jason Gray: Yeah, we were talking before this. I said, I'm wearing my official YC shirt. So I was a couple of years after you in winter of 17. And we were talking before we started recording. I think that the quality of YC companies is continuing to get better, exceed expectations. I feel like everybody's waiting for the trend to stop. And when is YC going to stop being YC in a way? And I'd argue that it feels like it's the opposite. From the VC lens, the companies that are going through, the ambitious products and companies that are coming through seem to be just getting bigger and better. Is that kind of the lens that you're seeing as well?

2:29Yeah, I agree. Yeah, each batch, it's just phenomenal, the quality that goes through. And I think the move to four batches a year just made so much sense. You know, there was always that that sort of the shoulder season where a founder could slip through and join another accelerator or just not go through YC. And so that really closed the gap there. And I think, you know, Gary being back now for a while, it's just been a phenomenal gravitational pull for founders. So it's yeah, the quality of each batch, we're just constantly impressed.

2:57Jason Gray: And then from an investment strategy, are you investing exclusively in YC companies? Is there a little bit of wiggle room? And obviously with the YC network being what it is, you probably have access to deals outside of YC specific batches, but still kind of, you know, one degree of separation away from that ecosystem. We do. Yeah. So we we will look at non-YC deal flow. We're pretty YC centric. So if a company is going through the batch, we're looking at them. We have 100 % batch coverage. Most of the batch, we actually do a full investment call with. We now have 500 YC alumni that are venture partners with the fund.

3:33So just an army of people to help us with diligence and help us with our portfolio. But with that army, there comes great deal flow outside of YC. So sometimes that's second time YC founders, or sometimes that's just great founders who have decided not go through YC. I was doing the math earlier this week and with our portfolio founders, pretty quickly approaching 2 ,000 portfolio founders, like one in five YC alumni are either a venture partner or a portfolio founder with pioneer funds. So, yeah, we're super blessed on DealPipeline and it can be hard to manage at times, but yeah, it's a nice position to be in.

4:10Jason Gray: Absolutely. Do you mind sharing? Do you have like an average check size that you're currently looking at as well? Does that vary? It's at seed is pretty standard. So we're kind of around the 200 ,000 check size at seed. We do have a follow on vehicle and that's somewhat dependent upon sort of allocation or, you know, we sometimes preempt deals and do some larger checks that way. Yeah. Love it. Before we get into the actual fundraising process itself, we have a few more questions that founders always like to ask us to ask you. You talked a little bit about what you were doing before. How many companies did you kind of start before?

4:42Jason Gray: Was it just the one going into YC? What was your entrepreneurial journey like before? And then maybe quickly tie into why you decided to jump in on the VC side versus maybe continuing down that entrepreneurial path. Yeah, so early in my career, I actually started at Cargill, which is like a massive private company. It was pretty interesting because you certainly got to see at scale what a very impressive company looked like. And they afforded me a lot of privilege on being able to do some pretty creative things on, you know, building new tech or solutions or, you know, new divisions within that group.

5:17Ultimately, I decided to jump into an MBA, which is feels very cliche. And, you know, I'm not I'm not this advice right here.

5:25Jason Gray: Yeah. Yeah. Yeah. Yeah. That's right. Yeah. So it was, you know, I enjoyed aspects of it. I think it was a good time to kind of reflect. But but was like starting to get more entrepreneurial itch. And so started looking at that, jumped into very cliche again, jumped into consulting. But that gave me some exposure to some of the things that were happening. And that was when I first started thinking actually about VC. And I started chatting with some funds. I was pretty young. And the best advice I got was like, go be an operator, go be a founder for a while. Started looking at companies I was excited about.

6:01Son Edison was just sort of getting started, chatted with the founder. He's like, hey, great background. If you move here, we need somebody here to like build this division, go. And just had free reign to build a pretty big P &L. We grew that to hundreds of people, 250 million a year on just that P &L. Very great, great experience. And then ultimately, when I when I left that started a company that was doing a similar thing as Sun Edison, but for more for developing markets. And that was a company that took me through YC that way. So so I found a very, you know, it was like it was kind of interesting because I at the time, I didn't think I'd go back to VC.

6:39I love the operator role and being a founder and then going through YC. And then as I moved to the board of my YC company was finding I was naturally gravitating to the great alumni network and spending a lot of time with them and writing some angel checks and just thought, well, you know, this is silly. Why don't I do this full time?

6:56Jason Gray: I love that. And I think that startups or sorry, VC is kind of like a startup, especially if it's your own fund and you get to still be an operator. In fact, I find that some of the best funds treat themselves still as operators and as a product. Yeah, that's a great point. Like, I have very much been able to, you know, scratch the founder itches, build Pioneer Fund of, like, building a team, setting the direction. You know, some of the tech we build internally, it's been a lot of fun. You know, I honestly can't imagine joining a big shop where everything's been established. They've got their Monday morning partner meeting and it's, you know, everything's been set in place.

7:35You know, it's been nice to be able to start with a blank slate for better or worse. We've we've definitely learned some things, but it's been it's nice to be opinionated on how we want to run a fund.

7:45Jason Gray: Now, do you have a favorite part now that you're kind of in the VC chair? And I think just throughout this episode today for the folks listening, I think it's always great having the founder background into VC because you can kind of talk and speak to both worlds here. What is your favorite part about the job and being a VC? And what is your least favorite part about the job? And maybe tie into that a second question, if you can. I find that sometimes founders, there's this evilness towards VC. It's like the necessary evil that I need, but you don't necessarily love VCs. Is there anything you could tie in on maybe something that founders don't know about what it is to be a VC in that answer and how that might give them a little more empathy on what it could be?

8:25Sure, sure. So, you know, things I love, I guess, I'm sure everybody says it, you know, just getting to chat with founders and sort of just being at the forefront of technology. You know, certainly very fortunate. I spend most of my time chatting with, you know, YC founders, which I humbly view is some of the best founders in the world. So immensely enjoy that. And that can range from, you know, helping them prep for fundraising to, you know, I have a call later today with a company about, you know, they're trying to navigate some challenges with their customers. So a lot of fun being able to, you know, help them.

8:55Agreed.

8:55Jason Gray: And so you see a lot of companies going through YC across a variety of different sectors. And I'm not saying you have to pick favorites, but are there any industries or sectors right now that you are seeing that are getting you excited? It could be either even from a consumer standpoint, products that you're excited to see and use, but also from a VC lens, new companies and sectors that are emerging that are exciting. Yeah, I've been spending a lot of time thinking about it, as many have, is like the agents as a customer. It's been really interesting seeing the products that are and services that are being built for agents as agents just sort of go into the wild more.

9:32So, you know, whether that's agents for insurance for agents as, you know, some of the more incumbents start to do car votes for agents from their policy payment rails for agents, you know, just sort of authentication and compliance and security. and even one actually, and I feel like we were fairly early on that. EXA is in our portfolio. So we invested in them at Seed in 2021 and they're doing search for agents. And so it's been kind of fun to see an early thesis we had several years ago on, you know, where LLMs and agents were gonna go play out. They just raised their series B, I guess earlier this year.

10:10And then now just what's happening at the Seed stage is all the stuff that's being built for agents. So, so quite fascinated with that. And, you know, PG sort of said, I think was one startup is like with agents, like in some ways, like the TAM is unlimited, right? Like it's, you know, there's certainly a future world where, you know, you're going to have five personal agents, your business is going to have 10 agents. And so it's pretty exciting to think of what, what that future will be. And, and I guess the picks and axes and shovels that need to be built for that. Yeah.

10:37Jason Gray: Still very early days on, on all of that very much. And YC feels like it's, it's on the forefront of a lot of those as well, which is great. It does. Yeah. Yeah, absolutely. Absolutely. So if I'm a hot YC company coming through, this is maybe a chance for you to shine a little bit here. Why should I choose you and or Pioneer Fund to be on my cap table? What unique advantages do you have as a fund for a hot YC company coming out or even just any hot company right now? Yeah, I think like I think it starts at the beginning, like just having even as those rounds start to kick off, Like, you know, we pride ourselves on building a process that we would have liked to have when we were raising capital.

11:17And it feels like super basic, like show up prepared for meetings, have everything ready to go. But like we've taken that to a whole other level that, you know, when we get on a call with a founder, we could like literally pitch their business back to them. So we don't want to look at pitch decks. We want to dive deep into the business so that ultimately we can make a decision. Like we tell the founder, we'll make a decision within 48 hours of that meeting. we're usually 24 hours. Yeah. So just that clarity of timelines showing up prepared. So I think like, you know, whether it's a hot company or not, just, you know, we're a quick, quick yeses are great, but quick no's are obviously helpful as well.

11:53From companies, like certainly when rounds get competitive, I think what stands out for us is, you know, we have a good longstanding reputation with founders. So we've well over 20 batches of investing as a fund, over 500 YC alumni represented by that one line item in the cap table. And then I think how we show up too after, there's a view of whether VCs add value or destroy value sometimes with their founders. We're of the view that the founder is the closest to the problem of anybody in the room. And so they understand it at just a subatomic level that it's challenging for us to do. So it's a bit much for us to show up on a quarterly basis or a monthly basis and fly by and drop in a bunch of advice and tell the founder what they should be doing.

12:36That said, we want to be there where a founder needs help. We want to be responsive. And I think the nice thing is, you know, I mentioned the conversation I'm having later today with one of our portfolio founders on customers. I can help there. But the nice thing is I have if I can't help, I have like 500 other people I can pull in. So we've built quite a system where we could do matchmaking on those requests for help so we can find the right person to chat with right away. And the nice thing, they're not MBAs who have operators. They're operators and founders. And so when you chat with them, they're just way more empathetic.

13:14They've been in the trenches. They understand that. So I think that seems to really resonate with our portfolio founders and often why we get our allocation.

13:23Jason Gray: Yeah, and I can't think of another fund that has the network and reputation like that, too. So props to you again for what you've built. Like you said, you're still considering yourself emerging manager. You're still emerging and figuring it out. You still have a lot of cool things in front of you, which is great. All right. Let's go to the fundraising process. We split it into three different waves here. The first is getting in the room. And I think what's going to be great about all these answers is that you get to see a lot of these companies going through YC very, very early, in some cases at the very start of their fundraising process.

13:55Jason Gray: And granted, a lot of people think I'm in YC, fundraising is easy. It's not. It's still very hard, even for the best YC companies. So I think your advice here will apply not just to hot YC companies, but everybody listening. But one of the things that we hear founders try to do a lot is figuring out which VCs to do the outreach to. There are so many VCs out there. What advice would you give founders in trying to build out the characteristics or traits for the VC that would be the best fit for them? Yeah, so so so certainly for us, if you're going through YC, you're going to hear from us. And so we'll we'll definitely be in conversation with with the company.

14:33I think for other ones, this is sort of like looking for a bit a bit of fit and who the partner is, especially like some of the larger shops are moving earlier. There, no, there's nothing worse than sort of being an optionality check for later rounds. And you're kind of stuck with, you're not stuck. You're necessarily with a partner on those conversations where you need help and I guess have the attention of that group. So I think it's a lot of it sort of, I guess, a bit of bifurcate. Well, there's probably three buckets, I think. There's probably like the strategic angels. I think those are important.

15:02Have a handful where, you know, their value certainly outweighs sometimes their check size. So, you know, get those conversations early to kind of build some momentum for your round and some signal. There's some great signal that can come from that. There's certainly a bunch, a big mix of like emerging managers or smaller funds that have some different thesis where, again, I think you're going to get much more, you know, much more time and attention from them as you grow. And then there's certainly like the bigger ones. And so there's always the dynamic, I suppose, for the round of like, do you party around it and do a bunch of hundred thousand, two hundred thousand, five hundred thousand dollar checks to get it done?

15:38Or do you, you know, try to get a few million dollars from a big fund? And unfortunately, that's going to squeeze out a lot of people that can add value. So it's a little bit on like what the founder wants to solve to. I'm of the view that, you know, fundraising is distracting to founders. And so the fastest they can get it done is the path they should follow. Now, fast doesn't mean get a bunch of assholes on your cap table and you're messing that up in the future. So I think there's there's importance in, you know, with that process. And I guess that's probably probably a question coming up is like what to do when you're chatting with with funds.

16:14And I think there is importance to do some back channeling and and some founder references. It's hard to do that in the moment when you're like back to back on calls. But, you know, you get somebody in your cap table at the seed stage, you're potentially going to be dealing with them for, you know, 10, 12, 13 longer years.

16:31Jason Gray: and it's really hard especially if it's your first time fundraising where when somebody gives you a check it feels really hard to say no to it and it's like maybe the first time where you feel like oh somebody loves me yeah and i need to take this but you're exactly right you do need to think about it as hard as it might be yeah yeah and i think like in any any vc or any investor who's reasonable should get it it's like hey thanks um i'm just gonna take a day to think about this or two days think or like hey can i chat with somebody you know you see some bad behavior of like exploding offers or like being pressurized like that's that that's a that's a signal onto itself like yeah to your point it's like so hard to say no after you're like the 20th pitch and somebody wants to give you money but but it but it's important to take uh you know kind of pause on that that's good advice that there's not a single vc out there that should pressure you and say you need to accept this right on this call or else we're backing out most vcs good vcs won't do that so if you were to say we need to take a day or two days good vcs out there will not balk at that so yeah yeah and i've sometimes wondered if like that's a good place to have the founder split because you know you you want to like concentrate the brain damage and focus of fundraising to like one founder so you're still running your business but you know using that other founder as as a bit of a backstop because they're like not in the trenches.

17:53And so they can kind of say, hey, well, let's tap the brakes or this, you know, be that, you know, sort of sober second thought on the process.

18:00Jason Gray: What are some of the best ways that you've seen founders during the outreach process? Obviously today with AI, there's a lot of cold emails, a lot of cold outbound. Everybody's trying to build those personal relationships as best they can. What's advice that you would give to folks that are trying to just get in the inbox or even just get their pitch deck in front of these VCs? Have you seen any good tips or tricks there? So I think, you know, I think it's like just, you know, it's just being super concise. Like, you know, I think when PG, when I was going through YC and it's certainly advice throughout YC is like there seems to be a correlation between how concise someone can be on their business and how well they really understand it.

18:38And so being able to a nice, concise email, like what's UD can cite, what traction is looking like is is way better than half a memo in an email. That's hard to digest.

18:50Jason Gray: Pitch decks like I don't know, like I kind of hate pitch decks, to be honest with you. But it is sometimes nice to just like remove the friction if, you know, have a light pitch deck that at least if that concise email sparks interest, they're not now getting into a back and forth of like trying to get more. I've, you know, some of the founders I've, you know, seen the imbalance was like, hey, this sounds interesting. Do you got any materials? Oh, hey, we prefer to get on a call first. It's like, well, you know, to be honest, I'm like thinking I'm thinking the opposite is like, I don't want to waste your time.

19:24Like, I don't want to take like 60 minutes of your time or 30 minutes of your time. Like, send me a little bit and I can triage it. And so I think like, you know, removing that. Now, I know founders are always concerned like, hey, I'm going to lose control of my story or I can frame something differently. But if that's why, then like, I guess maybe look at like your pitch or what you're saying. That's giving you angst about that.

19:48Jason Gray: And the other thing that founders will have is they don't want to give away some of their trade secrets or say too much. and they're trying to remain in stealth so they don't share the pitch decks. But I do think there's a version of your pitch deck if you are in that boat, which I'm on the fence of saying that I don't think that you should care too much about people stealing your idea. I know something even during YC that they would encourage us not to think about and to make sure that you're moving forward there. But if you are, you can still create something that does give more information about what you are doing without hiding some of those things.

20:18Jason Gray: Yeah, exactly. Some type of teaser. Like I don't need to see crazy IP or anything. like some type of teaser that's that's there. And I think I think you're right. Right. Like, you know, rarely is a competition that kills startups. It's usually something else. Yeah. Yeah, exactly. There's the I've seen a lot of these lately. I don't know if you've seen memos are becoming more common as well, where I'm seeing more folks sending over a memo than a pitch deck. Are you seeing more of those? Do you have a preference? Do you like when you get a memo that you can digest into? It kind of depends. Like, I kind of like the memos.

20:47I'm kind of wondering if like everybody's brain is atrophying a bit on the ability to read long form just given

20:52Jason Gray: the way the world is going and so well i think they're just putting into like chat ggp or quad and just having that diligence back and forth or something yeah and so like i think that's that you know if i i kind of like just sort of back to you know succinct bullet points and just crispness on that versus longer pros because it you know there is it is ironic that they're probably using you know writing bullet points on their business to feed to chat gpt to write a memo who then send a memo and the VC on this other side is then giving his GPT to make bullet points of it. So like if we just like remove that middle part, maybe that's the way to go.

21:26So I'd like it, especially like if there's some aspects of like quite on the really unique insights, like I think that's a good way to articulate that because a pitch that can be challenging on like, hey, here's a very unique insight that we have on, you know, whatever agents as a customer, like why insurance for any agents is becoming important sort of thing.

21:45Jason Gray: Yeah, Michael Seibel was my managing partner, group partner lead, who I think is he's the smartest startup mind in the world, in my opinion. And he used to always say that the longer your pitch deck is, the longer your website is, the longer your email is, the more of a chance you have to just F it all up. So it's like, why shoot yourself in the foot? Just show as little as you can to get them interested. If they want more, they'll ask for more. But to your point, you mentioned earlier, all you're looking for is maybe just a few bullet points. What's unique insight? Is this something that I could see being a big business?

22:16Jason Gray: You don't need a pitch deck to identify that, at least to get to a point where you're ready to hop into a call. Right. So I agree. A nice, concise email might be all you need. Well, I think that's it. Like, you know, I'm sure you recall the YC advice, too, of like when you put your skeleton together of like your deck, you know, like what are the two to three key messages that are in there? And it can't be 10. like and even and even like i'm you know i recall demo day and as much as i wanted every vc sitting on the edge of their chair listening to my pitch i recognize half of them were on their phone doing other things and i'm always kind of thinking about that in the background of like you know even when we pitch our fund to lps of like hey they're busy people it's hard to get their attention like if one or two things stick like that's a big win and so you know how to put that concisely so it's like oh, they're doing X for Y or, oh, this is what that business does so that they can easily, boom, park it in their brain and recall it later.

23:17Jason Gray: Yeah. Are there any slides or parts of their presentation that you think people over-index or spend too much time on? To your point, you only need a few things maybe to get you excited, but founders tend to go the opposite way and they make very complex things and even things that you don't even need, any advice to founders that are maybe overcomplicating it? And then where do they typically overcomplicate things? Yeah. So I think, I think like the run-up sometimes to the story, you know, too many times you get to like page eight or nine and they're like, oh my God, look at this traction. Like, why did they tell me this at the start?

23:52Like what's, what's happening here? Or, you know, or even, even on the team side at Pre-Ceed C, like it's still early, you know, pulling that up at the early side of things and not to sort of like, you know, hey, this is the market and this is what we think. And just like the slow, slow build and trajectory of it, like kind of hit it up front. As mentioned, like we hate pitch decks and when we get on calls, we tell founders like we don't want to see the pitch deck. Some will pull it up or like, hey, with all due respect, I know you put a lot of work into it. Like, please take it down. We'd rather have a conversation.

24:24So we don't spend a lot of time on it. I know other funds probably like it's a nice thing from the anchor on but i worry you know i worry cements the story too much on both sides and it can be challenging then to just have like a real conversation of like what's what's happening with the business so so i think one to your point you need to be careful like i think you need to be concise it needs to be short needs to capture

24:47Jason Gray: some points but in many ways the deck the deck is a compliment to you telling the story versus is replacing you telling the story. And so a win for a deck is to get the meeting and conversation. If you have that meeting and conversation, then put the deck away and just have that conversation. Yeah, well, let's use that as a perfect segue into the second phase of that fundraising process, which is the meeting. And I think that to your point, the faster that you can get face-to-face or over Zoom or whatever it might be, the better, because that is where you are going to win a deal. There is no investor out there that is going to, unless you're maybe multi-time founder coming in, they'll write you a check sight unseen or anything.

25:26Jason Gray: Most of the time, the decisions are made in the first meeting. And sometimes you'll hear a lot of VCs say, within the first few minutes, it's like as soon as you meet a founder and they do these things, you kind of hinted at a few of them. But going into that first meeting, what are the things that you're hoping to leave with or to see from those founders so that you would be excited enough to go into the diligence process or whatever those next steps are? So tips to that first initial meeting? yeah so for for us uh and certainly for me it's like you know get back to that like unique insight like what are they seeing that maybe the rest of the market isn't and then additionally like rate of progress so just how fast they're moving you know sometimes that's an aspect of like traction perhaps they're having lots of customers on traction but not necessarily like especially in hard tech or biotech or some of the deep tech stuff like you're not signing up customers on a daily or weekly basis so like how fast are they moving and like crushing problems and that's where it's been like, I'm super blessed when we can pull in, like, like when we do an investment call, we bring in, you know, three or four venture partners who are also LPs in the fund, also YC alumni and experts in that space.

26:33And so when they're experts in that space, it's very nice because we can have a conversation and the people who are builders in that space are very calibrated to what like moving fast is. So for me, I'm not a, you know, I'm not a deep tech founder, So I can't comment on like, wow, that they seem to be moving very fast on these engineering problems. But when we have somebody on, they can assess that. And so I like to think other funds have that calibration. So I think it's important for people to highlight like, hey, hey, we're like, here's the milestones we're crushing. Here's how fast we're moving.

27:06We've been able to ship this really fast. And that's where I want to be left at the end of the meeting. Like, wow, really unique insight. And these they're moving fast and I want to get on this train.

27:15Jason Gray: But maybe on the opposite side of that, what are some of the mistakes that you see founders make? And maybe it's not even just that they're not doing those things, but other common mistakes that you see founders doing in these initial meetings. If not with you, then maybe across all these first initial meetings as they go on their tours of VC meetings. So I think like for us, it's often we just can't get them out of pitch mode and we can't get them off their decks. You know, they've and I'm empathetic, right? like you know that the deck they've spent a lot of time on it so it's like hey i want to present this or their slide this and like and sometimes vcs prefer that and they've been they do i know we're sometimes unique on that i i hear that for sure so sometimes vcs like like that very sort of structured storytelling even with that deck you you know just sort of like you could i don't know like and again super empathetic because i've fundraised a bunch it's like a bit bit you know just can't get out of pitch mode, very robotic, like kind of just, you know, and it's hard not to be when you've done like 20 pitches that day and you're just like, you feel like you're saying the same thing.

28:16You've lost track of like, did I already talk about this and what have you sort of thing? So I think that's it is like, you know, trying to take a moment to be present and have a conversation. Like at the end of the day there, you know, it should be a conversation and related that being a conversation, it should be some questions for that fun. Like, hey, what do you think about the space are like, hey, have you invested in this space before? Hey, what's your average check size? Do you guys do follow on? Are you deploying capital? Like a big fear of mine right now is that unfortunately, given, you know, a lot of emerging managers have struggled to raise funds, like do they actually have dry powder or are they just trying to stay in market?

28:56So I think it's important for founders outside. And I'm always surprised sometimes at the end where there isn't those questions. Now, you know, I guess we're YC famous. So people know a lot about pioneer fund going in. But sometimes when we're chatting with companies outside, I see, you know, I'm a bit surprised there isn't a few more questions for us.

29:14Jason Gray: Yeah, we talk about that a lot on the show where founders in those first meetings should feel comfortable. And you mentioned this earlier, at the end of the day, founders are our customers and we should serve them in a lot of ways. But part of that doesn't feel like it happens on their side. They feel like they don't have any of the power or control. By asking some of these questions, you will start to to pattern match yourself on who the right partner is that you want in your corner, but also on the process, whether they can invest capital, how fast they move, because those are all things that you need to strategize in closing out your round.

29:48Jason Gray: It'll be more difficult without that information. Exactly. And it comes across as thoughtful. It's not like, yeah, what's this dude asking this question for? It's like, oh, OK, yeah, they're thoughtful. Like they're taking this serious. They're thinking about it. They're not just like grab it whoever for their cap table they have questions so so yeah again yeah we're you know they're the customer and the customer has questions like that's great we think it's thoughtful and it's well received i think that uh i've had the feedback from founders like well i've asked questions and then you know it didn't go over very well there's typically two reasons one some vcs maybe don't like being asked some of these questions especially maybe if you do hit a nerve like they don't have any capital that they're investing and trying to hide that or something like that.

30:25Jason Gray: There's some red flags there that are maybe good signals for you. But also I find that founders, when they ask some of these questions, sometimes they don't do it in a way that feels very thoughtful. So to your point, I think it is thoughtful if they do it in a way that feels thoughtful and they're wanting to take control. But sometimes they'll be like, so what are you going to do for me if I let you into my company? Or how quickly do you move? Are you going to move fast enough to get into this round? Like there's a right and wrong way to ask some of those questions. So to be thoughtful on that as well.

30:55Yeah, exactly. Like, yeah, don't be a jerk, basically.

30:58Jason Gray: It's pretty simple. Yeah, yeah. From like a next meeting standpoint, because that's another question. How do you suggest founders end the meeting and then maybe go into the next one? Is it more of a, do you schedule something on that call, which feels maybe a little too rushed? Is it more just asking what those next steps are? How would you recommend founders end the call so they can maintain or keep momentum going forward? Yeah. So, so, so for us, again, we're probably unique because like we look at it, we look kind of look at it as a failure on our process. If we have to do another meeting with a founder, like that means we weren't prepared or we didn't ask the right questions.

31:35So, yeah. So thank you. Yeah. So, so at the end, you know, we volunteer it and I think that's where founders appreciate it. We say, okay, like very clear, here's the next steps. Here's what's going to happen. Here's when you're going to hear by us. Before the meeting, we actually send the same thing. We know they're super busy getting inbounds. We're like, okay, here's the call. Here's what to expect. Here's the people going to be on the call. Here's going to be the decision for us. So I know we're unique and a bit of like, that's how we design the processes we would have liked for founders. But for other funds that sometimes need multiple calls,

32:06Jason Gray: I think it's fair to just ask like, hey, what are next steps? Like, hey, is there any materials I can get you? Or do you want to, I think is bold of like, Like, hey, do you want to schedule a meeting or should I follow up in a few days to see if there should be something? But like, I think there I think it's important to leave with tangible next steps on like, you know, what's your decision making process look like so that you can handicap it or you know on whether to continue to follow up with those people. So, you know, again, good, thoughtful questions at the end of like, hey, what are next steps?

32:36And and, you know, don't be a jerk in asking. But yeah, kind of point, you know, make sure you have some clarity in the process because there's nothing worse than like inevitably there's enough bad behavior, like the long maybes or long no's. And if you can at least clip a little bit of that off by having some clarity, it's super helpful for the process. And quite frankly, like founder psychology, just because fundraising is hard.

32:58Jason Gray: Yeah, yeah, absolutely. All right, let's move to the final phase of the fundraising process, at least before you write your or get the checks in. And this is kind of the hardest part because this is, you know, it can be days, weeks, months, hopefully not years. But this is where a lot of ups and downs, you're herding cats, you're building FOMO and momentum, and you're really just trying to build out that cat table. Is there any advice that you would give founders as they've had a lot of first meetings? Maybe they're scheduling other ones. But again, they're trying to build FOMO. They're trying to build momentum.

33:28Jason Gray: Any advice you give founders that are navigating that window? So I think it's like, you know, sort of the balance of like keeping top of funnel full and like, you know, continue to process folks that you've had some conversations with. And so, you know, don't take for granted like, oh, wow, those first 10 meetings were so amazing. I'm good. I'm just going to work on that. Like continue to continue to build that top of funnel. And that will inevitably start to see some checks fall, which is sort of unfortunate becomes a domino. Like I, I do hate that there's still a lot of seed investors like, hey, who's on your cap table?

34:01Like we have a rule in the fund that nobody is ever allowed to ask that on a call. We just think it's the stupidest question. It shows you can't develop your own conviction and can't make your own decisions. And it's just optimizing the wrong thing. And often we're one of the first checks and we're comfortable doing that. And so I think like, you know, inevitably you'll get that question. Like, hey, how much is committed to the round or this and that? You know, you don't want to BS your way. You want to be frank on that. And I think it comes down to like a little bit, again, YC advice of like having multiple fundraising strategies, like what's your A, B, C plan?

34:36And I loved that. Yeah. Try and get momentum on that first plan. If it's going well, then raise some more capital, even if you're giving up a bit more dilution or raise that cap a little bit just to get it done. So I think the danger in there is like manufacturing fake FOMO because like that can be a very dangerous game. and I've had conversations with the founders, like we've seen hundreds and hundreds and hundreds. And so I don't know. I think our like fake FOMO detector is pretty high.

35:09Jason Gray: I think for a lot of VCs it is, yeah. Yeah, yeah. And so it's sort of like, it's a dangerous game. You know, their data set is one on one fundraising process. So they think they, you know, think they can manufacture that and that could be super dangerous that way. But like, yeah, herding cats, I think it's like, that's where those strategic angels, I think at the beginning or funds like us could be helpful where they've got a reputation of like making quick decisions and moving forward. You know, picking up a$50 ,000 angel check and a $200 ,000, like those little base hits start to add up. All of a sudden you're at$500 ,000,$750 ,000, maybe hit a million.

35:44And now you're like, hey, we're halfway done. And, you know, that'll often drop the other side of it. We'll be like, oh gosh, I guess I better move and make a decision here.

35:52Jason Gray: especially if some of those early investors are also helping you in the fundraising process and the expectation shouldn't be that they're going to start you know hitting the phones and making calls some sometimes they will but it's more that they can be a source where you could point an investor that's maybe on the fence or wanting some additional advice your current folks so the conviction investors that are in early can also help you close out the round as well exactly yeah Yeah, like they should be happy to back channel. We back channel all the time. For us, when we make an investment, we have a list of funds we like and angels we like.

36:26We just go. We're like within 24 hours of us, within 48 hours, we make that decision. Within 24 hours, we wire. As soon as that wire hits, we just automatically do the outreach to get that round done. Just again, back to the point, like founders should be talking to their customers, not us.

36:45Jason Gray: And that's one of the benefits of, I think writing a smaller check, being in the, you know, I'd say even sub a million, certainly sub 500 ,000, you're in a position where you don't have to be a bully investor. Yeah. At Harpoon Ventures, sometimes we feel like we kind of have to be a bully. There's not enough food at the table for us. We have to kind of fight our way in, which is hard. But I think if you can find investors early like yourself that are wanting to work and collaborate with other folks in their network and bring other investors to the table, it's such a great ally and partner to have on your side for sure.

37:18Yeah, that's a really good point. I think like, you know, when you chat with those investors and understanding their check size and how round dynamics are. And so under a certain threshold, those people are happy to be in a party round and happy to bring people to the party. And so, you know, leverage those people for their network and their ability to help aggregate folks.

37:37Jason Gray: Yep. Yep. Agreed. We kind of hinted this a little bit earlier, but there is this sense of you're building out your cap table. In some cases, you might have to pick and choose, especially as I hinted at. There's larger checks or lead investors or folks that aren't willing to maybe go in with other folks or they want the whole thing. All those decisions become really difficult. yeah what what is advice that you give founders that are in the kind of a nice place but it's a hard decision of picking and choosing what should they be optimizing for over indexing on when they are in a position to pick and choose some of the investors on their cap table so so i think if if they're in that position i think the first thing is probably like importantly probably carve out a day or two just to really think about it come to a decision and then actually come to the decision And we've seen fundraisings get messed up where, you know, the founders, I totally understand, like they're kind of not sure what to do.

38:34So I kind of flailing around, they're thinking about it, they're not sure. And then all of a sudden, a few days turns into a week or multiple weeks, and it's still in that situation. And, you know, our offer holds. We make an offer like we'll stand by it for weeks and weeks and weeks until the founder makes the decision. But there are other funds and other angels where you come back and they're like, oh, well, I thought I wasn't going to get allocation. or I thought this was going to happen. Like we didn't have a handshake. So I've kind of moved on. So you can potentially screw up some of those, that demand by taking too long.

39:05So I think the important thing is just like, you know, carve out some time to make a thoughtful decision and then make the decision and just, and then execute on it. Now making the decision, it's easier said than done. And I think it probably depends a little bit on the business. So, you know, for second time founders, you have good network, you know, know, it's probably easier, just probably better in some sense to just party around to get it done for some of the bigger shops like or other ones where, you know, a bigger shop is of interest, like those could be very attractive, but really understand what that relationship will look like and who who that partner is that you'll be spending time with.

39:40And probably especially now back channeling some of their more recent investments, especially given the mega fund sizes, like what what what are the dynamics internally on that fund and how does that result and like, you know, time and attention at the pre-seed, seed level. Like series A and B and C, obviously different, but at that. So, but I think my big takeaway is like carve out time in a busy period to make the decision and then just execute on.

40:05Jason Gray: Do you, I mean, obviously you get to work with a lot of the founders after they've closed their rounds and then ongoing. Have you heard, you know, no specifics, but behind closed doors, regrets that they've had either in making that decision or how they've built their cap table or they raised too much money or too little money. What are some of those common regrets that you've seen maybe? So I think like, I think some of the regrets is like, you know, they've taken on a check from a tier one fund. And it's kind of been like, whatever, like it just hasn't been that special. Like, I think they had views it was going to be amazing.

40:37And like, it hasn't been negative, but it hasn't been like amazing. Right. And so, so I think some regrets on like, oh, maybe I should have partied around it. Just because like it expands my network, especially for distribution and customers. There might be some importance on that. the other other regrets is like it is certainly you know where founders start to optimize on fundraising as a win and fundraising caps is like a sign of success i think like with like we we we don't think it's right not because we're selfish vcs but we've seen it and often they come back like ah gosh now i've like now i'm really realizing what i got to do for my series a like oh gosh like I really have to crush it sort of thing.

41:19So, so I think there's, there's, you know, some, some regret on like, yeah, potentially raising too much capital at too high a valuation. That said, there is like that, that friction where if fundraising is going well, you know, it's, it's hard to not take that capital and fundraising can be hard and who knows what the world would be like in 12 months or 24 months. And so, so that, so there is a balance there. There's no black and white answer for sure, but like those are, those are some of the regrets. Yeah.

41:50Jason Gray: And the funny thing is, is that, you know, after your round is closed, you'll do the announcement. That's almost when you become one of the hotter company, you're going to have more VCs that now want to jump in. And in addition to the round that you just closed, which further continues this like ego boosting and you just finished fundraising and then you're kind of, do I go back into fundraising now? And a lot of VCs that are like, you're always fundraising. Let's start series A. And it's, it can become this treadmill that you get on very quickly. And it's hard to get off. Right. Yeah. It's hard to get off.

42:20There's always a fear that a kind of founder falls in love with it because there is some ego stroking for sure that occurs. But, you know, YC's talked about it. You know, certainly we've seen it and it's a big fear. It's like, you know, for YC, it's that demo day slump. And like for everybody, it's that fundraising slump. And so like the business has been focused on fundraising, you know, trying to pay attention to customers. But like how quickly you can get back to 99 % of your time on your customers, the more important it is.

42:50Jason Gray: Yeah, it is. It's a weird transitional period from fundraising mode to founder mode again, company building mode. And you have to switch very quickly because to your point earlier, the Series A is expected to be fairly soon, at least these days. Like investors like to see that momentum. You know, it feels like now it's like every 12 months, which is crazy. But even, you know, every 18 months, there's a lot of stuff you have to do in those in those times, especially if you're in hardware and there's but it's tough. So you have to snap back into it quickly and start company building again, for sure.

43:21Jason Gray: Last piece of advice here for for companies. Again, the hard part about being a VC is we see a lot of companies that don't make it. what are some of the reasons why you've seen that happen so that founders in the earliest stages can start to think about it prepare for it and then hopefully avoid it yeah uh so why they don't make it i think it's like you know to our earlier conversations like less on competition it's more on like i guess you know building a product that just isn't customers for i think founder dynamics people want yeah exactly yeah make some people want and uh you know i think founder dynamics is a thing like that that can that can kill more startups than people care where it's a it's a hard journey especially if things are not going right like you know just struggling to find product market fit you know in a pivot and so you know people being it's hard starting a company with with someone but like you know making sure to spend the time to have those frank conversations like how are people aligned how are people thinking about it because certainly how fast startups are getting formed right now some of those co-founder decisions can be made very very quickly and very quickly, all of a sudden, like founders just are not aligned on life or other expectations that way.

44:29So so those are kind of some of the I guess of the pre-seed seed mode, some of the failure modes we see. I think when fundraising happens at pre-seed seed is probably like treating your capital that you just raise like revenue. Yeah, that's going to just that that goes only one way that gets burned. And so so that that could be a risk of that and not having a good understanding of like your default alive, default dead status on that. So like, yeah, that capital is nice in the bank account, but it's not revenue. So be careful on your hiring, be careful on your spend.

45:00Jason Gray: Our last piece of wisdom here for the folks that are currently fundraising right now, they're right in the thick of it. Any last minute quote speech, hoorah, locker room, halftime show talk that you would give them during the thick of it right now? Yeah, I think it's like, it's a hard sprint. It's hard. You know, certainly leverage resources like this to get advice, have some people, some founders who have gone through it before to have a conversation with. So you don't have to do it alone because like it's a it's a hard thing to learn by yourself the hard way. You know, lots of people have done it.

45:33So so leverage your network for people to chat with. I think to our earlier conversation, like on outreach, leverage your network and warm referrals to get in front of people. And when you do that initial, be concise, like show off what's great about you, whether that's a team or whether that's attraction or whether that's that unique insight.

45:52Jason Gray: Awesome. Jason, thank you so much for being on today. We covered a lot in a little bit of time. I really, really appreciate your insights. Obviously, like I said, I'm a huge fan of what you're building at Pioneer. And I hope that we can continue to chat and nerd out about these things and hopefully chat again soon. Wonderful. Well, thank you for having me. And yeah, congrats on what you're building here. And then where can folks continue to follow you and pioneer and continue on that journey? Sure, yeah, yeah. So certainly if you're going through YC, you'll probably be chatting with us. But that said, like we, you know, one in five people who have gone through YC are connected with the fund in some way.

46:31And so if you're building something exciting, there's a big, big network to get warm referrals to us through. Yep, love it.

46:38Jason Gray: All right, Jason, thank you so much. Let's chat again soon. You bet. Thank you.