Matt Logan | Earthshot Ventures

0:00Matt Logan: Pitch, pitch, pass, iterate it fast. Story beats data when the storyline's fast. Visions, the ignition, but the numbers steer the ride. Conviction and precision, watch investors collide. 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.

0:37Let's start a little bit with a brief overview of what Earthshot Ventures is doing. What sectors are you focused on, stages, and then maybe your average check size? 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.

1:13So at a pre-seed, we're more likely to be 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. 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 wind turbines 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.

1:50That way, if somebody is listening to this, they could kind of rope themselves in there too. 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, it all starts with critical minerals. So we've invested in several companies in that space. Cobalt Metals is probably the most well-known using AI to find the metal deposits driving the energy transition.

2:25Mariana Minerals is another one that I think folks are going to 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. We're also investing heavily in energy abundance and solving the data center energy puzzle. Emerald AI is a company 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.

3:03So how do we get the most intelligence per watt per kilowatt hour of energy consumed? We just had some very exciting news in that bucket in the portfolio today, we invested originally in the Series A of a company called Etched, which is building compute from the ground up for inference. And so, yeah, they just announced a big Series C today. So really excited about what they're building. 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.

3:55So what would traditionally be a very manual process and take a legacy EPC a year, they are automating and can do in a week and seeing just really great traction 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 sort of physical world, the world of atoms rather than bits. Yeah. Those are incredible categories that I agree with you. There's going to be so many defining companies that unlock so much potential as well. Not only will those companies succeed and do very well, but it's going to unlock completely new categories of new businesses that will have their own breakthroughs.

4:37So we're in some exciting times. And I do love, you mentioned climate, like I mentioned earlier, I think climate, 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 fun narrative as well. Yeah, for sure. I mean, climate is much bigger than what I just mentioned, but 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 so, yeah, I think that'll in fund one, 80 percent of our investments or rather 80 percent of the capital deployed was in that clean intelligence stack.

5:17And I think it'll be similar in fund two. But, you know, I always love a wacky new idea that convinces me we should be investing in something that I have never even thought of before. Yeah, I love it. Well, before we go into the fundraising pieces, there's a few questions that founders always want to know about the investor themselves. We'll have a quick background on what you were doing maybe before jumping into the world of VC. 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 in, you know, 2010, 2011 timeframe that exposed me first to venture and, you know, got me really excited about it.

6:00One of which was sort of as the, you know, sort of first business hire for a solar water heating startup where I was just doing anything and everything I could pitch in and try to help the founder. One of those things 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, like some people are more natural investors. Some people are more natural founders and operators. And, 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 possible job.

6:41And I've kind of had a few different venture experiences along the way, a couple of different kind of internships during grad school and then had a stint in corporate venture. And then Earthshot over the last five years has been kind of my first, you know, just sort of standard vanilla non-corporate venture full-time role. Yeah, yeah, love it. I think that from an operator, the empathy buildup that you get 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.

7:16Yeah, for sure. And I did another one. The last startup I worked for, Advanced Microgrid Solutions, I was on the finance team there. So it was kind of like the right hand person to the CEO helping them raise their Series B. And it was, you know, a year long grind of a raise. And so I have experienced the worst of what of VC behavior. And I, you know, have vowed not to repeat those mistakes. That is so it's so funny you mentioned that on a recording I did a couple weeks ago. Founder mentioned the exact same thing where they became a VC because they actually had such bad experiences. And they were 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 the founders that they invested in.

8:04So it's not uncommon to feel that way. And a similar question, one of the things the founders always want to know is what is your favorite part about being a VC and then least favorite part about being a VC? Yeah, I truly enjoy everything from the sort of sourcing through diligence through, you know, actually making the investment. There's also a lot of fundraising and operations that come with being a VC that I, you know, I would say I'm learning to enjoy fundraising and, you know, the operations just kind of are what they are. But yeah, everything sort of in that deal process, I really do enjoy.

8:41And 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 sort of met that team 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. It's so true. It's infectious in a way. It's palpable, the energy that you get from that for sure.

9:19Yeah, absolutely. Absolutely. Is there anything that you wish that founders maybe better understood in the world of VC kind of hinted at one of them? There's this whole operational side that can take up a huge percentage of our of our energy and time. Do you want to 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? Yeah. Yeah. I think I would just say that VCs aren't monolithic. You know, I mentioned some of my bad experiences with fundraising.

9:49But 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 do it with honesty and empathy. One of our firms that recently raised a really strong round did so from a firm that passed on us back at the back in my ams days you know the last startup i mentioned i worked at and um you know as soon as the founder told me who was leading i was like oh yeah i really like them like they they were one of the best passes uh 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 uh sort of express is that you know be just sort of be on the hunt for good people through the process because, you know, there are jerks, but there's also a lot of really quality people on this side of the table as well.

10:48Absolutely. Yep. All right. Last question here before we go into the fundraising process. Why should founders pick you and or Earthshot Ventures to be on the cap table? Yeah. 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 15 years now. My partner, Dawn, is the founder and still very much the CEO of Elemental. Elemental has 40 people. And so we have a partnership with them. So we have a service agreement with them, you know, where we sort of pay them for some of their services.

11:31And then they also have a slice of our carry. So there people are sort of very much incentivized to help our companies as well. And so, you know, 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 part of the initiative, we have access to these customer relationships that I think is really compelling.

12:10Elemental 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. 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 tend to look for companies that don't rely on subsidy, but still there is a huge policy component that can either be a headwind or tailwind for, you know, most of our companies.

12:48And so the sort of policy work that Elemental does and bringing that to that sort of network to bear for our portfolio companies 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 spinoff from Elemental, 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.

13:27Yep. I love that. And you mentioned policy. I think policy is one of those things that will 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 going to be making some of these decisions that could be the difference maker and how they can succeed as they go forward. So it's an incredible value add. Yeah, especially with data centers right now, right? With the way that New York just banning data centers. And so anything and everything in that world, we need to be telling a different narrative about how, well, first of all, we need to set the rules in the right way.

14:04And then we need to tell that narrative of how this is such an economic opportunity. And unfortunately, just so many communities aren't seeing it that way right now. But that's why things like the Data Center Innovation Initiative, I think, are so important. 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.

14:38one 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. 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? Yeah. 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 really valuable. You know, there are the sort of bulge bracket, multi-stage firms who are doing a lot more seed now.

15:20I think they're good investors at seed. But if you don't sort of, if you're not already legible to capital, it's much less likely that they're going to 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. And is that, I mean, obviously, 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.

16:01Yeah, 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 them into Claude and asked, you know, who else should be on this list? And it's very good. So yeah, it is easier than it's ever been to know who the right investors are. 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. Yeah, I'm afraid I have probably not great news for most of the people listening to this.

16:48So I have sourced 17 investments in our first fund. Nine of those I sourced through cold outbound. So, you know, I keep my own CRM of 800 or so companies that I'm tracking. And that's probably where I would say I differentially spend more of my time than the average VC 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 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. I used to respond to them all. I no longer respond to them all.

17:30You know, I mentioned before we started recording, I have a five-month-old son. And, you know, 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 portfolio companies, my partners, my LPs, and my family than I do to, you know, sort of founders sending cold emails. So if, you know, if it's just like not a sector fit or not a stage fit and I know they didn't 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, I can tell that the founder really was thoughtful in their out and targeted in their outreach.

18:17I will still respond to those. 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 didn't work this way, but it does. So, but anyway, so 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 putting a great team around yourself and just any sort of other early signals that you can put out into the world that you're building something interesting.

18:51And 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, you know, knowledgeable about your market and who, you know, a 10K check from, I don't care, a 1K check from someone who I think is smart in a market I like. Like if I get that referral, 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 meet them. Like I'm going to take that, you know, 100 times out of 100.

19:31So, yeah, unfortunately, like I just don't think cold emails really work particularly well. So I would just focus on the things that you can do to make yourself sort of attractive for me to reach out to you and to just sort of get those light touches into the network. Yeah, I completely agree. And I wish it was any other way, but it is the most common response that we get certainly for that question. So it's got to be right. Find those relationships where you can. In fact, one of the pieces of feedback we always hear is the fundraising process starts far earlier than you think. It's usually not when you've started fundraising.

20:07It's the months before, years before of relationship building. So start now. 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 write or to put up front, including a pitch deck or a memo, or maybe it's just a one liner? What are some of the things that catch your attention in that brief moment of time when you might be glazing through an email? 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.

20:42This is our traction to date. and here's our deck link or, you know, something along those lines, right? So keep it short. And similarly in the deck, like, I should be able to flip through and get the moral of the story just by reading the headlines of the slides. So, like, you know, yeah, I think just, like, concisely express how interesting you are. Yep. Mentioning on the pitch deck, is there a particular slide that you find yourself gravitating towards? Any favorites in there? Yeah, I mean, I think the team slide is the is the most important. And, you know, it's not necessarily like, what are the logos, but it's like, 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?

21:30You know, why are we really 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? Yeah, it's the why. And it's 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 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. Yep. Are there any slides that you think are overrated that founders maybe spend too much time on? I would say probably most don't have this.

22:05Maybe this isn't needed advice, but just don't put an exit slide. Most don't have it, but when I see them, I do the same thing. I'm like, yeah, you just like if we would only invest, we only invest in companies where we think that 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 you're not thinking big enough. I find that. And that's not to say that you that like if you are thinking that way, that you shouldn't be honest about it. You should. But then you're probably just not not going to be raising from the right sort of capital fit for you is probably not the sort of traditional venture mold then.

22:52Yeah. Agreed. Yeah, 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. 30 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. What are you looking for as a VC in those initial meetings where you're meeting the founder for the first time?

23:25Yeah. Yeah. Yeah. If I'm taking the meeting, I'm probably interested in the market and the product. So again, I think it most significantly comes back to just our read on the founder. A couple of things that we really love to see are clarity around the business model. 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 if there are certain companies where the unit economics are not good in the early days and that can be fine.

24:13You 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 going to change over time. Otherwise, it's just sort of like sitting there as the elephant in the room. So yeah, those are some of the sort of like, you know, business specific things. And then back to the founder point, it's really, I've found that a lot of the founders that we tend to gravitate towards the most are just like very intense people.

24:46They have sort of an intensity bordering on obsession that's magnetic. You know, you don't have to be sort of charismatic in the classic sense, but I think there's a certain, you know, intensity that is just really helpful for attracting talent, which in turn 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 going to be able to build a product that enables you to sell you know so just that sort of core founder uh uh just bordering on obsession is it it has been a really common theme across our highest performing companies yeah one of the things i was like founders kind of here too and they go into these meetings if you could guess roughly what percentage of deals that you are seeing you an inbox that you're seeing, a pitch deck that you're opening up versus hopping into a meeting?

25:42What 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? Probably less than 5 % for sure. Isn't that crazy? So I think when founders see these meetings, it's a very common answer. It's usually like 5 % or less. So founders going into this should at least go with the energy that they've made a pretty considerable cut on that. 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 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 VCs already agreed to.

26:22We're already kind of interested in what you're doing. We wouldn't have taken the meeting and have at least some interest, but they spend so much time trying to convince you again to do it. So I always like to call out that you've already won a little bit there. Yeah, totally. 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. It's an attitude, it's the questions or demeanor. What is it a founder can come to these meetings and completely wreck their chances with? Yeah, definitely to an extent. So that's a flip side of what I just said.

26:53If you're low energy, that's definitely going to be a red flag. But then also, I think somewhat more unique to us probably is if you're not focused on a cheaper, better, faster value proposition. So, you know, I mentioned like 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 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. 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.

27:48What are some of the questions that you would recommend founders ask so they can kind of get better at next steps in moving through the process? us yeah i mean it's definitely fair to ask about uh the process itself like if someone is squirrely or vague about that it's probably a pretty bad sign and then you know i think the most important thing is like you know they're they like are and uh should be in you know nine cases out of ten in cell mode 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 some of the companies that have gone under that they've backed and talk to those people too.

28:39You know, I think that's really ultimately the most important thing because, you know, VCs can say a lot of the right things, but what they actually do when the chips are down, I think, is what really matters. 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 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? Yeah. And just another one in the pitch process itself, I think, is just too much focus on product and technology and not enough on the sort of business model and unit economic aspects that I mentioned.

29:25So, 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, you know, I think sometimes that comes at the expense of just going really deep on the tech. Yeah. All right. Let's move into the final phase of the fundraising process that is quite broad and it can almost be a little bit of all these pieces together. But I always say it's like herding cats. You're trying to maintain or build momentum, build a little bit of FOMO. You got to get those checks and term sheets in the bank so that you can close this thing out.

30:00Could you give a little background maybe on what your diligence process kind of looks like from the first initial meeting, let's say, to where you are signing some sort of a term sheet or agreeing to terms? 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 you're advocating for that and then there's interest coming out of that meeting, there'll be another call with a second partner. Then if there's kind of momentum from that group of two, we'll bring it to our partner meeting.

30:42If 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 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 a pretty simple process. Three meetings with the company, two sort of internal meetings to move it like sort of sage gates through the process. sometimes those get compressed if there's time pressure on an investment so you know the way we kind of think about things is having an extremely high bar for what we'll invest in but once we see it you know oftentimes you do just need to move fast and and and get to yes quickly so there have been you know multiple times where we've gotten to yes in in under a week and kind of expedited that process just when the process called when the uh sort of timing of the round calls for it Yeah.

31:39What 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 nos. What are founders doing wrong in this phase? I think, you know, it goes back to, you know, what I said earlier, like about me reaching out, like you need to be doing things so that I'm seeing or maybe you need is too strong, but it's definitely a positive. If I'm seeing you, you know, just have a bunch of good news 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.

32:32and uh you know i think it works so and you know it's like 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 oh 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 real genuine story but do figure out ways to stay top of mind other than just like pinging with a follow-up to say, hey, just checking in. Yeah. Yeah. That's a smart move.

33:05Really smart. Although 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, whether they have maybe one spot open for another angel check or, you know, a 300, 500K check, and they have a few investors they could choose from. 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 and what they've done in that very first round of funding.

33:36And we're trying to hopefully mitigate that for the folks listening. Yeah. Yeah. I mean, always prioritize clean terms, you know. What do you mean by that? Yeah. Just keep it simple. Like, Like, especially I think, you know, a lot of 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 going to like try to take half your company, just like crap like that, you know? So just do, you know, I don't think you should like optimize for valuation for the most part, but just like keep it simple.

34:11You know, if you raise, you know, I was going to say two on 10, but that, that, that, that maybe that's like yesterday's pricing. Maybe that's just wishful thinking, but you know what I mean? Like just like it's 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. And again, like maybe that used to be like dark, 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 would prioritize complementary skill sets.

34:4490 % of our portfolio companies have a generalist tech investor on the cap table. 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 uh in that etched around founders fund andresen index kosla they're all great investors we're probably not going to 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 and then also you know the numbers that that folks tell you are often flexible once they've gotten to yes.

35:24So not always. And, you know, probably some of those bigger funds are probably going to 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 flexibility once they've gotten to yes. 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 building mode and almost go back to founder mode.

35:57Any advice that you give founders to kind of have to make that switch and start going back into the business after spending weeks or months in fundraising? Yeah. Yeah. I mean, so usually then, you know, that's the time to build out your team. So you 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 in the in the industry. And, you know, sometimes some things are just relationship driven or, you know, there's reasons why sometimes you're you need your hires to do that or to sort of have that experience.

36:40But I think for the most part, hiring for hunger and sort of trajectory over, you know, the sort of years of experience is the right decision. Yeah, we see, I think one of the more common mistakes on that exact point is that they find some, you know, guy 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.

37:20Yeah, 100%. 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've raised a little bit of capital and then building towards a seed? Yeah, I mean, I think, you know, there's a - Or seed to Series A, yeah. 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 the stingier side of things. We have seen seen companies sort of spend ahead of product market fit.

38:00And if you do that, you just end up in permanent raise mode and just end up with a ton of dilution. Yeah. What are 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 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 how to avoid them? Yeah, you know, I think that the as I think about kind of our lower performing tier of portfolio companies in there, there was a co-founder breakup.

38:38So, you know, that does happen. You know, there's the sort of burn issue we just talked about is another one that can go wrong. wrong there was one i would say that was kind of like the wrong technology architecture choice but i 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 much harder question, of course.

39:16I don't have any magic advice there, unfortunately. I'd probably be a founder rather than an investor if that was my area of expertise. But yeah, I mean, I think that's just the cold hard truth is that that's the reason that most startups fail, is not having product market fit.

39:32Matt Logan: Absolutely. All right. Wrapping up here, any last minute feedback, motivational speech, you know, halftime 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? Well, 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 solar water heating startup where I was kind of trying to help raise some money to get it off the ground, we should have, like in hindsight, it just wasn't sort of absent traction.

40:08It wasn't going to be a fundable business. It's just not what people wanted to fund in the wake of Solyndra in 2011. And but if we had put up the numbers that the business was growing, I think, you know, we would like the traction, you know, again, product market fit covers covers all sin. So, you know, if you're trying to build like a fusion startup or something like that's not that's not practical. You you're going to 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 if you're not the kind of founder, who's going to be able to raise a hundred million dollars out of the gate for a fusion company, you know, just be realistic about that and, you know, focus on a problem that's more tractable with a smaller amount of capital and build the business.

40:59And, you know, once, once you have traction, it's that's undeniable. Yeah, we had a Paul Graham. It doesn't have 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 if you can show, you know, we have raised zero money and we've gone from, you know, we've grown 100 percent every month for the last four months or whatever. Like someone's going to 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. Yeah, we had Paul Graham come to our batch back in almost a decade ago, and he mentioned the same type of question of when in doubt, just go talk to your customers.

41:39So if you're struggling on the fundraising, just go talk to customers. 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, because 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 benefit you on the other side as well. Totally agree. Matt, this was awesome. Thank you so, so much for being on.

42:07Lastly, where can folks continue to follow you in Earthshot? Yeah, I'm easy to find. I'm matt at earthshot.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. Love it. Appreciate it again. Hopefully this isn't the last time that we get to catch up. But congrats on the new little one, as you mentioned. Hopefully you're getting some sleep. And we'll talk again here soon. Sounds good. Thanks, Matt. Have a good one. You too.