#188 Church AI: Deploying God's Agents

0:00Welcome to The Pitch, where startup founders raise millions and listeners can invest. I'm Josh Muccio. And I'm Lisa Muccio. And on the show today, we have Iryll with Church AI. He's raising$600 ,000. That's right. Church AI, which is exactly what it sounds like, AI for churches. But not like the spiritual stuff, right? They just take care of like the admin stuff. Not an AI Jesus. Not an AI Jesus, no. Every church has admin back office responsibilities, but that can take up so much time of a pastor's that he's not able to take care of the people in the church. The sheep. The sheep need their shepherd.

0:41The shepherd shouldn't be doing all of the back office stuff, right? No, shepherd should not be sending emails. Iriel and his team are the perfect founders to build this. They're all involved in their local churches, of course, and they have a sales background. The question is, will the local church market sound big enough to a bunch of VCs who may or may not be familiar with that market? God is infinite. So are these returns? The pitch for Church AI is coming up after this, featuring a real-life pastor. Who also happens to be my dad. But first, we are hosting two live events this season, one in SF at Tech Week and another in November in New York City.

1:24We're also hosting the taping of our next season, season 17 in San Francisco. You can join us at any of these events. Just go to pitch.show slash events for more details.

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2:28Welcome back to The Pitch for Church AI. Let's meet the investors. Elizabeth Yin with Hustle Fund. My best deals have been the ones that I've committed on the spot. Charles Hudson with Precursor Ventures. We have 500 companies, so you pick it, we have it. Mike Ma with Sidecut Ventures. I got strings. I'm not an easy yes. Jesse Middleton with Flybridge. I'm so sick of people that are building stuff for building stuff's sake. and Yasmin Cruz-Farine with visible hands. It's one thing to be the first, but then there will be fast followers.

3:04Church app. Nice job. You did a lot. Good snap. Is that right? Yeah, yeah. Hey, everyone. Hi. Great to see you guys. Hey. Mike. Iril. Elizabeth. Nice to meet you. Hey, Jesse. Nice to meet you. Yasmin. Hey, Charles. How are you? Doing well. Better than I deserve is typically what I say on sales calls. So my name is Irel, CEO of Church AI, and we're building the OS that equips churches to operate on its own. Four years ago, I helped my friend plant a church, and I learned firsthand how much work that actually is. People think that churches are just small Sunday gatherings. They're really not. Churches are fundamentally small to mid-sized businesses that care for hundreds of people, coordinate volunteers, and they manage donors.

3:57This is all being done by pastors and staff that don't have the adequate training, tools, and time. I mean, imagine a pastor on a Monday morning. He just finds out that a family of five has left the church and hasn't gone in three weeks. A volunteer that was really key to his team has quit, and it was too late because he had zero insight. And churches across the country are dealing with this. Churches spend over$60 billion on staff, admin, support infrastructure every year, but they still lose 32 % of their members annually. So our platform uses agents to predict member turnover, identify new emerging donors, and automate the admin and operational workflows so that they can stop the bleeding and they can grow on autopilot.

4:48At this moment, churches are reporting that they're saving 15 to 20 hours of admin work per week, and they're having proactive conversations and reengaging 10 to 30 members before they drift away. Our team is uniquely qualified to solve this problem. We combine 30 plus years of deep domain expertise of working in, leading at, consulting these churches with proven revenue scaling experience. And in the last eight months, we've gone from just a concept to a paid validation with an average 40 % monthly growth rate. We're closing one in three churches that go through our sales process. And we are raising a$600 ,000 pre-seed round to become the OS for Global Churches.

5:30Thanks so much and happy to answer any questions. Thank you. I'm still trying to wrap my head around how you do this with the product. Like, for example, predicting member attrition. Doesn't that involve like physical signals, like whether somebody's coming to church or like, you know, participating in something? I'm just curious, like what does this product encapsulate? encapsulate. Yeah. So all of that data is already there. And since they're not operators, they don't really know how to access it and use it in a tangible way. So the way our product works is we plug into their existing church management software, and then we curate all of those relevant data signals that pastors and churches would look for in order to determine whether someone is engaged or completely withdrawn.

6:16There are workflows where they can automate drip campaigns. They can also automate notifying team members and crew leaders to take action on this. So that's how it works. Where does all the data live? Do they have a CRM? Do they have like member management? Like what does their tech stack look like today? Yeah, so they're currently paying for legacy software. Think of these companies similar to Salesforce. They're just not agent focused, right? Our plan is to completely replace their entire tech stack. And we're moving extremely fast to do this. But we recognize as we had hundreds of conversations with people, The easiest way to really hit scale fast was to do a wedge and expand.

6:52Member churn and automations was really that first pain point that they were looking for. And so that's what we're staking our mark on. In this church management, what are the inputs? Is it contact information, dollar amounts, email and attendance? Like what are those contact fields? What's the data that populate that I couldn't use HubSpot for? In terms of contact fields, it's all pretty regular, like payment information, name, birth date, who they're married to, their kids. But for example, a really key workflow to churches growing is like kids ministry. This is a huge engagement marker for churches.

7:26And if the kids ministry is succeeding, this is actually the primary way that church is used to attract young families, right? So there are multiple case scenarios like that. Another one would be is these things called small groups, where they're like these micro churches in these houses. There's event scheduling. There's a hospitality team, there's a parking team, there's a music team, there's a hosting team. There are many teams and they're aggregating that data. You could hack your way to it, but these vertical SaaS platforms have already optimized it for them to do this. Most people think that churches are like Sally Mae for 60 people on Sunday at this really old building.

8:01No, they're actually tech adopters. They're behind the curve, but they're always looking for tools to increase their optimizations because they're drowning in admin. Can you describe to me then, like, okay, now I get the novel data set. What does it look like today? And what would it look like in church AI? So right now, those tools were designed for human workflows. We had a church that hired a planning center specialist. This is one of the leading companies. On our platform, she's saving 15 to 20 hours of work every single week. I have this bet that all of church admin and operations can be ran autonomously, if not managed by one person.

8:43It just takes the correct infrastructure and the correct context to feed the agents. Because the work is not necessarily complex, it's just bulk, which is perfect for agents, right? It just takes the right team to solve those workflows and really understand the idiosyncrasies that churches need in order to build that infrastructure as the models and the agents get commoditized. Totally get that. My sister actually runs operations for her church. Can you talk more as to when you say you can help with these workflows and reduce this on the other side of things beyond the member engagement, et cetera, how does it help with the internal processes?

9:17So I can speak from my personal experience. So my wife and I, we still lead the music team. We have a team of volunteers and they have these things called blackout dates. These are the days that we cannot volunteer or serve. With Planning Center or any of these other platforms, it's just an extremely laborious workflow that we have to do. My wife spends two hours doing it on a Monday night. With AI, if you were to intake that into our platform, it would easily be able to schedule it not just for the next month, but for the next three, six, nine, 12 months. I mean, also there are idiosyncrasies like there's a music set that you have to do.

9:51Well, in music, you have to make sure that all of the keys are harmonious and all the transitions can do. It takes my wife about three to four hours creating a set because we really care about what we do and how we serve the church. I mean, you could do that with the correct context. And your system does that? That specific use case, we will be done within 90 days. Got it. So right now, what does your current solution do? We aggregate the data. We flag who's at risk, identify potential donors, and we automate a lot of the communications workflows as well. We're currently in the sprint where we're creating a payment processor.

10:27So, for example, across our 18 clients, we are reporting on$19 million in digital donations. There are 130 ,000 churches in the U.S. that pay a 2.9 % take rate plus$0.30 on their payment processors. We've already been offered by Stripe and Finix a 2.2 % plus$0.30, and we can meet at 2.5%, and we can do a take rate of 40 BPS, right? Well done. Okay, thank you. Assuming that the average church takes$300 ,000 in average donations every single year, I mean, the total addressable revenue on just that product alone is, I believe, nine figures. And just full disclosure, we're investors in a company called Overflow, which focuses on church donations primarily.

11:12So right now, mostly about member retention and engagement. Yes. And then later you're addressing payments and operations internally. We'll be full stack in the next six months. I have this joke with our CTO and we track screen time. And the other day he showed 22 hours of screen time because he was just deep in the sprint. So we'll be done in six months. I'm really confident of it. Can you talk about the sales and go-to-market 18 clients? Where's the footprint? How are you acquiring them? And where are you going with that? So go-to-market is all direct sales, specifically cold calling. Right now for every 318 calls that we make, we sign a deal.

11:50My co-founder and I strive to do 150 calls every single day combined. Our background is in building companies and literally no-moat industries. We came from the residential solar space. So from cold call to demo booked, that's a 1.7 % conversion rate. From that demo booked to show rate where they go through our entire sales process, that is currently 54%. From that stage, that gets into close. We're at 34 % at the moment. So what we plan to do with the money that we raise is just pour the gasoline on the fire. We're going to hire two SDRs. I think that they can personally do 120 calls a day Monday through Thursday because church offices aren't open on Friday.

12:32On that growth rate trajectory, we would hit$400K by the end of the year ARR, and we'll easily hit$1.2 million by the end of next year getting ready for a seed round. And that's not even including go-to-market expansion with like partnerships with networks or events. I think that it's hard to overstate how much the domain expertise plays in the go-to-market. Are there any parts of the segmentation that can give you efficiency, whether it's geography, church size, denomination? Like I'm all for brute force, but are there thoughts or insights you've had in the go-to-market to get a little more yield out of that funnel?

13:08That's actually that number. Every 318 calls was after tinkering with this process. We used to be at like 600. And so we segment by network. So there are very specific networks that are our ICP. These would include, you know, modern assemblies of God, churches, ARC network. We scrape these leads, put this into a power dialer, and then we cross verify the website. If it's on ICP, we skip it. Digital footprint is the biggest indicator of our ICP. Our ICP lives on Meta. Their website looks a certain way. Their Instagram looks a certain way. They dress a certain way. They preach a certain way. So we're segmenting now.

13:43Tell me about the 600K. Have you raised before? What are your plans for the use of proceeds of 600? We raised 80. It's not part of this round, just casually through friends, angels. We're in that diligence, the 125K with Jason's launch accelerator. But in terms of the 600K, I'm just announcing it today. Talk a little bit about what you were doing before. I think you said residential solar. Yeah. This is like with you and your co-founder or who was doing kind of what? So before this, my co-founder and I, Trent, who's the chief growth officer, we started a residential solar company and we took it from zero to 12 million in less than two years.

14:21Before that, we were executives at a company called Stockdale Solar, same type of business. And when we came on, it was at$8 million in revenue. And when we left, it was doing$50 million in revenue. No moat business, pure sales. And at Stockdale Solar, since we had more capital available, I averaged a 10 to 1 ROAS on all campaigns. I would love to invest.

14:45Well, Mike got to conviction quickly. Can I real convert the rest of the VCs just as easily? That's coming up.

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16:12I would love to invest. You know, I would love to take the next step. We work with our founders for 30 days. We're writing somewhere$200 ,000 to$300 ,000 checks. So this is a definite commitment to take the next step and put us in our process. I know we have a lot of time, but I just wanted to say I love how you're thinking about it. And every time I've tried to write my next question, you just gave me the answer of the funnel thing. So I look forward to having that kind of dialogue as we dig in more. Thanks so much. I really appreciate the vote of confidence. I'm a longtime listener to the show, so I'm excited to dive into the foxhole.

16:46Amazing. How does the migration process work? We white glove implement everything right now. And I think that's a big part of the reason that 80 % of our contracts are on 12 to 24 month contracts right now. We just pull all of the historical data from their current platform. We ask them, hey, what's the cutoff? Because some of these, we have a hundred year old church right now. So we're like, yo, maybe we should do it. You need a hundred years. We don't want to completely skew your unique data set. And so we just ask them, hey, what fields do you want us to pull in? We implement this data. And then we ask, what does it look like for someone to be highly engaged, at risk, withdrawn?

17:18We also build out all of their email templates and their automations for them. Not all of them, but we do the key ones because we want them to hit the ground running as soon as they get a login, get that customer satisfaction. And with agents that we can use internally, it's kind of that hybrid services as a software. How much are you charging for your current product? Current average ACV is 3.2K. Our lowest price point right now is$199 per month for churches with less than 200 people. Scaling all the way up to churches that have more than 1.5K attenders, this is$1 ,125 per month. That's also not including the giving process or payment that we're going to do.

18:03I know that as you build out more, you can probably charge more. Absolutely. This is what you're currently charging. Walk us through a little bit sort of expansion of that revenue. So payments on the$300 ,000 possibly, I mean, where are you already seeing it? Where do you hypothesize? You sort of expand that. Yeah, payments is a huge thing. I mean, these key modules like event scheduling and services and kids check in, like, because they're not technical and they're not operators, they're telling us after hundreds of conversations, I don't want to pay for 10 different solutions for 10 different problems.

18:33And so that can include anywhere from what we do now to their front facing website, a potential app to also how they do payroll. They do payroll a very specific way and do expenses a certain way. Think about this market as a small to mid-sized market with a strong opportunity to get caught up. And there are a lot of different things that they're currently paying for that needs to operate a church. And what's their current spend on that tech stack? Yeah. I was consulting a church of 60 people. They were spending about$4 ,000 per year on marketing, a website, et cetera. There was a church that we sold.

19:13They were paying the 2.9 % take rate, but they were also paying about$12 ,000 a year for their legacy software. There's a church on our platform right now that does about$600 ,000 in donations every single year. And I would say they spend$80 ,000 a year on staff and admin who perform tasks that can be automated with agents today just with the correct infrastructure and training. I believe that. Yeah. Can I ask you a slightly different question? Yeah. I said yes. if you win and you make back offices of churches more efficient, I'm curious about your thoughts about what the impact is for both the church, the membership and communities that you work in.

19:52I would just love a little bit of commentary of what that looks like. Yeah. Is it okay if I get a little bit anecdotal? So I didn't grow up in church. I'm a converted Christian. Over the last 10 years that I've been involved in the church, I have seen so many tremendous stories of people who had broken marriages, broken families. They were struggling with addiction. I used to do street ministry in the worst part of the city that I'm from. There was this couple specifically, I'll leave them unnamed, but they were addicted to drugs. They had lost their kids. And just slowly by slowly, as they started coming around and they started investing into our relationship and they really found purpose and hope, long story short, after a few years, they became homeowners and their families got healed.

20:34What I see the admin and operations not only just as a business opportunity, but it kind of gets in the way of the true impact that churches can have. The change happens through relationships. It happens through embodied presence. And a lot of these staff and admin or these pastors, they got into the ministry to do that. When we succeed, we will have redefined the way that churches should operate, which is for the better. So it's like physician burnout. Because that's something that I was trying to understand in terms of what is the incentive to the buyer. And I think in your case, what you're saying is anti-burnout opportunity to do kind of the core mission.

21:18Absolutely. And we can really boil it down to dollars and cents. So a church right now, based on the reports, their average donation is$800 a month if someone's donating. We charge them 5.1K a year. If they recover some of these members that are drifting that we're engaging financially, the ROI is tremendous. So it's a pretty easy sell right now. On the staffing side, what are your current customers? How are they reallocating that staff that they were paying to do this? So this is the sort of anti-AI rhetoric of the era. Like these are also staff members getting paid. So what are your current customers having those people do instead, I guess?

21:58Yeah, so Marissa is a great example. She's the one who I said got hired as a planning center specialist and is saving 20 hours a week. She's technically the connections director. She was spending her time doing drip campaigns and workflows in planning center. And now she can go get coffee with people and invest in the people and do life with people, which is really her true role. Yeah. Which is really the function of a church, right? It's just a community of people. It sounds like in your next inning of this, you're planning on going pretty hard on donations. I would say, yeah, that's our next sprint.

22:31I really like your growth background, like that you've run businesses before. You're very sales oriented. And I think that this is a really good space. Unfortunately, I think I have a conflict with overflow that is their focus. And they're actually expanding into other areas within churches as well. So unfortunately I'm going to be out. No worries. I appreciate the context. Yeah. Thank you. I will actually join Mike and tell you about our process. We are targeting about 5%. So around the 250K neighborhood and my own mental model is around the founders as a pre-seed investor. And you have to really understand the customer and it's very clear that you do.

23:17So I look forward to digging in. Thank you so much. I really appreciate it. I think your passion comes through and it's awesome. To be honest, I don't know the church market at all. And all of the names you mentioned and the numbers that you stated were like brand new to me. So I'd have a really hard time being like, yeah, I'll underwrite that. Like not knowing any of this. I would like to learn more. We have a pre-seed program called Next Wave. That's typically a$50 ,000 check to start. And then we sort of spend time and decide whether or not to lean in more. Great. This one was a tough one. I couldn't quite get there in the end, but I thought you did a really good job of articulating the problem.

23:55We've made one or two investments in this category. So I know these folks do have money. I think for me, I was kept doing the math on like, where would I want to see the ACV per church get? And I think I have some sense of what you can get from donations and some sense of what you can get from software. And I just couldn't quite get my arms around the amount of traction you would need in order to get to like a venture scale business. But it's really early and you seem like the right person to build this. So this was a tough one for me, but I just couldn't quite make the math work on that. No worries.

24:25I really appreciate the feedback. One thing I would say to you, and this is just something I've recognized recently because some of my family, my wife's family, they're pretty active in their churches. is this current trend, this current movement of younger people going back to church, we're seeing it in New York, like lines down the street every weekend. Like, I think you could probably benefit from embedding some of that in your assumptions into your pitch. When I was sort of thinking about the numbers of churches and then the amount of spend, I was sort of like, all right, it sort of gets close to where you could imagine it being big enough for it to be this sort of massive return.

24:57But then I just think to myself, if the world looks completely different in seven to 10 years and the movement's going there, you may just say, that's going to be twice as big. Everything we can do would be very simple. We'll just build software. We won't nail payments. We want any of that, but just the demand in church is going to grow, the technological savvy of these version, that that's going to increase. I don't know the numbers, but my gut tells me that that would potentially bring some people over the hump where it'd be like, oh, actually the growth is like data center growth. It's not, you know, it's not just a little bit per year.

25:28Yeah. Okay. Sounds good. Awesome. I really appreciate it. Thank you guys. Thank you. Thank you. Thank you. We were spot on on the what does this company do based on the name. So good. Kudos to us. Good. AI for churches. Yeah. You're so smart on the nose. So the group chat was blowing up while you guys were pitching because Michelle Kwok heard the name Church AI and apparently she has a whole thesis on. That doesn't surprise me in the least bit. This, and so she's like a bajillion questions for the founder. What's it say in the chat? She said, this whole market is just all about, well, go to market, of course.

26:08And there are a bunch of smaller churches and you just got to pound the pavement. So then I told her that the founder was making 150 cold calls a day. And then she found out Mike invested and you invested. And now she's getting FOMO. What did the time read when you committed, Mike? 15, 16. I was like, is Josh going to be mad at me? You did not beat the show record, but it was definitely close. Who has the record? Either Red Drop founder. So Monica Williams with Red Drop, who is here, actually. Monica's great. That makes sense. I think Matt Conwell invested in like seven minutes. That was fast.

26:43That was fast. Damn it, Matt. Before that, I think Jillian Maness committed to shift in like five minutes. It's got to be Jillian. Wow. Believe it or not, I was pretty close to that in time. I was like, I don't need to know that much more. That was easy. It was easy for me on that. Okay, well, this just in from Anna, our producer. The transcript says it was 20 minutes for Mac. What did the clock say when you invested? I got him. It was like 16. I think he was under 20. 15, 16. He was under 20. Okay, well, you just got the second fastest career on the show. Second place. Second place. I told him to raise more money, and he said, we know what we'd do with 600K.

27:24That's all we need. I love Capital Fistings. Because it means he's going to sell more. Yeah. In one more plot twist, Enoch, our sound engineer, really offended me earlier when he said that actually my dad's voice is better on mic than mine because he did. He 100 % said that. We heard it. And so can he come in now? We're going to find out who's actually better at this job. Yes. Do you still want to get on mic after that? I don't think so. Don't worry. I already picked. Quit lying. Quit lying. Quit lying. I'm just kidding. Okay, so my dad actually has been a lifelong pastor. I know. Would you buy the product?

28:05Yeah, we would love your thoughts on this. I like the idea of the growth factor and connecting the dots between what he's doing and how that would free them up to be in their giftedness, the various people in ministry. So what are you thinking there? Yeah, I mean, look, I might be the most outsider. I don't know, like, this is not my world. But to me, I just think about, we're watching the trend happen in real time. I see it literally on the blocks of New York City on Sunday. Like, it's changing weekly. I mean, it's like actually pretty crazy to see. My feeling is though that it's an entire generation that either didn't have a connection to the church or any religious organization, or they did when they were children and they're coming back to it and they're finding their way.

28:50but they operate in the world very differently. And so it's digital, they're on YouTube or Instagram or TikTok or whatever. And so bringing and enabling the church that's out there that historically is using this, what sounds like outdated software that does something very simple, bringing all of that technological capacity to the church and then connecting it in a way that's very native to the next generation. And so I think you can allow the church to reach beyond what they could before digitally, tapping into the community beyond the church. I think there are two interesting trends that this is riding on.

29:29So certainly AI is the one that everyone talks about. I think the other interesting trend with churches, I have a friend who actually runs almost like a Y Combinator for churches. He actually helps start churches and they're just like faster to adopt technology almost out of necessity. And so I think there's that trend of people are interested in church because you can find the church that's for you. And there are all these people who are starting new brands. And so I think the customer acquisition is the right timing for this. Socially, I'm no anthropologic. I do think we're due for a connected slash analog moment.

30:08And I think churches and community are going to be an important part. I mean, I started looking at it from an angel perspective of tabletop gaming as well. No, but I mean, there's a line between both of them is I think we're craving real human connection. And if I and my investors can profit off that, shoot, I'm in. Let's figure it out. Wow. Well, this has been great. Any questions for my father before you're going to give me a seat back? Who do you think is better, you or him, from a voice perspective? He's better. You're very modest. At this. He's better. And he's a good teacher, too. I found that out back when he was a teenager.

30:44And I had him give a little teaching to the youth group. And I'm sitting there listening to him, and he was so connecting with them with his illustrations. But I thought, well, I don't know what he's going to do with this. That is what you said. Why do you appreciate? Yeah, Josh connects really well. Just with VCs, actually, I really struggle with others. Just you guys. We should probably wrap. We've got one more pitch. Awesome. Thank you. Thank you. Thank you. Yes, Michael Muccio, everyone.

31:23Thanks, Dad. Just had to throw in that embarrassing childhood story. Iriel walked out of the pitch room with commitments from Mike, Yasmin, and Jesse. And if my dad could invest, he would too. But for all the chaos in the pitch room, none of that compared to what was happening outside of it. After the break, Michelle Kwok with Draper Associates.

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34:03Welcome back. Usually this is the spot where we check in with the founder. But in this case, there was someone else with a story to tell. Michelle, in Tampa, you were on the previous day's recording and then you left. But you were watching the group chat from urgent care. yeah you know i've had since i've like moved to america because i'm canadian i've like been allergic to america but there was stuff going on i'm totally fine now you know relatively yes okay and i was just chilling at urgent care and as i'm ripping my emails something comes up on whatsapp that's just like, I think someone just said church AI.

34:50And just my brain lit up. I was like, oh my goodness. I wrote this religion tech thesis a year ago and I totally forgot about it. I kind of put it down because I wasn't sure. I was like, it seems like Western society is moving away from religion in some ways. But a year later, it's only been increasing. and I was like, should I pick this up again? And you guys saw me live tweeting basically. Oh, you were blowing up the group chat. Yes. You're like, hey, can I meet these founders at dinner? Are they going to be at dinner? We don't normally have the founders at the VIP dinner. But I was really wanting you to come to dinner and I wanted you out of urgent care.

35:38So I was like, I'll invite them for you, Michelle. You actually don't understand. I was like suffering at urgent care. I hadn't eaten all day, like had not showered. And I was like, I need to meet these church people. It was almost like a spiritual experience for you. Oh my gosh. Have you ever committed to a founder based on a group chat before? I can confidently say I have never. I have never. Okay. So then how did dinner go? Blind date, three founders, church AI. I think we were in there for like three hours. We were like deep in the cut for three hours. And I got to know everything about like their lives, their wives.

36:25Like what does an executive pastor mean? We arrived at dinner, me, Kyle and Trent, and we just felt so underdressed and like, oh shoot, what are we doing here? That place was bougie. Michelle came up to us. And at first I was like, oh, she's not really vibing with this. Because she, just from a body language perspective, was leaning back, arms crossed. And I was like, whatever. I don't know. I couldn't tell. I was just really selling the vision. And I was just letting go of the outcome. So I didn't know if anything was going to come out of it, honestly. Yeah. Did you have a call with Michelle after that?

37:06Yeah, for that meeting, it was just me and Michelle. I think Trent might have been there as well. And then they just recorded it. And then I think they brought that recording to their investment committee. Yeah, they record pitches, kind of like we do at the pitch. And then they just send them to Tim. He's like, go, no go. Yeah. Did you hear from Draper after that call? So she asked for the data room and then she sent over an offer. An offer? Yeah. You mean a term sheet? Term sheet, yes. What were the terms? It was a million at four mil pre. They wanted to invest a million dollars in Church AI?

37:53You were only going to raise$600 ,000. Yeah. What happened? Well, we always had plans of oversubscribing. Oh, did you now? Oh!

38:09You know what you're doing. If we had that option. Yeah, you play like you don't know. You know what you're doing playing like you don't know. Yeah. It was pretty crazy. I was having barbecue with my wife for date night. And Trent FaceTimes me, like answer the phone like he's spamming me. And I try to disconnect on Fridays and be spamming me. I'm like, oh, shoot, there's like an emergency. We screwed something up. I finally answered the FaceTime and he's like, dude, Draper wants to invest a million dollars. I was just like, wait, what are you talking about? And my wife was in shock. She just had no words.

38:47Yeah, it was pretty cool. So then did you accept our terms? We accepted the terms after a little bit of back and forth, but we basically accepted 1 million out of 5.2 mil post. That's where it landed. Okay. They signed and wired? Yeah. Yeah, pretty quickly. Pretty quickly. Gotta love that. All right. So obviously your whole round is oversubscribed at this point. You wanted to raise 600. You got a term sheet for a million, but there are other investors that were also interested in investing, Starting with Jesse. You had a call with him and Dorothy at Flybridge. What do you remember from that call?

39:32On the call with Jesse and Dorothy, I remember Jesse was really kind. He seemed really excited. And Dorothy actually is an avid churchgoer. And so she kind of really understood the space. I'm curious how these churches might think of, like, outside of the revenue that's being generated. you know, what's the spiritual increase on, you know, return or community return? You know, how are they thinking about the... Community adjusted... Community adjusted, right. ...in your business. So to investors, we talk about donations and member churn. To pastors, it's primarily a discipleship tool. I think Trent actually just posted something on LinkedIn.

40:16Did it say, Trent, 8 % of pastors are satisfied with their discipleship process? which is the process of having people grow in their faith journey. But they have literally no systems or processes around this. And this is the most important thing that we're supposed to do as churches. And so that is really where they see the true value. Obviously, there's a little bit of conversation around revenue and attendance, but it's primarily like, hey, look, at the end of the day, this is the Great Commission, right? Let's really focus on building out systems and operations around this. So did Jesse invest?

40:48Yeah. Yeah, he invested the 50K that he committed on the show. Nice. It's interesting that you pitch investors and pastors differently. Obviously, we know why you're good at pitching to pastors because you come from that world. But I'm impressed by how well you've been able to communicate your vision in a way that resonates so well with VCs. How did you learn to do that? I learned how to communicate with VCs through a lot of failure and a lot of rough feedback. I remember even my first pitch with you guys like nine or 10 months ago. I was just like, that is just the worst. That is just absolutely terrible.

41:28And Lisa was being so nice. She was like, yeah, I just don't even know what you guys do. Like, can you like pull it up or something? And I just wanted to like crawl underneath my desk. I was just like, this is so bad. And then you came back like way better, like a hundred times better at pitching. So like what happened? I got a coach. I got a coach that really helped me after multiple rounds of failure and then a lot of like really sober coaching. I think we kind of got to a point where we can communicate it to people who have no context. Yeah. Okay, so then what happened with Yasmin? We had the first initial call probably the week after the pitch.

42:13She was just saying that the person leading the deal, Justin, who's more familiar with the space, is currently doing diligence on three other deals. Okay. So it just might be some time. And then it just ended up taking a little bit too long and the round closed. You closed it without them? Can't take that much time. I mean, yeah, when someone comes in and takes a million dollars. There's not much room left. Okay, so you told me before the show that you were nervous about having to pitch Mike Ma. Yeah. Can you tell me about that? Yeah. Why were you nervous to pitch Mike? Just some of the previous episodes that I had listened to.

42:53I'm a longtime listener, you know? It's the foxhole, isn't it? Yeah, the foxhole is definitely a big part of that. So you were scared of the foxhole? Yeah. He's scared of the fox.

43:10But you got a commitment from him. Yeah, he was the first yes in the room, which was like super surprising. I was like, oh, shoot. So you thought he wouldn't like your business? I don't know. It just all happened so quick. And then one moment he's like asking about novel data sets. And then the next moment he's like, I'm in. And then the next moment, he's like teeing me up for, you know, an anecdotal story. And it's like, wow, this is incredible. But yeah, he's great. So is Mike different than you were expecting? Yeah, yeah. He's way more cool, way more chill. He's a really good guy. That's what I've been telling people.

43:47I don't know why everyone's so scared of Mike Ma. He's a big softie. He's a really good guy. He says he scares because he cares. I can see that. Yeah. Did diligence go how you expected it to? Diligence did not go the way we thought it would be. I made the mistake of thinking that the foxhole or his process was going to be easier than it was because of how committed he seemed like in the room. Oh, wait. So you flipped. So like his diligence matched what you originally expected. Yeah. Oh. Yeah. Interesting. So it was as infamous as you feared. But not Mike. Yeah, it was pretty granular. He was stress testing a lot of the things that I thought that he really liked during the pitch recording.

44:39You guys are incredibly lean. Your financial statements are very detailed and you've thought through everything you're spending. What I'm asking for is the same level of detail thinking through the next round because the worst thing possible is for you to run out of money. Why is it dialing for dollars? and what's the plan to make it more efficient? You guys have done like somewhere between 6 ,000 and 8 ,000 calls. I mean, this is a really high friction outbound sales motion, right? Are you only targeting Christian churches? How do you think about TAM and other faiths? I do think we'd be open to this, but I mean, we're laser focused on the Christian faith space because of the potential network effect and how big the space can get.

45:26Let me ask a slightly personal question. Is that a business decision or is that a faith decision?

45:34Well, it's a business decision. I think if we were to boil down the question to like, can I only sell things of value or provide services of value to people without my worldview? Obviously, that's not true. That was pretty tense. And we honestly didn't even get that far into it. We did one meeting. We sent over some follow-up materials. And then he politely passed. And I just want to say, like, even during that meeting, even though he was stress testing us, he was really kind. I mean, he was really honest. It was just like genuinely trying to get to the merit of the ideas and the processes. And he really even made us rethink some of the way that we're doing things.

46:21And I saw him at New York Tech Week a couple weeks ago, and I just told him, like, hey, we'd love to stay in touch, you know? Got to respect the foxhole. Don't fear it, but you got to respect it. Oh, my gosh. Yeah, 100%. So then how much did you end up raising in total? Around$1.3 million. And in the last, like, four weeks, we've turned down probably, like,$800 ,000. What? Why? We just don't need the cash for it. I think we would if we could like maybe charge a different tranche, but we are concerned with dilution. Yeah. And we're just confident that we'll be able to raise at a significantly higher seed price.

46:58Okay. Do you wish you would have waited longer and like been slower in your fundraise? Because then maybe you could have negotiated different terms. He's nodding. Probably. Probably. Yeah, probably. But no regrets. Trapper's been absolutely incredible. Yeah. Yeah. I don't want to put words in your mouth, but if you were to just look at the past few months, it seems like the ideal fundraise. You get in, you talk to several investors, you get a term sheet, you close the round. I mean, pretty much. We tried to raise when we first started the company. I thought this was like 2021, you could raise on an idea.

47:38And I spent maybe two months trying to do that. It just didn't work out. So we kind of got back to just building the business. And so when I said, I'm announcing the raise today, I meant it. Like that was the first thing we were actually raising. In the pitch room? Yeah. Wow. I was not really doing crazy investor outreach. Maybe I was doing like the quarterly YC application that you'll get a denial from, but I was not outreaching to investors really. Yeah. And so the fact that it all happened so quickly in the room, it was just, yeah, it was insane. Yeah. It was pretty crazy. Well, I'm glad we got in.

48:15Yep. Thanks for squeezing us in the round. Yeah. Let's go. We're stoked to have you guys on board, man. We're stoked to be on board. We have come a long way from that initial pitch last year. Show me the website. What is it again?

48:35I wonder what I even said. Oh, my gosh. I would pay to listen to that call. Well, we officially invested$150 ,000 into your round. And you are one of our first checks out of Fund 2. Church AI to the moon. Churches and AI. Come on. Together. To the moon. Oh, my gosh. Come on. Oh, gosh. Anna's writing puns in the doc for us. Church AI to heaven. Yes. Dang it. Now everyone's going to know that the producer behind the pitch is the one writing all my puns. Oh, my gosh. Oh, no. You hold your own, too.

49:20Wow, he's come so far. So far. So proud. A year ago, I didn't even know what the heck he was building. Now he's turning away money from other investors. To be fair, it was called Church Stream before, which makes you wonder. Oh, yeah. Is he streaming churches? I don't know. But now he just got a million dollar term sheet from Draper. That's incredible. I think it might even be record-breaking for the show. Okay, yes. It matches the Nectar AI pitch, where the founder got a million-dollar term sheet from Long Journey Ventures. But that was a part of a much larger$3 to$4 million round. Yes, that was a seed round.

50:01But this is Iriel's pre-seed round, and he just raised over a million dollars on the show. $1.2 million of his$1.3 million round was from VCs in the pitch room. Technically, Michelle wasn't in the room. Yeah, but God works in mysterious ways. Or he works in the group chat. He's everywhere. Well, despite my dad's best efforts, we are still the pastors of the pitch. Yes, we are. And so you know what that means for the end of service. The altar call to action. Are you real? Take it away. No offer to invest in Church AI is being made to the listening audience on today's show. But you can invest in The Pitch Fund, where we invest alongside the VCs on the show.

50:47We're currently deploying Fund 2, and we're open to new investors through the end of the year. To learn more, go to thepitch.fund. Next week on The Pitch. Can you tell us what the outcomes were from the previous two companies? Yeah, so Soylent, we got that up to$70 million in revenue. But then we hired CEOs and we all stepped away as founders. Huge mistake. What are your non-negotiables of how you will build this company? what are you doing differently? Well, first of all, I'm a solo founder this time. I learned that I'm not a great co-founder.

51:41We'll see you next week in the pitch room. In the pitch room. In the pitch room. Stop. In the pitch room.

51:54This episode was made by Josh Muccio, Lisa Muccio, Anna Ladd, and Enoch Kim, with deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun. Music in this episode is by The Muse Maker, Breakmaster Cylinder, The Firmware Rebels, Evergreen Song Factory, Farnel Newton, SNVRS, Cosette, Joanna Katcher, Soul City, and Peter Jean and the Runaway Queen. The Pitch is made in partnership with the Vox Media Podcast Network.

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