How to Win Investors: The Brutal Truth About Raising Capital | Elizabeth Yin

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Plus, it really, really helps me continue to bring amazing guests, okay? So let's dive in. How do you invest? What do you look for? What are all the things that can go wrong? The good, the bad, the ugly.
Elizabeth Ian, co-founder and general partner of Hustle Fund, before becoming an investor, Elizabeth built and sold her own company, Launchbit, and later helped shape the next wave of startups as a partner at 500 Startups. In the beginning, I had no idea what I was doing.
I couldn't raise any money, but I also didn't know how to run a company. We did 20 versions of our pitch for our fun one.
And by the 20th one, it was way better. The first pitch, I'm almost like embarrassed that I thought that that was good.
That's also part of the process. In getting rejections, you learn, you adapt, you change your messaging, you address the concerns, and you get better at it.

So how did you figure it out? How did you raise capital? How did you learn how to be acquired?

A lot of it was just... Elizabeth Yen, co-founder and general partner of Hustle Fund.

I've been following her for a while. Thank you for having me, Alana.
It's going to be super fun. So take me back in time.
How did you grow up? Why engineering grabbed your attention? How did that happen? Yeah, I think I'm really a result of time and place. So I'm originally from the San Francisco Bay Area, still am here.
You know, I'm kind of dating myself here, but I was in high school during the 90s. And so during the 90s, you had the dot-com boom.
I was in high school starting in late 96 and graduated in 2000. So that was that perfect time when all the wave of companies took off.
And then I was in college during the bus. So I think from my perspective, startups looked rosy all throughout high school.
And that honestly, actually was a big draw for me in getting into tech in the first place. And it's not like my family was in tech, they were not entrepreneurs or anything like that, just by being here.
Like being surrounded with it. And I remember that because I was in Intel at the time.
So a few years difference between us, but everybody was hiring everybody. Like it was just an incredible time to be probably around here for sure.
I've seen it from the other side of the ocean. But if I'm not mistaken, you also interned in a lot of different countries, am I right? Like Switzerland, Japan, India, like I've seen a lot of countries.
How did that happen and how did that shape you? So I'll actually give you a very specific story of something that happened to me in high school and then I'll go into that. So during high school, my best friend Jennifer in ninth grade asked me if I wanted to help out her cousin Tony during winter break with his startup.
And I didn't know what a startup was, but I also didn't have anything going on during winter break. And so we took the Cal train up to San Francisco and we went to this nondescript office and there was nobody there for probably a good hour because everyone sauntered in late.
And it's all these people who were maybe 22, 23 years old coming in. The office was a mess.
It was chaotic. People were running around.
There were important looking people coming into the office, leaving the office. There was just a lot going on.
But I love that energy. And I loved that Tony and his friends were kind of doing everything and they could eat all the pizza they wanted.
It was the dream. And I didn't really understand how startups make money back then.
But fast forward, Jennifer's cousin, Tony, ended up selling that company for a couple hundred million bucks to Microsoft. But I think what more people here may know him for was actually, he later became the CEO of Zappos, which was one of his...
Oh, Tony. Oh, amazing.
And that was the late Tony Hsieh. So he actually had a very big impact on my life as a mentor over the years as well.
But I think what I saw on that day was just sort of this new way to work. Back then, corporates were very structured, right? There were cubicles and you dressed up to go to work and people interact with their boss in a certain way.
Obviously, much of that has changed even at large tech companies. But back then, it was a big breath of fresh air.
And I absolutely love that. So that was the initial draw to startups and a big driver for wanting to also study engineering in school.
Fast forward, you know, I think one of the things that happened when I graduated was the market actually was not great. I graduated in 2004.
We were in a recession still. A lot of people were even wondering, is software even still a thing? That was very unclear.
Obviously, that sounds absolutely ludicrous now, but it really was a fear, certainly in 2001. But even by the time 2004 rolled around, that was a big question mark about whether startups were going to come back.
So I went to work in big tech for a while. And, you know, I think as part of that soul searching journey, I realized that I had done almost all of my schooling in the Bay Area within like a five mile radius, you know, middle school, high school and college were all basically in the same place across the street from each other.
So I really wanted to leave and go very far away to see what was something new. And that was how I ended up interning at CERN or interning at Infosys or wherever, or spending a year working at a multimeter company in Japan.
So that was the driver to learn something new. And even to this day, actually, I would say that some of the things I've learned, especially in the cultural side, but even just in terms of how seeing some other places operate, you know, we look at a lot of international companies and it has informed a lot of my thinking around investing internationally as well.
That's incredible. And I'm sure it shapes you, right? Even just needing to prove yourself in a new place and new languages.
How was that? I mean, it's not easy, especially if it was not your nature, right? Yeah, I think perhaps many people who have immigrated to places, if you're watching this, can certainly relate to that. I think what it is, at least for me, is it ends up being all the little details added up that kind of bombard you all at once.
Like, I can't get a bank account, or I don't know how to get a bank account, and I can't get a cell phone, and I can't get this, and I can't get that. And each thing in isolation doesn't seem like a big problem, but somehow they're all circularly connected together, and it does affect your life.
So I think there's the combination of language, but also the combination of understanding what works with what in a society. And that does shape you, but it was good philosophically for me to go through and learn more about myself and who I am.
I love that you said that. I almost feel like every example that you said, yeah, tick.
I've had that tick, you know, like no social security, no history, no phone number. No, you know, it was just like, oh my God.
And it was almost like all my advantages back home in Israel now became disadvantages. How is that even possible? And I think it does teach you a lot, but then you start working in Google and at some point decide to start your own thing.
Tell us a little bit about that journey of what happened, what did you learn, and how did that start? Google had phenomenal people. That was probably the number one thing that I loved about Google.
Like they hired amazing people. Many of those folks have gone on to either start companies or other amazing things now.
That was the best part about it. But I think that aside, I also had many frustrations.
Admittedly, it was a very big company even back then, and certainly is bigger now. And so the bureaucracy was just really starting to get to me.
I just felt like it wasn't meant for me. And I needed to go to a smaller place.
And that's how I finally landed on this idea of, okay, maybe I need to just start my own thing. That was my problem, not Google's problem.
And so I left in late 2008 after spending just over a year at Google. And at that time, there had been a TechCrunch article that had just come out weeks before I decided to turn in my notice and said, rest in peace, good times.

And it was all about how Sequoia was battening down the hatches.

They were not going to invest in startups and everyone should be prepared for a downturn.

And that gave me a moment of brief pause, like, OK, maybe I should not leave.

But then my second thought was, well, if I don't leave, what would I be waiting for in order to leave? And I couldn't answer that question. So I decided to leave.
And I think that ended up actually being one of the best decisions I made and also one of the scariest at the same time. In the beginning, I had no idea what I was doing.
I couldn't raise any money, but I also didn't know how to run a company. And the next two years really taught me a lot about all the hard parts of starting a company, including the major one, customer acquisition, like how do you get customers? At Google, even if you just wrote about something, every news outlet would pick that up and amplify it because everyone wanted to be part of Google Story.
But that was not the case with my startup. Nobody cared.
And that was a learning. But it also shaped a lot of my thoughts on how I invest as well.
Right. And I want to go there, Elizabeth, where you said, first of all, I want to make sure our listeners and viewers see this.
What would I be waiting for? It's such a beautiful question because it kind of makes that urgency, right? Versus like tomorrow, tomorrow, next day, next year, right? And just keep on moving that carrot and just really asking yourself, okay, what am I waiting for? And I think in Leap, we see it a lot because it's like, well, I want to Leap, but I don't know when, right? And it's never a comfortable decision anyway. But I assume Google was paying well at that time.
They still are really paying well. And at some point, it's not an easy decision to say, I'm okay, was not taking this.
I will take whatever zero for a while because I'm chasing a dream. Can you take me back in time, Elizabeth?

A hundred percent. And actually isolating on this decision of when is the right time to do something, I actually think there is never a right time to do a lot of things, whether it's starting a company or having a child or whatever it may be.
So I think the way that I thought about it was there's never a circumstance where anybody wants to take no salary. And as you move on, maybe there's this point where, okay, you've accumulated a whole bunch and you have a bigger safety net, but also you may have more responsibilities and more expenses.
So I think there are these trade-offs. At that time, when I decided to take the leap, I was young, I was single, I had no dependents, I was living with my parents.
I didn't really have much by way of expenses, and I didn't have much by way of responsibilities either. So from that perspective, it was actually a very ideal time, even though the markets were not great.
If I had waited to take some of my savings or whatever, maybe other things would have come into play that I would have needed to consider, right? Like getting married, having a child or, you know, now caring for somebody else and we need more space. And now we're off on our own paying rent.
I didn't have those things. How did your parents take it? Were they like, what the heck are you doing? Or was it like, oh my God, like how did that conversation go speaking of? Well, my mother often still asks me when I'm going back to Google.
But I think it was less from the perspective of what are you doing? And it's not like I left to go and do something totally foolish that was out of my area of understanding. I was still in tech.
It's not like I was going off to become an actress, which I know nothing about. So I don't think they cared that much from that perspective.
But what they could no longer say is, oh, my daughter works at Google, which I think was the bigger thing for them. The status, the status is amazing.
Okay. So fast forward, you actually grow it.
Launchbit is getting acquired, but talk to me about those first years. I think you alluded to what you don't know that you don't know.
And I think for me, I resonate a lot because I think at some point I build so much overconfidence and a little bit of ego to think that I know everything and I needed to smack myself and fall down deep to understand how much I don't know. What was it for you, Elizabeth? And how did you start acquiring clients and et cetera? So talk to us a little bit about those first years.
It was very humbling. And I think to your point, I felt like I knew some things.
And then it was a process of learning, okay, I actually don't really know anything. And I often feel like actually, once people are comfortable with the idea of I don't really know anything, but I'm here to learn and I'm going to learn as fast as I can, that actually positions people well.
And I would say that that is a really good attitude to go into as a first-time founder and CEO, because a CEO's job is to learn just about every aspect of the job. And most people, unless you've been an entrepreneur before, have never done that.
Like you've done your one thing, maybe you do it really well, but you've never done the 10 other things you need to do. And then your job changes again, like once you start growing and you have people on your team and you have to learn different skills.
And I think that is a position that I'd like to try to have even to this day as an investor. And in fact, every year that goes on, I hate to admit it, but I would say that my impression of investing is every year that goes on, I realize, I don't know, I have no idea.
But I think that is actually a good position to have. And I fully agree.
And it was interesting, I just talked to Gary V in his studio. And I think one of the things that we talked is the difference between number one and anything else in the company.
And I think that realization, I mean, I was already VP, whatever, you know, it's like, oh, I probably know it all. No, I don't.
Every single time, there's just this massive learning that needs to happen. So how did you figure it out? How did you raise capital? How did you learn how to be acquired? Walk us through this a little bit, Elizabeth.
Oh, gosh. Well, a lot of it was just reading a lot and making a lot of mistakes, honestly.
So in the beginning, I didn't know how to acquire customers. So you just sort of start trying things.
And some of the trying things is just like, okay, well, I can email 10 people. Now that I've exhausted my network, maybe I can start to send emails to people I don't know called email people, right? So you just take these baby steps.
And then you also read about what other people are doing. And then you try those yourself.
I do truly believe that to the extent possible, people should not reinvent the wheel. So if there are things working for other people, borrow them and do the same thing and see if it works for you or modify it.
And so that's how I learned just about everything on the job. The problem is you're constantly learning so much about everything.
So it's really like the old adage of drinking out of a fire hose. But I would say it's like, as the company goes along, then you're learning the next thing that you need to know.
And you're just trying to stay a step ahead of it's too late. So you shouldn't, like you should have learned that five months ago, but that was really the process on everything.
And I think it wasn't actually a very pretty streamlined journey. There was a lot of zigzagging, a lot of mistakes that I made, everything from tactical mistakes, like customer customer acquisition mistakes to working with people.
I was also a first time people manager, so made lots of mistakes in that as well. So just lots of mistakes everywhere, but you live, you learn, and it just makes you stronger.
We'll talk about it because I can see already how much of this you're bringing to Hustle Fund. So we'll talk about it.
But talk to me, how much did you lean on amazing mentors like Tony and others? Well, I did have a number of awesome mentors around me, especially later. In the first couple of years, I would say I didn't really have many people.
But once we were able to raise a little bit of money, a number of my angel investors were extremely knowledgeable about this journey. I learned a lot about fundraising from Andrew Chen, who's now a partner at Andreessen Horowitz.
I learned a lot about being seed strapped or whatnot from David Hauser, who was another angel of mine who started a company called Grasshopper. So I did learn a lot of things about specific areas from specific people who are really good at that.
But I wish that I had had actually more of that knowledge and mentorship even earlier. It has certainly changed the ecosystem, but I'll give you an example.
When I started this entrepreneurship journey, Eric Ries and Steve Blank were not even talking about lean startup yet. This is how sort of dark ages this was.
But now every founder I meet has at least heard of lean startup, if not gone down the rabbit hole of reading everything or watching all these videos about what lean startup is. How do you de-risk the things that need de-risking the most? How do you build the minimum viable product you need to get some level of validation? These kinds of concepts or strategies were just not talked about or around.
So I was just shooting in the dark for a while, the first couple of years before either some people came into the picture or actually I really just latched on to the lean startup philosophy once they did start writing about that. It's amazing how much has changed.
And we're also going to talk about startup accelerators, like 500 startups in a second. But so you bring somehow the company to an acquisition and that process on its own, and it doesn't matter if it's big or small, that process on its own is a heck of an earthquake.
Share a little bit of how that looked like for you or whatever you can share. Yeah, the mergers and acquisition process, I would still say is very opaque.
There are not many people who talk about that on the internet. So that I think is an area of opportunity to spread more knowledge for sure.
I would say that it's very akin to a fundraising process in that there's that old adage, whatever companies are bought, not sold. It's very hard in that you're not trying to go out and actively sell yourself.
But at the same time, to create optionality, you do have to build relationships. And this is why I say it's a little bit akin to fundraising, except even harder, because for fundraisers, at least you know all the investors you're talking with, at least for VCs, you know they're going to invest their money in somebody.
It just may or may not be you. For M&A, that's not necessarily the case.
A company may decide not to acquire anybody, right? And priorities change, and they're not just acquiring you because they think this is the best ROI on their money. They're acquiring you because there's good fit.
It's got to be good strategic fit with product or culture or all these other things. There are many reasons why companies acquire other companies, but that is not a guarantee and not necessarily what companies are actively looking for.
So I think to the extent that people want to maximize their optionality on M&A, one of the best things that

they can do, and I've certainly heard this validated from other portfolio companies of mine over the years, is to build relationships even early on with other people in the ecosystem. These relationships can be with other folks who may be potential partners for you, in which case it is useful for your business.
You're not just wasting your time. But over time, if those partnerships end up becoming very fruitful and you like the people, then you may end up exploring something bigger.
And that's typically where M&A comes from. On occasion, M&A also comes from companies who are looking to get into a strategic area and they realize they have no expertise in that area.
And so they're trying to actively meet people. That's another way as well.
But I think ultimately thinking about it from a partnership perspective is the best way to thinking about how to meet lots of people and why you're meeting them. And it's under the pretense of, can we work together even as a separate entity right now? And maybe down the road, it leads to something, but maybe it doesn't.
And so that's how I would approach it. And I love that because again, there's so many reasons to buy a company, whether it's the team or the product or the market, and each one has a very different way of looking at things and the potential and the pricing.
And so that's amazing. And there's just so much to learn in that.
So you sell the company and you decide to join 500 Startups. Tell us a little bit about that.
I think it's still before I even heard of 500 Startups. So I think I was still deep in my own world of tech.
But share a little bit. Why did you decide to join and how was that experience for you? Going specifically to the LaunchBit acquisition, and again, building off of this idea of partnerships, LaunchBit was acquired by a company called BuySell Ads.
They are a seed-strap company, but at a very high level. They own a lot of ad networks and media properties.
And we had actually been partners with them for quite a long time. And so again, going back to that, I had known the CEO for years, we had worked with that team, we were already had a monetization partnership, all prior to the acquisition.
So post acquisition, it was actually quite easy. And as part of the agreement on that, they had actually wanted my co founder and myself, not to work there, We were not in handcuffs, but there was a time period where they wanted us to essentially provide support for them as they figured out how to run this.
As it would turn out, actually, after I think about day two, they didn't need us anymore because my business partner, who is really thorough and great at documentation and had been writing all this documentation over the years, had handed them this handbook. It was this huge handbook of everything about how do you run the launch bit business.
So she said, even on day one, here, start using this. You need help.
Ping us. But then they never pinged us.
So they never pinged us. It was very effective.
And so actually, we didn't really need to do anything with them. So at that point, I was trying to figure out what to do and how to spend some time.
And 500 Startups was the accelerator program that I had gone through with my own company. So that's how I knew them.
I had been so heads down in the ads world. I didn't know everything that was happening at that point in time.
And this is a time when Bitcoin was just kind of becoming a thing. Drones were becoming a thing.
ARBR was also becoming a thing. Obviously, 10 years later, we now know what ended up really becoming a thing and many things also did not.
But the world was very new. And I thought, gosh, I really need to learn if I want to start another company, which I wanted to, I need to learn about what is happening in the world.
So I went to 500 startups. What year is this? This was in late 2014, early 2015.
So if anybody bought Bitcoin back then, I'm sure you're doing great. And so, you know, I was trying to learn about what was happening.
I didn't go to 500 Startups to learn how to invest or become a VC. I wanted to know what startups were being built and what people were working on and kind of mentor and give back.

That was the initial driver. But then their accelerator manager ended up leaving and there

was this vacancy and they asked me, since I had nothing else going on, whether I wanted to run it.

And although I didn't really know how to invest, I took the job and learned how to invest.

I wrote about 200 checks for them out of that fund.

And if I remember correctly, there were some dramas. So you were taking in organizations with a little bit of drama, if not a lot of drama, and you needed to stabilize the brand and to bring more people in.
Was that a problem for you or no? The drama came in 2017 and I left as a result of some changes

in the organization

or changes that I felt needed to happen

in the organization, I should say.

So I left in 2017 and started Hustle Fund that summer.

But I think for the first couple of years,

it was a pretty stable place. I mean, obviously there's always a lot of chaos with startup accelerators in general.
But I learned a lot in those two to three years or so, just about how do you invest? What do you look for? What are all the things that can go wrong? The good, the bad, the ugly. Right.
And take me there for a second, because when you see big data like you've seen and you wrote, you said hundreds of checks, it's very different than a typical VC. VC will write a lot less checks in general.
So what did you learn about evaluating startups and founders? Take us a little bit there. There are many schools of thought on how to invest.
Certainly, there are a lot of VCs who have very concentrated portfolios. They write large checks, they sit on boards, and they don't have that many positions.
Accelerators tend to be the exact opposite. They write small checks, they go in very early, they don't sit on boards.
It's much more of a community feel because the partners cannot spend that much time with each company. It's more about how do you help each other out in a cohort.
They are night and day models, but both can work from a returns perspective. So I was very much in this world of the high frequency model.
And so I got to see a lot, to your point, which I think was very helpful for my own career. In terms of, I think my takeaways were, you cannot tell after four months who is going to be a winner or how big that winner is going to be.
But I learned a lot about, I guess, assessing how founders work. And what I found over the years in my best founders is that they are very focused on one thing at a time.
Typically, it's revenue, but it could be whatever. They are very experimental.
They will execute with speed on an experiment, regroup, run another experiment, etc. That speed of execution is so, so important.
And when people ask me, what do you mean by that? An example is, if I see a company doing customer development, maybe they're doing 100 calls in three days, or another team might be doing 100 calls in three weeks. There's a difference between the two teams, right? So the best teams just really do move fast, and they are still like have high quality work and throughput during that, that fast time.
So that's actually why we call ourselves hustle fund, because we are looking to back those founders who have speed of execution. Hustle to me doesn't mean like burning the midnight oil.
Actually, many of our best founders don't work all the time. But when they do work, they're very focused and they're focused on that one thing.
And I think that that's something that I found at 500 Startups, at least in comparing founders. Correct me if I'm wrong.
I think it's very easy, relatively, to figure out who's not going to make it. I think if you see them for a while and you see the people that can't take action or really trying to get the perfection or like, I think it's relatively easy to see what probably will not work versus the maybe and the yes, I think they're always a problem.
But I feel like it's easier to say, okay, like that's not gonna help. But maybe I'm wrong.
Did you see that? I think there are three buckets of founders. There are certainly people in that bucket that you're talking about where it's just like, oh, gosh, they are really not focused on the right things.
They move too slowly,

whatever it may be, all these issues. But the other two bookies of founders, like the difference between a great founder and call it okay or good founder, there isn't really much correlation in outcome.
And the reason for that is the actual business idea or business matters just as much as the founder, if not even more. I've seen founders whom I would say are, they're good or they're okay, but they happen to get extremely lucky in landing on this thing that everybody wants.
And they can really grow their company quite well, and that can work. So I think that is something that a lot of investors will disagree with me on.
They will say, oh, we only want to invest in the best founders. But the reality is the idea actually matters a lot.
And I would say it matters more and more every year that goes by because the world is getting more competitive. So I have backed a number of people whom I would consider great founders, but they just had the wrong idea or an idea that was in such a competitive space, they couldn't maneuver or grow that quickly or grow that well.
And I think there's just a lot of luck around the idea that has to be factored in here. It's not just all about the founder.
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The link is in the show notes. Now back to the show.
So in 2017, again, you decide to do something that for most they would call it suicide. suicide to start your own fund.
I do think that it's exponentially harder to raise money for your own fund. You did have really good background.
So the 500 Startups is a huge background. Being a founder that already sold a company, that's very different.
But still, raising a fund is not easy. Can you share a little bit of that journey of raising the first round for this fund? Yeah, raising a fund is definitely not easy.
I think if people hate fundraising for their startup, they will absolutely hate raising money for a fund. If you do not love fundraising, I would not recommend raising a fund to anybody.
I think actually that is probably one of the things that people need to consider in deciding to start a fund. How much do you love fundraising? Because you will be spending years of your life just focused on fundraising.
I think I felt fortunate in that I had done fundraising before. I got a lot of my learnings about how to fundraise as a founder.
So in raising money for our fund one, for Hustle Fund, certainly it was hard, but I was not thrown for a loop because I was not surprised. I had all the things that you go through, people ghosting you or trying to iterate on your story or trying to close people.
All those issues that you face as a founder in fundraising, you also face as a fund, if not like 10x fold. And the reason why I say 10x fold, it really is a factor of when you're a fund one, you're like a pre-seed startup.
So a lot of institutional investors will not touch you. They may meet with you, but nobody is gonna be writing a big check.
And this totally makes sense, right? If I'm meeting with a pension fund that is trying to invest teachers' retirement money, they're not going to invest in my fund one. They're not going to take that level of risk with somebody's money like that, right? But they may want to meet with me.
So that way down the road, when I've proven myself, then they'll write a check. So that means that the big money is more or less off the table.
And now you're going to effectively the equivalent of angels. And many of these angels whom we went to are people who are also angel investors in a number of other startups that I have invested in as well, right? And so they're 25K checks.
In some cases, we took money from friends at the 5K level for our fund one. But the thing is, you're not trying to raise half a million dollars or a million dollars, you're trying to raise 10 million or more.
And so that was really the issue with the fund. It's just a longer process as you take all of these small checks.
I hear stories around it. And my question is, Elizabeth, how do you not give up? In the startup phase, you still need to meet a lot of people, but you kind of need a few yeses to at least get going.
But like you said here, the amounts are different. So you need to meet, what, hundreds? I don't know.
Like, how do you not give up? How do you not just say, you know what? I have no chance. This is not going to work.
Forget it. Well, I think it comes back to how badly do you want to be doing this? And especially as it became popular to raise a fund, I think a lot of people just flippantly decided to raise funds, not really understanding what was involved.
But if you love fundraising enough and you know it's a numbers game, like go in with the mentality of, okay, I'm going to do 2,000 meetings on this fund and it's just a numbers game, then I think it's fine. On some level, you can actually see light at the end of the tunnel.
Like, all right, we're only at meeting 500. We're just going to keep going.
So that makes it easier, I think. And I think also this general question of why are you doing this is something that I think a lot of people should ask themselves for whatever it is they do, whether it's raising a fund or starting a company or whatever their job is.
For us, building Hustle Fund was not really just to play VC here, which is, I think, something that a lot of people thought we were trying to do. For us, it's a big mission and my life's work.
When Eric and I, my business partner, decided to start Hustle Fund, we had a lot of conversations around what did we want the world to look like? Not just are we going to be a VC, but one of the things that's really important to us at Hustle Fund is we want to really have a lot of impact. And I think not just on the portfolio companies that we invest in, but on the broader entrepreneurial ecosystem.
I think one of the things that we had struggled with in our own journeys was this idea of there really wasn't a lot of content, as I kind of mentioned at the earliest stages, that has changed a bit now. There really wasn't a lot of help from a network's perspective.
And there really wasn't a lot of funding at what I would call pre-seed. There was some funding at the seed stage once somebody got to maybe $10,000 per month in revenue.
But at pre-seed, nobody wanted to take a bet when we started Hustle Fund. I could count maybe a handful of pre-seed funds on one hand.
Now there are more. But back then when we started Hustle Fund, pre-seed was not an area most investors wanted to touch.
And even to this day, most investors don't want to touch pre-revenue companies. So for us, it was much more about a mission of, can we help founders at the earliest stages provide capital knowledge and networks? And even I think beyond our portfolio companies, can we get more knowledge out there to help other people, even if they are not raising from us, help other people raise money or help other people get connected to help jumpstart their businesses.
So it was more of a life's work type of thing rather than, oh, we're trying to play VC. Let me ask you a question.
I usually don't go to the whole men, women thing because I do want to create equal opportunity. And I do believe that a lot of us can hustle our way in.
But I think when you are raising capital, sometimes that does come into play because I think the first impression in the general sense is not that you felt the mold of the typical whatever Sequoia partner that will crush it. Was that a thing for you? And is there something that as women, can we do differently or as society, can we do differently? For sure.
Like you, I don't usually, you know, spend my time thinking about it, but it does show up. I would say it actually showed up a lot more when I was a founder.
So I'll give you an example. When I was pitching this angel investor at a Starbucks once for my company, Launchbit, at the end of the meeting, I asked him, so what do you think? And he said, I don't want to say the wrong thing and call you a meek Asian woman, but I question how you'll lead a company of a hundred people.
And my head just went racing there because I was thinking on one hand, he is not calling me a meek Asian woman, but I guess he kind of is. But he just did.
He just did. And now I have to come up with a response really quickly because otherwise I will seem like a meek Asian woman.
Anyway, I think as much as I have thought about that moment a lot and replayed it a lot in my mind, you know, you could flippantly say, oh, you know, he was kind of an asshole for saying all that, but it was also a gift. And that is something I've taken away from that moment, which is he actually said it out loud to me, but probably there were a number of people who either thought it or unconsciously thought it and were not saying it out loud.

Because from that moment on, when I went into all of my meetings, I felt like, gosh, well,

if he thinks that, then I need to combat this idea, like smash anybody thinking that,

potentially thinking that. And so what can I do better? I can sit up in my chair better.
I can look people in the eye better. I can talk louder, you know, all these things that you do.
And my fundraising actually went much better when I did that. There probably are a number of stereotypes that people internalize, etc.
But there are things you can also do to combat those. And this is, I think, something that I encourage all of my founders to think about.
There's only so much you can change in the world right now with your state when you're fundraising. You can't go around thinking, oh, woe's me.
I'm a woman. I'm going to struggle.
You can't go around with that mentality and even sabotage yourself and your confidence. So you just have to go out there and make the best of whatever it is you've got.
And if it's you got to combat the meek Asian woman stereotype, you got to sit up, you got to talk louder, you got to come out like a confident CEO. And that's, I think, what people just need to do and focus on.
And if there are going to be naysayers or for whatever reason, you just move on. You just keep going.
That's my advice for that. Down the road, by being successful, you can change some of these stereotypes that exist.
But in the moment, you just need to focus on you being successful. Oh, I love that.
And what I love about this is how you did not take it into a victim mentality. Because again, I think our instinct is sometimes, okay, that's it.
It's never going to work out. This is how they see me.
And I see it with other people, even in Leap Academy. They try for about 10 meetings, they get no's, and they're like, see, I'm getting no's because I'm a woman.
I'm like, no, you're getting no's because everybody would get 10 no's. Like, go on.
Like, move on. But I think you took it to a different place and said, okay, so how can I actually show up in a different way and take that objection and actually just hit it right in the head and right before you have the conversation? I just love how you took that, which I think is brilliant.
Yeah, I think it's so easy for people to want to get dejected and blame it on something. But the reality for fundraising in particular is it is a numbers game.
Lots of people get rejected. Even all the companies you read in TechCrunch who are very successful, run by white men from MIT or whatever, everybody gets lots and lots of rejections.
So you just need to go out and have lots of meetings. Let's get those rejections over with.
But I think the other thing in getting rejections is you learn a lot about what people's objections are. And then you have to be able to adapt to those like, okay, they said this.
And then you have to decide, is that like a legit thing? If you hear the same comment two or three times, it is a legit thing that has to be answered, even if you are right and they're wrong, but you have to address it. And so I think that is why it actually takes a while because your version one of your pitch will have objections.
You can't possibly think about all the things people will object to. And then your version two gets better.
We did 20 versions of our pitch for our fun one. And by the 20th one, it was way better.
The first pitch, I'm almost like embarrassed that I thought that that was good. Right.
And so I think that's also part of the process in getting rejections. You learn, you adapt, you change your messaging, you address the concerns and you get better at it.
And that is just like running a company. You learn, you get better, you iterate.
Everything is an iterative process. For people who are maybe listening to this and saying, God, this is so hard.
I want to be an entrepreneur, but I'm scared. I don't know if the money will be coming in.
I don't know how to raise capital. What are some of the main things that they need to listen to? And again, some of it is just, what are the objections? What are people saying? Speed of execution, right? What else? What are the common mistakes that you're seeing that you feel like if people wouldn't have known that, they would have changed? Well, I think knowing yourself and why you're doing the thing you're doing is really important.
And I think along these lines, you don't actually have to raise money for your business. You can still be an entrepreneur and not raise money.
And I think that sometimes people get caught up in reading the articles about how so-and-so raised a hundred million dollars and think they want that. But really to get that, you have to do a lot of fundraising.
And so like being very self-aware about what is it I like doing? Where's my skill set, et cetera. And the conclusion may be, I actually don't want to fundraise.
And I think that's perfectly fine. And then thinking about, all right, well, what are the businesses then that I can do that is not reliant on fundraising? And there are a lot of those.
So I think that's the kind of thing I wish people would be more thoughtful about. What if I can't fundraise? Because that is a legit question, either because people won't invest in you or because the

market is bad, whatever it may be.

And if you can't fundraise, then what?

Like, are you going to continue anyway?

Is that going to be okay?

Just playing out all the different scenarios of what would set you up for success and what

is it that you really want?

And one of the things that we share with our clients, I decided not to raise capital for Leap Academy. I've raised before.
And we're 7% of the fastest growing companies in the US. I don't think that necessarily is it easier or harder.
It's just different. And it means that you need to look at things different.
And there's some companies that it's impossible because you need to raise capital. But some companies, actually the best way to check the market fit and to see if you can actually make it grow right on its own.
So I agree with you. I think there's this notion of if you don't raise capital, you're not worth it as an entrepreneur.
And I think that's something that I would personally would have loved to squish. Yeah.
And I think that's absolutely amazing that you've gone and done that. I think sometimes people also think if I go and raise capital, it will give me more cushion.
And I actually think that's not necessarily true because I think once people raise capital, there is more pressure to spend the money from investors. Investors don't want you to just sit on, let's say, $5 million.
So you don't actually necessarily have more cushion. It's just different.
And then in terms of, is it easier once you have money? Not necessarily because you have a whole other task of investor relationships or raising the next round or whatever it may be that you don't actually have in a bootstrap company. You don't have those extra tasks.
Right. So there's pros and cons for sure.
But it really comes back to, I think, what is it that you as the entrepreneur actually want to do? And what do you think your own skill set and also personality is suited for? Right. And I think you have to be very creative when you don't have that much capital.
So you're forced to figure out that creativity versus to create these leaky buckets that you just pour money into and realize that, oh, never mind, that didn't work out. But one of the things that I want to take you for a second, Elizabeth, is there something that maybe people don't necessarily know about you, or maybe it's something in your childhood that built you towards that kind of resilience to be able to get so many no's and to continue? Do you think there's something that helped you become that? I don't think there's anything special about me or my childhood, but I do think that as entrepreneurs go through and get more experience, you just naturally get more rejections on everything, whether it's fundraising or customers or whatever it may be.
And I think that those rejections actually help make people stronger. So even if they didn't have a particularly crazy childhood where they went through a lot of resilience, I think everybody just by practicing entrepreneurship gets better over time.

How do you get better versus crush your confidence?

Because I feel like it can go either way.

Yeah.

And I've definitely seen a lot of entrepreneurs go through mental health issues or breakdowns.

Like that is a real issue. It's a real thing.
Yeah. And I think part of it is also really internalizing and having a good grip on what is my identity.
I am not Launchbit. A lot of things can happen to the company, but that is not me.
I am a separate person from my company. I think sometimes people internalize both the successes and the failures of their company with them.
And since there are so many failures, you know, even micro failures along the way in a journey of a startup, people can really take that to heart and feel quite depressed. So I don't know what is sort of the secret path to like staying, you know, mentally sane, whether it's meditation or whatever.
But I think people have to have some separation between their own identity and the business's identity. I totally agree.
Although it's a lot harder than it seems. Yes.
So let me ask you, maybe it's a personal question. You feel uncomfortable answering.

That's fine, too.

You mentioned Tony, which I think for a lot of us was very inspirational, but also a very

shocking end to the story.

And I assume because you knew him, that definitely impacted you.

Are you willing to share?

And if not, that's fine.

Yeah, gosh. You know, I'm glad that a couple of years have passed since then.
It was a very hard time. I think for people who are listening, who people maybe don't know, maybe share a little bit.
Tony died in a very tragic accident, drug fueled accident. And I think for many people felt was representative of how his life had become where you know you have this guy who was very successful in just about everything he touched and frankly speaking he was very very good at running companies and almost everything he touched in life was a success even from when he was a child.
And by the way for those who don't know he was a big part of why Zappos was acquired for 1.2 billion, right? Or whatever, right? So I mean, definitely ticked all the boxes of success. Yes.
And so I think a lot of people wonder, this is crazy. Like how can somebody who is so successful, and he was also a very kind person as well, always wanted to help everybody.
And it just seemed like somebody who had everything going for him. How can you devolve into issues with drugs? And his life kind of just sort of spiraled a little out of control.
And ultimately, when he died, it was related to that. How does that happen? And I don't know the answer to that.
And I think it's something I've certainly thought a lot about over the years. But what I do think about is, I think it's really important for people to have, you know, coming back to this idea of like, why is it that you're doing the thing that you do? What is your purpose? I think that is so, so important for people, whether you're successful or not, because I think ultimately, there is only so much that money can get you.
And here's an example of somebody who had just about all the money you could have ever wanted in the world, but you need to have that mission. You need to have the thing that keeps you going that is beyond yourself.
And I think that that is something that I really have doubled down in thinking about over the last few years. I appreciate your sharing because I think for all of us, this was a really shocking moment.
And I think it also brought a lot of the mental anxiety and things to surface. Actually, one of the most interesting conversations I had here on the podcast was the president of Starbucks.
And he basically said that the minute he retired, he almost killed himself. And I was just like, what? You were the president of Starbucks.
That's like the ultimate success. And he's like, I lost so much relevance.
I couldn't live with that. And I think just hearing that and realizing the impact of just what you're saying, losing that passion and losing who you are and who you want to become and continue to become is just a really interesting realization.
And it's so important, I think, going back to this idea of your identity is not your entities, et cetera. A thing I often see founders go through, even if they've had a successful exit, after the exit, they actually get really lost.
And I feel like I had a little bit about that for myself, which is you had this feeling of emptiness. The thing that I had been working so hard on for years is now gone.
I don't know who I am. I don't know what I'm doing.
Like, what is going on? And I think actually that is a feeling that many people do not expect to have when their company is going to be acquired. People think, oh yeah, my company is going to be acquired.
I'm going to bring out the champagne and celebrate or whatever. But that emptiness is a real feeling that I see a lot of people go through.
And so this is where I do think there needs to, to the extent possible, have this separation between this is your company, this is you, whatever happens to your company, good or bad, is not you. Because I think that can cause some problems when people get too tied up in the thing that they're working on, then all of a sudden the thing they're working on is not there anymore.
Right, and I agree because that emptiness was there for me when my first company was acquired. And to some extent, Leap Academy is part of that.
Like I had to reinvent myself, figure out what on earth do I want to do next? And how do I take myself to a next level? And I think I was like, how is there no home for me, for somebody like me, very driven. It's not about who you can do it.
I'm like, I know I can do it. I just don't know what.
And I was just like, how is it not possible? And I think this is a big part of that emptiness. So, oh my God, I love this conversation.
I can probably talk to you for hours. But what is something that if you look back at Elizabeth earlier in your career, what would you want somebody to tell you? What advice would you give to yourself? There are a few different things.
One is on the financial front. I learned about angel investing through a couple of friends of mine who were startup founders.
And this was actually when I was still building my own company and my friends were too. They had not yet had exits or anything like that.
And I learned that they were writing angel checks, really small, like $1,000 in some cases. But they were starting to build a portfolio.
And that's not something that is really talked about very much at all. In my mind, I thought an angel investor needed to be, I don't know, writing checks of $100,000 or $25,000 or whatever it is.
And I thought you needed to be super rich to be able to do that.

But here were my founder friends doing this.

And I didn't learn about this

until fairly late into the startup journey.

And certainly I was in my 30s by then.

I wish I had known about this much earlier in my 20s.

And it's kind of for twofold.

One, I actually believe that

to build a good investment portfolio, it's not about investing in startups. You have to have good foundational things like index funds, etc.
But I do think that if you are in the startup world, you're meeting a lot of great people and maybe you have some level of taste because you're meeting amazing people and it is a good sort of kicker as an investment and you get to learn. And then the second thing is it actually helps you build network.
So outside of the ROI of the actual investment, if you think about it as the equivalent of an MBA degree or whatever, or some sort of degree, that network actually ends up becoming very valuable. It allows you to meet other angel investors who could potentially invest in any of your ventures, etc.
And that was just something that I wish I had learned a lot earlier that I think some people were already doing, but probably most people don't talk about or know about. Ooh, I love that, Elizabeth.
I think that's brilliant. I mean, I think Leap Academy does talk a lot about portfolio careers, because I think that's kind of where the future is going anyway.
People will do multiple things, whether it's investing or public speaking or writing a book or whatever, like people will do multiple things in their life. And I don't know why nobody teaches that, but it's a really interesting idea to also for small amount, to play with understanding the investment

and creating portfolio and getting the network. And so I just love that idea.
Thank you so much

for this amazing conversation, Elizabeth. I had a blast and I hope the listeners did too.

Thank you. Well, likewise, thank you so much for having me on your show.
I hope you enjoyed this as much as I did. If you did, please share it with friends.
Now, also, if you're feeling stuck or simply want more from your own career, watch this 30-minute free training at leapacademy.com slash training.

That's leapacademy.com slash training.

See you in the next episode of the Leap Academy with Zilana Gulancho.