The Exchanges

Q used the same. He said, oh, well, we're going to raise like a pretty normal like series A, and I said, well, what are you doing? And he goes, well, it's like this husband and wife who's like our neighbor that like wants some cap table, and they want to invest over the next five years. I'm like, that is not normal. So like typical is different for different people.

A So I'll give you, maybe you're asking for more. So I would say our, our capital raises have been fairly old school in terms of their, their, maybe the better word is classic, right? Within a classic, uh, seed round or angel round, we called it of, uh, uh, 650 K. Then we did, uh, you know, classic real seed round of two and a quarter million dollars. Then we did a series A of six million dollars. Um, so, you know, series B, you know, eight to 15, you know, eight to 10, that's the kind of range you see in the valley, uh, Um, and that's kind of what we're, what we would be likely looking to raise. So it's pretty broad range, but it's, it's fairly typical here.

AI assessment note: “seed round or angel round, we called it of, uh, uh, 650 K”

Q That makes good sense. And, and don't obviously talk about maybe what you're going to end up at, but in general, what percentage of, of the company are people who do series B raises giving up?

A You know, I think the best guidance I've heard is that, you know, in every round, you know, think of it as a 30% dilution event, um, because your, your, your investor is, um, you know, they want to own a certain percent of their company. That's usually about, you know, again, people give ranges of the series A level about they want to own 20% after, you know, after they invest. You've got to create an employee option pool. You're going to hire a bunch of people. So that's going to take, you know, 10 to 15%, uh, depending on how much money you're raising, how long it's going to last, and how many people you already have on board. So those are the two big things that are going to cause dilution, uh, the investors and the employee option pool, and every round, every round that's going to happen.

AI assessment note: “in every round, you know, think of it as a 30% dilution event”

Q That's awesome. Speaking of CEOs, I mean, if you have someone kind of journaling the ad tech space come up to you when you're going out to do this Series B capital raise, and they get wind of you and offer you an exit that matches or comes close to the best valuation on a term sheet you get from a VC, would you consider an exit?

A Um, any, uh, board member that tells you they won't consider an exit is, uh, should be fired, right? Your, your job as a board member is to consider the value of the company. I'm representing every shareholder at this point, not just myself or the investors and employees. So you, you have to consider it. Um, the best exits, and again, Silicon Valley sort of conventional wisdom is full of bullshit. And part of that's like, oh, we're never going to exit. Uh, you have to consider an exit. Most companies exit. It doesn't mean you will, uh, Uh, and, and if anything, as a board member now, I think I, I've, I've much a bigger picture of how much, how much this company is worth, how rare it is to achieve what we've achieved. Um, so, so obviously we, we wouldn't, uh, sell for something that wasn't very compelling, but you have to consider it. There's no, there's no question.

AI assessment note: “any, uh, board member that tells you they won't consider an exit is, uh, should be fired”

Q Now, uh, have you still, is that your total capital in is about eight, uh, ten million or have you raised additional capital?

A That's right. Our total capital end is, is about, uh, just over ten million. Um, uh, we are planning to raise, raise more capital, and the company's doing very well, so we need, uh, you know, fuel to, um, to, uh, accelerate that growth. And you asked about my role, so now I'm, you know, chairman of the company, so I've given myself, I guess, a little bit of a promotion. Um, but, but really what that entails is, uh, you know, that Chris is in charge. He's running the company day to day. Uh, so it's been a fun transition for me to go from, you know, the CEO to now, obviously the founder, you're always the founder forever. Um, but then, you know, being able to take on more of an active, uh, board seat, um, and focusing and helping the company that way.

AI assessment note: “Our total capital end is, is about, uh, just over ten million.”

Q When you say typical, you mean an early executive, you're talking maybe one or two percent if you're lucky. That's what you mean when you say typical outcome, right?

A That's right, yeah. That's right. Um, and obviously, you know, you take into account other factors. And for me, at Bright Funnel, obviously, this is, you know, a really promising company. We're doing well. We're, you know, about to raise our Series B. Now, as a startup, as a founder, you should think of it as it's probably going to be worth nothing, right? That's the way to think about, um, really any founder. You shouldn't be thinking about the outcome. But the further you get, you certainly have that self- You know, it's, it's pressure because at this point we do have, you know, lots of employees, past and current who are shareholders. We've got lots of investors who put in real dollars. Um, and so there is a certain amount of responsibility that comes with a CEO job and you don't want it forever because it is a certain amount of, um, it is a very demanding, demanding job. So as I thought about, you know, spoke with my investors and, um, you know, other people, obviously, and what was the right Move for us for the next five years. It seemed like a logical time, um, you know, to hand over, uh, to Chris. Now, the other thing you need to take into account is most startups our size can't attract someone really, really good. Um, not to toot our own horn.

AI assessment note: “That's right, yeah. That's right.”

Q Now, um, it's rare that you find a founder that's kind of at your size that has the, uh, Well, I don't know how to say, it has the non-ego to be able to say, let me bring in a new CEO besides myself. I assume you seem like a really nice guy, but I assume there are probably other strategic reasons you chose to do this. What are those?

A Uh, you know, there's all, all sorts of things. I mean, you know, for me, the, the, Uh, the calculus, I mean, not, not that it's a very analytical decision, there's all sorts of things, but, you know, when you look at CEO-founder transitions, uh, and I'm very data-driven, so I do, I did look up the data, uh, you know, you look at Crunchbase, um, you know, you see typically the transitions happen six to seven years in, uh, at least the ones you hear about, uh, the ones that, you know, the company goes out of business, obviously, you transition into, into oblivion, um, but, but typically it is a little bit later, but you see that sort of a pre-IPO kind of transition Um, but when you think of a startup, you know, going from idea, you know, you know, two people in a garage or three people, um, you trying to figure out exactly what you're doing, then 10 people, then 30 people, then 50 and beyond where we are, uh, today.

AI assessment note: “when you look at CEO-founder transitions... you see typically the transitions happen six to seven years”