- Duration: 23 min
- Platform: meet
- Source: Read.ai 01J5B03VK0RWF7J5JZC1A7XCP7 (https://app.read.ai/analytics/meetings/01J5B03VK0RWF7J5JZC1A7XCP7)
Transcript
[Ben Ornstein]: Oh, how are you? [Abhivyakti Ahuja]: Doing well, doing well. [Abhivyakti Ahuja]: Forgive me. My camera is not working, uh, for some reason. So I need to keep my video. [Ben Ornstein]: Sure. No problem. I’ll, I’ll do the same just for, uh, wifi purposes. Uh, well, yeah, no, thank you so much for, um, Oh, there’s your note taker. Um, thank you so much for doing this. I really appreciate it. [Abhivyakti Ahuja]: Of course. So, yeah, I guess I’ll give you the floor. I’d love to learn more about the case study you mentioned, and we can go from there. [Ben Ornstein]: Yeah, absolutely. So, I work at a company that’s under Michael Houck. He has an email newsletter. It’s called Houck’s Newsletter. And have you heard of the newsletter? [Ben Ornstein]: Yeah, I have. [Ben Ornstein]: Okay. So, yeah. So, that is a newsletter. We want to do these case studies for founders to learn how to fundraise. There’s no really better way to do that than to, well, learn from the founders who actually raised the funds. That’s kind of what we figured. So that is what we decided to do. So we’re having a bunch of these conversations with venture backed founders. Really softball questions, like nothing you’re gonna struggle with or anything. And really, the only reason we record this is really just so we can use the transcript afterwards to create the case study. So, That’s why the note takers in here. This is obviously pre-recorded. So if there are any questions or if there’s anything you say that you’re like, oh, actually, I want to take that out, no problem. This is going to be payment gated behind the newsletter. And so this is only going to first time founders, aspiring founders, the founder community. So you can be pretty candid with how you speak. [Ben Ornstein]: Uh, yeah. So what we’ll kind of do here is we’ll, we’ll do this. We’ll record it in a week or less. I’ll get you a draft of the case study. You can edit it, confirm, say, Hey, I want to take these five things out. Actually, I could have explained more at this, et cetera. Um, that is pretty much it. Um, yeah. Any questions? [Abhivyakti Ahuja]: Uh, no, that sounds, uh, great. Let’s do it. [UNKNOWN_SPEAKER]: Amazing. [Ben Ornstein]: Okay. Well, yeah. So I think a great place to start would just be if you could briefly introduce yourself and your startup. [Abhivyakti Ahuja]: So Aphrodite is a creative testing tool. We predict performance of a visual identity of a company. So we are calling it brand tech before it ever goes live. We are currently starting with advertising because we can directly replace A-B testing. In advertising and predict performance of ads before it goes live. But as we are growing, we hope to sit at every touchpoint that is creative and faces the end consumer. So that can be product packaging, that is book covers, brick and mortar experiences, because some stores have a different look and feel, and that draws people in. Any place where you have You are artistically involved, but you need ROI. We marry science with art. [Ben Ornstein]: Amazing. That sounds really cool. Could you talk a little bit about the fundraising journey for the company so far? If you’re comfortable, you can say valuations. Many of the founders have said, actually most have talked about their valuations. Again, this is just to a founder community. It’s just for their learnings. But again, if you’re not comfortable, totally fine too. [Abhivyakti Ahuja]: So in April, we raised from four mentors for their accelerator program, we got 100 $45,000 or $1.93 million. So that goes about at 7.5% equity. We are currently fundraising a pre-seed plus round, a full round. Huge mistake, never raise in summer because everyone is on summer vacation and most emails are just bouncing off and returning out of office. [Abhivyakti Ahuja]: I was fundraising in July post pretty much conference season. There were a bunch of conferences going. That was fast, but then July hit, sorry August hit and it was incredibly slow. So please don’t do that. I will be able to tell more when we resume it in September. So yeah, so far we are seeing decent traction for like early experiment we ran like late July. [Ben Ornstein]: Amazing. Yeah, VCs love to take the summer off, don’t they? What are you planning to raise at and how much in an ideal situation for the pre-seed? [Abhivyakti Ahuja]: In an ideal situation, $1 is $1.5 what I’m targeting at $6 million pre-money cap. [Ben Ornstein]: Awesome. Very cool. Well, yeah, wish you luck with that. [Ben Ornstein]: So for the funding that you’ve already raised, and maybe you can talk about, you know, milestones you want to hit before raising the next round of capital. [Ben Ornstein]: You know, what are you using that funding for? [Abhivyakti Ahuja]: So the next round of capital that we are raising for us is essentially part of development. We are doing a lot of R&D in-house. All our models are proprietary. So we are building synthetic audiences that essentially simulates a consumer’s decision making. And we have to now do it for millions and millions of different types of consumers. Because creative is a very subjective, I guess, thing. However, as a community, we respond to creative pretty objectively, you can predict it. So now we need to simulate a different, sorry, a type of target audience. So that is one place where we are doing a lot of R&D. Then second is we are also trying to make our models explainable, which is a huge beast in AI itself. Because since we are talking about decision making, part of the equation is not just What is the answer? It’s also why is the answer so you can learn from it. You can track it across the years Uh an example I like to give is I was very excited about the barbie movie like most women were but the reason for that is I grew up watching barbie in that How was it just the marketing of the movie itself or was like me watching barbie movies as a kid played a role? So we want to capture that so why it’s very important and And then last is we are also working on corrective Gen AI. Today, Gen AI is pretty unusable for advertising. No one wants to use it. The images do not convert. So we want to be able to take what our customers are giving us and just tweak it enough in such a way that they are not spending another round of dollars on doing creative, given our feedback, and they’re able to correct it just enough to retain that human touch, that vision, but without spending any money, they’re able to correct for higher ROI. So there’s a lot of things we need to do just within advertising. And then there’s also expansion into product packaging that we are hoping to get out of the current race. [Ben Ornstein]: Awesome. Yeah, no, a lot to do for sure. How did you decide which investors would be a good fit? [Abhivyakti Ahuja]: Oh, boy, that is hard. So we are a Canadian company and Canadian VCs tend to be more conservative. So we definitely tested our pitch a lot with Canadian VCs and we got great traction like because we did have a network within the Canadian ecosystem. Canadian VCs are amazing. They got, we even like went to later and advanced stages with a lot of them. However, I think ultimately we are deciding based on who is going to help us go to market the best and those tend to be concentrated within New York. And, uh, uh, the Valley scene. So I’ll just looking at their portfolio companies, have they helped companies in our space at tech usually is a known a zone for a lot of VCs. Have they made previous investments and have they made a lot, have they helped a lot of other ad tech companies get into, uh, go to market rather was essentially the final filter we are using. [Ben Ornstein]: Makes a ton of sense. And how did you get in touch with investors? [Abhivyakti Ahuja]: So the, um, for our ventures, the current accelerator we are part of definitely helped with quite a few, uh, of the outreach. They have their own, uh, relationships that became a huge help. Other than that, conferences work pretty well for us and, uh, now pretty much relying on cold outreach. [Ben Ornstein]: Awesome. So yeah, and then you, so you just talked about the cold outreach. So if you could provide an estimate of like how many initial meetings, how many, how many people you, you know, reached out to, then the subset of that, that you had initial meetings with, and then of those, how many resulted in, you know, actual funding, et cetera. [Abhivyakti Ahuja]: I don’t have good metrics. They’re very rookie metrics in terms of cold outreach, because I spent around, I only sent around 50 at the time before we came into summer vacation season. So out of got 50, around five to six meetings. However, I am not sure. I’m still trying to figure out if that’s the problem in the message or just the timing of it. Might be able to give you a better answer in September for that. [Ben Ornstein]: Oh, good. No worries. That’s perfect. And in your pitches, when you have had conversations with investors, what are you emphasizing? [Abhivyakti Ahuja]: At our stage, definitely the team. I’m super proud of my team and the vision is great. But it also depends who you’re talking to. There was a VC I was talking to, they They are a generalist firm. They invest heavily into a lot of e-commerce companies who spend a lot on advertising. So I was focusing a lot on how we can even just help their portfolios immediately. So it really depends. Some VCs really like to go off the engineering and the products, so highlighting that. Some care about market size, you just really have to personalize and do a bit of research. But on average, it’s the team and the vision is what I’m highlighting more. [Ben Ornstein]: Yeah, definitely makes sense at the earlier stage. And when you were trying to close these funding rounds, was there anything you did to drive urgency among investors to close? [Abhivyakti Ahuja]: Yeah. With the forum and the conferences, and luckily a lot of the meetings were crammed together quite a bit. So I was able to leverage that. Some forms did have fast processes. They were making decisions fast. So I was able to drive urgency through that. However, I am probably not the best person to answer how to run a tight process because First time fundraising was again, like I I know I sound like a broken record. It just wasn’t a great time So I need to still do it without having that crutch of conferences and bookings or Having help from tax trader Yeah, no, so it seems like timings just gonna play a big factor for [Ben Ornstein]: you Which is all good and that you’re gonna learn a lot more when you know post post vacation season for your VCS and What was the biggest challenge that came up during fundraising? Maybe something different than, you know, just the timing. [Abhivyakti Ahuja]: Yeah, I think one issue we have faced is ad tech use to be, is even, not even just used to be, is a very challenging market from a VC perspective because there are many issues. AdTech has many, many point solutions. One of the vision is to remove those point solutions for us. We want to become like a one-stop shop of all creative work. Second is also, it tends to be a very competitive landscape. And the question that comes up a lot is why can’t Meta or Google do this? So it becomes a little bit of a riskier situation. Also we are a fairly young team so question does come why can’t a PhD or why can’t a seasoned marketer do this? So there are factors around the competitive advantage that I get a lot and those just come from the nature of the current landscape that is in ad tech. [Ben Ornstein]: Yeah, 100%, especially just with the competition of AI right now, just in general, like, it’s insane. [Ben Ornstein]: Any other, you know, unique or interesting fundraising stories that happened during your process? [Abhivyakti Ahuja]: I think you never know who will pick you up in terms of an investment so always if you see an application for example a program just apply don’t accept it if you don’t want to but apply because that’s how I got my first funding. So I put in an application for DMZ which helps an in-kind services rather than investment so Forum Ventures picked that up months later invited me to a dinner it would they were hosting a dinner for funders and founders and After the dinner I jumped on a call with a partner I met there and got the funding it I did not have to ever pitch I did not have to run a process, it just happened that they liked the company. [Ben Ornstein]: That’s awesome. Sometimes it works out that way, right? Yeah. You’ve already given a couple pieces of advice, which has been awesome, but is there any other fundraising advice you’d give to other founders? [Abhivyakti Ahuja]: I would say… [Abhivyakti Ahuja]: keeping them in the loop is very very important and I think that’s a mistake I made when I was fundraising that I wasn’t sending uh updates frequently enough uh I found my sweet spot to be two weeks although traditional wisdom does say about a month even sometimes but two weeks was my sweet spot it showed you okay you’ve done enough uh you it gave you a chance to show small wins, but also like not have huge company changing information where they have to be like, okay, now we need to do due diligence from the get start again. [Ben Ornstein]: That’s awesome advice. [Ben Ornstein]: Is there a specific investor or a firm that you recommend other founders work with? [Abhivyakti Ahuja]: I would say it really depends on what the company is. I can’t say on top of my head that they have to work with this or they have to work with the other. However, I can speak from Forum Ventures perspective because I’ve been a part of their accelerator now. They focus on B2B SaaS and the support is definitely amazing and hyper-personalized. I can message them at 2 a.m. With a problem and they will help. [Ben Ornstein]: That’s awesome. Those are the best type of investors to have. [Ben Ornstein]: Yeah. [Ben Ornstein]: In terms of resources that you’d recommend to other founders, are there any, you know, it could be really anything, books, blogs, podcasts, newsletters. Do you have any resources you’d recommend? [Abhivyakti Ahuja]: Definitely read Secrets of Sandhill. Sandhill wrote that is very important for fundraising and to get started. Other than that, your newsletter, I have read it. It’s amazing. So that is very, very helpful. And follow all of course, then follow all the VCs on LinkedIn and Twitter. There is a gold lineup content and their strategies. They’re definitely follow them there because then you can get into their headspace. But before you start raising 100 percent. [Ben Ornstein]: Yeah. No, that’s a great that’s a great call out. Okay, and last question is, do you have any hot takes regarding the fundraising process? [Abhivyakti Ahuja]: Oh, hot takes. I wish it didn’t have to be such a pain, but that’s not a hot take. I think… [Abhivyakti Ahuja]: It needs to be more independently minded. VCs tend to flock a lot, especially the ones that don’t lead. My inbox is full of right now. Did you find a lead? Did you find a lead before to start diligence? And I wish there was a way you can get soft commits without finding a lead and then leverage that. So that is an issue I am also facing. [Ben Ornstein]: Yeah, that is a very common one that we see. It is unfortunate that it is, that’s just how it is. It’s true. I wish the space was the same. Yeah, so that’s all the questions I have. Is there anything else that you wanted to mention that might be helpful to founders? [Abhivyakti Ahuja]: Biggest mistake I made when I was starting Effort ID was I did not validate or talk to the users before writing code. Please do that before writing any code or building anything, validate. But that is, again, it’s so basic, but a lot of, I know, software engineering-focused founders, especially, just are very build-hungry, but don’t do that. It is a principle for a reason. [Ben Ornstein]: Yeah. No, it is so basic, but it’s, I mean, my company, we fell into it, our last startup, we did the same thing. We’re like, this product is going to be amazing. We built this amazing creator product and we, We kind of talked to users along the way, but barely and like nowhere near enough to get actual insights or anything actually valuable from them to validate anything. [Ben Ornstein]: Awesome. Well, Avi, thank you so much for taking the time. I’m going to turn this into a case study. I’ll send that draft to you to check out. [Ben Ornstein]: And yeah, you can tell me what to remove. If you wanted to add more, I’ll just give you edit access so you can kind of add comments and stuff. And yeah, then we’ll let you know when it’s live. [Ben Ornstein]: Sounds great. Thank you so much, Ben. [Ben Ornstein]: Amazing. Have a great day, Abi. [Ben Ornstein]: You, too. Bye-bye.