- Platform: meet
- Source: Read.ai 01JD5T0J9SD9H2GQXY24EZPNG1 (via Ben Ornstein’s account, imported 2026-08-06)
Transcript
Ben Ornstein: He is a serial founder. He raised $10 million from A16Z for his last company. He has a different company now. And he has an email newsletter with 65,000 subscribers in the startup space with mostly VCs, founders, aspiring founders. And another resource that he wanted to create for founders was specifically related to fundraising. And he kind of figured what better way to do that than by actually speaking with founders who have done it themselves. So that's what this call is about today. I've got a preset list of questions here, softball questions, things you haven't really thought about or answered for sure. And this ends up going behind a paywall for the premium subscribers, but you You still get the shout-out to the entire newsletter list. Each Saturday when we add a new one of these, you'll get exposure to that. We say which ones have been added to the case study library. I have the radar guy in here because it's a text-based document, so I take the transcript from this call and I turn it into one of those case study text-based documents. And yeah, the video goes nowhere, so it's just for us today. Ali Safavi: Sounds good. Awesome. Ben Ornstein: Any other questions before we get going? Ali Safavi: No. Let's jump into it. Ben Ornstein: Let's do it. Okay. Ali, can you please briefly introduce yourself and your startup? Ali Safavi: My name is Ali Safavi. I'm the CEO and co-founder of Kovu. Kovu is an insurtech startup that works with insurance agencies, and we like to call ourselves AI Native Services for Insurance, which means we use a combination of AI technology and humans. Like a service company powered by AI versus like just pure software to, at the end of the day, help customers and end policyholders managing their risk and insurance. That's the core mission of Google. UNKNOWN_SPEAKER: Incredible. Ben Ornstein: Sounds really interesting. Can you please talk about the fundraising journey? So this could be like how many rounds of funding you've done, the amounts in those rounds, only if you're comfortable, but of course, no pressure on the valuations. And how long they took to close. Ali Safavi: So with the V1 of this model, so I left, I was an investor before and I was the founder of basically like a founding head of Plug and Play's InsureTech vertical. I also was a partner on the venture side. I started an insurance division before. And so I left Plug and Play with the vision of what I want the world to be in a sense for when it comes to risk and insurance. What I love, plug and play off of my, you know, just the little connections and relations and even the plug and play founders and so on. For my previous company, Vero, we raised somewhere close to $2 million in convertible notes. The first one I would say was relatively straightforward because it was mainly up off the founder’s background and the vision of what we wanted to do and people that were excited about the vision. But then at Vero, you know, like what we were trying to do, we realized the mission is great, but like the execution is very difficult. And it just became harder and harder to fundraise moving forward. And we also knew as a business, there’s flaws in our business and business model. So we essentially pivoted or we changed, like we kept the company, I would say, the same entity and started Kovu. And Kovu brought in a new co-founder. A new set of investors and all that. And then with Kovu, with a new business model, some of the early proof points that we had shown, it was a lot easier to raise a seed round. It was $8 million seed round. And what we announced was $10 million, which was $2 million from Vera and Kovu and, you know, combined 10, that kind of got converted. And that one was relatively quick. So one cool story with that was like we went from, you know, like starting to investors. And then when the first term sheet came in, they took because maybe like two weeks to get five term sheets. So we went from, we got five term sheets and that's how the valuation and how the amount of capital we were asking for just kept going up just based on the competition that was created. And then with Krovu, we were off to a good start. In 2023, it was a tough market though for Series A, so that took long and it wasn't as favorable as we wanted to. Then eventually we managed to go and raise our Series A And then, you know, now we're closer to our Series B. Ben Ornstein: Awesome. How much funding did you get in the Series A Ali Safavi: So we had, so altogether between the different things that we did was around 12 million. Ben Ornstein: Okay, cool. Sounds great and awesome. So when you were fundraising, you know, what did you plan to use funding ahead of time for? Ali Safavi: Depends on the fundraise, I guess. But a lot of times, obviously, you have a plan, you have a financial plan in terms of what requires investments. And for us, a lot of it was focused on our product and tech and what we call our core platform, which is AI native services. So some operation capabilities and overhead and all that kind of stuff, including our carrier marketplace. And so on. And a lot of it obviously is extension or runway. Ben Ornstein: Yeah, now it makes sense. The standard stuff. How did you decide which investors would be a good fit? Ali Safavi: For seed round, because of the term sheets that we have, I asked every investor to give us, obviously one was how much do they know about our space, how much value thing we can add. And I asked each one to introduce me to a few of their portfolio companies. Just me being in this space, I knew some of their portfolio companies, so I could call them directly as well. And also it had to do with how much would that investor be involved? Are they going to be a board member or not a board member? And obviously that is a material factor. And just based on that, the terms that we got and all that, we decided to go with a specific one that we felt has the most knowledge in this space that we're in with some of the connection of value add, it seemed all the portfolios were very highly of them and the terms were also favorable to us as well. Ben Ornstein: Awesome. Yeah. And so how did you get in touch with these investors? You obviously talked about plug and play, which, you know, makes sense there, but how'd you get in touch with the investor in general? Ali Safavi: I think there's always like multiple options. I'm a big believer in cold outreach as well. I mean, I think as long as you have a good business with a good track record, cold outreach would always go a long way. That's been a good way and that could be LinkedIn or email. But in addition to it, asking for introductions, I've always found useful having a very good group of founders around you. It's always great. Warm intros are obviously a lot better than cold outreaches and gives you some credibility. The one thing I learned with warm intro is that obviously it makes a huge difference if the person lose your space because a lot of times, let's say the founder is a healthcare company. And obviously one, they know more healthcare investors, which is less relevant to us. And B, if a healthcare entrepreneur is introducing a friend to an insurtech VC, it's just not the same as someone that they would think highly of their credibility or opinion in this space and the subject matter expertise. That was great. Sometimes capital introducers are also good. So sometimes In 2023, when we had to do a bridge round before our A round, I found that to be a great option because you have people that just know a lot of family offices and groups of people that they could quickly connect to and just saves you a lot of time. And I found that process to also be very helpful whenever I need to fill around quickly and to just get exposure to a lot of options between family offices, smaller funds, larger funds, and so on. And that was a very big online for me. And yeah those are like three or four different ways that you could and obviously like I have my own network of group networking events and all that that I run into and met. I think in San Francisco helps there's always like VCs, VC events and networking events they could meet people in this specific stuff so some of the conferences I would go to I found them to be more helpful for finding investors than anything else like like in our space like Insure Tech Connect was one that originally I was just looking at always meeting prospects, but then I realized meeting investors is probably the best spot because everyone's there and they're all in person. So that was big and so on. Ben Ornstein: Yeah, makes a ton of sense. Most people have done like 80 of these. Most people shy away from the cold outreach. They're like, it never works. But I love that you're talking about it differently. Ali Safavi: As long as your email, I mean, if you have a good business and there's good numbers, obviously the conversion is not great, but that definitely can work. Ben Ornstein: Definitely. One other thing that was unique that you brought up was the capital introductions. How does that work? Do they take a percentage of the funds raised? Ali Safavi: I don't think there's like one model out there in terms of that, but yeah, the one that we worked with, take a percentage of it's a little bit similar to investment bankers. Sometimes I've returned a fee, sometimes they don't. In our case, they had like a fee that I was very hesitant about in the beginning, but then I spoke to a few friends who had tried it and they were spoke very highly of it. So they had initial fee for the pitch in a first session, almost like, you know, like a quick pitch to a lot of people. And then they continued by manually reaching out to people on top of it. And so initial fee, and then you could have an ongoing fee if you want to, you don't have to have the retainer fee, and then a percentage of the capital raised between our debt and equity. Ben Ornstein: Yeah, makes all sense. Thanks for explaining that. If you think about the process as a funnel, and you said you did a ton of cold outreach, how many people did you initially reach out to? What was the subset of those, either percentage-wise or numbers-wise, became in first, second, third meetings, then ultimately many ended up as investors, you know. Ali Safavi: There's a good way to talk about that. Mainly because it was very different for a seed round versus a series A and versus now, like in series B, I have a lot of people reaching out and now they're offering us money versus like us going out to market. So it's very, very, very different. Uh, when I talk to some of my most successful founder friends, they're talking about like one out of three, you know, becomes interested in the talk. Uh, some are talking about like, you know, very high conversion rates in terms of conversation to turn feeds, especially if they've had an exit before and they've been a successful founder. Some of my friends, you know, have public companies to use before and the fundraising is just a whole different beast for them. I have a friend that, you know, raised $30 million just off of his background without anything else and so on. So I think it really, really, really has to do with the business. So I don’t think there’s a good way of talking about that. So I know a lot of people reach out to hundred investors. I got zero. And then I know people that almost have like 50% conversion rate from conversations to term sheets. So it’s all over the place. Ben Ornstein: Yeah, no, it makes total sense. And when you were doing these pitches to investors, what did you emphasize in the pitch? Again, it depends on the stage. Ali Safavi: So when we’re talking about a company in pre-revenue, obviously a lot of it is the team credibility and proof points. So what do investors want to see? Think of the business as, first and foremost, as a business doesn’t make sense. The idea makes sense. I think a lot of things that I have a lot of people that are trying to start companies. And when I listened to their pitch, a lot of times they’re talking about a solution and that solution is not a good business. So is that a good business? I think it’s first core to everything else, unless it’s a very scientific, you know, like you really build a new AI model, not like a skin on top of AI. And then a lot of people are just investing in IP and IP, obviously there’s a lot of ways to monetize it. But I think for 99% of companies, it’s really a matter of like, what is the business? And that business question, I feel like a lot of people fall very short on it, have to look at it from a solution building perspective. And then when you’re trying to de-risk the business, what are the questions you ask? Depends on the business. So is it go-to-market that you have to de-risk? Is it feasibility of the platform or the technology? Is it the feasibility of the user value risk? Is it the fact that you can’t charge as much as you want? Is it the fact that there’s not enough viable customers or people out there for you? So that’s usually what you have to emphasize. So he’s done a lot more, but of course, the larger you get it, the lot, a lot more, it just becomes about numbers. Like what’s your growth rate, what’s your CAC, what’s your LTV, what’s, you know, all that kind of financial and the more financial oriented everything becomes. Ben Ornstein: Yeah. And you, as in a previous investor, like, you know, exactly what investors want to see. So that’s definitely helpful. Ali Safavi: I think I thought I knew, but then the more I went into it, the more I realized it really depends on the type of investors. I mean, have in mind that there are thousands of investors. Investors out there with different categories and appetites and some are PEs, some are VCs, some are family offices and each invest very differently. So some people are very gut feeling oriented. How do I feel about the founder? Do I like this guy or girl? And do I feel like I could trust them with my money? Some people are very like public company. Let me look at what’s a public company, multiple, you know, all that kind of very, very financial oriented without looking at the story. A little bit all over the place. I’ve seen small chicks that do a lot of due diligence and I’ve seen larger chicks that don’t do a lot of due diligence. So I just feel like people need to understand, we’re talking about thousands of thousands of people that are just as like any other individual, people are different. Ben Ornstein: So every investor I also think is a little different. 100%. When you were closing your rounds, did you do anything to drive urgency among investors? Any FOMO tactics? Ali Safavi: I think the FOMO tactics work great when you actually have something that has a lot of FOMO, but when you don’t have FOMO, like it becomes actually, it has like a very negative effect. So obviously everyone, it’s funny, like I see a lot of founders, again, founder friends and someone that I give them advice just based on experience that I wouldn’t do that. And they realize like they start with like, no, I want to start with a 50 million valuation and they got nothing. And, you know, they just lose a lot of credibility as part of that. And they say like, Oh no, I’m having interest. I’m going to close next week. And the answer is like, okay, I don’t have enough time to like do the diligence or pass. Um, so I feel like FOMO usually works when there’s really like there, there is something like I wouldn’t bluff it too much. Um, but, and then there’s a lot of ways to create FOMO. So in our seed round, when we had five terms, she’s like FOMO played a large round. Like I had the first term, she’d come in and again, it took me less than a week or two to get five term sheets because of that, but that we already were in the process with them and all that. But then, for example, in the Series A, it was a tougher market, so creating foam was not as easy. I first have to understand, what do investors want to see? Are we ready? How much interest do we have? Can I put them against each other? UNKNOWN_SPEAKER: Can I not? Ben Ornstein: All that kind of stuff is a very, very different dynamic. Ali Safavi: Yeah. No, 100%. Ben Ornstein: I like the way you phrase that, because it’s true. In retrospect, you can talk about how simple it is, but challenges probably came up. What was the biggest challenge? That came up during fundraising? Ali Safavi: I think it really has to do with the business and where the business is at. So obviously the more exciting a business is from a growth rate perspective, margin perspective, all that, the easier the fundraising gets and the worse it is in terms of position proof points, the harder it gets. So when we had our good days, our challenge was how do we drive up the terms? How do we drop the valuation? How do we drive up the capital? Can we get the best investor? Versus like, you know, our second best investor, can we get, you know, all that kind of stuff. You just keep optimizing for the best option. And when you’re in a down market or in a situation where the fundraising is not there, it’s like the biggest challenge is I find someone that is willing to give you capital without a massive amount of dilution. And sometimes it’s a matter of like, is anyone even willing to give you capital at any dilution? And those are just very, very different dynamics. So I’ve seen anything from, let’s go look for capital and can we get the capital we all the way to let’s just drive up the valuation as much as we can and get the most out we can and also how should we cognizant of we don’t want too much capital and too much valuation because we have to grow into it and you know all that kind of stuff as well. So too much capital and too much valuation also have like a negative effect down the line especially as the markets turn. Ben Ornstein: I love how you break it down by stage and situation because you’re right every situation is kind of unique. Ali Safavi: At the end of the day think of it as demand thing, right? First and foremost, being a very good company, it’s hard and it’s very difficult. So for a lot of companies that are not going to be the very best, obviously the worst of companies from a position perspective, the less options they have, sometimes it’s strategic capital that makes the most sense because someone really needs their solution and not just them. So that’s probably the most important factor here that more than a market down market or anything else. Ben Ornstein: Yeah, absolutely. Are there any unique or interesting stories that you haven’t brought up related to fundraising that you that. Ali Safavi: would be interesting to bring up? I think one of my friends, I know his story that was very cool is where he, I found what he did pretty cool, which was he Because of COVID, his revenue just quickly went up. And because his revenue went up, he just started doing a lot of PR back to back for a period of time, let’s say a few weeks or a month. And then within one week, he had lined up everyone he knows, like his investors or introductions or whatever else, to outreach investors all on the same day. And then for a period of a week, he was just meeting with investors, but he really concentrated everything into a week in order to create FOMO. But he had like a string of PRs before, so people keep hearing about him before he goes to the market. And then he got term sheets from all the tier ones and he picked the best option for him. So that was one cool story that I could think of In my own experience, again, as I said, like being with Vera, having a hard time raising money and then going to Kovu and how easy it was to raise money. Saw the difference that team can make, obviously business idea, traction, proof points and all that kind of stuff. And how much easier what is, and also one thing that happened that was cool, interesting for me was that once you have momentum, you have momentum and once you lose the momentum, it’s just everything flips. So we went from like zero to five term sheets. And then after we wanted to add a little bit of money, you could see the difference in terms of how urgent people were going to jump in and all that. And that was also a very big That’s what I learned for me in terms of having momentum when you’re fundraising. But again, to have the momentum, there’s a lot of pre-working to do to make sure people are excited, people are ready, people want it. And then you go to market and hit it hard. But if you’re not ready and you hit the market hard, by the time the first crunch gives you feedback, you already ran out of a lot of options. And then it’s harder to use that feedback to retread and go back again to the market. Also, another thing that I’ve learned is a lot of times it’s better to start with Tier and pitch them first and get feedback from them and see how they think. And then once you have a term sheet from a Tier 2, for example, then go to Tier 1s and say, hey, I have this term sheet from this guy. Would you like to read it? But I prefer to work with you. And I found that to be a lot more powerful incentive or a way to work with them than starting from scratch and Tier 1s being the first ones you target. Ben Ornstein: Yeah, that’s a great strategy. You gave a few great pieces of advice there. That is the next question. Like, do you have any other advice that you’d like to give founders? Ali Safavi: I think the most important advice that I have is like, it’s really about the business. It’s not about investors or capitalists. You have a good business, people will give you money. You don’t have to struggle with it. So as long as people focus on building a good business, and I think that’s the biggest lesson learned for me and a lot of mistakes that I’ve made over the years, focus on the business, creating a great business. And then once you have a good business, it’s a lot, you know, it’s just much more powerful because when investors are talking to you, and you know your business inside out, the unit economics, you thought about everything and like a cashflow, going towards profitability, all that kind of stuff. Then a lot of the questions that investors ask are not going to be a shock because you know the business, you’re underwritten yourself and you’re confident that this is a great business versus like, Hey, I think this solution is exciting. Give me money so I could go build a solution. It’s a very different dynamic because then people ask you about your different models, like distribution channels and all that. And then you don’t have the answers because you haven’t thought about to just build a solution. And I think that’s probably the biggest mistake I’ve seen people make. Ben Ornstein: Yeah, now that’s so important. And to have that leverage to like, that’s, that’s so key. Who’s an investor that you would recommend other founders work with? Ali Safavi: I mean, a lot of investors that we work with, especially if anyone is in the insurtech space, I’m super happy and excited about. So BGV, Eric Benamou was a founder of 3Com. The reason I like Eric and his team quite a bit is that he was an operator before. So like that kind of like mentor operator, like I’ve had a lot of advisors, but it’s very different when they’re like a board member who’s incentivized. And wherever I kind of like, you know, need help, he’s been like a massive resource. Just how long he’s been in Silicon Valley, all that kind of stuff has been super, super helpful and interesting. So I’ve been very, very happy with the, with a bit of a global ventures team. And then on the insurance side, obviously Manchester Story, all the LPs are insurance companies, amazing team, great people, very supportive during our good times and bad times, and as well as market insurers. Obviously, they also have been super good in helping us in good times and bad times. And of course, I came from Plug and Play, so I could always give a shout out to Plug and Play as well, because there’s obviously a lot of positives in terms of having access to a massive ecosystem, and especially for folks that want to sell to different countries and are looking for the right people in different companies, Plug and Play has a very streamlined way of connecting you for a lot of business development. Ben Ornstein: Amazing. Who are those second and third companies again? Just so I can make sure. Ali Safavi: Manchester Story and Mark Ventures are both very InsureTech focused. So it’s only for people that are in the insurance slash InsureTech. That would make sense. UNKNOWN_SPEAKER: Awesome. Ben Ornstein: Thank you. Are there any resources you would recommend to other founders? This could be, you know, Podcasts newsletters anything Starting a company. Ali Safavi: There’s a lot of great books out there That I read on a lot of blogs I think I always loved YC’s content boys He had amazing content and obviously Paul Graham had a lot of great content some of it a bit older But there’s still a very relevant today. Um, I think in this specific it’s very important especially like some of the latest trends about AI native services or around tech growth buyout and all that I found very interesting. But, um, any book, I mean, I read a lot of books. I’m trying to think which ones really were super impactful. I mean, these are all from like four or five years ago, so that’s why I don’t remember. I could look them up, um, to see, but there’s a lot of great content out there in terms of how to be a CEO, how to pick the team, how to, I think it was one book that like basically walks you through every stage. And I found that very interesting. You’ll have a chance to edit this, by the way. Ben Ornstein: I maybe didn’t mention that at the beginning. I’m going to send this to you before we post it live. Ali Safavi: So if there’s anything you wanted to add there, you certainly could afterwards. Yeah. Also, another VC that I’ve really enjoyed their thesis is One is like Equal Ventures. I really like their content. Ben Ornstein: Oh yeah, they’re great. Equal is awesome. Ali Safavi: The other one that I found, not first run, what’s the other one? I have the newsletter actually. I found it to be one of the better newsletters and the content is usually very on point. One that is pretty good BC. Oh My god, my brain is blinking. I haven’t been newsletter in a while It wasn’t first from our founders fun. Oh, yeah, of course No, I’m sorry. It wasn’t even founder fun Let me see, was it first round maybe? Ben Ornstein: First round has good stuff too. First round review. Ali Safavi: Yeah, their content usually is very helpful. It’s very high quality. The way they structure it, it doesn’t feel like you’re just putting out content for the sake of content. It actually feels like it’s very specific topics that they go into and I found it to be very strong. Ben Ornstein: Awesome. No, those are great. Thank you. I appreciate that. And our last question is, Do you have any hot takes regarding the fundraising process? Ali Safavi: I think my biggest hot take right now is a lot of people are too focused on building just software companies and solutions and not that many people are focused on building great companies that could be just ticked forward. So in our case, we realized as opposed to just building software and selling people software, like especially we work with small business space, giving like the CAD capabilities don’t work, adoption is hard. It’s just a lot better to build like an AI native services company or a growth buyout company, which is a little bit the kind of like the intersection between PE plays and VC plays. And I found that to be fascinating and I feel like not enough people are talking about it. We wrote an article on it. Forerunner wrote an article on it. Wrote an article on it. So it’s starting to become a bigger take. So I think a lot of people, the reason they can’t fundraise is because the business is so small. So by thinking outside of the box in terms of building better businesses that could just happen to use software versus just being purely software for the sake of fundraising and for the sake of getting VCs, I think it’s the biggest lesson that I’ve learned. Instead of focusing on what the VCs want to see, go and build a great business, the money would follow. And to build a great business, just build a great business and then use software to give you scale and all that kind of stuff versus just building software because it’s a cool solution and then VCs would be excited about it. I think that mindset change and focusing on better business that just happens to use software versus just purely software is probably the biggest advice that I have for people. I love that. Ben Ornstein: That’s a great one because you’re so right. People just build software to build software sometimes, and they don’t really have a fundamental business or just a good reason to do it. Ali Safavi: A lot of businesses don’t understand businesses that are not that, so I get it, but having a great business will give you a lot more options than just something. Because a lot of businesses get bad advice because that’s all they know because a a lot to follow FOMO and all that kind of stuff. So building a great business and going deep into building a great business, I think it’s a much better way to approach it versus building software, pure SaaS businesses, just because VCs like SaaS businesses. Ben Ornstein: And I think that’s one of the biggest lesson learners I have. 100%. That’s a great one. I like that one. Yeah, that’s all I’ve got for you. Thank you so much for taking the time here. Really appreciate it. It’ll take me anywhere from a day or two days to up to a week to get this back to, I’ll send the first draft. You can edit it, say, hey, I didn’t want to say this, or I wanted to add this, whatever. And then when you give me the go ahead, we’ll push it live. Ali Safavi: That sounds good, Ben. Thank you so much and take care.