Anna Mazarsky (00:00.046)
Hahaha
Tzakhi (00:01.564)
I am.
Anna Mazarsky (00:02.87)
Hello, good morning, how are you?
Tzakhi (00:06.347)
I'm great. It's great to have you. Anna Mazalski, we're at the Meet.Capital startup podcast. And you've been advising startups for seven or eight years now. And I know that you've had hundreds, more than 500 startups you told me that you worked with, including startups that came to exits and tens of millions of dollars raised. So you have a lot of experience. And I know you also do something.
special with your clients, which is you help them prepare for investor questions. And sometimes you even come along meetings and help them during the meetings deal with tough questions. So that's going to be our topic. But before we get into it, anything to add about yourself or your experience that we should know about.
Anna Mazarsky (00:56.142)
Okay, first of all, it's a pleasure to be at your podcast. I've listened to several, I've been listening to you for a while and it's a very value adding important podcast. So it's a real pleasure and privilege to be here. And as for me and my company, basically we cut the bullshit from the fundraising process because
Tzakhi (01:05.931)
Thanks.
Anna Mazarsky (01:23.654)
There's so much clutter in the way and there's so many misunderstanding of the process and what investors really want and how to prepare for the process properly so that even when startups approach like hundreds of investors, they left without any funds or they're left with less than they wanted or with the relevant investors or with really non-profitable shitty deals, you know? And so here
is where, like you mentioned, I work with more than 500 startups. From my experience, from like from a company to a company, from a fundraising process to a fundraising process, I started to understand where are the pitfalls and addressing them. And as you've mentioned, being ready to meet the investors and being ready for their questions and anticipating in advance what they will be looking for.
and prepare a really smart response to it. It's a really vital part of the fundraising, right? Sometimes it's even more important than the pitch deck. Like I know that people love the pitch deck. Like they praise it, but like being ready for meeting the investors, it's really, really important.
Tzakhi (02:31.207)
Yeah.
Tzakhi (02:35.059)
Yeah.
Tzakhi (02:44.327)
Yeah, so obviously everyone knows that you need to prepare your pitch and along with that, your deck, which is your pitch deck and then, um, and your, your storyline, those things are super important, but there's what happens once the pitch is over, then.
or even during that investors will ask questions. And if you're not prepared to answer those questions, no matter how brilliant your pitch is, it's all going to shamble. So let's talk a bit about the kind of questions that investors are likely to ask and how to prepare for them. So what is a typical question that an investor asks after seeing the pitch?
Anna Mazarsky (03:23.954)
And first of all, before I'm getting to the after the pitch, I'm going to like take you a step before is to break your, like it's the important thing is to break the pitch into what I want to say in the pitch and what I anticipate as the Q and A section. And like, even if it's on the same PowerPoint or Canva or whatever medium you're using, it needs to come like,
I'm happy to see that you're asking. Because for example, the team questions, right? Everybody likes talking about the team because especially in early stages and seed rounds and investors will invest in the team and not specifically in the product, right? Because it's more important to see that the team that you're working with are dedicated, that they have the rights.
background, that they age well enough, they have some business understanding and when investors are questioning the team they will not ask you directly, okay so what's your experience? You will probably have a slide for it right? You will have a slide for the founders and perhaps some other key team members that you will be showing in your pitch.
But when investors will ask you about your team, they will do it like usually, like not indirectly, they will ask, okay, so what's the sales experience of the founders or who of the founders will be in charge of the sales? This is like, they will want to see specific abilities and skills of the founders.
which are not necessarily shown at the pitch deck, but are vital to the success of the company. Because if none of the founders can sell, most likely that nobody will be able to sell because they won't be able to also get the right salespeople. They will not be thinking correctly with how to sell. So all of these projections that they've shown in the financials will probably be not being able to.
Tzakhi (05:47.995)
Not met. Yeah.
Anna Mazarsky (05:48.514)
being achieved, not met. So they will be asking about the abilities of the skills and the experience of the team in those points of the company which are vital to the success of the company, it can be the operations, it can be the sales and marketing sides. And if it's a heavily HR, they rely on startups, so they will be asking about the interpersonal skills. So this is one set of
questions that again, each startup is unique. I'm guessing that for the deep tech startup, it's less relevant because there will be more technologically focused questions and the founders will be more tech focused and et cetera. But still, if it's not a very specific deep tech startup and it's a regular type of startup that wants to expand like to the next market and et cetera, they will have to know
what are their strengths and also to emphasize it. And then they will have to, if they are not experts, they will have to also explain or tell the story of how they're going to overcome their own weaknesses. Right? For example, none of the startup founders are salespeople. None of them, they're all...
Tzakhi (07:07.803)
Yeah.
Anna Mazarsky (07:13.358)
tech guys and they're all like very focused on the technology and expansion and they love their idea. So you need to understand that you have this weakness of not being able to expand and already in this part say, okay, we are not sales people, but we are already looking for the best business development or the marketing person or the sales. And one of the reasons that we want you as an investor because we want you as a smart investor.
for example, in their smart and their approach in smart investors, is also to guide us, to help us define who is this best person for us to help us with the sales, right? Because know your internal weakness and address them. And then once you address them and you acknowledge that you're not the perfect founder, like you know, because most founders are not the perfect founders.
Tzakhi (07:55.165)
Okay.
Tzakhi (08:06.299)
Yeah.
Anna Mazarsky (08:07.566)
So, but if you acknowledge your weakness and you say, yeah, this is on my priority, this is why I need the funding for, this is why it's on my roadmap is to get this first person, is to get the operational manager, because I personally know how to deal with the technology, my co-founders knows how to deal with marketing, none of us has ever had a logistics background, we're looking for the best logistics person to join us.
And once you acknowledge it, investor will really appreciate it because they understand that you understand what needed to be done in this way. So this is one set of questions.
Tzakhi (08:33.544)
Yep.
Tzakhi (08:41.927)
Yeah. So, so I'd say if I can just like recap, I think the point is you need to think of what are going to be your growth metrics. If you're like very, if you're deep tech and you're heavily on R and D is the next stages, then you need to address that. But if your, uh, your success is going to be, uh, based on corporate sales, that's one thing, if it's based on marketing, that's another thing you need to know how to tie your future success to your team. And if you.
don't have the right team members, and you also need to be able to address that and be prepared to how you're going to solve the lack of a relevant team member and be prepared to address that and not be kind of surprised or taken aback by the kind of question that will come up. Okay, great. So that's about team. What next?
Anna Mazarsky (09:33.438)
Next is, oh, it's not about the team. I had something to add by the way. It's also not to argue. Don't argue with your investor. Maybe I should have left it to the end, but it's like you mentioned, it's like be ready to acknowledge and to see. There are too many cases where personally witnessed the founder starting to argue with the investor.
Tzakhi (09:43.272)
Okay.
Anna Mazarsky (10:01.918)
on, yeah, we don't really need that. Right? He's like saying, yeah, like, I've actually witnessed it, like the investor says, you meet sales, I want you to see, show me how you're going to make sales, you're saying that you're going to do blah, this is your roadmap, you're going to be okay, so how you're going to do the sales, I'm looking at your team, I only see R&D, and I see administrative, and maybe one marketing, I don't see any strong sales team, and the founder started.
argued with me saying no we were now focusing on that this will be nice we don't it's not really important it's like he actually started to argue and he could see the investor at that moment like he shushed so this is a one thing and another thing is also understanding like if we're on sales because it's kind of like investors really like investors want you to understand sales sometimes even more than marketing
Tzakhi (10:44.231)
Yeah.
Tzakhi (11:00.255)
Yes.
Anna Mazarsky (11:01.958)
And founders don't really understand sales, especially if they're coming from the tech angle. So they will ask about the life cycle of the client, right? Describe to me the usual life cycle of how a client will get to you. Like they will see you somewhere, what would they need to do to be interested? How many of them do you expect to convert? Why do you expect them to be converted into?
active customers and then maybe paying customers, maybe recurring customers, and then, et cetera, et cetera, right? Every product, every company has their own life cycle of the company. But you really need to understand why would your customer be converted and how would it be converted from a regular John Doe or a regular company that doesn't know you exist into a premium paying client, right? Whether it's B2B.
Tzakhi (11:57.907)
Yeah.
Anna Mazarsky (11:58.882)
whether it's B2C, whether it's even government, like if governments are your clients, still you need to really understand your customer journey here and how you're going to address this instead of saying, yeah, we will convert.
Tzakhi (12:14.811)
Yeah, and I guess if you're really early stage and you don't really know how that journey is going to look exactly, then at least you'd need to A, acknowledge that, like you mentioned before, and B, show some level of understanding as to what the process is and what you need to learn and what kind of research you need to do on your clients to understand how the sales will work if you're at a very, very early stage and you still don't have all that figured out.
Anna Mazarsky (12:43.138)
Precisely, precisely. And even then, you probably like, part of your preparation of the pitch is to learn your competitors, right? So see how they do it. Like, what's the current way of doing things? Maybe in the process when you grow, you will improve it. Fine, but at least know how it's done, correct? Currently, instead of saying, we will convert. So this is another.
Tzakhi (13:10.439)
Yeah.
Anna Mazarsky (13:12.23)
And this leads me to another question. There is no such thing as we don't have competition. Right, I think you've also seen that with your experience and all of the startups that you've ever had the opportunity to work with. Too many of them say, yeah, I know, we are in blue ocean, right? There's no competition. There's always competition. Because currently, it is being done without you. So.
Tzakhi (13:20.592)
Yeah.
Tzakhi (13:38.548)
Yeah.
Anna Mazarsky (13:41.158)
Even if it's not the best competition, if it's not the smartest, if it's not direct on the same code string or on the same technology, there is competition. There are substitutions to you. There are alternatives to your solution. All of these are your competition. Exactly. But it is a competition. Like somebody is used to using like even like I'm taking the iPhone example. People are used to use their Nokia's. You remember Nokia?
Tzakhi (13:41.479)
Yeah.
Tzakhi (13:56.379)
Yeah, even if it's just a current status quo, right?
Anna Mazarsky (14:10.818)
the snake game, but it was the status quo. People are looking to like the status quo was people want smaller and smaller phones and smaller and smaller in their pockets. And then iPhone had to say, like, if for example, they would say, yeah, no, we don't have any competition. Nobody is doing touch phones. They probably would have been lost because they could not define, if you don't know your competition, how can you define
precisely your pain points of the customers. Like if you really disregard the part that somebody has a solution to his problem, but now you have to define your problem and then you can really tell your story in a better way. So there's always a competition and we need to acknowledge that, really acknowledge.
Tzakhi (14:58.183)
And you need to be and be prepared to answer how things are done at your competitor with your competitors.
Anna Mazarsky (15:02.752)
Exactly.
Yeah, exactly. Even if we don't like, ChadGPT, nobody's doing generative AI, right? Before the beginning of 2023. But there was a competition. People were doing things differently. They used to think. And the problems with thinking is it takes so much time, resources, you don't whether or not, and then ChadGPT solved it. But it was the way things were done before that. So, once you're like, I think...
Tzakhi (15:29.607)
Yeah.
Anna Mazarsky (15:34.602)
from this interview, I kind of thinking already, once you acknowledge all of the risks, all of the challenges, all of the weak points of yourself, of your startup, of your solution, of your product, of your process, of whatever, once you acknowledge all of these, you can then from acknowledging find a solution and find the explanation of how you're going to address this.
And this is how you will win the investor.
because it shows that you're humble enough, not only to say, yeah, I have the best solution and this is why I think it will work, it is also humble enough to say, it's not perfect, but I know how to address the not perfect in order to grow. So, and then no matter what question would the investor will ask, he will say, yeah, I understand, this is part of my weaknesses. My financial model is not perfect yet.
Tzakhi (16:07.72)
Yeah.
Tzakhi (16:23.943)
Yeah.
Anna Mazarsky (16:34.162)
It's still based on only evaluations and on market cap, right? Because especially if you're on the stage, you don't have any traction. Like your P&L for the next five years will be, we just made it up. Investors know that. They just want you to see that you understand that it's being made up and you have the means and process internally with yourself and with your founders on how to address.
Tzakhi (16:46.142)
Yeah.
Anna Mazarsky (17:03.594)
And then you can say, yeah, this is why we need the money for, because we need to develop it. This is why we're looking for the funding, because we want to address this weakness. This is a weakness that we will address in two years. Currently, it's irrelevant because it's not damaging us yet. In two years, we understand that this is a weakness that we will need to address. This is why we're already anticipating the funds for. Right? It's all part of the preparation of really looking at the mirror of what's stopping you.
Tzakhi (17:03.879)
Yeah.
Tzakhi (17:24.871)
Yeah.
Anna Mazarsky (17:33.918)
In terms, okay, this is a good one. Next question. Now is the finance, the money. Again, it's a question that not many founders are ready with it. And it's the point of what will you do once the funds run out? Like, right? It's usually frame as what's your runway. I think almost every startup gets to hear it.
Tzakhi (17:38.984)
Yeah.
Anna Mazarsky (18:03.106)
But the sub question beneath the what's your runway is that they want you to, the investors want you to see, want to see whether you're really smart with the funds that you're raising now and that you understand the amount of work needed to get the funds. Like I'll explain, too many startups and founders, especially at the beginning.
They say, yeah, I will only race for the next eight to 12 months, right? They're looking for funds to close a certain gap before the next race. It's usually like when they see it on their decks. It's like they're saying, okay, I only need it for eight months, for 12 months to get me, I need like 400,000 to get me to the next stage. And then I will do the seed round. Then I will do the A round for the three, four million. But.
Usually it's not enough because investors understand that just to get the money, just to go on the fundraising process, just to go on the fundraising itself, it's something like four to six months of active, intensive work of the founder. Right. It's not like, hi guys, I need money. Send it over. It doesn't work like that. It's actually an active work of something approximately between four to six months.
depends on your network, depends on your charismatics, on your story, on your pitch, on your whatever. But it's usually like that. Even if you're unless you're this is your 10th startup and you're super well connected and with one phone call, you can guarantee the money because like everybody knows you and you're like a walking unicorn. Most people really need to work on their fundraising and investors understand that. So when you're telling the investor, like, listen, right now, give me 300. It will last me for eight months.
They're starting to think, okay, so I'm giving him the money, but like, he will run out, run out before time. It won't, it won't be enough to get the KPIs that he's mentioning. And to get to the next round, it's another six months. So basically he needs money for a year and a half to get the KPIs that he's looking for and to have enough time for the next round. So he's going to burn my money, not have enough. He will run out of time.
Anna Mazarsky (20:22.57)
his runway is not accurate, so I'm not going to invest in because he will lose my money.
Tzakhi (20:27.419)
Yeah, so I think there are two things here. So one is that the investor wants to hear that the founders are smart about how they're managing their money and how they're planning ahead. And the second thing is...
Anna Mazarsky (20:37.522)
including the next raise and the time it takes where it will take them.
Tzakhi (20:41.935)
Yeah, yeah. And also that founders often want to kind of show that things are going to move very fast and that the next stage is going to come very soon and therefore they don't need much and kind of to go for less because it seems like they're asking for less. But actually the investor wants to hear more.
They're planning for a longer time ahead and will have a longer runway so that their investment is safer.
Anna Mazarsky (21:13.546)
Exactly, exactly. It's kind of like I've heard one investor say, give me a proposal for $1 million. I will tell you it's too expensive and give me another proposal for $100 million. And I will say, wow, it's cheap. And I will invest the $100 million and not the $1 million. Because the $100 million makes more sense, it gives me more time to reach my KPIs. It gives me an understanding that there will be problems along the way.
there are chances that I won't get the KPIs that I want. So I need to have this buffer and many founders don't raise the buffer, right? They raise, yeah, I don't wanna ask too much. I'm afraid to ask too much. So I will only ask the minimum, but then this minimum really what stops them and they get them to be stuck. And investors understand that because they're preferring to invest 2 million in something which is.
with the understanding of the processes, the challenges, of how much time, et cetera, versus 400 and somebody who will burn it in six months and will be stuck in the next problem. So this is a very important thing to address.
Anna Mazarsky (22:30.066)
Okay, another part is on the technology. And it's usually something that I see that many founders are prepared with, but still. And it's the understanding how easily you can be replicated, copied, whether you need regulations and issues with the regulations, patents, like all of these things that sometimes...
It's actually less common, but I still see it. When founders don't really pre-address this when they're preparing, because yeah, we have a great technology, right? We have the perfect app, we have the perfect solution, but then how easily are you copying?
Anna Mazarsky (23:20.554)
I know. The moment they start not to have a really good answer on that, also the investor won't invest in them because they're easily copied. Or at least they don't understand what needed to be done to protect or what steps are needed to be done to be first to market before others can copy you and make you successful. Because I don't know, perhaps somebody with more resources and more, I don't know.
Tzakhi (23:22.191)
Yeah.
Anna Mazarsky (23:49.782)
like access to resources, can see what you're doing, say, oh, I like it, I have a hundred million spare here. I will invest, copy you, maybe it won't be perfect, but that will be first to market. So you need to understand how you're going to protect your intellectual property, your technology, your code, whatever, even if it's not being patented. What's the?
Tzakhi (24:13.339)
Yeah, even if you don't have the perfect answer, at least you need to know that, show that you are addressing the issue and you have some, some way of dealing with it or some solution to it, or some understanding of how, um, how the risks that you're taking with your technology or the competition, uh, might impact you. And if you're prepared for that, that's fine. Or at least you have some awareness of what's going on and not some kind of, um, unaware, uh, wishful thinking.
Anna Mazarsky (24:41.074)
Exactly, exactly, exactly. It's very important. Like with health tech startups, it's easy because they just need to patent, right? But even when you are approaching patent, like to patent your technology, it doesn't take a day or two, right? The process of registering the patent and it's in the EU and the US and then maybe in Asia and then here and there, and it will take
between a year and three years on average, depends on the complexity of the solution and other solutions. So what do you do in the meanwhile? Right, how do you address the fact that it's just patent pending or patent applied? So you should understand even then, even when it's in the patent world, you need to understand what will happen in the meantime until you'll get your patent. Because I know personally of a company,
that just because they didn't send the responses or they didn't prepare their patent registration properly and they were missing one or two documents, somebody else beat them to the same solution and they just like lost millions of sales, hundreds of millions of sales just on that part and they lost their future investment. So anything can happen in the process and once you're going at it, you really need to understand all of the things.
that comprise this, defending your technology. Because if I'm an investor and that's sure that you as the founder know what to do and how to protect yourself, most likely you will lose me money and I will not invest.
Tzakhi (26:12.007)
Yeah.
Tzakhi (26:24.275)
Yeah.
Anna Mazarsky (26:25.034)
It's easy as that. Even if you are a very nice person, I believe in you personally. So, yeah.
And another thing which is also an indirect, kind of like smart question of an investor will be to ask you about any challenges which were unexpected that you had to overcome in the process so far. Right? It can feel like where is this question coming from? Like I'm talking with you about
Tzakhi (26:58.483)
Yeah.
Anna Mazarsky (27:05.082)
app, I'm talking with you about my health tech solution, I'm talking with you about my sustainable converting alternative protein solution, whatever. And then you come and you say, no, tell me about any challenges that you didn't expect and like that you had to overcome. Like sometimes it founders, it can be because sometimes if you're in the very early stage, it means personally, because the investor wants to see
how you usually, or not even usually, watch your approach to challenges or unexpected problems or any hurdles that you have to overcome. If it's a co-founder team, it will be a joint question to see how they communicate with one another at that point, or was there a connection in their relationship in that moment?
they had to both come up with. It's kind of like a tricky question, but it shows the dynamic between the founders, for example. So it's also something to prepare for. Like agree on two, three scenarios, two, three cases that you already know that you had to overcome. Maybe it was to find the co-founder. Maybe it was like with another two startups that failed before you even reached this one, which didn't fail, right?
Tzakhi (28:10.907)
Yes. Yeah.
Tzakhi (28:32.872)
Yeah.
Anna Mazarsky (28:34.082)
It may be something personal, like I had to deal with the loss of a loved one and how I had to overcome it. There are so many cases, but you need to have in your response package, in your response bag, at least two, three scenarios. And if it's a co-founder team, they have to have like a synergy on the response. Like they have to.
Tzakhi (29:01.051)
Yeah.
Anna Mazarsky (29:01.662)
In that point, this is a great opportunity to support one another's case. Like one is talking, one is like adding additional information. And then it's like really good if they're seeing a really good synergy with the co-founders and that they're like, you know, with the basketball, they're like giving to each other, it's, it's a great, great dynamic and they love it. If at that point they're starting like, you know, this is it, like starting to argue and also can break the point.
This is one. And also on the co-founder team, especially with co-founders, make sure that you have some sort of a co-founder's agreement.
Now, not many of co-founders do that. I think in the early stages, very few or less than 50% do it. And it actually can hurt you with investors, with smart investors. Because if you have a co-founding agreement, co-founder's agreement, and it's a legal co-founders agreement, not even something that you wrote on a napkin, and it's a really good, like you say, yeah, we took the time. We understand that not everything is going to be perfect.
Along the way, we understand that things can happen in the future once our honeymoon will be over, right? And we already took the responsibility in advance to address any challenges that we may have in the future. And in the moment of peace, discussed everything and agreed upon things, it really makes the investor feel really secure about an investment because relationships end.
Tzakhi (30:44.883)
Yeah.
Anna Mazarsky (30:45.186)
Right? Not only husband and wife, co-founders can end the relationship they want to continue to elsewhere. What happens if it doesn't work? What happens if it does work? Like lots and lots of things can happen that a really good co-founder's agreement can address. And sometimes investor ask, like if it's a co-founding thing, they will ask about it. Or at least to see that you understand that this is important.
Tzakhi (31:07.804)
Yeah.
Tzakhi (31:15.123)
I think we covered a lot of ground and there's a lot more questions that I can think of and I'm sure that you can think of. But I think the main point is to kind of try to think like an investor and try to understand what an investor would like to know and be prepared to show that you're thinking of problems coming ahead of time and that you have solutions, even if you don't have the
Anna Mazarsky (31:20.43)
comes.
Tzakhi (31:44.743)
to the solution and each relevant topic that's come up. Anna, this was very, very useful. Thank you so much. Who should reach out to you? How should people reach out to you?
Anna Mazarsky (31:55.31)
Great.
Anna Mazarsky (31:58.986)
Okay, great. So first, yeah, this is a really huge topic. When I work with my clients, it's like several hours of session just to come up with the questions, by the way, and then to prepare the answers and then to drill it. And in terms of who should address me, these are companies that are not too early stages, but those that are ready for their usually seed round, round A, et cetera.
that are ready to take over the big guys and the big investors world when they want to approach VCs or more professional investors or professional angels. And they really should approach me even if to get the fundraising readiness evaluation. Like I do a 20 minute session with companies, with founders, just to estimate how ready are they? Because...
Just this estimation of saying, hey, guy, first work on your marketing, then go to the investor, it can blow, like, it can change the whole course of the potential success of the fund raise. And just to get this part, and of course those that are already ready and they're ready to gather one, two, five, 10 millions and above, and they need professional guidance and to ensure that their lack of preparation won't hurt their meetings. So that every meeting,
will be an actual potential investor term sheet.
Tzakhi (33:28.98)
So should they go to your website or where should people find you?
Anna Mazarsky (33:31.418)
No, you can contact me on my LinkedIn on Anna Mazarski. And it's LinkedIn Anna Mazarski. You can approach, yeah. It will be the best and more available there. I'm always there. And because also the website is now being redone. So it's not the best at this stage. And yeah, you can feel free to reach out, question, discuss. My goal is to help the startups succeed, right? This is eventually.
Tzakhi (33:35.691)
Okay. We'll put the link in.
Anna Mazarsky (34:00.47)
my eternal calling, you can say that. So I'll be happy to help. And thank you for having me, Tzachi. It was a pleasure and you're doing an amazing job.
Tzakhi (34:05.291)
Excellent. Thanks, Anadis.
Tzakhi (34:11.403)
Thanks so much. This was a very, very good talk. Thanks so much, Anna. We'll speak soon.
Anna Mazarsky (34:16.426)
Yes, thank you.
