Feb. 8, 2023

#102 Tether: Bodyguard of the Grid

#102 Tether: Bodyguard of the Grid

Founder Luis Medina Rivas travels across the world to pitch his big vision on how to solve one of the most important problems of our time - energy. His pitch is close to perfect. However, the VCs worry about the location of his company and come back to him with an easy solution, but it’s up to the founder to decide what’s right for his company.

If you are interested in investing in Tether, visit pitch.show/tether and if you'd like to literally taste next week's pitch alongside the investors, go to pitch.show/sauce 🌶️


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Last November, for the first time in two years, founders from all over the world came to Chicago for one reason - to pitch our investors on the comeback season of The Pitch.

Josh: [Pitch 1, clapper]

For our first episode back – a founder all the way from Barcelona walks into The Pitch Room with a massive vision to help solve one of the most important problems of our time – energy. Using something that millions of people have just sitting in their garage.

The founder, Luis, is at square. One. And he needs venture capitalists to make it all happen.

But in the pitch room today, a question arises… who’s to say this first time founder can actually beat his competition at their own game? 

I’m Josh Muccio and you’re listening to The Pitch, where real founders, pitch real investors, for real money. 

Neal Sales-Griffin: I’m Neal Sales-Griffin, Managing Director here at Techstars Chicago and I’m happy to welcome y’all to my city

Elizabeth Yin: I’m Elizabeth Yin, and I’m a General Partner at Hustle Fund

Charles Hudson: I’m Charles Hudson, Managing Partner, Precursor Ventures

Jillian Manus: I’m Jillian Manus, Managing Partner of Structure Capital

Mac Connell: I’m McKeever Conwell II, most people call me Mac, and if you follow me on Twitter it’s Mac the VC

The pitch for Tether is coming up right after this.

The information provided on this show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the business presented. Those opinions should not be considered professional investment advice.


Jillian: Hey Luis.

Luis: Hello.

Jillian: Nice to meet you.

Luis: Very nice to meet you guys. All right. So, yeah, hello. My name is Luis and I'm the co-founder and CEO of Tether. But before I was an entrepreneur, I was actually a renewable energy engineer. And I couldn't think of anything more worthwhile than building renewable energy projects and contributing towards the fight against climate change. So my job was to design solar panel projects that would help clients go green, save money on their electricity bill, and sell some power back to the grid. And my designs always got approved. But about 80% of my projects were never built, and it wasn't because the clients didn't want them. It was because the grid simply couldn't handle the power that we were injecting back from the solar panels. So the solution here would have been to add energy storage: batteries. But batteries are really expensive and oftentimes they kill the economics of the project. And this was super frustrating for me, because I was trying to do something that was good for the planet and I was spending all this time and effort building these projects and they were dead on arrival. Well, what if I told you that there are 130 million potential batteries that are completely suitable for this type of application, that are sitting there unused for 95% of the time. Do you guys know what I'm talking about? Do you want to give it a guess? 

Jillian: this is -

Charles: EVs?

Jillian: - this is a fascinating...

Luis: Exactly. EVs. So a typical car's parked for 95% of the time. So when it comes to an electric vehicle that's basically just a big battery that happens to have wheels. And with 130 million electric vehicles being sold in Europe alone in the next 10 years, that's 130 million potential batteries that could be used to reinforce the power grid, substitute fossil fuel power plants, and allow more renewable energy on the network. But more importantly, they could be used to allow regular everyday people to actively participate in the green transition, while extending the vehicle's battery and getting paid for it. And that's exactly what Tether does.

Luis: Tether is a cloud-hosted SaaS platform that uses machine learning to intelligently manage the charging and discharging of electric vehicles that are parked all throughout a city. So we are gearing up… 

Charles: That's charging and discharging? So there's a risk that you would draw down - if my EV is plugged in, there's a risk that you would draw down?

Luis: I'm gonna address that in a second.


Charles: that caught my attention.


Elizabeth: Now you can’t drive home.

Charles: Range anxiety.

Jillian: No, no.

Luis: We've totally thought about that, don't worry.

Charles: I figured you had.

Luis: So yeah, charging and discharging. In the future, the vehicles in garage, it's going to be like a giant power plant. We're ready to launch our product. We have a commercial agreement with a major EV charging company in Sweden and so we're raising 1.5 million to get there.

Elizabeth: So I'm curious about Charles' question.

Luis: Yeah

Jillian: If you interrupt the charging, doesn't that affect the vehicle?

Luis: Not, not really. So the service that we're performing is minimally impacting the vehicle's batteries. At most we charge or discharge for 15 minutes. The market works …

Charles: Just to balance it back out.

Luis: Yeah. Exactly. It's just to give enough time to the grid operator to be able to ramp up other power plants.

Charles: Is it sort of charger network dependent and is it vehicle dependent?

Elizabeth: And hardware. What additional hardware do you need?

Luis: So the idea is that we don't want to install additional hardware. We are a software company, and what we want to do is connect to the charge point operators software via an API, and basically get the information we need as far as how much battery's available in each one, we aggregate that and then we coordinate thousands of vehicles to charge or discharge at the same time according to all of those factors.

Mac: So you mentioned your first customer being this large, power plant or -

Jillian: Is it a utility?

Mac: - utility in Sweden.

Luis: No. Yeah. So we're gonna start in Sweden. There's a million reasons why. Sweden's electric vehicle market is 120% year on year growth right now. It's around 40-something percent of all vehicles being sold today are electric, and they're gonna have 3 million vehicles sold before 2030. But the way we make money is we participate in existing balancing electrical markets. We're a backup to the grid. And so what we do is we say, look, we have, I don't know, 2000 vehicles available on standing by, those vehicles account for, 10 megawatts or whatever, and there's a price for that power. So we bid into the market and we get paid for just standing by. 

Mac: So, so walk me through the like how do you get to those customers to pay you for that?

Luis: So the customer doesn't pay us, the grid pays us. And the key here is that we get paid even if the grid didn't need us during those hours. We like to say we're like the bodyguard of the grid, right? You, you pay for a security person who is outside of your business and if nothing happens, you still pay them, right? So that's the way it works.

Elizabeth: Are you charging like a SaaS fee of some sort, or how do you -

Luis: So I guess you could say the SaaS fee is like the utility grid operator's the one that's paying us continually to have this capacity available.

Charles: But you're really operating in the spot market, basically.

Luis: Not the spot market; the balancing market.

Charles: The balancing market. Yes. 

Elizabeth: Okay.

Luis: Yes. And so what we do is, we go to the owners and we tell them, look, we made, you know 5 euros off of your vehicle, here's 1 euro back, so you're essentially turning their vehicle into a passive source of revenue, and that's how we incentivize them to join the network, we're helping the grid, we're getting money for it, and everyone's happy.

Neal: So as far as starting and traction, what does the sales process look like for you right now? 

Luis: So actually if we go through these CPOs, the charge point operators, or the OEMs that don't have the functionality that we're providing but want to have that on their software, we can partner with them, we add that to their software and we get access to thousands of EVs that are already using their software, that way we can expand much more quickly. We have two letters of intent, right. I mentioned one of them was with a major EV charging company, so it's exactly -

Jillian: Here or there?

Luis: In Sweden.

Jillian: That one. Okay. So it's a LOI?

Luis: It's an LOI. Yes. So we're pre-product, pre-revenue, we're developing the software. But basically what that would look like is, they already have about 3000 EVs and so if we integrate through the software, we already have way more than the minimum to participate. The other LOI is with a battery energy company in - and basically we would have a giant stationary battery and we would have that in parallel with the EVs so we have, you know, the stationary capacity that doesn't come and go.

Neal: So when does it get real and how long does it take to get there?

Luis: We want to have those two pilots next year. So our goal was quarter 2 of 2023. That's a little bit ambitious, so maybe it gets pushed back a little bit, but definitely our 2023 goals is to have those two pilots deployed and have our first commercial operation.

Neal: So I'm asking, I guess, is what are the inputs? What are they key milestones between now and Q2 of 2023?

Luis: Okay. We want to hire a couple of key developers to get the code that we have running right now to pilot stage deploy. We have to get approval from the utility grid to operate in that market. So we've already started the talks there. And then it's just a matter of starting to see how aggressive we can be with the bids and then that’s what the pilot projects are for, right? You, you see how much money you can make, how aggressive you can be, and then you participate in the market freely. 

I just want to recognize how plugged in the investors are right now. And for good reason.

This is everything VCs want in a pitch. A massive market, a massive problem, and an industry ripe for disruption. 

But there’s one big thing that hasn’t come up yet - the competition. Here’s Elizabeth.

Elizabeth: How do you think about the future? Like the Ford F150 often sells this idea that, oh, you could charge your house for two days with that and, I don't know, if more car manufacturers move in that model then does that effectively leave you out?

Luis: No, no, no, it's actually a great thing. So first of all, all manufacturers are gonna be V2G. Like, any car manufacturer in the future that doesn't have that is gonna be at a significant competitive disadvantage compared to the ones that do. But what you mentioned about the Ford F150, basically what they're doing is they're discharging the battery on their house, right. But they're not coordinating that with the grid. They're not actively participating on those markets. Any vehicle that is electric, we can control to participate there. And I think people are going to want this type of service because it allows them to generate revenue passively.  

Elizabeth: I hate to be that VC who's like, well, what if this big company does it, but it almost seems like a natural jump for any of these companies that will make this possible on their end as well.

Luis: So I don't think - so here's the tricky part about participating in this market, right. So in the US each grid has its own laws and its own regulations of how you operate. And it's in Europe as well. So if you are a vehicle manufacturer, you would have to have software that knows where the vehicle is and changes the way you bid into the market and the way you operate for every single transmission system operator, distribution system operator. That's a big hassle. What we are doing, like that is our business, so we are gonna know the inside outs of those markets and that's how we, I think, remain competitive.

Charles: Is anyone else piloting or doing this in any other country or geo? Or is this like a truly novel -

Luis: I think there's - I mean, there's definitely other competitors. So the difference between us and our competitors is a lot of people are aggregating other sorts of loads. So for example, heat pumps.

Charles: Heat pumps, yeah mhmm.

Luis: Or, you know, industrial loads like servers, etc. What makes us different is we're targeting these electric vehicles, private electric vehicles, so everyone has their own schedule, right. So this is a scheduling challenge. But by doing so, that enables us to get access to this huge market.

Mac: Where is your company dociled? Is it a Delaware C Corp? Is it based in Sweden? Where is your company based?

Luis: We're registered in Sweden. Martim and I are currently living in Barcelona developing the code. my cofounder is Martim. Martim is a mechanical engineer. So we both have dual Masters in renewable energy engineering. So what we're gonna do is we're gonna have two offices, we're gonna have one in Sweden, one in Barcelona. But we're certainly open to the United States. I think it's a huge market. And the reason we're starting in Sweden is because today there's already 40%, you know, vehicle penetration. The US -

Elizabeth: Yeah, it seems easier.

Charles: Seems easier.

It makes sense that Tether is based in Sweden. But when Mac asked if they were a Delaware C-corp - he was wanting to know if the legal entity of Tether is a U.S. based business.

It’s not yet, but Luis seems pretty open to that!... Here's Elizabeth. 

Elizabeth: What are the terms of this round?

Luis: so we're actually kind of open to negotiations. So.

Elizabeth: Have you raised any money to date?

Luis: We have a small business angel network that's invested. But that's it. We actually…

Mac: How much -

Elizabeth: What were the terms that they - 

Luis: It's a SAFE and it was like 10k, so it wasn't too much. But just -

Elizabeth: Oh, but they didn't have a cap on it?

Luis: No cap.

Elizabeth: But you're willing to do a SAFE with a cap?

Luis: yeah. Yeah. We're willing to do a SAFE, we're willing to do equity.

Jillian: Elizabeth do you have any investors in Sweden? Do you have any boots on the ground there or?

Elizabeth: We do not.

Jillian: Okay.

Elizabeth: But I guess, along those lines, so here are my thoughts on it. Coincidentally, in 2002, I did a project called mobile e y large battery maker in Japan. And essentially we were exploring this, the idea of you can take your car, you park it at work, your car may be able to help kind of power the building for your work, Basically, they were exploring whether that would be feasible. And the TLDR is when we gave our presentation to the executives at the end, our primary assumption was around what the price of gas would need to be in order for this to actually be reasonable. We told them our number, which today the average price of gas is way higher, but back then everyone laughed us out of the room because they were like, gas will never get above this. It now is way past that. So I am inclined to be very excited about this idea, having spent like an entire quarter on this project before in my life. I think the things that probably concern me are around the competition. I'm not sure I fully agree that Ford would not venture into this, but that's a bet I'm willing to make. So I think, assuming we can get to terms on valuation, I'm in for 50k.

Luis: Okay. Awesome. Thank you so much.

Charles: So I'm on the board of a company called Populous that provides urban, works with cities to basically redefine curb use, help them manage fleets, ebikes, [inaudible] And so I also think you will end up getting a lot of support from governments at the state and local level to do this. I think this is super interesting. I'd like to do 25 with one caveat - just around corporate structure. As Elizabeth knows, as a US investor, when you have non-Delaware C Corp companies, the end of year - basically I spend 90% of my time on my audit on the three companies that are not based in the United States.

Elizabeth: PFIC.

Charles: PFIC.

Elizabeth: Yeah, I would also love to make this ask. Like, see if you're open to converting to a US company, 

Luis: Yeah we’d be open.

Charles: that would make it a slam dunk.

Charles: Yeah. I love Barcelona, it's my - probably my favorite city in the world. So keep the development there. It's just more of a structural thing. But I don't think -

Luis: Excuse me, I'm just getting a little bit dizzy right now. Do you mind if I just 

[sit down!]

Jillian: You okay?

Mac: You okay?

Jillian: Low blood sugar? Do you want a blood sugar?

Luis: I think I'm a little low on -

Mac: I think there's a candy bar in the other room.

Jillian: Or orange juice.

Neal: We got you.

Luis is looking a little ghostly, sitting on the floor. 

Thankfully, he didn’t actually pass out. We scrambled to get him a chair, Gatorade, candy, I mean anything to get his blood sugar up.

Josh: You want an IV drip.


Neal: You can sign me up for that.

Mac: Yes. Yes please.

Neal: I'll take one of those.

Elizabeth: So did you fly here from Europe?

Luis: Yeah. I was in Barcelona two days ago.

Jillian: Have a little bit more. Just drink a little bit more.

Mac: She's a mom.

Elizabeth: Well, thank you for coming all the way over here.

Luis: No, it's great to be here, honestly. I confess, I don't know if I would be starting my company if it wasn't for The Pitch, actually. When I was kind of considering this crazy idea, I was listening to this podcast, listening to you guys asking the questions, and I would be pausing the podcast pretending that it was, like, the questions were being asked to me. So people thought I was crazy, but - because I was muttering to myself - but -


Neal: Well, here you are. 

Luis: Here I am. Yeah. So. I'm super happy.

Jillian: So I think there is something here and I think the utility companies right now are really grappling for so many different solutions. I'm going to put 25 in. I think it's critical that we're all leaning into this space right now. I think you're on to something very, very smart. And I love also your demeanor. I love your transparency. I do like the fact that you were so open to making this Delaware Corp so fast, which obviously does make it easier and, truthfully, if you didn't [laughs] I would be struggling just a bit. So it was worth the trip. Keep drinking.

Neal: So I - I have a restriction for one of the two, you know, funds that I can invest through. You have to be a US-based company for my pre-seed fund called Rising Stars through Techstars. But assuming that is something that happens, you can count on a commitment later.

Luis: Okay.

Neal: And we can talk through what that looks like.

Luis: Okay. Awesome. Thank you.

Mac: How much did you go in for, Charles?

Charles: 25. I might end up increasing it later.

Mac: 25. Elizabeth?

Elizabeth: 50.

Jillian: Me, 25.

Mac: You got to 100 already!

Elizabeth: Rounding -

Mac: I guess I'm in, pending that Delaware C Corp, because if you're not a Delaware C Corp, like, I'm - like I do North America, South America, the UK, and even then that's tough. So if you're a Delaware C Corp I'm in. Dollar amount - I'll match Charles. I'll match Elizabeth. I'll go 50.


Mac: I'll go 50.

Neal: That was a good change up in one sentence.


Neal: You went from 25 to 50 right there. You almost made the man pass out all these numbers y'all.

Mac: 50 yeah. 

Elizabeth: Keep drinking the Gatorade.

Josh: Hold up. Luis you got four investors here that want to do a deal with you. Is it worth talking about terms?

Elizabeth: We can talk terms. Yeah.

Charles: You two are the big checks.

Jillian: Right. What do you see this? How do you value it?

Mac: Yeah. You're pre-product, pre-revenue, started in Sweden. If you told me you were doing a note on a $4 million post-money, that's easy. Like, I can do that all day every day.

Elizabeth: I would say the same.

Charles: I would be in at 4, for sure.

Elizabeth: So we can do this right now. 

Jillian: Four pre? Four post?

Charles: Four post.

Luis: Okay.

Elizabeth: And so that gets you the fundraising momentum.

Jillian: Yes.

Elizabeth: We will all introduce you to a boatload of people so you will have enough like people to close the rest

Jillian: Yeah

Neal: But yeah, we'll get you plugged in man. There's a lot.

Mac: We got you.

Jillian: Okay. Three - all thumbs up!


Luis is visibly speechless, so much so that he could only communicate with his thumbs. To be clear, it’s two thumbs way up.

Jillian: Well done.

Luis: Thank you. Thank you so much.

Jillian: On the way out, don't fall over.

Neal: Yeah, rest up. 

Luis: I'm feeling much better. That was actually just a ruse to get you guys -


Neal: That's funny.

Mac: There we go.

Jillian: There we go. We got a deal. Now you gotta work on the Del Cor which is super easy.

Charles: Yeah, that's easy.


Jillian: And we can help you with that. All right. Thanks so much.

Luis: Thank you guys.

[thank yous]

Luis walks out of the room fully charged up on Gatorade and cash. All 5 investors want a piece of Tether, for a total of at least $150,000. 

Mac: That was interesting.

Elizabeth: That's a cool trip to -

Mac: Yeah. No joke.

Neal: Oh yeah.

Jillian: I love the fact that he came here all the way from Barcelona.

Charles: That's so cool.

Jillian: I mean, you talk about conviction.

Mac: Founders will do whatever it takes to get some money.

Jillian: That was - I'm gonna do whatever it takes.

Mac: I'm assuming that's like a rarity, everybody saying yes.

Elizabeth: Yes.

Charles: We've had a couple of clean sweeps. Not that many.

Josh: I mean, you all invested in, I think, in 30 minutes.

Mac: Less than 30 minutes.

Josh: Like, why was this such an obvious yes?

Mac: First of all, there's people in this room who are smarter about this than I am. They were all saying yes, so that made my ears perk up. But secondly we know that there's going to be a proliferation of EV cars. We also know that the proliferation of EV cars is actually gonna put a lot of strain on the grid. If you can make the argument that the EV cars actually support it, that actually makes the idea of having all the cars in the US more viable. And if you told me, as somebody who has an EV car, I'm gonna save you $25 on your electric bill, hey, that makes a big difference. Now, admittedly, I wanna dive into the competitors. But if he can make it work in Sweden, even if he doesn't get to the US, if he can own Europe, still a big company.

Charles: Yeah. I just think also - I just think about it from a distribution standpoint. I don't believe these charge operators want five different software systems. They're going to pick one. And if he can make it work, he has a chance to be an early winner and lock up a bunch of distribution that will be very difficult if not impossible for someone else to come and take away from him.

Elizabeth: Here's a question - can you run your SPV on this for a small allocation?

Elizabeth is actually asking ME that question! If you remember from episode 101, we’re starting our own fund, and a syndicate…aka SPV… that lets listeners invest in companies alongside the investors on our show. 

Mac: Could this be like Could this be like your first investment?

Elizabeth: Yeah. Can this be your first investment?

Josh: I mean, that's what I want to do, yeah.

Jillian: Okay.

Elizabeth: So maybe ask him to save you some allocation.

Jillian: If he's doing 500, we do 250 and they do 250 in SPV.

Josh: Oh yeah.

Charles: Maybe you can come sit over here.

Elizabeth: Oh now we're gonna fight each other for allocation on this!

Jillian: Actually, no, no. 


Jillian: I truly think …

Mac: This is the kind of stuff my wife would like - she don't have no money but, if she did -

Jillian: Yeah. This is - this, I mean, if we're not investing in this, then shame on us, truthfully. This is exactly where we should put our bets.


Lisa Muccio: Yeah I’m excited about this. But also thank you guys. That just makes me so happy. 

Neal: Good pick.

Jillian: - for seeing this. Really appreciate it.

Elizabeth: Yeah, you should do the SPV on this one.

Charles: I agree.

Jillian: Absolutely. Very gratifying. Don't worry, I know Josh -

This was the perfect pitch. Luis had everything going for him. But after the break… Will this be the first deal we do out of the pitch fund? Or will something as simple as where the company is based kill the whole deal?

Luis: if it was the Swedish company, would you still be willing to invest? 

Coming up, things get complicated.


Welcome back.  A week after the pitch for Tether, Elizabeth and Luis jumped on their first due-diligence call. She asked a bunch of hard and thoughtful questions about the concerns she had, mostly about Tether’s competition. By the end of the call, she was ready to cut a check for $50k. 

Elizabeth: Okay - Well I think those are all my questions. I've asked you guys a lot of questions. Is there anything I can answer for you?

Luis: The first thing is probably shows a little bit of my inexperience or naivete, and you can correct me if I'm wrong. So in the show one of the discussion points was about the Delaware C Corp, which I said I was totally open to. So the only thing is, I just have to check then what the implications are as far as the investors that we're talking to. I, I know some of the, the VCs and stuff that we're talking to, and some of the business angels only invest in Swedish companies. So I just have to see if they would be, you know, what, what are the implications here? I believe in the pitch, you know, you said you were gonna invest before the Delaware C Company came up. So if it was the Swedish company, would you still be willing to invest? I mean, and I'm not saying that's what's gonna happen. I'm just trying to see what we stand, right?

Elizabeth: Yeah, yeah. So I'll tell you the complication. The complication is something called PFIC. I'm not gonna go into the details in the interest of time, but it's like a US government issue. But basically the US Doesn't want people money laundering outside the United States, so We've invested in a number of foreign entities, but when we do, we have to jump through a lot of hoops, So I think that's like a regulatory thing that we would, I would need to kind of figure out, because we've had a lot of complications with some of our other foreign investments as well. So, that's my wishy-washy answer of I would need to look into that. If in the case that we cannot do it out of Hustle Fund, I would be happy to write you a $5,000 personal check, but that doesn't move the needle for you, I realize.

Luis: right, right, right, But okay, But that's, that's, that's fine. I mean, I'm not saying that we wouldn't open the c corp. I'm just saying, you know, we have to look at the implications and verify with other investors and stuff.

After the call, Elizabeth introduced Luis to a lawyer that could help them make the change to a c-corp.

As for the other investors… Jillian decided that she was out. She realized she didn’t know enough about the space to help Tether, as much as she’d like.

The rest of the investors were still interested - but only if Luis converted Tether to that Delaware C-corp.

Needless to say, I was eager to see where they landed. A few weeks later, Neal from Techstars Chicago, Lisa, and I hopped on another call with Luis.

Josh: Are you guys gonna open up a Delaware C Corp or what? What's going on? . . 

Luis: Yeah, that's the, that's the never ending struggle of our lives. So here's the, Rundown on the, you know, since last time we spoke, the, the idea was, we were holding off, we were speaking to a couple of investors in Europe. What we then said was, we wanna, we want to also get into Techstars Stockholm, we applied there. We said this is perfect because it seems like Techstars Stockholm, they want you to do a Delaware C Corp, and then we can have our cake and eat it too. So we can have the European investors. We can have the American investors. We'll be in Techstars and everyone will be happy. And we'll be happy. However, there is a new thing that's happening right now

Josh: No! 

Luis: Which complicates things of it. So Techstars Berlin, they contacted us. And basically they're doing a program that is a vertical only for companies in the EV space, which is great. 

Josh: Wow. 

Luis: so it's like a, our, our vertical, and it's in conjunction with an Audi Accelerator. Now, here's the, here's the wrench in the gearbox. This is the only Techstars that we know of where they specifically only want European companies. They don't want a Delaware C Corp. 

Josh: What?!

Luis: All the other ones . All the other ones want. All right. And so now it's like, oh God, we were already, like, things were lining up and now this, this kind of gear in the wrench.

Neal: Well, one way that might kind of really flush us out is... like what are, what are the, the factors that would go into you deciding to move forward with a, you know, Delaware C-Corp? 

Luis: Well, for example, part of the reason why our investors want us to open up in the US is because the, the, the amount of effort that they have to do for tax, purposes and stuff is much less. But that also is the, the opposite for us, right? If we now have a multinational company that has to. Deal. Like we're, we're a very early stage startup that's gonna be in three countries, in two continents. That, that's a lot of things that we don't fully understand. But that's why we have our advisor. And, but he's saying like, look, this is. the easiest. Like, this is not a, a simple, open up a company and, and do this.

Josh: Yeah I mean… you know obviously you guys have to choose what's best for you all. But I think that if you're wanting to raise from a lot of US-based investors, you're gonna have better success if you have that Delaware C Corp set up.

Neal: it doesn't sound like he wants to. It doesn't sound he wants to, Josh. Yeah. That's what’s I’m hearing .

Luis: Well, well, so it's, it's not, I don't want to, like, I, I want to, right? Like I, I am I, Luis Medina, I, I want to Right? Like, but at the same time you. I have to understand like, okay, we are in Europe and operations are in Europe and the connections that we need right now and the people that we're gonna be operating with are in Europe. 

Neal: So from a company perspective, strategic benefits going to the us, staying in Europe. From how you're thinking about it and framing it.

Luis: Yeah, because for every door you open, like if we move to the US we'll open a lot of doors, but we also close a lot in Europe. 

Neal: Right. 

Luis: And so, . And I know that in the long term, maybe, you know, like, it, it, maybe it's easier to raise money for higher, like for other rounds in the US in the future. But for now, we, like, you have to look at the goal that's directly in front of you. And what is the goal directly in front of us right now is start operations 

Neal: Yeah. 

Luis: In Sweden and get some pilots there. So, so that's, that's basically, you know, I'm not saying. I'm not saying no. 

Neal: I got you. Alright. Right. It sounds like there's a lot riding on Techstars coming through on this.

Luis: Well, yeah. , we're on the hook. Yeah. Yeah. I mean, we made it to the next round and, we're gonna have a call with the head of, Techstars Berlin on Friday. So I think that's the strategy right now is like Techstars, we, we realize it's, it's pretty key and. If we can get in through there, we'll be in a really solid spot.

Luis and his co-founder Martim had a lot riding on Techstars. When I dug in, we found out that they were going to let whatever Techstars they got into, determine which path they would take.

Which I thought was odd, why would they turn down the fundraising momentum they have right now with investors in the U.S. just on the chance they might get into techstars. That’s when I started to wonder if their inability to just make a decision would make the investors on our show, start having second thoughts about investing.

We called them again a few weeks later, still no decision. It had been three months since Luis pitched on our show. It was getting down to the wire. 

Finally, just three business days ago, Luis and his co-founder Martim gave us a call. 

 Josh: Well, hey guys. 

Martim: Hello. Hello. Back again.

Josh: So… have you made a decision? 

Luis: We have made a decision. Can, can, do you have a, a drum roll like sound effect that you can put in? 

[josh making drumroll sound]

Luis: We have decided that we are gonna go to do the Delaware C Corp. 

Josh: [gasp] What?!  

Luis: we have decided.

Josh:  no way. 

Luis: Yes, 

Martim: yes, yes. 

Luis: Woo.

Luis & Martim: [Laughter]

Josh: Okay. . So tell me - How did you come to that conclusion? Because I think the last time we spoke, I wasn't sure which way you were gonna go. 

Luis: Neither were we. 

Martim: Yeah, we were just very confused. We just had to put everything on the table. Look at both scenarios. And also there was a lot of confusion in the US side that related to like costs and, how is it gonna work and how do you do that? 

Josh: yeah

Martim: So after talking with the lawyer that Elizabeth suggested. She clarified some things and then she made us talk with a CPA, so like a tax specialist. 

Josh: Ok.

Martim: And then he clarified the other end of the things and then both, we just looked again at the scenarios and consider our options and we, we thought like with the potential that the pitch is gonna have and also the connections of the US investors, we just decided that it was the best decision. 

Josh: So what did it come down to? Was it just, it wasn't as complex as you originally feared? 

Martim: Oh, no, it's complex.

Luis: it is complex. But at least we have a clear understanding now of what the steps are, what the cost will be like. That CPA we talked to this guy was like, you're gonna have to fill out form this and this form, and you guys have more than X percent ownership that's outside of the us so you're gonna have to do this thing and you're gonna have to do that thing. And like the cost per entity that you tie from outside the US to the where C Corp is gonna be this, and like blah, blah, blah, blah, blah. Right? Like, so everything was very clear. And without that uncertainty, like yeah, the costs are are, you know, they're. They're not negligible

Josh: well, would you mind what is the cost? On a yearly basis to be a Delaware C-Corp? 

Martim: Per subsidiary, it's approximately 10 k per, per each. It can go up to 10k.

Josh: Got it. So, a month from now. You've got all the funds raised, you know, maybe you're in Techstars, maybe you're not. Like, what, what does the business look like? What are you guys doing next? 

Luis: Well, we are currently interviewing people for multiple roles, right? So we have a data scientist role that we’re interviewing people for. We have a cloud or backend engineer role that we are interviewing for. 

Josh: Nice. 

Luis: And we have a mathematical optimization engineer role. So basically like operations research, constraint optimization, all of that.

Josh: Luis, you've come a long way from listening to the Pitch podcast and muttering to yourself the responses to questions you heard on our show. 

Luis: yes, no. I've traveled halfway across the world, almost fainted in your, studio and gave you guys a heart attack and kept the suspense up. And now this is the conclusion. So… feels good. [laughter]

Josh: This is great. Obviously, I'm excited to, for this to be the first investment out of the fund. I'm really excited to see where this goes. 

Martim: let's do it. 

Luis: Let’s do it. 2023 is the year.

Listeners, I’ve been waiting for a long time to be able to say this on the show. If you are interested in investing in Tether, alongside the investors on our show, Go to pitch.show/tether and fill out the form. For this deal, you’d be investing alongside Elizabeth and Charles. You’ll be the first to know as soon as that C-corp exists and we’ll have details on terms, who invested, all that jazz.

There you can also sign up for our brand new newsletter, The Pitch Insider, where you can learn more about Tether’s new job postings and get updates on their progress. Again, that’s all at pitch.show/tether.

Luis: If you guys are listening, the listeners, invest! [laughs]

Thank you for listening to the first episode of our comeback season. For a literal taste of next week’s pitch, stay tuned after the credits.

The Pitch is me, Josh Muccio, Lisa Muccio, Kerrianne Thomas, Anna Ladd, and Enoch Kim.

Special thanks to Kareem Maddox, the only podcast producer to leave our show to be in the Olympics… twice. Love ya Kareem.

Music in this episode is from The Muse Maker, Breakmaster Cylinder, Fairing, Jupyter, Imagined Nostalgia, Memory Palace, Onders, and Our Many Stars.

Also, this season we’re doing another brand new thing, videos from The Pitch Room. Follow us on Instagram @thepitchshow to see what our investors actually look like. 

The Pitch is made in partnership with the Vox Media Podcast Network. 

Next week on The Pitch…

Paul: We’re coming after Heinz 

I thought we would do something fun this season, if you want… you can taste test next week’s pitch with the investors on our show.

Paul: you have ketchup, you have barbeque at the top, and then you have an old Bay style hot sauce.

Charles: The Chesapeake one's good.

Paul: Thank you.

Elizabeth: I really like the sauces.

Paul: Thank you very much.

Carl: Which was your favorite?

Elizabeth: Actually, I - maybe the spicy one.

Charles: The Chesapeake one. Chesapeake fire.

Neal: I'm a Sweet Baby Ray’s guy, and that barbeque sauce right there, I would take that any day.

Next week’s pitch is FIRE. If you want to taste the sauce along with our investors, head to pitch.show/sauce

See you next Wednesday.

The Pitch, Inc. and their respective employees and affiliates do not provide investment advice or make investment recommendations. The information provided on this show should not be used as the basis for making investment decisions. Listeners should conduct their own research and consult with their own investment advisors before making any investment decisions. 

Jillian Manus // Structure CapitalProfile Photo

Jillian Manus // Structure Capital

Investor on The Pitch Seasons 1–10

Jillian Manus is Managing Partner of an early-stage Silicon Valley venture fund, Structure Capital. Branded “Architects of the Zero Waste Economy," they invest in underutilized assets and excess capacity. She was named one of the top 25 early-stage Female Investors by Business Insider in 2021. Jillian serves on numerous corporate and non-profit boards, these include: Stanford University School of Medicine Board of Fellows, NASDAQ Entrepreneurial Center Board of Directors, Fuqua School of Business at Duke University.

Charles Hudson // Precursor VenturesProfile Photo

Charles Hudson // Precursor Ventures

Investor on The Pitch Seasons 2–10

Charles Hudson is the Managing Partner and Founder of Precursor Ventures, an early-stage venture capital firm focused on investing in the first institutional round of investment for the most promising software and hardware companies. Prior to founding Precursor Ventures, Charles was a Partner at SoftTech VC. In this role, he focused on identifying investment opportunities in mobile infrastructure.

Elizabeth Yin // Hustle FundProfile Photo

Elizabeth Yin // Hustle Fund

Investor on The Pitch Seasons 6–10

Elizabeth Yin is the Co-Founder and General Partner at Hustle Fund, a pre-seed fund for software startups. Before founding Hustle Fund, Elizabeth was a partner at 500 Startups, where she invested in seed stage companies and ran the Mountain View accelerator. She’s also an entrepreneur who co-founded the ad-tech company LaunchBit, which was acquired in 2014. Her book is called Democratizing Knowledge: How to Build a Startup, Raise Money, Run a VC Firm, and Everything in Between.

Luis Medina RivasProfile Photo

Luis Medina Rivas

Co-Founder of Tether

Luis - originally from Merida, Mexico - is an electrical engineer with a focus on renewable energy. Having worked as a solar design engineer at GE Solar for a few years post graduation, Luis moved to Sweden and Spain to get a double masters in renewable energy engineering and a crash course in management and entrepreneurship from the ESADE Business School in Barcelona. After seeing the pivotal role that energy storage will play in the transition to net zero, Luis decided to develop Tether to help leverage millions of electric vehicle batteries in the fight against climate change.

Neal Sáles-GriffinProfile Photo

Neal Sáles-Griffin

Investor on The Pitch

Neal Sáles-Griffin is an entrepreneur, teacher, and nonprofit leader. He co-founded the first beginner-focused in-person coding bootcamp, and ran for mayor of Chicago in 2019. He's currently the Managing Director of the Techstars Chicago accelerator as well as the Techstars Rising Stars fund, and is an Adjunct Professor at Northwestern University's McCormick School of Engineering where he teaches entrepreneurship.

Martim Girao de Melo PerestreloProfile Photo

Martim Girao de Melo Perestrelo

Co-founder of Tether

I am one of the co-founders of Tether, an e-mobility company that turns EVs into energy storage. My background is in mechanical engineering and I have a double degree master's from InnoEnergy Master School, having specialized in energy storage and electricity markets. I also have graduated from 3 courses in management and entrepreneurship at ESADE, Georgetown and Genoa universities.

In my spare time I enjoy reading, watching documentaries, TedTalks, shows, and a good movie. I am active in sports, either by playing tennis or working out.

Mac ConwellProfile Photo

Mac Conwell

Investor on The Pitch

McKeever "Mac" Conwell II is managing partner at RareBreed Ventures. Mac is a former software engineer and was a former DOD contractor with top-secret clearance. He was a two-time founder with an exit and a failure. Next Mac moved on to venture capital via the Maryland Technology Development Corporation as part of their seed investment team. Mac went on to found RareBreed Ventures, a pre-seed to seed venture fund that invests in exceptional founders outside of large tech ecosystems.