Season 14 Finale: The Mad Scientist, The Foxhole, and a $48M Power Move

I’m Josh Muccio

And I’m Lisa Muccio

Welcome to the pitch season 14 finale

This season was marked by spectacular drama

Sarah: We are aiming to have 48 million post money valuation cap. 

Rohit: You're going from 15 to 48? 

Sarah: Yes…

Rohit: That's tough dude. 

Spectacular Bagels…

Brad: Why would you care if it's gluten-free or glutinous? It's just good bread

Spectacular pitches, that we thought for sure would get funding…

Girum: Hair transplants. 

Charles: Turkey

Cyan: Turkey. 

Girum: Turkey. Yeah. 

But turned out to be a spectacular fail.

Monique: I only see a world in which this is the plastic surgery place. 

Spectacular slovakian swimmers,

Patrik: Even though he wasn't big as he is right now, I still was like, whoa, how could this big mass be moving so fast and efficient?

And a spectacular final pitch ... at least, in the room

Matt: Sorry, I know you said there's a lot, so I'm scared to show this. There is one more thing. [laughter] This is the thing I'm super excited about. I got it working last night.

Josh: There were a lot of surprises coming out of Napa

Lisa: There were a lot of surprises

Josh: So many gotchas from the VCs

Lisa: We had Elizabeth going in on a deal that she didn’t commit to in the room.

Josh: And then we had, you know, the typical thing, VCs backing out like they do.

Lisa: And then we had that surprise valuation from Sarah after the fact

Josh: But all in all, the Napa event where we recorded all these pitches for season 14, was so good that we got enough episodes to make two seasons of the show

Lisa: Two seasons!

Josh: So starting in February of next year

Lisa: Yesss

Josh: We’ve got 7 more pitches coming your way, all from Napa. But before we get to that, let’s close out season 14

Lisa: I can’t wait to find out what happened

Josh: You already know what happened. On today's show we call up four founders from this season AND host another round of rapid fire updates to bring you up to speed. And I know I say this every season, but actually, this season, we’re gonna go even deeper behind the diligence curtain, with the 30 day Sidecut diligence foxhole

Lisa: Dun dun dun. The season 14 finale, is coming up after this

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Welcome back. In the season debut, we met Sarah Lucena from Mappa. The first company we invested in before bringing them on the show. In that episode the VCs demo’d the product right before the pitch.

Mappa: Hello! Welcome to Mappa. We specialize in behavior analysis through voice. To start, could you tell us a little bit about yourself?

And the results were…

Rohit: My favorite line here is you rely less on charm or enthusiasm. [laughter]

She got three commitments in the room, but no one talked about valuation until after the fact when Sarah dropped a bombshell…. She was raising her valuation from 15 million to 48 million in just two months. We left that episode not knowing if Sarah came to terms with the investors. So we caught up with her later to see what happened.

Josh: Hi, how are you, Sarah? 

Lisa: Hi Sarah. 

Sarah: How are you guys? 

Lisa: Good, how are you? 

Sarah: I'm good. Minus my voice. 

Lisa: Oh no

Josh: Oh no. How did you lose your voice? 

Sarah: Oh my God. It's been a crazy week with TechCrunch Disrupt. Mappa end up being selected as one of the top 20 companies at the Startup Battlefield.

Lisa: Yes. 

Sarah: Yesss

Josh: Congratulations. 

Sarah: Thank you. Oh my God. It was a crazy experience. Not as crazy as recording The Pitch Show in Napa, but I was having so much fun as well. 

Josh: There's like gotta be a joke I can make here about the voice AI startup founder losing her voice.

Lisa: Oh my gosh. 

Josh: Well I am so excited to talk to you because your episode left on a bit of a cliffhanger. 

Sarah: Oh my God. I have never been stopped that many times for people to ask me about valuation since this episode dropped. People that I have never met was like pulling me aside and like, what is the valuation? And I was like, what do you mean, like I was like, are you an investor? Why are you curious about my valuation? They were like, no, from The Pitch Show, what is the valuation? And I'm like, you gotta, you gotta watch. The, the last episode, and I have to say Josh, everybody agrees with Lisa that it was a Sarah move. So

Lisa: Yes! Yes!

Josh: It was a power move. 

Lisa: Yesss. I love that. 

Josh: All right, so at the end of the episode, Cyan Banister, Immad Akhund, and Rohit Gupta were interested in investing, but then you had a call with Rohit where you said you wanted to raise at a $48 million valuation. First, can you explain your thinking? 

Sarah: Yeah, of course. So when we started having those conversations with Rohit, those conversations with VCs, they usually take at least two months. And in two months time, I knew we would be hitting the $4 million annualized revenue mark and 4 million dollars in annualized revenue times 12 marks, the $48 million valuation that I asked in that exact same call. 

Josh: So your thinking was that the 48 million felt high, but that you would grow into it in two months time that it would take to go through diligence? 

Sarah: Exactly. And so we did. Right? Like we are now over $4 million in annualized revenue. I guess if I was a tech bro, I could be valuing Mappa from a revenue standpoint, a data standpoint, an opportunity standpoint, and putting a much bigger number on the table. 

Josh: Maybe you are a tech bro. This sounds like tech bro thinking right here. 

Lisa: Oh my gosh

Sarah: I think like I have the voice for it right now, right? Like [laughter]

Josh: We did get on a call with you. 

Sarah: Yes. 

Josh: Before you got on with Cyan. Because I wanted to understand your thinking there and like if your strategy had changed at all since that call. Were you thinking differently about valuation?

Sarah: Yeah. I really appreciate you guys giving me a call and checking in and saying, Hey girl, are you sane? Um, but I actually truly, deeply appreciate it because it also allowed me to kind of validate the way I was thinking. I think what I did badly in our call with Rohit and I, and, and I can see that in retrospect. I didn't get to the point in which I could clearly explain what was the reasoning behind the valuation. And I think that just throwing the number kind of scared him, and, and, and naturally, right?

Lisa: Yeah. 

Sarah: Like it's a huge jump. I got that sense, you know, during that call and then started like thinking, okay, how I wanna approach this with Cyan because she's also definitely somebody that I wanted to work with and that I admire deeply. And you guys gave me the idea of, hey, let them start the conversation. 

Cyan: All right, well, I know that I wanna put in 100K, which is what I committed to. I don't know what terms that's gonna be on, so you'll have to tell me what the terms are. Your traction is impressive. You're amazing. I was impressed with you from the first time I met you and saw you. And I deeply understand what you're trying to build here. And I really, really think that you have a higher calling to help people understand each other more. 

Sarah: I agree with you. Sometimes for me it's kind of hard to explain what we are doing because I think it's so sacred in a way that I almost feel that I shouldn't be speaking on it. You know what I mean? But I agree with you. I think the way we should be experiencing humanity could be much more powerful. If we not only knew ourselves to the deepest levels, but we’re also willing to know others. 

Cyan: Yeah, I agree. Well, thank you so much for your time today 

Sarah: Oh, likewise.

Sarah: So she joined our cap table as an angel investor

Lisa: Yay. 

Josh: Fantastic. 

Sarah: And we negotiated the valuation and we got to 30. 

Josh: 30 million. 

Sarah: Yeah. We closed with both Cyan and Rohit. 

Lisa: Ah! 

Josh: Wow. 

Sarah: Yes. 

Josh: I guess your strategy worked out. I was just afraid that you would lose Rohit forever by saying 48. My concern always with founders that say a number that's too high is that you instantly lose interest and a bit of credibility if you feel like it's untethered from market. 

Sarah: I agree.

Josh: And I understand tech bros have their own market sometimes, but I, I, you know, I've just seen it happen too many times on the show where like, instantly the founder loses credibility 'cause they said a number that's just ludicrous.

Sarah: I agree with you. And I think like the reason why that didn't happen, it's because although it was a big number, it was not just me throwing a number out there. When I actually got the opportunity to walk Rohit through my line of thinking, he was like, okay, I get this. I understand what you were saying, I respect that. But if you wanna work with me, we have to find a common ground and I'm happy we did because he is rad, I think he is, he is one of the raddest investors out there. 

Josh: He's different!

Sarah: He is.

Josh: That's for sure. I like him. He's like different in a really good way. 

Sarah: Exactly. 

Lisa: Yes. 

Josh: He's like really excited to be invested. He actually messaged us and was like, I just wired into Mappa. And he told us thank you. 

Sarah: Oh, that's nice.

Josh: For bringing the opportunity to him. 

Lisa: Wait, wait, wait. Has he wired? 

Sarah: Yes. Everything is signed and wired. 

Lisa: Okay, okay. 

Sarah: You know how superstitious I am. I would never be telling you all this story if money wasn't in the bank. 

Josh: [laughter] That's amazing. And Cyan signed and wire too? 

Sarah: Yes. Cyan is also on board. 

Josh: How much did Rohit invest? 

Sarah: So Rohit, the valuation was still out of his mandate for the fund. So he entered as himself, and he wrote a 50k check. 

Josh: Okay.

Lisa: Wow. 

Josh: Got it. So 150K at a 30 million. Yeah. It sounds like the story's all wrapped up except Immad also committed to your round. 

Sarah: Yeah. 

Josh: 150,000. What happened with Immad? 

Sarah: I guess he was not that interested and that’s completely fine. We did go into a due diligence call, but I didn't felt, a lot of excitement either way. And I guess like things just. Didn't evolve after that. I did, I did follow up with them a couple of times after that call But I guess, it was not for them. And that's fine too. I even like Immad told me something at the pitch that really resonated with me. When we were having lunch over Chipotle that day. And he told me like, you shouldn't be optimizing for all investors, you should be optimizing for the right investors. That actually stuck with me. It's like Mappa’s technology, right? Like we don't see behavior traits as good or bad. It's not like, oh, this is, this is bad. And therefore it's not for me, it's not about it. It's, it's really about compatibility at the end of the day, there will always be VCs and founders that are more compatible and that would work better together. And, and I guess. It was just not the case with Immad.

Josh: Yeah. It's not lost on me that you effectively doubled your valuation in three months. 

Sarah: You are welcome Josh! 

Lisa: Yes. Okay, so. Just so we have this completely on the record, who was right? Josh or Lisa, was 48 million a power move?

Sarah: 48 million was definitely a power move. And Lisa, you were right. You got it from the get go. 

Josh: The important thing is it was a power move that worked. 

Lisa: Yeah. 

Josh: A power move that doesn't work is not a power move. 

Sarah: Is just a move.

Lisa: And it worked. So it was clearly a power move. 

Josh: It's just a move. Yeah. Yeah, you're right. You got, you win this one. 

Lisa: Thank you. Thank you. 

Josh: I'll let you have this one. 

Lisa: From what I see, I think women tend to undervalue themselves and operate from a place of insecurity more often. I love seeing a powerful woman who is not scared of what people are gonna think, and you are just willing to put that number out there and you talk about believing in people and the potential that they have. And I want to see every woman living to her fullest potential. And so to see you operating like that makes me so happy. 

Sarah: I'm gonna cry. You get it. You know it, it's a constant reminder to ourselves, right? Like as women and as women in tech, that what we are building has value. So I, I agree with you and I appreciate you seeing that. So thank you. Thank you again.

Josh: Well, I am so excited to be on this journey with you. Honestly. It's been like so fun. And the whole, 

Lisa: Oh gosh, yes. 

Josh: Narrative arc. You know, we brought you on just 'cause we were like, Sarah's gonna crush it. Like we've never been more psyched about a founder before the show. And then it was just like a success story. To open the season and then you gave us the juicy twist right at the very end to make it just fully a beautiful pitch episode. 

Lisa: Yeah. 

Josh: So, you know, thanks for giving us the content.

Sarah: Oh, I appreciate that. Yeah anytime

Lisa: Man I like being right

Josh: I’m happy for you. 

Lisa: Thank you. 

Josh: Begrudgingly happy because at least we got in at 15 million. And I’m excited to see what happens next, now that their API is live!

Lisa: Yes, ooh, I can’t wait to see all the ways that people use this API

Josh: Hopefully none of them are nefarious. Alright.

Lisa: Who’s next?!

Josh: When we come back, it’s time for some rapid fire updates on Original Sunshine

Lisa: Bagels

Josh: Doctours

Lisa: Turkey

Josh: and My Town AI

Lisa: SimCity

Josh: And whether buying an allergist will kill the biggest deal of the season.

Lisa: Achoo

Josh: That’s coming up.

BREAK

Josh: Welcome back. Are you ready for the rapid fire updates!?

Lisa: Let’s go

Josh: Enoch, drop a sick beat. Do kids still say sick beat?

Lisa: Original Sunshine!

Josh: The bagel bros! They’ve taken the gluten out of wheat. In the episode you heard that we invested $144k, very specific number, but that was all David had room for in his round. But we ended up getting the full allocation we wanted and invested $180k. Thanks David!

Lisa: After the show ANOTHER Pitch Fund LP invested too – Rich Smith put in $10,000.

Josh: Now Original Sunshine is planning to move their manufacturing facility from LA to Austin instead of New York. 10,000 sq feet of bagels. He thinks they can do 30M in revenue out of their new facility.

Lisa: And! They’re expanding into cookies and sourdough bread. Brad’s currently in the lab formulating the best gluten free burger bun ever. And hopefully, please Brad, make me donuts

Josh: Next up, Doctours, our favorite Turkish hair transplant marketplace. 

Lisa: The VCs had trouble reconciling hair transplants with Girum’s original pitch, about a lifesaving procedure that his brother received overseas. 

Josh: Yeah. The VCs on the show hated it. But I thought it was a good business. And it turns out… I’m not the only one! After the show, Girum oversubscribed his round by a full million, raising $2M in total. From folks like Draper Associates and Jason Calacanis’s fund.

Lisa: But to be clear, The Pitch Fund did not invest.

Josh: We might regret passing on this one!

Lisa: We might. Man I was hoping to get a discount on a BBL.

Josh: Brazil! I can’t believe you actually said that. 

Lisa: And finally, the last of our rapid fire updates, Nichole from My Town AI. A real life Leslie Knope in The Pitch Room.

Josh: In the episode, you heard Dawn quickly diligence the deal and pass, but Charles was still mulling it over.

Charles: I was very close to saying no. I was like 51-49, and I was like, I'm gonna say yes because I think I'm gonna like the answers, but it's not like an obvious, I'm a hundred percent sure I'm gonna like all the answers. 

Josh: Their diligence call sounded like it went pretty well. But then, Nichole got an email from Charles.

Nichole: He ended up passing. It kind of came down to the market, you know, the viability of going after kind of, the smaller towns, but yeah, it was disappointing.

Josh: I hope this one doesn’t come back to haunt us.

Lisa: But I would still vote for Nichole if I lived in Nederland.

Josh: This concludes the season 14 rapid fire updates. Now, there was one company this season, that took the cake for the most money committed in the room.

Lisa: Some rapid fire investments!

Cyan: I’d like to put in 100k at that 10 cap if I can.

Immad: I would love to invest 150k

Monique: You stole my number.

Immad: You can say it too!

Monique: I’d like to invest 150k

Josh: Matt Truebe from Above Health won the investors over with his mad scientist vibes.

Immad: Are you a surfer? 

Matt: uh, I'm a nerd

Lisa: It’s time to catch up with Matt 

Josh: Matt, your pitch went amazing. You had $550,000 committed in that room, including The Pitch Fund. There was just one investor who didn't commit and he was conflicted out. And you could tell he was pretty bummed that he couldn't participate. So to catch everyone up to speed. Let's go through each of those commitments. Starting with Monique. You had a call with her where she was taken aback by your plan to buy an allergy clinic in LA. What happened with Monique after that call? 

Matt: I think it was less that we were going to acquire a practice for $0 and more that our go-to-market strategy included brick and mortar. And that was it. She said she is no longer going to move forward with the investment. I mean, I, I think she had been burned by before by three investments and that was a deal breaker for her. 

Josh: So let's talk about that. Are you buying just one clinic or is your plan to buy a bunch of clinics? 

Matt: The plan is to go where the market needs. So my end goal is an AI diagnostics platform that can diagnose diseases at home. How to get there, there's a few options. The easiest is actually through a few physical presences where you can run your own trials. So most device companies go out there and spend tens of millions of dollars trying to seek FDA approval. We are going to be profitable before doing that. And so that's just a different go to market path that I think no VC has seen before, and so I think a lot of VCs are pattern matching to something they’ve seen work. I'm moving towards where I think will be the fastest and best for Above, not based on a historical thesis. 

Josh: Hmm. Why are you not afraid of taking on these like brick and mortar clinics? You're a pretty experienced entrepreneur, so like you, you understand how that translates to the P&L. And I know this first one, you were able to buy with all equity, but you only have so much equity, so you can't do that continuously. So - 

Matt: Yeah. 

Josh: Why is it not scary to you as a business builder? 

Matt: I keep coming back to my discussions and now contracting with payers and health systems that, that's the simple requirement. If I wanna work with the medical system in the United States a single physical presence is needed at the very minimum. You know, I think you're either gonna make a change in healthcare or you're not. Let's say I was a device company that built the best device in the world, but I just wanna be a device company. I would pitch it to, let's say, UCLA Health. They would then create a program, centered around our device. And so how do we get paid as the device company? They're getting paid a ton of money. They created a special program with our device. They talked to the payer. We're not talking to the payer, they are. And then we have to get like a very small nugget from that. So how does this device company that spent tens of millions of dollars in FDA approval, make their money back. 

Josh: Yeah

Matt: Well they have to charge a ton of money to patients. And then on top of it, the payer doesn't want to pay them, right? Because it's too, too expensive. So we're stuck in this system. So I can play that system or I can try to break it. My goal is to break the system. 

Lisa: We've heard that before on this show.

Matt: Yeah. I'm sure every uh, founder wants to, wants to break some system somewhere. You know, don't get me wrong, we have a pivot. 

Lisa: You have a pivot in mind already if, if necessary. 

Matt: Yeah. I joined a pre-revenue company before, we pivoted four times. I don't try to kid myself. I'm trying something extremely hard. I want it to work, and at the end of the day, if it can't, I'll go the route I just knocked on. 

Josh: [laughter]

Matt: But it, it just won't serve as many people. It won't be as exciting and it, the impact will be hundreds of thousands, not millions. And I guess that that's okay. 

Josh: Got it. 

Lisa: Yeah. 

Josh: So you also had a call with Charles. And it was a pretty classic Charles Hudson call. It sounded like he was in. What happened after that? 

Matt: He just asked me for a financial model. That was it. He said he was in for 50. I did set a minimum check size, so I think that, um, potentially might have scared him off.

Josh: What minimum check size did you set? 

Matt: It was a hundred thousand dollars. 

Josh: Oh!

Matt: Yeah. 

Josh: Okay. 

Matt: And I don't think he's going to move forward at the higher amount. 

Josh: And did he say why? 

Matt: He wants more information on how the model unfolds as I roll out the hardware and services to more people. 

Josh: Okay, so now he's waiting for a response from you. 

Matt: We're launching November 3rd. So in the next 30 to 60 days, I'll have a lot more information on how the model's going. And I think he really just wants to see the final numbers play out on the unit economics and then probably make a decision from there. 

Lisa: So if he wants to invest at that point, then will you still take his check? 

Matt: You know, I may be very naive, I just want believers. So let's take Immad, who I really liked on the show. I thought his questions were great. He said 150. He sent me to one of his business partners and I never talked to him again. And then when the partner came back, they came back and said, they're in for 50. And I, I shook their hand and I said, thank you but our minimum is a hundred. And, I walked away from that. Maybe in a year I'll really regret turning down Immad. But I also got rubbed a little…I felt big timed. It's like, okay, here's my person and here's a smaller check. You know, they're a new fund, so maybe they changed their strategy. 

Josh: Yeah, 

Lisa: It's not unheard of. 

Matt: Yeah. And that's totally fine. And mostly because I, again, I want believers and maybe I'm in a different situation than your typical like 24-year-old who's working out of an apartment and struggling to get by, but then spending $20 on a DoorDash burrito, you know, I'm not that person. You know, that's not me.

Lisa: Love that so much 

Matt: I'm just in a different situation. And so what I'm looking for are people who believe in it, who can help, like provide intros and that's maybe naive. So I just wanted to say with Charles, maybe, you know, but I'm not sure he is a believer. 

Lisa: He needs to see the unit economics to be a believer. 

Matt: Yeah, for some reason I've gravitated towards people who understand the problem I'm trying to solve, and that's really made a connection with me. It's where I've got a syndicate, for example, of, of people who have been impacted with food allergies. Every week I just get energized. I talked to last week a few grandmothers whose entire family's impacted by this disease. One of their grandsons was in the hospital for a week ICU, right? And so they're at their wit's end and they’re bringing in five people. One phone call. I get really energized from that. And you know, it's really tough when I switch gears and talk to someone else who does not, who doesn't have that. 

Josh: Yeah. 

Matt: So, you know, who knows? I, I really like Charles. I do need help. I'm on the hardware side, but actually just got a term sheet from someone who is very deep and was a former operator, turned into a fund on the hardware. So, even though I really like Charles, he doesn't seem like having a connection to what we're trying to do. So we may not end up working out with him. 

Lisa: So it seemed like Cyan was a believer because of her kid. What happened with Cyan?

Matt: Yeah, Cyan. I don't know what's going on. But I, I felt like this really good energy. 

Lisa: Yeah. 

Matt: And that's the energy I was actually talking about. She like helped sell the rest of the room and she understood. Never heard from her. And so I did meet with Ariel, one of her GPs, and I think she was a no coming in. I felt from the body language and you know that synergy you build in person was was not there with that VC. And so they passed. So I think that's part of the challenge. If someone doesn't really understand what we're trying to go after or has had a connection, they don't understand how serious some of these things can be to people and what people will do to seek treatment or seek better care. Which is what we're offering. So needless to say, they did not move forward. Um, but yeah, it was, it was like, it felt like a shock, like a small bait and switch. Actually, I'd be pretty honest. Yeah. I was very, very surprised with that. 

Lisa: I’m sorry. Yeah. That really sucks. 

Josh: Yeah. One of the things we learned super early on, like a decade ago when we tried to launch this show is how hard it is to create human connection with someone remotely. In the very beginning, these episodes don't exist anymore, but we had 55 episodes where no one ever got investment A: we probably weren't that great at picking companies then, but also everything was done remotely. We made the switch, hosted an in-person event and then all of a sudden out of 12 companies we had over a million dollars committed. But it's interesting when we see this dynamic happening on our show where you meet someone in person. You establish this rapport, they're on board, and then they pass you off to someone else on their team and you talk to them remotely. It's almost destined to fail from the beginning. 

Lisa: Yeah. 

Matt: Yeah. I, it's so, so I show up with two devices. Someone calls me a mad scientist in the room. It's just such a different vibe. I, I'm with you. Any VC who like sends this to someone will come back with a no because I'm doing something no one's done. I was very excited to, to work with them and, and her. It was just a shame I wasn't able to make the connection again after that day. 

Lisa: What are you at now? How much have you raised? 

Matt: We have raised a total of $700,000. I was looking for a million. And I, I'm actually planning on closing it tomorrow. The last term sheet signed, yeah.

Josh: Um, well we're in! 

Matt: Okay. 

Lisa: If you'll have us, 

Matt: Yeah. I would love to have you guys, you've been very kind and generous along the way. But yeah term sheet’s tomorrow! 

Josh: Let's go!

Lisa: Submit that investment now. 

Josh: I do wonder, like. Should you be willing to take those 50K checks?

Matt: I was wondering too.

Josh: knowing that those 50 K checks lead to probably some great intros that are gonna help you down the line. But at the same time, I, I totally respect your conviction around wanting to work with true believers like you've been building in this industry for long enough and this business is particularly personal for you. So. You know why not make sure that you've got people with equal conviction? Like there are millions of investors out there you can work with. 

Lisa: yeah, 

Josh: You don't have to settle if you don't want to. 

Matt: I will be real with you. Yeah. It's something I thought about on like, was that dumb? Am I trying, am I trying to big time others? Just like I got big timed. Like, what does that even mean? I just want believers. And if they're willing to write a check, doesn't that make them a believer? I don't know. Honestly, if they came back after watching this video, I'd probably say yes to them. You're right. And maybe the intros could help, maybe, you know, who knows? 

Josh: Well, I would be a stickler about it because we like to co-invest alongside the VCs on our show. 

Matt: Yeah.

Josh: But you already have a VC from our show on your cap table, Hustle Fund. 

Matt: Yeah, 

Josh: So we're in for 100K, so we just barely make that minimum. And yeah.

Matt: Okay, I appreciate it guys. 

Josh: We can wire in the next couple days. 

Matt: That's amazing. 

Josh: Well, and I just, I really appreciate how you showed up and brought your whole family. I will never forget meeting your daughter and knowing the story of why you started this company and then getting a chance to meet her. It was really, it was just a special, beautiful human moment. And, you know, VC can be pretty transactional at times, but in moments like that, it doesn't feel transactional at all. It feels like very, very purpose led and very meaningful. 

Matt: Yeah. 

Josh: oh. Lisa's crying 

Matt: That day was like,

Lisa: You’re making me cry

Matt: That day was like one of the highs for me. So, you know, life has ups and downs. For my company and for my daughter, that was definitely on the high. I'm not gonna stop and change what I want to do because a few people said no. It's, I'm doing something for her and I think that if I just maintain that simple focus, we'll get there eventually.

Josh: The very next day I get an email from Matt saying that he decided to take Immad’s $50k check. 

Lisa: I really believe in Matt and what he’s doing. And I really believe that venture capital is a way for us to make a difference in the world. There are founders out there who have the solutions to the problems that our world has. And I think Matt is one of them and I’m very excited to be backing him.

Josh: Next up next we have Investrio. They’re taking on quickbooks, the accounting platform built by boomers for boomers.

Joyce: I started building Investrio in public on social media. Sharing my own personal finance journey, how I got out of student loan debt, started investing. That's how I started attracting the business owners as customers. 

Dawn: Are you a TikTok star? 

Joyce: I'm not a TikTok star. 

Dawn: Just checking. 

Joyce: I'm a millennial. 

Jesse: So Instagram. 

Josh: No one invested in the room, but someone did invest outside the room. Yev, an LP who was watching live. We caught up with Joyce and her cofounder Laura to see what happened after the show.

Laura: Hello? 

Josh: Hello. 

Laura: How are you guys? 

Lisa: Good, how are you? 

Laura: I'm good, thank you. 

Joyce: We're just living the dream. 

Josh: Living the dream. Love it. So you both came to Napa. Joyce, you pitched while Laura, you watched from outside. First, I wanna know from your perspective, Laura, what was it like to watch your co-founder pitch?

Laura: Well, I was really proud of her, but I was also suffering. 

Josh: Suffering. Tell me more. 

Laura: I don't know. There was a lot of pressure that we had that day. Like self-imposed, right? 

Josh: Yeah. 

Lisa: Mm-hmm. 

Laura: But, I was really proud and I think she did a fantastic job and we had a lot of fun that day. 

Josh: I'm curious from your perspective, Joyce, why do you think no one invested? 

Joyce: I think we're early, well, back then we were early. 

Josh: Uh huh 

Joyce: And the sentiment is different these days, right? Pre-seed is not what pre-seed was before. I think the requirements are much, much higher. 

Laura: It's also consumer FinTech, right? So there's a lot of scars. 

Lisa: Yeah. 

Laura: In the space. 

Josh: And we don't have those scars. We're like. Let's go. Let's take on QuickBooks. But the VCs are like, no, it's so brutal. 

Lisa: Okay, so I know you guys didn't get a commitment in the room, but after you guys pitched, Yev, one of our LPs had come up to me and said that he was interested in maybe investing in you guys. What do you think that Yev saw that the VCs missed in the room? 

Laura: He hates QuickBooks too. And, and, you know, we were also in due diligence with another VC and part of the reason why they also went into due diligence with us was because they hated QuickBooks. 

Lisa: Interesting.

Laura: Like they fundamentally understand that there is a gap in the product itself. 

Lisa: How is the rest of the round going? 

Joyce: So we went into due diligence with a few VCs and have not closed yet. And Laura and I decided to stop the fundraise. 

Lisa: Oh

Joyce: Yep

Lisa: What? 

Joyce: So we let Yev in and bowed out of the fundraise. We have enough runway for another five months, and our goal is to just make revenue. I just want profit actually as an accounting software. 

Josh: Still big fans of what you guys are doing. 

Lisa: Yeah. 

Joyce: Thank you. 

Josh: And QuickBooks is the absolute worst. 

Lisa: Oh my gosh. 

Josh: Sorry. QuickBooks. You can never sponsor our show. 

Lisa: Oh my gosh. 

Laura: This made my day. 

Josh: Sorry Vox, one less potential sponsor.

Lisa: Next up THE CRAZIEST DILIGENCE OF ALL TIME with my favorite Slovakian Swimmers.

Josh: You know more Slovakian swimmers than just them?

Lisa: Sure.

Josh: STAG goes into the 30-Day Diligence Foxhole with Mike Ma, after this.

BREAK

Josh: Welcome back … for our final update of the season, we have STAG, electric construction equipment. Made in America… by Slovakian Swimmers

Patrik: I picked up the phone, I called Adam and I said, Hey, I got this opportunity and I think this might be the next Tesla of this industry. Are you in? 

Adam: was like, yes, of course, I, I'm in, I'm in. Within the week I was on the plane to Slovakia. 

Josh: But they could not have predicted that call would lead them into the foxhole, with Mike Ma.

Lisa: The foxhole 

Josh: The foxhole

Josh: Can you describe what is that process like? 

Adam: It's thorough. I would say 

Josh: Thorough.

Patrik: Yeah. You can call it that 

Adam: He was not lying when he said he is not a fast check. 

Mike: When we do these 30 day things like, Here are the parameters. I want us to meet at least twice a week without being intrusive and annoying, but we work on something that you care about. If ever you don't like it, let us know. And if you really wanna leave, you can leave anytime. All I want is just your time and obviously the right to be a major investor in the company. And this is our time to kind of like co-convince you that we're the right people to work with you in that time. So with all that in mind, what are the things that you think would be accretive to the business? 

Adam: Yeah. I was gonna ask you guys what you think that would be something that excited you about this project that you would want to contribute in 

Mike: I would love to like be involved in the go-to market aspect of this. It sounds like so much of this is gonna be event based, belly to belly, person to person to build this I can bring some people from brand and experiential. I haven't done a branding project as part of our due diligence process. So this will be fun and a little bit different. And I think like, yeah, I'm, let's fucking go. Like, I want to get moving on this. 

Adam: Awesome. 

Josh: Mike then brought in a couple, like marketing and brand people to work with you guys, Cindy and Steve.

Adam: Two Steves. 

Josh: Can you? Oh, two Steves. 

Adam: Yeah. Steve and Steve. 

Patrik: yes. 

Adam: Yeah. 

Josh: Oh 

Patrik: At first it was only Steve and Cindy, but then they added a Steve. 

Adam: Steve and Steve have a marketing company together. 

Josh: Cindy and two Steves. 

Patrik: Yes. 

Josh: Got it. 

Adam: Yes. 

Josh: Can you describe how those calls went? 

Adam: Pure chaos. 

Cindy: You said you had a limited budget, but how limited is it? Is it like less than a million or more than a million? Probably less than a million. Right? 

Mike: It's less. We're just, Cindy, to calibrate. They're, raising 1 million dollars

Cindy: They're raising 1 million. Yeah. 

Steve: To what extent are we comfortable, or do you think it's useful to start to become a little bit more of a challenger tone.

Cindy: Oh? 

Steve: You know, does that work in an event environment? It's like… 

Cindy: Um, it does. If it's clever, 

Mike: Believe it or not, then the creative thing of what you do, lime green, not lime green. Promo booth thing. Not booth, those tactics become very, they, they kind of write themselves.

Cindy: Go green for not a lot of green. I don't, I mean, that's what I want to anchor the guerilla marketing off of. 

Steve: Maybe the story doesn't start with green. 

Cindy: Mm-hmm. 

Steve: It starts with the current market and the current offerings.

Cindy: Yep. 

Steve: And how there are barriers. Right. 

Cindy: I think we need to make your, your name and your product a little bit stickier. because right now I don't think I have that yet with y'all's product and I need that to help me define how I show up to the first show in Dallas. 

Steve: You know, have some conversations with that, with dealers about this and, and say, what do you think of the proposition of twice the profit half the time. 

Cindy: Yeah. 

Steve: Right. Your profit's electrified. I mean, I started writing shit on, over the weekend 

Cindy: Oh, I love that. 

Steve: It's like, you know, what's powering your margins? Right. A whole new way to power your margins. Like, 

Cindy: Is your equipment quiet? 

Adam: Patrik and I were just sitting there and we're just, we're getting bombarded with opinions and, and ideas and I'm just like, do I take notes? It was just overwhelming. 

Patrik: All these ideas were coming in and, and we are getting frustrated, I would say. I think I, if I will be honest, Adam, because we wanted to move forward. We wanted to learn something. We wanted to, you know, upgrade or update how we think and the whole project. And we had nothing. Like, you know, when you have all these ideas and you're having beer with friends and you have all these great ideas, right. But in the morning, those ideas are just ideas and nothing comes out of it. So 

Josh: Yeah. Yeah. You, were you having second thoughts about the foxhole at this point? 'cause like listening to those calls, it doesn't sound like you guys were that enthused at that point. 

Adam: Well, it was kind of funny because week two ended. And I'm just, I'm just sitting like, I don't know what I need to, I'm supposed to do, like this is a mess. And then I just got a message from Mike on Slack. He's like. Hey, how do you guys feel? And I started typing and I was just typing this massive message and he was like, I see a lot of typing. Can we just hop on the Zoom? 

Josh: He stopped you mid type. 

Adam: And we hop on the Zoom and I'm like. Mike, uh, I'm, I'm gonna shoot it with you straight. I'm, I'm so confused. It feels like there's, we haven't accomplished anything and we go in a million directions and he's like, thank you. That just showed me also that he personally cares and he is not just there for show, it was pretty refreshing to see that we were at the same page about it.

They decided to step back from the branding project, and instead, work with Mike on good ol’ fashioned sales during week 3. 

Mike: You have 25 pre-orders. Right. What would it take to make it a hundred pre-orders this week? 

Adam: Go back on the road, go visit them with the production units in hand and just start dropping them off. 

Mike: No, but that you can't do that this week. 

Adam: Not yet. 

Mike: There has to be a way to get the dealer to sign that day. And I just, I wanna think out the box for a second. Each of these contractors gave a hundred bucks preorder deposit, and you got a hundred of them. And you said like, look, I, I collected all these deposits. Like I literally have a briefcase of 10 grand. Would they sign that day?

Patrik: They're careful because in the past there were brands, they came and you know, there are like a lot of mistakes they learned because if you're in manufacturing world as we are, there are certain laws, for example, if even if we, let's say bankrupt in two years and we delivered a hundred units in the next nine years, we have to still have a spare parts on stock and for the dealers and so on. So they're very careful. If you survive, and if you're strong enough to support them. 

Mike: You can pre-sell more than the 25. That's just something I believe. You need to ask for the order. Have you asked them, I just wanna be clear, you're gonna take two of these orders this year? 

Adam: I haven't asked them like that. Like, but based on the conversation, he's like, yeah, I'm, I'm, I'm, I'm ready to, uh, to, uh, take deliveries. Let's schedule it. 

Mike: And then what'd you say after that? 

Adam: I said, yeah, we'll, we'll, we'll schedule them. 

Mike: Uh, okay. 

Adam: Well, it -

Mike: Why wouldn't you say, like, 

Adam: He didn't say, he didn't say it in a, in a way. Like he didn't say it in a way that like, Hey, let's, let's, uh, let's schedule it. But he is like, yeah, I'm interested in, in the deliveries. Uh, send me as much information as, as you have. Uh, let's get the, let's get the partnership going. 

Patrik: The thing is that me and Adam haven't think about the sales yet, so we were always just working on the, raising the money, starting the production, and now we raised the money, we started the production. So it's time for us to do the business development. This week, for us, is the starting week to get more sales. 

Mike: Yeah. And I, I'm glad to hear that because for this whole call, I've been feeling a lot of resistance on doing it and

Adam: No, no, no. That's, that's the completely wrong interpretation.

Mike: You guys, you, you guys are, you guys are driving me cra- I, I, I am being very transparent with you. It's like, no, that won't work. That won't work, that won't work, that won't work. Or we tried this, we can't do this, we can't, and I'll admit guys, like I'm struggling. Like you've already taken institutional money. You are in the matrix. 

Adam: Yeah. 

Mike: There is no out. I mean, there is, but then like if you decide to take all the money and they only grow up lifestyle, like we will all leave you for dead.

Adam: Yeah. 

Mike: So to be very precise here, here's my homework for you, um, as your friend and your coach. Like. All these deals need a close date. 

Josh: There was such a disconnect between the typical startup playbook and the grow quickly and do all of these tests on the market. There's such a disconnect between that and what you guys have experienced actually building in this market, and you could just feel this tension. It just didn't seem like a good match. 

Patrik: Yes. 

Adam: I felt so bad week three. I was like, well Patrik, I'm sorry but we are out. 

Patrik: Yeah. We thought that we lost the investment and we lost Mike and we are done. That was really difficult and tough call. But then the next day we sat down, we finally said, okay, let's try to change it and let's try to do it his way. And prove him that we can do it. So we didn't give up. We spent years on building this company and this is the investment that can help us big time. So let's keep working and do not give up because he didn't say no. And we still have few weeks left. So we worked hard. And we are trying to prepare everything for him, to show him that, okay, you know, we're trying our best and we are willing to rethink the process. 

Adam: The next week I recorded some of my calls to the dealers and I send it to Mike and I'm like, hey, here's the call. And this is what I can do. And he's like, ah shit, this is awesome. Okay, we're back. 

Lisa: Oh, awesome 

Adam: But then, I traveled to Indiana and Chad came out. We, um, we toured the factory. 

Josh: Yeah, Chad, so this. Chad is Mike's like venture partner at Sidecut yeah? 

Adam: Yeah

Josh: Yeah 

Adam: yeah, yeah. But Chad came out, we toured the facility. He drove the prototypes and seen some cows and..

[chad in the pasture]

Josh: He's like on. The STAG mini skid steer. Like in a cow pasture 

Adam: Yeah. 

Josh: Yeah. Like in slacks. Like not dressed for the job at all. And daintily trying to drive the machine. 

Adam: Yes, yes. Mike loves the video of Chad standing on the machine, you know, and everybody's like, this machine sucks. And he is like, no, it's just Chad. He cannot operate it. It's the first time. 

Lisa: So then on your last call with Mike, what happened? 

Adam: Go ahead, Patrick. 

Patrik: We got the investment. 

Lisa: Yayyyyy 

Mike: Hey, listen, uh, I know it's been a long road, but I wanna say three things. One thank you. We're so excited to be investing in STAG, we think you're going to change the world. And we're so pumped for it. It's a huge honor. And I don't take that lightly. Because you know what a pain in the ass I am. So I appreciate it. But you know, it's because we care. The second thing is be in touch please. Like if I don't hear anything, I just assume it's going bad. Not because you guys suck, just because I've been a founder, know how bad it is. Number three is like, if this doesn't work, like if we stay in contact, we'll do the next one. This is a long-term relationship I wanna have with both of you. So that's it. 

Adam: It's gonna work. It's gonna work.

Mike: Alright, here we go guys. You know, it's not gonna hit right away, but boom. Approving wire! 

Adam: Let's go. 

Mike: alright

Josh: How much did he invest?

Patrik: Yeah. 

Adam: Invest 200,000. 

Patrik: 200. 

Lisa: Awesome. 

Adam: With option, for a hundred thousand in the next 90 days. 

Lisa: Oh. 

Adam: He really wants to be our largest investor. 

Adam: When the check hit yesterday from Mike, I was like, I had the deep, deep breath. I opened the beer and I'm like, okay. 

Lisa: Yes

Josh: Oh, I'm so happy for you guys. 

Lisa: Me too. That's exciting. 

Adam: Yesterday I kind of, I, I texted Patrick, I'm like, Hey, you know, like take a deep breath.

Lisa: Yep

Adam: Remember what we would give to be where we are right now, four or five months ago. Yesterday was a good realization of that where, okay, we're on the right path and I think we can, we can do this. 

Lisa: Super excited. I'm just thrilled. I was rooting for you, probably the hardest of anyone in Napa. Um, so really excited you, 

Josh: You can't have favorites Lisa it's not allowed.

Lisa: I don't have favorites. They're, this is what I do with my kids. I tell them all, they're my favorite, but they don't know that. 

Josh: They totally know it.

Lisa: So they all think they're my favorite. 

Adam: Hey, we'll, we'll gladly be your favorite, Lisa.

Lisa: Oh my gosh. 

Adam: I mean, you guys were our good luck charms too, you know, that's something I tell everybody that you guys were a big turning point for us and we're very appreciative for it. So we're super lucky to have you guys on board as well.

Josh: Yeah, can't wait to go to my local construction sales and service center. My local um…

Lisa: You don't even know what to call it. Do you? 

Josh: I don't. don't. I don't. 

Adam: Dealer, dealer, construction equipment dealer

Josh: a dealer, local Caterpillar. I’ll be like, do you guys have STAG? I will only purchase something if you have a STAG electrical unit for me. 

Lisa: Oh my gosh. 

Josh: I wonder if people listening are intrigued by the foxhole or scared of the foxhole. 

Lisa: I’m scared of the foxhole. I do not want to go in the foxhole with Mike.

Josh: You know, I think, like, The Pitch, our foxhole is way more fun.

Lisa: Wayyy more fun. We’re like, come to Napa, drink wine with us. We’ll introduce you to VCs and they’ll give you money.

Josh: It’s a good pitch Lisa. 

Lisa: Thank you.

Josh: The thing with Mike though, if you make it through the foxhole. He is in your corner. And when he’s in, he’s really in. His $200k check ended up turning into $375K after he shared the STAG pitch episode with his LPs… 

Lisa: Crazy.

Josh: THEN he introduced Adam and Patrik to two more VCs who took the last $150k remaining in the round. STAG raised $1M dollars. Oh and we also increased our investment from The Pitch Fund, from $50k to $100k. 

Lisa: I think we fomo’d ourselves. 

Josh: I think we did.

Lisa: With our own podcast. 

Josh: And we fomo’d Rich Smith again. He invested $10k in STAG. Between us and the VCs on our show, we took $625k of STAG’s $1M round. Which brings the total raised on this season of the show to $1,373,000!

Lisa: That is a pretty good season. 

Josh: Yeah, I’m proud of that.

Lisa: Let’s do it again! 

Josh: We’ve got more Napa pitches coming next year. Robots, wearables, AR glasses, climate change, 3D websites…

Lisa: And we have a very exciting update! One of your all time favorite founders returns to the show - Kavitta Ghai with Nectir

Josh: This is the outlier all these VCs are hunting for. It is you. How do you feel? 

Kavitta: Fucking amazing. Oh my God. It is the best goddamn feeling I've ever had in my life. Holy shit. A 28 year old, first time founder, woman of color, didn't even go to business school. I have no idea how the fuck I'm sitting here doing this right now. Not a goddamn clue.

Josh: I'm gonna go bench press 400 pounds. Let's go. 

Kavitta: Exactly

Josh: I'm so pumped!

We’ll see you next year in the pitch room <3

This episode was made by me, Josh Muccio, Lisa Muccio, Anna Ladd, and Enoch Kim. With deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun.

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