On Fundraising

a kombucha bottle, a space heater, and a cat in the box

“How did we do it?” I mused.

Devon’s voice came back faint, “What?”

“How did we, a Dungeons and Dragons company, get an investment from Andreessen Horowitz?”

I sat at one end of a conference room table surrounded by thirty-two herman miller chairs. At the other end was Devon. He held his hand to his ear as if he couldn’t hear me, and I finally understood the game, “Uh, excuse me, sir. Would you mind passing the Kombucha?”

We had fun at the A16Z offices. It was during the era of mock corporate TikToks, and Devon was always on the lookout for a good skit. “Nate, would you take a two thousand dollar bonus or double it and pass it to the next person?” “Oh, always double it.”

He slid a kombucha bottle in a delicate-dance of momentum, too little force and the bottle stalls out at the center of the table, but too much and the bottom slides out from underneath. It whizzed across the table, and I lept to grab it. Boom! Low proof sugary beverage doused a Fahrenheit 451 sized TV.

At that exact moment, Jon peeked his head in, “Hey guys, just happened to be in the office–” Devon and I looked at each other like two kids caught in the act cowering from the principle, his raised ruler in hand. For a moment Jon tried to hold it in, then a big smile creased his face and his laugh erupted throughout the office.

Jon was the reason StartPlaying got the A16Z investment. And he was the first serious investor I ever talked to.

Prior to Jon, I pitched a coven of friends and family, pacing in the Hillsborough Coffee Courtyard, pontificating and expectorating into my phone. I thought I knew what I was doing. I knew my investment plans A, B, and C – raising either too little, just the right amount, or just a little too much. I knew my vertebrae, my three strongest startup points I repeated till I was hoarse.

But I learned about timing.

We were part of the cursed batch at YC W20, the batch that was half in person and half remote. The one where the entire world was adapting to COVID, and some still had the belief that it was just going to be a four-week affair.

I learned about investors.

I talked to VCs lounging on the South of France, dabbling with generational money they no doubt believed they earned, VCs that corrected me mid-call on facts that neither of us could possibly know, and most frequently, VCs that read the name of my startup and nothing else. “So you’re doing mobile games, right?”

I learned about the delicate-dance of momentum.

I squished my meetings into two weeks. Relying on the phone call of the next investor to sever the tie with the previous one. The two weeks are a rush. There’s this forced sense of urgency with your back to the wall, but so too feel the investors. Everyone knows the game. You start off with your plan A. Just $1.5M. Enough to hire a small team. And as the checks come in, you slowly fill the round. You hit the $1.5M. The terms change. I’m looking for $3M. I was always looking for $3M.

This momentum is key. Maybe everything. It’s not the baseline that matters, it’s your velocity. “What did you do in the last week?” The reason Y Combinator has a dramatically higher acceptance rate for repeat applications. There’s only one thing worse than a storm, and that is doldrums.

And I learned to believe the no, but not to believe the why.

When an investor mutters the why: not enough traction, I only invest in AI, I think this will make a nice lifestyle business. They collapse their rationale into something unidimensional.

Each investment is a spark. A subtle flame that leads to a partner meeting and a multi-million dollar check. And that spark has no singular reason. You don’t just buy the kombucha, you buy the mother, the scoby, the hemp and rose water. You buy the bottle design and the aphorisms.

Unfortunately with A16Z, there was no spark that demo day.

But a month after we pitched to Jon, he wrote an article about Dungeons & Dragons going digital, leading to an explosion of content and capitalistic returns. He even mentioned StartPlaying in it. I was confused. So I took the article to my YC partner and he said, “Selling’s not about convincing, it’s about finding those already convinced. And if they weren’t before, they clearly are now.”

A16Z was on the lookout for companies like mine. I just had to sell them that we were the team to back. And as much as I loved my industry, loved my business and saw the number go up, I didn’t know for sure it would be a ringer. But I did know one thing. I’d seen other teams. I’d seen the amount of foot shooting, focus splitting, hype posturing, spend thrifting, and shit headery. So I knew despite our foibles, our team was the best.

A year later we had our chance to land the A16Z investment once and for all. This time, instead of talking to sixty-plus investors, I reached out to four, my top choices. And pulled in YC for one final round of fundraising advice.

I showed my partner the pitch, “What do you expect your revenue to be next year?”

I told him.

He raised his eyebrows.

“Nate, you’re never gonna be able to fundraise with that.”

“Why? This is how much we’ve done historically. I mean, look at the curve.”

He looked at me confused. “Are those are your actual projections?”

“Yeah, of course, they are.”

“Nate, everyone doubles these. When VCs hear your projections, they’re gonna assume you’ll make half. You can’t go out with this.”

“I absolutely cannot do that. That’s like lying.”

“Nate, only the Sith talk in absolutes.”

I decided to play the game.

For the final round A16Z wanted a group Zoom.

I know myself well. I’m a presenter. I get energy from a crowd. But I have one nervous tic: the chills. So I bought this tiny space heater and I placed it right behind me, blasting heat up my shirt. I never dismiss the mind-body connection. It’s much easier to be brave under a thunder blanket.

I conquered the chills and Jon said he’d meet me in Philadelphia to tell me the news. I was nervous. But would Jon have flown out to Philadelphia just to give me a rejection?

I drove all the way from Reading, white-knuckling the steering wheel blasting Jon Legend. My heart in an area of cardiovascular concern for anyone over the age of sixty. I checked into a hotel room. And listened to the sounds of Philadelphia as I tried to go to sleep.

Next day, I met Jon for dinner, showed up, shook hands, sat down, and I eagerly awaited the news. But as we ordered appetizers, Jon didn’t say whether we got the investment and what the investment was. Instead he ordered and chatted. I didn’t know what to do. Did I ask? Did I just leave it there?

I’m such a strange person in this regard. Some want to know the outcome of their decisions as soon as possible. They repeatedly click Refresh on their sales emails to see whether they have been opened. I’m always the opposite. Something about the Schrödinger state of the decision gives me a bit of peace. Knowing could lead to a dead cat, but not knowing, well, the cat could always be alive.

I remember my college applications. For my top choice, I’d selected to get the application response via mail, but by the time April 1st came around, I’d forgotten. Having received no email from Harvard, my assumption was failure.

Halfway through that day I got a call from a Harvard sophomore asking whether I’d be attending that fall. I frenetically called my mom, “Mom, Mom, I got in.” And still to this day, I remember her saying, “Oh, honey, you sure it wasn’t some student doing a prank call on you?”

I tried to enjoy the dinner before learning the news of success or failure. But something about the knowledge being right there, chatting with me, sharing old stories, smiling and laughing, took away my joy of having the cat in the box.

By the end of dinner, as we were eating our desserts, I found them tasteless. I was simply following the motions. Spoon in ice cream. Lift ice cream, place in mouth, close mouth. Wait before swallowing, then swallow.

Jon was looking at the menu. “Nate, should we order some drinks?”

And I blurted out, “Jon, so are you investing?”

For a moment Jon tried to hold it in, then a big smile creased his face and his laugh erupted throughout the restaurant.