Closing is the most worst name in the financing dictionary.
I know, it’s the day or week when money changes hands. Back in the day, Wall Street-ers would hold a dinner and, after the wire went out (or came it) at 4:31pm everyone would head to the bar to celebrate. But the world of start ups, and start up financing is so different!
Funnel and Filter – for years, I have had the good fortune of a funnel of opportunities that keep coming my way, and I’m very grateful for every one. I’ve always followed the lead of [Bear Bryant from this epic post]- be nice, be helpful, and be quick about it. When it’s time to apply the filter, I stick to a couple of basic theses described on the Vaux portfolio website. I also think, but can never be certain, that this show called MoneyHunt, which ran on PBS during dot.com, has kept me in the game.
Funding Process – as many SFO’s and angels know, I send around periodic updates from Vaux and Vaux 2 portfolio companies, filling in interim developments o existing deals, and previewing deals to come. That usually means Vaux is funding in the next month or less. Once the deal is ready for market, we arrange a 30 minute 1:1 call to review the deck, financials, investment terms and docs (it’s always a KISS convertible from the 500 Start-Ups template). I give every active angel equal chance to participate, given I will call the next day for an indication of appetite. Once thats ironed out, documents come by hello sign, wires are expected next day, and we’re off. Since investments are direct (unless specified as a Vaux convert KISS), angels re directly on the cap table (or convert table) of the company and get direct reports from them as well.
So, that’s the Opening part. It’s when thing actually get started… not closed.
Building and Monitoring – as many SFO’s know, I take a very active role in each company. When asked I assist with team-building, hiring, product, BizDev, and overall strategy I also am capable of just shutting up when things are working. Since i am so directly involved, I share non- confidential reports with my angel network, together with my take on things, in the updates mentioned above. This, in addition to the company updates gives about as good picture as a direct investor can get. And yes, this business has risks, so sometimes that same picture is ugly.
And now, that story about Bear Bryant…
At a Touchdown Club meeting many years ago, Coach Paul “Bear” Bryant told the following story:
“I had just been named the new head coach at Alabama and was off in my old car down in South Alabama recruiting a prospect who was supposed to have been a pretty good player, and I was having trouble finding the place.
Getting hungry, I spied an old cinderblock building with a small sign out front that simply said “Restaurant.” I pull up, go in, and every head in the place turns to stare at me. Seems I’m the only white fella in the place. But the food smelled good, so I skip a table and go up to a cement bar and sit. A big ole man in a tee shirt and cap comes over and says, “What do you need?”
I told him I needed lunch and what did they have today?
He says, “You probably won’t like it here. Today we’re having chitlins, collard greens and black-eyed peas with cornbread. I’ll bet you don’t even know what chitlins are, do you?”(small intestines of hogs prepared as food in the deep South)
I looked him square in the eye and said, “I’m from Arkansas , and I’ve probably eaten a mile of them. Sounds like I’m in the right place.”
They all smiled as he left to serve me up a big plate. When he comes back he says, “You ain’t from around here then?”
I explain I’m the new football coach up in Tuscaloosa at the University and I’m here to find whatever that boy’s name was, and he says, “Yeah I’ve heard of him, he’s supposed to be pretty good.” And he gives me directions to the school so I can meet him and his coach. As I’m paying up to leave, I remember my manners and leave a tip, not too big to be flashy, but a good one, and he told me lunch was on him, but I told him for a lunch that good, I felt I should pay. The big man asked me if I had a photograph or something he could hang up to show I’d been there. I was so new that I didn’t have any yet. It really wasn’t that big a thing back then to be asked for, but I took a napkin and wrote his name and address on it and told him I’d get him one.
I met the kid I was looking for later that afternoon and I don’t remember his name, but do remember I didn’t think much of him when I met him.
I had wasted a day, or so I thought. When I got back to Tuscaloosa late that night, I took that napkin from my shirt pocket and put it under my keys so I wouldn’t forget it. Back then I was excited that anybody would want a picture of me. The next day we found a picture and I wrote on it, “Thanks for the best lunch I’ve ever had.”
Now let’s go a whole buncha years down the road. Now we have black players at Alabama and I’m back down in that part of the country scouting an offensive lineman we sure needed. Y’all remember, (and I forget the name, but it’s not important to the story), well anyway, he’s got two friends going to Auburn and he tells me he’s got his heart set on Auburn too, so I leave empty handed and go on to see some others while I’m down there.
Two days later, I’m in my office in Tuscaloosa and the phone rings and it’s this kid who just turned me down, and he says, “Coach, do you still want me at Alabama ?”
And I said, “Yes I sure do.” And he says OK, he’ll come.
And I say, “Well son, what changed your mind?”
And he said, “When my grandpa found out that I had a chance to play for you and said no, he pitched a fit and told me I wasn’t going nowhere but Alabama, and wasn’t playing for nobody but you. He thinks a lot of you and has ever since y’all met.”
Well, I didn’t know his granddad from Adam’s housecat so I asked him who his granddaddy was and he said, “You probably don’t remember him, but you ate in his restaurant your first year at Alabama and you sent him a picture that he’s had hung in that place ever since. That picture’s his pride and joy and he still tells everybody about the day that Bear Bryant came in and had chitlins with him…”
“My grandpa said that when you left there, he never expected you to remember him or to send him that picture, but you kept your word to him and to Grandpa, that’s everything. He said you could teach me more than football and I had to play for a man like you, so I guess I’m going to.”
I was floored. But I learned that the lessons my mama taught me were always right. It don’t cost nuthin’ to be nice. It don’t cost nuthin’ to do the right thing most of the time, and it costs a lot to lose your good name by breaking your word to someone.
When I went back to sign that boy, I looked up his Grandpa and he’s still running that place, but it looks a lot better now. And he didn’t have chitlins that day, but he had some ribs that would make Dreamland proud. I made sure I posed for a lot of pictures; and don’t think I didn’t leave some new ones for him, too, along with a signed football.
I made it clear to all my assistants to keep this story and these lessons in mind when they’re out on the road. If you remember anything else from me, remember this. It really doesn’t cost anything to be nice, and the rewards can be unimaginable.”
Coach Paul “Bear” Bryant