Swing and a Miss
By October 29, 2023– Published on
In 2016, I met a young tech entrepreneur who was trying to raise two million dollars.
He was building a predictive analytics company for biomarkers. Readers know I love the health science world. I was fascinated by the company's potential but skeptical about commercialization.
We met at a venture funding meet-up. He took the stage, gave his pitch and received a warm response from the audience, but no one stepped forward to write a cheque.
I spent some time with him and dived deeper into the application. I decided to introduce him to some capital providers. We met a few independent investors, in addition to some of my partners at Canaccord Genuity. Everyone came back with the same response - it could be cool, but it was unproven and too early stage to invest.
This kid needed another six months of data to prove his algorithm was consistent, but unfortunately, he had run out of money. He would have to let his developers go, without which he couldn’t continue.
The everyday story in venture tech.
By chance, I was hosting an investment conference the next week. I told him to hold tight, find a way to keep his team together, and I would get him one more shot to pitch - this time, on a big stage.
When the day came, he knew his back was against the wall. His team had given him two weeks' grace, but if he failed to raise some money at my event, they would have to walk.
He stepped on stage and pitched his heart out. There were about 400 investors in the crowd.
Following his presentation, he walked off stage and entered the green room behind the curtain.
Typically, if an investor in the audience is interested in a company they saw, they will request a formal meeting through our platform.
But soon after this young entrepreneur left the stage, a woman from the audience chased him down, and with no further diligence, stated she would lead his financing.
Shocked as he was, this kid had the guts to be honest with this lady - “I’m raising two million, but truth be told, I need twenty grand in the next 48 hours, or I’ll lose my team.”
She cut him a cheque on the spot.
After the mysterious investor departed, this young kid was elated. He could never have dreamed of a better outcome. I would have given him a giant slap on the back - but here’s the thing - I wasn’t there.
My wife had gone into labour that morning, and I missed my own conference.
When he called me with the news later that day, I was nothing but happy for this young entrepreneur. But as time passed, and he closed the remainder of his $2 million, I was aware I had made a rookie mistake - I had rushed this kid onto the stage on short notice, and in the fray of the moment, I hadn’t put a finders fee agreement in writing - a fee, for introducing him to two million dollars.
I had made the assumption that he would know what was expected on the street. But this kid was also a rookie and had no idea about quid pro quo.
When I brought it up, the merchant bank who had also seen him at my event and taken over the financing told him, “hell no.” They would fill the rest of his $2M, but no fee to me would be paid. I could buy an allotment if I wanted.
I was furious, I hadn’t made any real money at that point in my life. A typical fee would have been 3%. A material sum that I duly felt owed.
Although I was mad at the entrepreneur, at the banker, and even at the frantic lady who ran backstage and cut this kid a cheque, I knew that there was only one person I could blame - myself.
I learned a valuable lesson - holding an expectation, that hasn’t been stated clearly, is a loser's game.
It was early in my career, I made a mistake, and left some cash on the table. But… I got to keep the sweet little boy that was born that day.