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About Elaine Bolle

Elaine Bolle has served as CEO, board director and advisor, leading domestic and global organizations from start-ups to $750M+ enterprises. This includes senior management roles in strategic marketing and brand management, business development, sales, fund-raising, mergers and acquisitions.

She is an active angel investor, currently focusing on early-stage entrepreneurial ventures, including serving as:

A founder of RTP Angel Fund
A board director of RTP Capital Associates, an angel network and One Digital Trust, an early-stage digital estate planning platform.
Lead venture partner for Portfolia’s Active Aging and Longevity Fund I
Past board director and committee chair of the Angel Capital Association
A mentor at First Flight Venture Center, one of the nation’s largest high science incubators and various other start-up programs
An advisor to early-stage companies, assisting in strategy development, fund raising and mergers and acquisitions

Ms. Bolle’s industry expertise includes financial services, consumer goods and services. Ms. Bolle was the SVP and GM for Western Union, leading the consumer payments businesses worldwide. She was also VP and Sr. Director of Citicorp Global Payments. At Quaker Oats, she conceived, built and managed a new wholesome snack business, “Quaker Chewy Granola Bars”.

She is also actively involved in the non-profit world. She serves on the board of Frontier Nursing University. In addition, she is the Past Chair of the Board of Directors for Dress for Success Triangle NC, serving on the board for many years, and now the liaison for the Dress for Success Triangle Advisory Council.

She lives in Chapel Hill, North Carolina with her husband and her Aussie doodle. She earned BA and MBA degrees at the University of Michigan.

Episode Highlights

The two special ingredients that set entrepreneurs apart
How to tell angels and VC’s apart, and how to select the right investmet for your startup
Critical differences between angel investors and venture capitalists, and why they matter
Practical strategies for first-time founders to identify the right angel groups
Smart ways to extend your startup’s runway
Tactical advice for women founders on navigating male-dominated investor groups
How to enhance your credibility with great deal preparation and legal hygiene
Key insights into effective pitching
The insider’s view of investor due diligence and how to get it right
How to handle valuation discussions with realism while still protecting your interests
How to balance investor feedback with maintaining your vision and focus

Links and resources

Angel Capital Association (ACA): Professional association for angel investors providing resources, education, and connections.
National Venture Capital Association (NVCA): Represents the venture capital industry with advocacy, education, and networking.
Small Business Administration (SBA): U.S. government agency supporting small businesses with loans, grants, and connections.
Y Combinator: Startup accelerator offering seed funding, mentorship, and resources for early-stage companies.
Techstars: Global accelerator providing mentorship, funding, and networking for entrepreneurs.
Golden Seeds: Investment firm funding and supporting women-led businesses.
VentureWell:Supports innovation and entrepreneurship in higher education with funding, training, and resources.
RTP Angel Fund: Provides term sheets and funding for early-stage companies in the Research Triangle Park area.
Duke Angel Network: Angel investment network affiliated with Duke University, supporting startups with capital and expertise.
SBIR/STTR Grants: U.S. government grants for small businesses engaged in research and development.

Interview Transcript

Shubha K. Chakravarthy: Hello Elaine, Welcome to Invisible Inc. We’re so excited to have you with us today.

Elaine Bolle: I’m happy to be here and to share whatever insights I can. You’ve come a long way since we first met. You’re doing a lot of good stuff and I really like it.

Shubha K. Chakravarthy: Thank you. I love it and people like you are what make it happen so thank you.

To start off, you’ve had a pretty rich and interesting background professionally. You’ve been an entrepreneur, you’ve been in corporate America and now you’re an angel investor. Across all of these experiences, Is there one thing that kind of stands out in terms of what drives early stage success for a founder?

Elaine Bolle: It’s not one thing. I think it’s a combination of things.

First and foremost, it’s about being curious and figuring out how things fit together in new ways. If you think about what most entrepreneurs do, there are very few new problems on earth if you really think about it. But what they’re doing is they’re finding a new way of tackling this. That is what I think is the common ground.

It is not somebody who said at five that they’re going to be an aeronautical engineer and all they did was study engineering. Then they went out and started an airplane company. For example, it is people that have sort of a little bit of a circuitous route or have different approaches.

I had my undergraduate degrees in Spanish, French and linguistics. I was totally unemployable. I was designed to be some rich woman’s wife and I was already married. So that wasn’t going to work because I’d already married the guy.

Understanding that problem solving in a variety of ways can apply and seeing those perspectives really help. I think that’s what an entrepreneur can recognize patterns that other people don’t recognize.

Shubha K. Chakravarthy: I’m sure we’ll dive into all its aspects as we go along.

Choosing the Right Investors

Shubha K. Chakravarthy: I want to focus on two big themes for our conversation today.

The first is how does an entrepreneur, especially a first time early stage founder, pick and work with the right angel groups? Then secondly, what’s the right way to go about those?

Let’s zoom in on the first one and talk about how you, as a founder, pick the right angel group to work with? Many founders are more familiar with venture capitalists and VC’s because of all the press, than they are with angel groups.

At least that’s true from my own experience working with them and founders as well. Can you tell us how you would broadly categorize angels and then what these categories mean for the founder who’s looking to raise their money for the first time outside?

Elaine Bolle: First of all, I would step back. I want to step back one level which is that you need to decide if you want to raise money. And if so, why do you want to raise that money and what are you going to do with it?

That’s a question for us and we can go down that path in a moment.

Talking about the difference between angels and VCs. Let me sort of set the stage a little bit. Going back into the 90s and 2000s, venture groups were putting in their first money and they would easily put in 500,000 or a million dollars.

As we’ve seen in the 21st century, venture funds traditionally have gotten very large. They’re raising 100 million dollars or a billion dollars. If you’re going to pour that much money into a fund, you’ve got to deploy it in much bigger chunks.

Therefore, VCs generally have moved sort of up the funding scale. It’s really hard to talk to many VCs if you don’t want to deploy at least 5 million dollars. Because they have got to employ at least smaller ones at 2 to 5 million and they’re happy deploying 10.

What happened to the angels who originally might have been individual investors but have grown dramatically in sophistication, particularly over the last 10 to 15 years? They have really filled in the gap. There is virtually no difference today in funding level between an angel group or an angel fund and a micro VC.

The key distinction is that angels invest their own money and VC’s invest other people’s money which is really an important distinction. When an angel fund rolls it up or an angel network, they are investing all their own dollars. And these are post tax dollars. This is the money. After they funded the retirement and paid for the kids’ college, they want to invest this money. They’re investing the money because they want a return.

But disproportionately they do it because they also want to give back. My story as an angel is very typical of many others which is that we were successful, either in the corporate world or the entrepreneurial world. In my case, I did both. But then we wanted to give back. What I give back in terms of expertise, demonstrating to women that you can raise money from VCs and others.

I spent most of my career because I’m a little bit older as the only woman in the room and the fact that I could give back. I think that’s the other distinction besides from doing their own money. Very often angels are providing their expertise as well. Selectively, not every single angel but the angels that you want to raise money from, if you’re an entrepreneur, can add value beyond money.

The ACA did a sort of, Angel Capital Association, did sort of an informal study, and they have found that angels, on average contribute at least one hour for every dollar invested whether it is mentoring, connecting with potential customers or suppliers or service providers, lawyers, attorneys, etc.

When you’re starting out in this company, you often don’t have a lot of resources. You often haven’t done this before. You might know your problem.You know your solution. You might know what you don’t know and now you have to fill in those gaps.

When you look for funders or when you start taking people’s money, it fundamentally changes your business. You are accountable to other people but you also have access to a broader network.

Strategic Fundraising Tips

Elaine Bolle: If you’re an entrepreneur and you’re going to look for money, first of all is why do you want this money? Don’t just do it because of all the cool kids that get money from VCs. That is unfortunately because of Shark Tank and other things that have occurred in the popularization of looking at now old mature companies, Facebook and Google and everything else as being quote sexy.

Sometimes entrepreneurs think they’ve got to raise money from quote VCs because that’s how I’m real. It’s not necessarily how you’re real. You might be a lot better off raising money from customers pre buying something or getting grant non dilutive money.

Don’t just think I need to raise money because that’s what I need to do. When you go to raise money and you decide how much you want to raise particularly early on. The first time angels tend to invest and you can replace the early stage investor and that would include a micro VC or crowdfunding, although that’s a little bit of a different animal.

But you’ve got to look and say, “What do I need? And what am I going to use this money for?”

Sometimes entrepreneurs will say, “I know raising money is hard. It’s difficult. And I don’t want to do this so I’m going to raise 5 million today. Then I never have to do this again.”

The problem is if you are raising five million dollars at your first raise and maybe all you have is a concept or a prototype, you have to give up too much of your company for an early stage investor to be interested and that’s not good for you.

On the other hand if you sit and go, “What do I need to get to the next milestone”?

Let’s take an example. One of the companies that we’ve invested in has a better way of filtering water for large water projects. This is a capital intensive project and they have a more sophisticated membrane that does it.

First step was that they had the concept. They actually filed a patent on the thing and they could build something that’s as big as a bread box. That was the first prototype. It’s all an idea. It’s all passion. It’s everything that you want.

Particularly angels who understand this industry get all excited and can help. Then once you prove it out on the bread box level, now they’ve got to build something that’s as big as a room. That’s the next set of money to raise. Then eventually they’ve got to raise obviously because this is a massive kind of thing and you have to think about those stages and what you need for help.

So again, I’ll come back to this water membrane company. They knew a lot about their expertise. They did not know a lot about calling on customers and about fundraising. They got involved with a very science focused accelerator which then also had mentors that could help with that who then introduced them to people like us who were really interested, who understood it.

We happened to have some members in our group at the time who knew a lot about this kind of technology and knew how to raise money. We worked with the entrepreneur’s named Sue. We worked with her for about a year to put together that what should that first thing look like.

Shubha K. Chakravarthy: Before you funded her?

Elaine Bolle: Before we funded her.

Shubha K. Chakravarthy: Wow, okay.

Elaine Bolle: That’s not unusual. A couple of the companies that I’ve invested in the time, I met them when they were seniors in college just starting out. Even though I might start working with them, it can take two years till they’ve made enough progress and I’m really going to invest in you.

The next time that people can really raise money, it’s never easy but more easily you’ve gotten a few customers, you’ve gotten some letters of intent. Now it’s like, okay I’ve got this idea. It’s going after a very big market and I have proven that I know something about this and customers are saying yeah, you know “I’m willing to buy what you’re gonna sell.”

If you talk to enough customers, they’re going to tell you. So as a founder, what you’re looking for in your early stage investors are people that you like to work with, you respect, and can help you go further.

Again, we always say every meeting should end with an ask and the ask isn’t always money. It could be, I need a good accountant, I need to meet three potential customers, I need to meet a supplier who can provide me with X.

It could be a whole array of things but you want to have people you work with because this is a long term relationship. Getting involved with investors and particularly your angel investors. You’re probably going to be involved with your angel investors for eight to ten years. That’s longer than most marriages last.

Shubha K. Chakravarthy: Let me ask you this, you just laid out a really visceral kind of understanding of the process which is awesome. How you said you even start working with entrepreneurs before you fund them as an entrepreneur.

How do I find these angel groups where there’s an Elaine that I know is good hearted and sharp and wants to help me?

Finding the Right Investors

Shubha K. Chakravarthy: How do I even find these people, especially if I’m a woman because we don’t have the networks that’s proven, right? What is the best way?

Elaine Bolle: I think within any community and I’m going to start with geography. Even though we’re doing this via Zoom and everything’s become virtual, there is still a hands-on element to this. People like to sort of sit across the table and talk to people.

We are fortunate today. In almost any larger city, they’ve recognized that entrepreneurs drive the economy, they drive jobs. There are incubators, there are accelerators. If you’ve been at all tied to a university, they can help point you in the right direction and it’s two levels. It’s one, what’s locally in your area? You’re going into food tech, let’s say. Who are the food tech accelerators?

It’s always networking but it’s simple asking one person and say, “I know you’re not the right investor for me because you invest in healthcare and I’m not a healthcare company. But who should I talk to? I have done this in Silicon Valley, in New York, in Philadelphia, all over the East Coast and now I’m in North Carolina”.

It is much more of a cooperative nature than it is a competitive nature. As an entrepreneur, think about your own course. You got involved with the ACA. I think that was one of your first steps but you came to a meeting and you saw somebody there you wanted to talk to. Then you said, “Who else should I talk to?”

The worst thing that’s going to happen is somebody’s going to say no to you. It’s fine. They’ve said no. Now you’re going to the next person.

I have said this in almost every speech I give. As an entrepreneur, if you’re not smart enough to get a warm introduction to somebody that you want to talk to you should be talking to. You’re not smart enough to be an entrepreneur because you don’t need or want to talk to Bill Gates or Mark Zuckerberg or whoever the latest cool person is that I’m out of date with.

You want to talk to people who are making a difference in the field you’re in. You should be well read enough that you can meet somebody else. It might be as simple as going on to your LinkedIn and we all know LinkedIn has pros and cons. It’s not a commercial for LinkedIn. I still, to this day do this.

Do you know anybody who does such and such? You’d be surprised by the reaction you get. I suppose if you are in Fremont, Colorado and this is a small part of Colorado that I just spoke not too long ago. It’s a lot harder but in fact, Colorado happens to have a very active economic development facility.

The small business administration exists to make connections for people. It’s not easy, you’ve got to do your research and it’s a heck of a lot easier nowadays. You can Google who are the top five food accelerators or who are the top five digital healthcare, whatever you want to do.

Begin doing your research using your creativity. That’s part of it. One of the problems you have to solve is who do I talk to? Does that make sense?

Shubha K. Chakravarthy: Yes, it does. My question to you and a slight challenge is time is the single biggest commodity to the founder, right? Your opportunity cost is really high because you’re alone. You don’t have a lot of resources. And let’s admit that we have to kiss a few frogs before we come to the prince,

Elaine Bolle: Oh, a lot of. Not a few. A lot.

Shubha K. Chakravarthy: I was just trying to be polite. How do you make that process more efficient so that I don’t sit here wasting months talking to the wrong people and trying to make that process as sharp and surgical as possible?

Are there tells, are there flags, are there indicators?

Elaine Bolle: First of all, I think it’s a matter of doing some basic research. First of all, who’s in your marketplace and seeing who’s name keeps appearing. It is also building a network of other entrepreneurs in your area, talking to them ,listening hard, listening harder to the people who say no and understanding why they’re saying no.

Ask them why they are saying no and then take that to fine tune. There is a fine balance and I can’t tell you the exact equation of being tenacious because investors are busy. They often do other things. A lot of things happen that you want to follow up.

If after a while, let’s say three or four tries and nobody’s answered, a good thing is to send one more note and say, “look it appears that you’re just not interested in this. If you don’t answer this I’m just not going to bother you anymore”.

And it helps you close things off. On the other hand, let’s say if you talk to an angel and they want to get all excited. They keep wanting to have more meetings. It’s fair for you to say “Help me out. What’s your process? Am I in the right stage? Am I too early? Am I too late? What has to happen?” This would apply to an angel group, an angel fund, a VC.

It’s also fair to say, “What is your process? What is the timing? What should I expect? And also, do you have money to invest”? Because sometimes you can have a fund but they’re at the end of the fund life. They’re not going to invest in a really early stage company because they don’t want to have to carry it that long.

Go with your gut, be realistic. If you go, I think this person’s just stringing me along. They probably are so there’s no magic formula but also talking to peers and mentors you respect and say, “Hey, I talked to Jane Jones last week. What do you think?”

And I might say, “Hey, she’s right in your alley or boy, be careful because she’s going to keep you strung along for seven years.” So you really have to trust your own. What is it trust but verify is the famous line but there’s no easy answer.

Entrepreneurs have to work 36 hours a day at a minimum.

Shubha K. Chakravarthy: A couple more on that and I want to go into the deep dive of the process. So I’m coming in, I’m going to look at some angel groups. I’m trying to figure out which ones have the best shot and are a good fit for me.

How do I assess the industry fit if they don’t have a fancy website? Also how do I assess because I’ve heard stories like literally everybody on LinkedIn calls themselves an angel investor these days.

How do I find the legit good groups that run almost professionally. If not completely professionally, like the ones we know versus the one off few people hanging out and drinking coffee and want to go talk to people and look at deals.

Elaine Bolle: I’m gonna put a plug commercial into the Angel Capital Association if they don’t belong to either NVCA, The National Venture Capital Association or The Angel Capital Association.

Why not and they might have a good reason but your time is better spent and when you’re just exploring to go towards more formal groups. You might meet an individual in that group or an individual in other groups.

For example, if you, as an entrepreneur have done any kind of pitch competition. They are going to be other entrepreneurs there and you ask them who they’re dealing with. There’s going to be other investors there and you ask them who they are.

That really helps and you want to meet them. You might just be starting out. So I was at a pitch day just last week and there were entrepreneurs who were still working their day job. They were there to just begin to sort of feel out the community. That’s what you really want to do before you started.

Then it’s a matter of finding how many deals have you done? Have you done deals like this? And look at real good sources, look at who you would perceive as your competition. Both the larger companies but particularly the other startups are where have they got their money? Go talk to them. You already know they invest in this field.

Shubha K. Chakravarthy: Oh, you mean go talk to the investors obviously, right?

Elaine Bolle: Yeah but you’re creating an educational tool and we’ve talked about this. Look at investors that invested in other early stage educational tools who might not be exactly in your space but similar.

Reach out to those entrepreneurs and ask how did you raise your money? More and more people are doing podcasts nowadays as we’re doing this today. It’s easier to quickly sample, see and hear whose people are talking.

Challenges for Women Founders

Shubha K. Chakravarthy: Then one last question especially for women founders who are founding STEM companies.

We’ve heard a lot of stories and we’ve also seen some research in terms of prevention versus promotion based questions and all of that jazz. What have you seen? Is there any word of caution or advice that you would give to women?

We’re approaching largely male led investor groups and anything that would help them advance their chances of getting funded.

Elaine Bolle: As you said, be cautionary about this idea of a promotion question versus a risk related question. That’s something that research is just generally shown. I think there are more women in all kinds of angel groups. Now about a third of all investors are women. That greatly increases your numbers.

I think it is probably less of an issue for women today than it used to be. I think it’s easier if you’re in a STEM-like company because that’s what most early stage investing is. They are science and technology driven rather than food or beauty or fashion, although those are becoming bigger markets.

I just think about talking to other women, talking to people. Now we’ve got inside the angel capital association, growing women’s capital. There are all sorts of women investor groups and supporters but don’t forget that men support women. If you’re just really looking at them, see if they have daughters. If you’re really concerned because you know men who have daughters are probably going to be a little bit more supportive of women.

But I really do believe it’s a lot easier actually than it was many years ago. I think this myth about two percent of VCs is a bad myth that people and we shouldn’t be perpetuating. We should be talking about where people are getting good. It’s hard for any company to get invested.

On one hand it is slightly harder for women to get the investment. On the other hand if you have 10 pitches and you’re the only woman presenting, guess what the guys are all going to. Guys are a generic term but the men are all like I’m going to remember your name. The old bogey in me says that as a woman presenting is important.

Maybe be a little bit. I wouldn’t present in jeans and a t-shirt. I think there was a little bit more of a burden on a woman to look more professional. But that could just be me and a generation difference. Make sure you know what you’re talking about and you know what you don’t know.

Hopefully you have your own cheerleading squad behind you. That really does help because it is a hard road.

Shubha K. Chakravarthy: On that one follow up is. You have seen a lot of pitches by a lot of men and a lot of women founders.

Are there themes that you keep seeing over and over again that you think are helpful to call out so that women founders can be cognizant of them, prepared and better able to address them?

Elaine Bolle: I think you have to understand not just your problem and this is to a men and women entrepreneur but what the solution is. Why your solution is big enough that it can really work and then why you are uniquely suited to do this.

Women tend to round down, not round up. I tell the story, you’ll come in and you’ve got two startups and one’s led by a woman and one’s led by a man. They have 12 customers. Without blinking, typically the male entrepreneur will say I’m on my way to 25 customers and the female entrepreneur would be that she has managed to get just a little bit over 10 customers.

Round up, you must always be truthful. That’s not what we do, but it’s interesting. Women entrepreneurs have been very successful, often have been competitive athletes.

Shubha K. Chakravarthy: Interesting. I’ve never heard that before.

Elaine Bolle: I’ve met several because they have that spark, fight and tenacity. One of the companies just recently invested. It’s a male and female part team and they are changing what cows eat to reduce the methane that cows produce. Huge problem, okay?

The CEO, who is a woman, happens to be six foot one. She stands out in a room and she’s a former volleyball champion.

That’s not unusual because there’s something in the competitive spirit, willing to go because you are competing when you’re obviously trying to raise a new company.

Shubha K. Chakravarthy: What should I do as a founder if I don’t happen to be a volleyball champ and I want to get that.

Elaine Bolle: Know what you don’t know, learn about investing and learn about investors. There’s a difference between being an investor or investing in our own money which means we need an exit to have something happen.

An exit can be an acquisition, a merger, an IPO could be bought, being bought by a private equity firm. But something has to happen for us to get our money back. It’s important that you make revenue and profit eventually.

You have to understand how and we’ll ask from the very beginning, What is the exit? And don’t tell me an IPO. Fewer than three percent of all exits are IPOs.

We have to understand how the business works. I really encourage entrepreneurs to take courses that are offered from the ACA and others about valuation, due diligence, just how angels think about investing and their portfolio strategy. Because if you know how I think it’s going to be easier for you to answer my questions.

It is really important and these are just general rules. We’re going to talk about early stage meetings. Don’t use a lot of acronyms. Most investors you’re going to talk to cover a broad spectrum and they might have a couple people who are real experts, most people aren’t.

Don’t have me worrying about what the heck does that acronym mean. Tell me what it is, talk to me about the problem in a way. Even though I’m not a nuclear engineer, I can understand the problem.

Tell me how big this market is and how you’re going to make money in this market. It’s fine to say that you don’t know and knowing what you don’t know is often the key to success for an entrepreneur. Then they know what questions I need to answer and hopefully in the right order.

Shubha K. Chakravarthy: Awesome.

Effective Pitching Strategies

Shubha K. Chakravarthy: That’s a fantastic segue to what I wanted to talk about is how founders pitch to investors and how to get that process right.

We’ve already talked about how to approach angels. We’ve talked about what you need to have in place. I want to understand like I know each angel group is different but can you give a high level overview of what the process is for an angel group?

Elaine Bolle: It is pretty similar for most. They’ll have nuances but most typically there is some type of initial meeting pre screening like do you even fit in the broad thesis of what we’re talking about.

You want to know what the group’s thesis is, then there might be a screening questionnaire or it might be that you do an initial pitch to a screening committee. Then they will decide which ones go.

If it is a VC managed fund where you’ve got managers making the decision, you go do some committee thing, do you go to the bigger committee after the screening, enough interest. They do some diligence, and then you can negotiate. It’s a different scenario a little bit if you have a term sheet and you don’t have a term sheet.

Often that’s the hardest thing, particularly in the first round, whether you want to call it a pre-seed or a seed round getting that term sheet. That’s in fact, part of the reason why we started our new fund, RTP Angel Fund.

In our area, we wanted to be able to write term sheets. You’re going to do a screening and there’s going to be questions about, “What you’re doing, how big and we’ll talk about what should be in that presentation” in just one moment. But you’re going to get feedback and whether it’s feedback to move forward or not move forward.

If you don’t get feedback you should ask for feedback because that’s really important. When you’re not ready for us to invest because ABC comes back to us when you’ve done XYZ. We really like what you’re doing but you’ve got to explain how you’re going to make money better. We don’t really understand this. We don’t understand how you’re going to go to market. You need to be prepared and have a deal room.

The deal room is where you have all the key documents. If you’re just starting out, you don’t have a lot of documents but we want to know that you’re incorporated or if you’re an LLC. A lot of people say that you can be an LLC now but you better become AC Corp by the time we fund you.

Do you have employment contracts? When you are starting out a company and you are being serious about this company and you really want to commit the time and energy and everything else? You do want to create a formal legal structure and you want to hire a good attorney who understands startups.

There’s two reasons for that.

One, you want your paperwork to be in order from day one. Because if it’s not, it’s going to cost you a heck of a lot more once you finally get investors involved to clean up.

Secondly, that attorney is going to help make connections for you. If you do early stage work in the triangle, you know every active angel investor and every active VC in the marketplace. Your attorney will say that you should talk to venture south. You should talk to the RTP angel fund. You’re probably not a good fit for Duke Angel Network.

I don’t want to hear the excuse that you can’t afford it because the groups that are really good about it, they have all sorts of arrangements with early stage companies. Just the fact that you can get a major law firm to take you on as a client shows your seriousness.

The fact that you’ve gotten a good IP attorney to file your claims, not your brother in law who does this on the side or you did it on your own, says you’re credible.

The hardest thing before you have customers or revenue is why should I believe you’re a credible team? Credibility is going to be built by competitions. It’s going to be built by grants, whether it is state or local grants or SBIR, STTR grants.

We need some validation that people who know what this is all about think this is a good idea. The attorneys or the other service providers can really help with that.

The accelerators and every market has some co working space. It’s also sort of an incubator like thing and they have some mentorship. Some are better than others. Winning mass challenge means a lot if you’re in STEM businesses but it’s also just understanding what happens and having that a couple words of caution.

Don’t tell me you want me to sign an NDA because I’m going to steal your idea.

First of all, I’m not going to steal your idea but I probably already heard your idea five times. That just shows you don’t understand how the process works. If we can’t build a trusted relationship, it’s not the right fit.

Now, that is not to say if you have some truly incredible IP. Once you get to due diligence and you want somebody to really get into all the nitty gritty, there would be a specific person who would sign an NDA just for that purpose. But broadly speaking, we don’t use NDAs.

It’s also easier if there’s already a term sheet. If you’ve already gotten that first investor to write a term sheet and they are a serious investor, not your uncle who loves you and says that he’ll give you $50,000 with a $5 million valuation or a $10 million valuation because he knows you’re brilliant. You’re his niece and you’re brilliant.

It makes it easier for them to follow on to do it because typically the math is, first round a company raises between 500,000 and a million dollars. The typical early stage investor puts in somewhere between 150,000 and 250,000. So you do the math.

You’re going to need four of them in order to be able to but they work with each other and if one’s done diligence, the other might do different diligence but hopefully they’ll share and do things together.

Understanding Term Sheets and Lead Investors

Shubha K. Chakravarthy: How do you get that first term sheet? You kind of almost walked me into that question because I’ve heard this over and over again. Everybody says they’re ready but they need a lead. I’ve heard this from founders so many times.

Elaine Bolle: It’s finding those people who are willing to be a lead. We have that right on our website that if we’re the right one, we’re willing to do that.

It shows the conviction for the idea and it also probably means that it’s harder to find the leads but there are a lot of groups that actually do write term sheets. There’s also ones that don’t and they will be very upfront. Golden Seeds does write term sheets. I don’t think ASFIA might not but I’m not sure about that. So, Portfolia does not. That’s a good example.

The Portfolio funds don’t write term sheets. That’s not to say that you can’t get investors. If you can get them to say that look, when you get a lead or when you get 500,000, I’m willing to invest. It’s a very iterative process.

Find the guys who have written term sheets for other people. The term sheet you have when you come out of Y Combinator or TechStars is not the investor term sheet.

Shubha K. Chakravarthy: So my goal as a founder should be to find that right fit angel group that’s in my sweet spot of my domain. They have a good reputation and ideally I can hope to get them to lead and write me a term sheet. So, it makes it easier for me to go find follow on investors. Is that approximately right?

Elaine Bolle: Yeah but that also means you’re the one in a hundred who’s really lucky going out of the gate.

Shubha K. Chakravarthy: I can aspire, right?

Elaine Bolle: Things like participating in some of the VentureWell accelerators, good example. Other very focused accelerators that can really help you along the way.

Hopefully you’ll get some people who’ll give you some money on a convertible, not subject to equity round. That’s really common. There’s way too many SAFE’s out right now and there are a bunch of people that love SAFEs and then there’s a bunch of us that don’t like SAFEs. We will be candid and part of the reason for that is that early stage companies do need accountability, governance, help, and that structure comes along with things like a convertible note or obviously a priced round.

Sometimes it’s timing and it can be extraneous factors. Right now people are all waiting to see what’s really gonna happen with interest rates and things really gonna open up.

Once you start seeing some more exits in liquidity, you’re gonna see it’s gonna flow downhill. It’s going to be easier.

Or on the other hand, if you raised money in the crazy days of the end of 2021 or early 22, you either can’t raise money or can raise money at a real haircut. I know you’re focusing a lot of energy on this first money and I would say that on first money, try to get as much non diluted money as possible right now. There is a lot more money out there.

There’s this new money that came out of the IRA that has made it easier for some of the earlier stage companies and non-traditional companies to get money. But again, it comes back to who’s the people doing it. Obviously if you’ve done it before, it’s easier to raise money but most entrepreneurs haven’t and particularly most women entrepreneurs haven’t.

But can you build a team even if it’s a small team? You have to be a leader to be able to do this. In order to lead, you have to have people that are willing to follow you. It is very hard to be a one person company. That is not a company, that’s a person.

If you have a co-founder, that is often really important. Maybe somebody who complements your skill. You might be the educational expert, they might be the technology expert or they might whatever the comparable skill is.

Do you have a couple other people that are working with you part time? Because as a team, you’re going to have to change over time.

Market Size and Validation

Elaine Bolle: Second thing is how big is the market? Not necessarily what your product is but because you need a big enough market that’s growing or that is going to be growing. Growth covers a lot of sense. It gives you the time to sort of figure out what the right product market fixes.

Then what is your solution to this problem? If you notice that’s typically number three because if you step back about it. If you’re going to waste your time and energy for a big & great solution, it better be for a market that’s big enough to go after.

We are talking about companies that have the potential to eventually be, let’s say 100 million dollars. With 50 plus more employees, today there were three people or four people. That’s the trajectory you’re looking at.

If the whole market is only three, 400 million, it’s just going to be too hard to grow. You’re going to have to do too much and there’s not going to be a big enough reward at the end of the day. Remember most early stage investors because they’re coming in so early and they’re going to be there so long and are looking for at least a 10x return.

Now, why are we looking for a 10x return? Because only one in 10 of our companies is going to return any money at all. But we still believe that the day we write the check, we believe each and every company has that potential.

Shubha K. Chakravarthy: You raise a really good point about market size. This is one thing I want to dive into for a second.

We’ve all seen those pages where there are three bubbles with the big numbers. Can you talk a little bit from your experience of what makes you convinced as an investor that this is a good market other than I come and show you a page with a big bubble that says 5 billion.

What are you probing for? What are you looking for? And what are the markers?

Elaine Bolle: It’s not just that you’re saying that. I’ll give you a case.

We had a company that’s got a really interesting tool. They are sort of an app that you use for information when you go to a zoo or a museum or everything else. They added up the numbers and including people like Disneyland and everything else. They claimed it was over a billion dollars. I’ll be honest, I don’t remember the exact number right now.

We liked the company, we liked the product but when we got in and dug into the due diligence under the most generous ways of looking at it, we could not get a market over 300 million. It has got to be markets that we can validate or we’ve seen in growth projections beyond the company itself.

I used to be in the cereal business. I’m talking about Cheerios and Wheaties and that kind of breakfast cereal. I know I had to be clear about that. That’s a huge market. It’s not as big now as it used to be but it’s still a big market.

All I need is a 1 percent share to be successful. Let me tell you, I did an analysis and this is going back a ways but it was the top of the top 25 cereals in the country for 40 years and 15 of them were the same.

Shubha K. Chakravarthy: 40 years.

Elaine Bolle: And we’re talking about Cheerios, Corn Flakes, Wheaties, Rice Krispies, Fruit Loops, I can’t remember all the rest. And fads would move out for a while. Corn bran was really hot and then granola was really hot.

My point is that getting a 1 percent share is really hard. But if within a big market, you have a focus for we all talk about beachhead markets. What are the markets you’re going to go after first? These are markets where you have something you might know customers or you might have come out of companies that were in that market.

It’s credible that you can begin to gain traction there. It’s also credible that as we read industry reports and remember one of the first things we do. We’re fortunate. Most of us in the early stage groups, we have interns that are at universities and they have access to every research thing. If you’re in a large market and I’ll be in two large markets, one of which I’d invest in one of which I wouldn’t if I had the right company expertise.

Gasoline engines, huge market but not quite what happened. Electric vehicles are growing tremendously. It’s not obviously as big as the other but potential is there.

AI is not a market. AI is a tool like the internet like electricity that everyone is using. It’s more sophisticated computing. That’s why we should really think about it.

Yes, it’s changing the tools we use. It’s not necessarily changing all the problems we solve. I think that’s what you’ve got to distinguish. So don’t tell me to go ahead.

Shubha K. Chakravarthy: As a founder, how should I position the market or what should I look out for to paint that credible picture of a market that’s compelling to you as an investor?

Elaine Bolle: It’s really simple to a non market expert and a market expert. It sounds logical. I know that sounds really trivial but it really says that we just invested in a company that is helping hospital systems do their screening more efficiently.

They’re helping hospitals schedule breast cancer screening, tubercular screening etc. Two doctors have been doing this for research for a while. They’ve managed to work with a couple of health systems as a pilot and get it going.

They can show us the market for just the first two markets in how many screenings there are. They can show us how they’re going to acquire it. They’ve done a pilot and the pilot’s proven these data points.

I’m not an expert in healthcare but it makes sense to me. Facts don’t lie. They take over the mailing and make sense. They get more people to sign up for the hospital systems that are used more efficiently so the CFO likes it from the hospital. It makes sense and it doesn’t strain credibility.

If you can talk knowledgeably when I start poking you.

How do you get this? So, for example, this is a great case. One of the questions we had when we did diligence was that you’re going to do this and you’re going to have this big burst of people signing up when you first do it.

But then two things are going to happen. You’re going to get everyone booked to capacity and then there’s going to be nobody left to screen. Okay, logical.

It’s if they were able to show how many new people come in each year and how capacity really self-levels. In terms of what people are doing so they would in fact be part of the reason. We’re rolling out slowly is to figure out how we feed the stream? How fast do we feed the stream?

They got us shaking our heads saying that makes sense and yes you’re going to prove it. Next year, we’ll watch it and see what happens. You have to understand your building blocks. You have to understand how you’re going to make money.

One of the first questions people are going to ask is that what is your lifetime value? What is your cost to acquire a customer? What’s your sales cycle? If you’re just starting out, you don’t know. But saying that I don’t know based on other benchmarks I think are sort of like ” They should be in this ballpark over the next six months”.

Here’s how we’re gonna figure that out. There could be one of two reactions. One could be that, come back when you figured it out. Others will say that they’ll give you a little bit of money now and will help you get there.

Shubha K. Chakravarthy: Got it. You now bring up this question of due diligence which many first time founders aren’t familiar with.

Due Diligence Process

Shubha K. Chakravarthy: As an angel investor what are the top things you’re looking for during due diligence? What are your focus areas?

Elaine Bolle: You start out with, What am I betting is true for this company to be successful?

Is it that I’m betting that they can reduce the cost from 10 a unit to 1 a unit? Am I betting that their sales cycle will be about 3 or 4 months long, not 3 or 4 years long? The important thing when we do due diligence is what has to be true and what are sort of the deal breakers and take them in that order.

We’re going to give you a laundry list that asks for every contract that asks for every supplier. We have a blah, blah, blah, and half of which you don’t have because you’re an early stage company. We’re going to tackle those questions based on what must be true for this to be successful? We can put holes in it. We are not looking to say no to the deal because I can kill any deal anywhere in the country at any time because you’re a startup, you don’t have a lot.

If I know these are the risks, talking about how do we mitigate them? What do we do if this happens?If you can get an FDA approval, how quickly can you get this? Do you have the right person helping you with it? Do you know how to get FDA approval? Have you hired the right consultant to do it?

So it’s really risk. We’re doing risk mitigation.

Our typical due diligence reports just to give you an idea are about 15 pages long and they are not cutting and pasting the presentations that we got. We got it. We do our own market research. We will talk to customers if that’s relevant or potential customers. One of the pushbacks you get and that’s it right now that well, I don’t want every investor talking to customers and that is fair. That is absolutely fair.

You get the investor that you’re most serious with, maybe you’re doing the lead or you think you have the best and say that look, if you go and do my customer interviews, will you share that with other investors? 99 percent of the time they’re going to say yes and that we’re really again and it always has a summary.

How big is the market? What are the competitors? What are the real issues? What does the team look like? We’re going to want to talk to the whole team and various members of the due diligence group will do that.

Due diligence shouldn’t last longer than 60 days because if it does both sides is a deal fatigue and you have to worry. It’s a real red flag.

That’s driven in part by from day one, is the entrepreneur ready? Do they have at least a prototype of a deal room? Groups like venture or out of the ACA, we can tell you exactly what in theory should be in the deal room.

Now, somebody’s always going to ask for something else but, can you be responsive? Are you organized?

I heard something the other day at a presentation which I hadn’t really thought about but they said that when you set up your deal room, make sure you’ve got a very good document structure because as you go along, you’re getting more and more versions and you want to make sure you know what version you’re on.

It sounds stupid. We’re talking about these big ideas and I’m talking about keeping a file. It’s important because that makes you more efficient as the entrepreneur

Shubha K. Chakravarthy: Got it. So this is awesome. I love it, Elaine, because what I’m hearing and what I’m taking away from this is as an entrepreneur, I should be thinking about what are the biggest risks and which are the strongest pillars kind of like that are load bearing of my story and then focus on making sure that those are really strong as I head into either building the startup or raising funds.

Elaine Bolle: It’s the same thing. Getting the money is directly correlated to that and it’s really asking yourself a lot of questions.

Understanding what type of questions the investor is going to ask you and what you should be asking for yourself.

Shubha K. Chakravarthy: So one quick follow up on that and then I want to close with a few concluding questions.

The first thing is, what are the tough questions that you typically look to ask? You talked about poking and prodding the founder, right? What types of questions should founders expect and what are you looking to get out of those questions as an angel investor?

Elaine Bolle: You’re looking at how they answer questions. Are they defensive? Or are they really cocky? Are they willing to admit they don’t know something?

The best thing that can happen to an entrepreneur is they know what they don’t know. A real common question is what’s keeping you up at night or what do you think over the next six months are your biggest hurdles?

They know what steps they need to take. They have a plan now that’s going to change. But something’s going to happen. The world’s going to blow up or the or COVID is going to hit.

It’s going to be the best opportunity or the worst thing ever. but we were trying to see how they think and can they think on their feet?

Shubha K. Chakravarthy: What about thinking are you looking for? Like, what are the markers of good thinking versus bad thinking? Other than admitting what they don’t know.

Elaine Bolle: Does your answer make sense? Have they listened to the question and other answers and say, “Hey, wait, I’m not sure I understand. Are you asking me about A or are you asking me about B”?

A great response. It shows that they are really listening and they know their business.

Shubha K. Chakravarthy: One other question on what kind of feedback you get from investors, right?

One thing I’ve kind of come across from talking to many founders is investor X who’s very credible gives me some feedback and investor Y who’s equally credible gives me the exact opposite advice. How do I stay grounded and oriented the right way as a founder?

Elaine Bolle: You take all of it with a grain of salt. You’re right. The worst thing that can happen is what we call drive by mentoring.

Shubha K. Chakravarthy: Yes, exactly.

Elaine Bolle: It’s not as much from it. It is a little bit from investors while they’re talking to you but it’s from mentors. Oh, you should look at it this way or that way.

I think you’ve got to take everything in. As an entrepreneur says, “I hear them but here’s why I want to do X or “Y. You shouldn’t just cave.

Now on the other hand, if six different investors say that this doesn’t make any sense,you might want to listen to it.

Shubha K. Chakravarthy: I figured so.

Valuation and Fundraising Strategies

Shubha K. Chakravarthy: From a deal perspective, I’m just going to wrap up with a few questions that are very hot on founders minds.

One is around valuation. Like if you’re a first time founder, maybe you don’t have access to PitchBook. I’ve seen people come up with ridiculous valuations like, 37 million or 35.

Elaine Bolle: First of all any company you’re starting out that doesn’t have revenue and is really early and just getting the concept is probably worth something less than five million dollars. I don’t care what industry they’re in.

Having said that, valuation is a negotiation between the entrepreneur and the investor. It is truly a negotiation. It is not the most important factor. Way too much time is spent on this issue of valuation. As an entrepreneur, what you need to say is how much of the company can you give up now? Because you got to do that calculation, what percent you are still going to own.

How will the money you are raising right now take you to the next major milestone, the next major inflection point? What does that valuation have to be? Because you want to have an up round. You really have to look at it that way.

While maybe you can’t subscribe to PitchBook if you’ve got access to a university. You can get good data. You’ve got to be able to figure it out. And the Angel funding report, which is from the ACA doesn’t cost you anything. You can read about what angels are and what the valuations are.

Shubha K. Chakravarthy: Recommended to everybody.

Elaine Bolle: All of them and just even the documents, your pitch book. You can download all their quarterly papers and they show the numbers. They are less accurate for the earliest stages that’s why the angel funding report really exists.

There are others, use that and talk to your peers. If you say that you can get 10 million in Silicon Valley. We’ll say, “Go to Silicon Valley and go get it. Come back to us when you want to talk about something else.” It is not the only factor at all.

Shubha K. Chakravarthy: Got it. There are other terms of the deal etc., which are not in scope. I hear what you’re saying. So one other point is, this is a pretty tough raise environment, right? We’ve just come off.

Elaine Bolle: It is. It’s hard. Absolutely.

Shubha K. Chakravarthy: What advice do you give for founders who have to raise in this environment?

Elaine Bolle: Be realistic. Be very creative in terms of how you can let your money run longer. Whatever money you have. Look really hard for non diluted funding.

Look for things like, is a customer willing to pay for a trial? Just keep knocking on doors. When you do kiss enough frogs, you eventually will find a prince or a princess.

Shubha K. Chakravarthy: Just be prepared to kiss a lot of frogs.

Elaine Bolle: Give me one of them but yeah.

Advice for Women Entrepreneurs

Shubha K. Chakravarthy: Then looking back, especially at women founders in STEM, are there themes that pop up other than them being volleyball athletes that have struck you or have kind of emerged over time in terms of what really drives successful women that might be slightly different than you see for men?

Elaine Bolle: This is showing my own biases. The women tend to be smarter, more insightful, more hardworking, and more aware of a larger environment.

Shubha K. Chakravarthy: So how should we translate that into success in startups and raising capital?

Elaine Bolle: If you’re not smart, you probably don’t want to be an entrepreneur. I’m sorry. You got to be really smart to be an entrepreneur.

And being creative, it’s not any one marker but you have been successful and you’ve conquered things over time.

Demonstrate it, whether you did various things you juggled, now people are much more accepting of mothers and I’ve had two or two of the companies we funded recently. One had just given birth three weeks before. Years ago that would have been a much bigger concern but we’ve seen people do it. I think women need to think less about being uniquely women and just think about what you need to be successful

Shubha K. Chakravarthy: Awesome. Good words of advice.

On that note, is there anything that you think I should have asked you but I didn’t that you think is relevant to our audience?

Elaine Bolle: No, it’s just, recognized as an entrepreneur, it’s really hard what you’re doing is hard and make sure it’s worth it to you.

You’re not doing this just to make a lot of money. You’re doing this because you want to make a difference in the world.

Shubha K. Chakravarthy: This has been amazing Elaine and this is just an amazing conversation. Thank you so much for taking the time and for sharing your insights.

Elaine Bolle: All right. Thank you so much. Have a good day.