Awkward Zoom Meetings, Lower Valuations, and Ghosting: What It's Like Fundraising in a Pandemic

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Awkward Zoom Meetings, Lower Valuations, and Ghosting: What It's Like Fundraising in a Pandemic

When Jessica Toh, co-founder and CEO of Huckleberry Labs, was pitching a venture capital investor recently – via Zoom video naturally – Toh glanced at her computer screen and worried something seemed off.

"The other person looked so still," she said. "I thought she was frozen."

Toh was forced to make a split second decision. Should she pause and see if something was wrong or keep going as if nothing was amiss? She opted to plow ahead with the presentation she had delivered hundreds of times for her app that helps monitor the sleep patterns of babies, but it was hard to concentrate when she thought she might be speaking to herself.

"What I didn't realize is how that was coming across in the way I was talking," she said. "It turned out the investor wasn't frozen but just was really still."

Toh did not receive the check. And, when she asked for feedback, was told she did not come across as passionate about what she was building. "That was a shock because everyone else can see how passionate I am," said Toh. "I realized when it's over Zoom it's so hard to have that personal engagement and things come across in a different way."

Toh's experience illustrates the pitfalls of fundraising in the COVID-19 era. After a decade of ever rising valuations put founders in the driver's seat, everything suddenly changed in March when investors literally locked their doors and retreated to triaging their existing portfolio.


U.S. venture capital investment fell by 46% from March to April, according to Pitchbook data. During the global financial crisis, fundraising fell by nearly 60% from 2008 to 2009. "Fasten your seatbelts," warned the National Venture Capital Association in a report last month. "It's going to be a bumpy ride."

The start of a once-in-a-100-year global pandemic certainly is not an ideal time to be raising money for your exciting new startup idea.

"If you don't need to fundraise, I wouldn't go out right now," said Franky Bernstein, founder and CEO of Markett, a word-of-mouth marketing company. "It's definitely hard out there."

But what if you have no other choice than to raise cash? dot.LA talked to a half dozen founders about their experience. Admittedly the sample size suffers from self-selection; most of those willing to share their stories have still managed to raise funds because their companies are not adversely affected by coronavirus, or in some cases have benefited from it. But it has not been easy, with lower valuations, mixed feelings about trying to proceed as normal during such un-normal times, and an increase in ghosting. More than one founder compared fundraising right now to online dating.

"It's not a great time to go out and meet people," said Bernstein. "I feel bad for single people and for people who have really good ideas right now."

Another L.A. founder, who did not want to be identified because she was afraid of alienating potential investors, says she started to raise an $800,000 seed round in February and by early March had secured commitments from a group of angel investors for half a million dollars. But by mid-March, she suddenly stopped getting replies to her emails and phone calls.

"Everyone just started ghosting," said the founder. "I was like 'oh my god, the angels are gone.'"

The founder realized investors who had committed to help build her business were now facing their own financial and personal problems, and the last thing they wanted to do was to write a $25,000 check for a risky startup.

"That was tough to take," said the founder. "They gave us a verbal commitment and they wouldn't even respond to my email. But you also don't know what they're going through. I thought it might be insensitive to follow up because you don't know what's going on. I thought maybe I should wait until next year and try this again."

Markett's Franky Bernstein, in more social times.

Founders say that in retrospect they wish they would have started fundraising just a few months earlier when they no doubt would have received more favorable terms.

"We would have been able to raise significantly more money significantly faster if we would have started in December and closed in February," said Bernstein, who says he's still happy with his valuation and thankful to have a network of VC's he can draw upon. But adds: "The investors definitely have more sway now more than ever."

Even though both sides had already agreed to terms, Steven Dietz, founder and CEO of United Dwelling, said he decided to voluntarily lower the valuation of his company's $10 million series B round once the pandemic hit to avoid what he described as "ongoing awkward conversations" with investors."I think valuation has to adjust," Dietz said. "We took it down 10 percent and moved forward."

Dietz, Toh, and Bernstein had the fortune to start companies well-suited to the coronavirus era and they have been able to raise their rounds though it has taken longer than they expected.

"People are definitely still writing checks but things are moving much slower than they used to, from first meeting to check," said Bernstein. "But we're in a lucky position because I decided a couple years ago I want to run a profitable business."

Normally founders are not shy about touting their accomplishments – investors generally do not want to back a failing company –but in this environment no one wants to be seen as gloating.

"I would never want to capitalize on a global tragedy but I'm so grateful to be in the online learning sector." said Christine Outram, founder and CEO of the virtual tutoring app Everydae, which has seen an uptick in users during stay-at-home orders that helped her close a $1.2 million round.

The startup community is close-knit and competitive and now there is sensitivity about touting your latest fundraise or valuation at a time when many of your friends may have been recently laid off or are struggling.

"It's this weird thing because we got positively affected by this," said Ryan Chan, founder and CEO of Upkeep, which announced May 12th it has raised $36 million in Series B funding. Chan says the pandemic has only made UpKeep more appealing because it is a mobile platform that helps companies streamline maintenance and cleaning requests, which are crucial as workers return to the workplace.

"I feel weird talking about it because I know a lot of companies aren't doing well," said Chan.

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Top LA Accelerators that Entrepreneurs Should Know About

Los Angeles, has a thriving startup ecosystem with numerous accelerators, incubators, and programs designed to support and nurture new businesses. These programs provide a range of services, including funding, mentorship, workspace, networking opportunities, and strategic guidance to help entrepreneurs develop their ideas and scale their companies.


Techstars Los Angeles

Techstars is a global outfit with a chapter in Los Angeles that opened in 2017. It prioritizes local companies but will fund some firms based outside of LA.

Location: Culver City

Type of Funding: Pre-seed, early stage

Focus: Industry Agnostic

Notable Past Companies: StokedPlastic, Zeno Power


Grid110

Grid110 offers no-cost, no-equity programs for entrepreneurs in Los Angeles, including a 12-week Residency accelerator for early-stage startups, an Idea to Launch Bootcamp for pre-launch entrepreneurs, and specialized programs like the PledgeLA Founders Fund and Friends & Family program, all aimed at providing essential skills, resources, and support to help founders develop and grow their businesses.

Location: DTLA

Type of Funding: Seed, early stage

Focus: Industry Agnostic

Notable Past Companies: Casetify, Flavors From Afar


Idealab

Idealab is a renowned startup studio and incubator based in Pasadena, California. Founded in 1996 by entrepreneur Bill Gross, Idealab has a long history of nurturing innovative technology companies, with over 150 startups launched and 45 successful IPOs and acquisitions, including notable successes like Coinbase and Tenor.

Location: Pasadena

Type of Funding: Stage agnostic

Focus: Industry Agnostic, AI/Robotics, Consumer, Clean Energy

Notable Past Companies: Lumin, Coinbase, Tenor


Plug In South LA

Plug In South LA is a tech accelerator program focused on supporting and empowering Black and Latinx entrepreneurs in the Los Angeles area. The 12-week intensive program provides early-stage founders with mentorship, workshops, strategic guidance, potential pilot partnerships, grant funding, and networking opportunities to help them scale their businesses and secure investment.

Location: Los Angeles

Type of Funding: Pre-seed, seed

Focus: Industry Agnostic, Connection to South LA and related communities

Notable Past Companies: ChargerHelp, Peadbo


Cedars-Sinai Accelerator

The Cedars-Sinai Accelerator is a three-month program based in Los Angeles that provides healthcare startups with $100,000 in funding, mentorship from over 300 leading clinicians and executives, and access to Cedars-Sinai's clinical expertise and resources. The program aims to transform healthcare quality, efficiency, and care delivery by helping entrepreneurs bring their innovative technology products to market, offering participants dedicated office space, exposure to a broad network of healthcare entrepreneurs and investors, and the opportunity to pitch their companies at a Demo Day.

Location: West Hollywood

Type of Funding: Seed, early stage, convertible note

Focus: Healthcare, Device, Life Sciences

Notable Past Companies: Regard, Hawthorne Effect


MedTech Innovator

MedTech Innovator is the world's largest accelerator for medical technology companies, based in Los Angeles, offering a four-month program that provides selected startups with unparalleled access to industry leaders, investors, and resources without taking equity. The accelerator culminates in showcase events and competitions where participating companies can win substantial non-dilutive funding, with the program having a strong track record of helping startups secure FDA approvals and significant follow-on funding.

Location: Westwood

Type of Funding: Seed, early stage

Focus: Health Care, Health Diagnostics, Medical Device

Notable Past Companies: Zeto, Genetesis


KidsX

The KidsX Accelerator in Los Angeles is a 10-week program that supports early-stage digital health companies focused on pediatric care, providing mentorship, resources, and access to a network of children's hospitals to help startups validate product-market fit and scale their solutions. The accelerator uses a reverse pitch model, where participating hospitals identify focus areas and work closely with selected startups to develop and pilot digital health solutions that address specific pediatric needs.

Location: East Hollywood

Type of Funding: Pre-seed, seed, early stage

Focus: Pediatric Health Care Innovation

Notable Past Companies: Smileyscope, Zocalo Health


Disney Accelerator

Disney Accelerator is a startup accelerator that provides early-stage companies in the consumer media, entertainment and technology sectors with mentorship, guidance, and investment from Disney executives. The program, now in its 10th year, aims to foster collaborations and partnerships between innovative technology companies and The Walt Disney Company to help them accelerate their growth and bring new experiences to Disney audiences.

Location: Burbank

Type of Funding: Growth stage

Focus: Technology and entertainment

Notable Past Companies: Epic Games, BRIT + CO, CAMP


Techstars Space Accelerator

Techstars Space Accelerator is a startup accelerator program focused on advancing the next generation of space technology companies. The three-month mentorship-driven program brings together founders from across the globe to work on big ideas in aerospace, including rapid launch services, precision-based imaging, operating systems for complex robotics, in-space servicing, and thermal protection.

Location: Los Angeles

Type of Funding: Growth stage

Focus: Aerospace

Notable Past Companies: Pixxel, Morpheus Space



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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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Fuel Innovation: 7 Unforgettable Team Building Experiences in LA
Image Source: Discover LA

In today's competitive business landscape, team building activities have emerged as a crucial tool for fostering a positive work environment, enhancing productivity, and crucially, improving employee retention. Studies have shown that such activities help employees feel valued, with one report indicating that 93% of those who felt appreciated were more motivated at work. Importantly, team building events may improve retention rates, as employees who feel connected to their colleagues and company culture are more likely to stay long-term. With these benefits in mind, let's explore some of the most engaging and effective team building activities available in Los Angeles.

Pickleball

Image Source: Modern Luxury Angelino

Pickleball is a fantastic team bonding activity because of the easy-to-grasp rules and gentle pace make it perfect for everyone, regardless of age or fitness level. The game thrives on communication and teamwork, as players must collaborate and strategize to outplay their opponents, boosting team cohesion. Plus, the lively, fast-paced action sparks friendly competition and laughter, creating a fun and spirited atmosphere that brings everyone closer together. Los Angeles boasts numerous pickleball courts that are easy to rent if you have your own equipment. If you need additional assistance organizing your pickleball outing, there are plenty of full-service companies ready to handle every detail for you.

Resources: Pickle Pop, Corporate Pickle


Escape Room

Image Source: The Escape Game

Escape rooms are a great way to build camaraderie. They require participants to work together, combining their problem-solving skills and creativity to overcome challenges and puzzles. The immersive and time-sensitive nature of escape rooms fosters collaboration and communication. Additionally, the shared experience of tackling complex tasks and reaching a common goal helps build trust and foster positive emotions among colleagues.

Resources: The Escape Game, 60Out


Day Trip to Catalina Island

Image Source: Love Catalina

Catalina Island is a perfect day trip for a team because it provides a break from the usual work environment, allowing team members to relax and connect in a new setting. Shared experiences during the trip, such as exploring new places and participating in fun activities, help build stronger relationships and foster a sense of camaraderie. There are numerous team-building activities such as an arboreal obstacle course, an island tour, scavenger hunts and more.

Resources: Catalina Island Group Activities


Top Golf

Image Source: Topgolf

Topgolf is an excellent team building event because it provides an inclusive, relaxed atmosphere that accommodates players of all skill levels, fostering personal connections and improving team morale. The unique blend of competition and entertainment creates an ideal setting for building trust, enhancing communication, and revealing hidden skills among team members. Additionally, Topgolf offers structured team building packages with guided activities, discussion prompts, and lessons on culture, change, collaboration, and strategy, making it a versatile and effective platform for strengthening relationships and boosting overall team performance.

Resources: Topgolf El Segundo


SoFi Stadium Tour

Image Source: Discover LA

A SoFi Stadium tour offers a unique, behind-the-scenes experience of one of the world's most advanced sports venues, allowing team members to explore exclusive areas like premium suites, team locker rooms, and the player tunnel together. The tour provides a shared, memorable experience that can foster camaraderie and spark conversations among team members, regardless of their interest in sports. Additionally, the stadium's state-of-the-art features and impressive architecture can inspire creativity and innovation, while the group setting encourages interaction and collaboration, making it an engaging and enjoyable activity for teams of various sizes and backgrounds

Resources: SoFi Stadium Group Tours


Corporate Volunteering

Image Source: L.A. Works

Volunteer work serves as an excellent team building activity by uniting employees around a shared, meaningful cause, fostering a sense of purpose and collective accomplishment. It provides opportunities for team members to collaborate in new ways, often revealing hidden strengths and leadership qualities that may not be apparent in the regular work environment. Additionally, engaging in community service can boost morale, enhance the company's reputation, and instill a sense of pride among employees, leading to improved workplace relationships and increased job satisfaction.

Resources: Habitat for Humanity, L.A. Works, VolunteerMatch


Corporate Improv Sessions

Image Source: Improv for the People

A corporate improv class encourages spontaneity, creativity, and quick thinking, skills that are valuable in the workplace. It promotes active listening and collaboration, as participants must work together to create scenes and respond to unexpected situations, fostering better communication and trust among team members. Additionally, the playful and often humorous nature of improv helps break down barriers, reduces stress, and creates a shared positive experience that can improve team morale and cohesion long after the event.

Resources: Improv-LA, Groundlings, Improv for the People

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