0-1 Series

If you missed it, a month ago I kicked off a series on all the firsts of Habits. Consider things like our first sale, how I found my co-founder, our first investor, attracting early employees, and today will share the moment Habits took a serious change in direction.

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Angel Investors vs. VCs

Raising money from angel investors is a lot like speed dating. Every conversation is different, and you have no idea what you’re walking into. You might say the right thing at the right time, or you might just fit the oddly specific checklist they’ve been carrying around in their head. It’s unpredictable, fast-moving, and often based on vibes as much as numbers.

Venture capital, on the other hand, is like meeting the family. More people to impress. More opinions flying around when you’re not in the room. You’re being judged every second. Some family members make you feel welcome, others not so much. Certain ones are impossible to win over. They’ve got their own weird traditions and expectations, and you either embrace that you’re different or try to play along. But you never really know if you’re accepted until the wedding day—which in this case, is when the wire hits.

Welcome to the good, the bad, and the ugly of raising VC money.

The 101 on VC Funds

First and foremost: VCs are not a charity. Early-stage investing is high risk, high reward, and they’re just fiduciaries of capital. They’re raising money too—pulling it from asset managers, corporations, family offices, wealthy individuals, even government grants. Just like you, they’re trying to build something, establish their culture, and prove their investment strategy works.

And these days, there are so many versions of VC funds—micro-VCs, corporate venture arms, family office investors, accelerators, incubators. The list goes on.

But no matter what kind of VC you’re talking to, convincing them to write a check is a big f**king deal. You have to prove three things:

1. Your idea is worthwhile.

2. You’re the right team to execute it.

3. The timing is perfect.

Whether you raise $1 or $100M from institutional investors, it’s both a validator and a motivator. But that’s when the real work begins.

Our First VC Investor

I met Titi, one of the partners at Elevate Ventures, nearly three years ago. At the time, I was basically acting as chief of staff for Puma’s global basketball division and was in town visiting my girlfriend when I got a last-minute invite to pitch at a Techpoint event.

(Quick plug: Techpoint is a nonprofit that connects startup founders and investors in Indianapolis. Every city has a version of this, and it’s the best place for early founders to start. Trust me, I’ve found them everywhere from Columbia, SC to Boston to Houston.)

It wasn’t a glamorous pitch. I gave a dawgshit presentation to about 11 people—8 of whom were students. But Titi was in the crowd. Afterward, she told me to add her to my investor memo. And just like that, the relationship started.

Fast forward, and a friend of mine became an operating partner at Elevate. He was my first call. Now I had two people in my corner, the timing lined up, and things started moving.

I pitched seven of them over Zoom, went through a few weeks of negotiations, and eventually, they wired us $100,000.

Why Did It Take a Few Weeks?

Well, Elevate only invests through convertible notes, and—candidly—their terms weren’t great. I had to explain to our existing angel investors why this VC was getting a better deal than they did. Turns out, that conversation was a lot easier than I expected.

But the negotiation process taught me a ton about how VCs operate—their strategy, their risk tolerance, and their formula for investing.

For example, do you know what pro-rata rights are? MFN clauses? Have you ever actually modeled out how liquidity preferences impact your exit?

I had read about all of this in Venture Deals, but let me tell you—it’s a whole different experience when you’re in the driver’s seat.

What’s the Big Takeaway?

Honestly? There isn’t one single takeaway. I know founders who raised $5M off a pitch deck. I also know founders who bootstrapped to millions in revenue and still can’t get a VC to take them seriously.

For us, getting that first VC investor was an invaluable learning process. It forced our team to tighten up operations, build a robust data room, and—most importantly—realize that taking on venture capital is just the beginning.

Because at the end of the day, you’re responsible for delivering a return on that investment. And a lot of founders tend to forget that part. But trust me, VCs don’t. And that might just be the biggest differentiator between who gets funded and who doesn’t.

What’s Coming Next?

Next week I’ll tackle a topic that may surprise you. Because we are coming close to the conclusion of this 0-1 series and it’s impossible to tell the Habits story without addressing how friends & family play/played such a huge role.

I bet you next week will be my best newsletter yet.

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