When to Pivot Your Startup with Michael True

The Journey of Prescient AI

Michael True, co-founder of Prescient AI, a probabilistic attribution and media forecasting tool for D2C brands, joined The Fundraising Debrief following their $4.5 million seed round to share insights from his journey.

Pivoting During the Pandemic

Prescient AI's journey began with a pivot. Michael and his co-founder, Cody, initially built a tour prediction model for artists. However, when the COVID-19 pandemic hit, they swiftly shifted their focus to measuring the impact of digital marketing on album and track releases. This ability to adapt quickly to changing circumstances is a crucial trait for any startup, and it would take another large pivot for Michael and Cody to get to where they are today.‍

Adapting to Industry Changes

Soon after their first pivot, Google and Apple announced their plans to phase out cookies, an important tool used to track and attribute clicks, conversions, and sales to specific advertising campaigns. Michael and Cody recognized the seismic shift that this represented for the advertising industry, a much larger market than the one they were tackling, as well as the applicability of their technology to this problem. So they shifted focus again, and found traction along the way. For more on when and why founders should pivot, check out these resources from Y Combinator, Founder Institute, and Hubspot.‍

Fundraising Strategies

Prescient AI was bootstrapped for much of their life, but when it came time to raise outside funding, Michael turned his attention to relationship building for the long term, instead of trying to win investors right away and get some quick checks. He advises founders to view a 'no' from potential investors as an opportunity to learn what is needed to get a 'yes'.

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Building Investor Relationships

Documenting and updating potential investors on your progress is an essential component of getting to 'yes'. You haev to identify what KPIs or hurdles they care about most, and update them as you hit those inflection points to convey momentum. Michael's experience with Andrew Batey from Side Door Ventures exemplifies this. Initially, Batey was a 'no', but he changed his mind after seeing the back-testing and accuracy of Prescient AI's models. This highlights the importance of creating a compelling story to convince investors of the company's potential to be a winner and a nine-figure SAAS company.

Effective Fundraising Techniques

When fundraising, Michael recommends having a clear financial and operating model to show how much money is needed to operate and achieve targets. Using multiple touch points to get a response, such as LinkedIn messages, cold emails, and submitting decks on websites, can be effective. 1 touchpoint is very likely to be insufficient, but it's also not helpful to send 6 emails if the partner's inbox has 6,000 unread emails, so it's definitely worth exploring those other channels and getting in front of investors any way you can. Michael also points out that it's beneficial to leverage founders within investors’ portfolio companies to get eyes on the deck.‍

Building Relationships with Investors

To get in front of the partners for a thoughtful conversation when opening a round, building relationships and understanding the success criteria with associates, VPs, and principals is crucial. Roadshows can be highly beneficial for relationship building in person and understanding the core ethos of what the fund is looking for. Michael highly recommends booking 10-20 meetings in a city like New York in one week, and knocking them all out in person. Despite the move many investors have made to zoom meetings, the rapport building in person is unmatched.

It's also important to understand the hesitations of the funds you're speaking with and ask the right questions upfront. Investors should be transparent with founders about what they are looking for.

Beyond Fundraising

Beyond fundraising, Michael, like other guests we've had on the show such as Maddy Alcala, emphasized the importance of taking time to mentally escape and reflect for a better understanding of oneself and the current situation. He also encourages founders to take advantage of the resources around you to save money and time, look for ways to streamline processes or operations, and prioritize only those tasks that will have the greatest impact on the success of the startup. Like Phil Odelfelt suggested on a recent episode, Michael urges founders to invest in professional development and networking opportunities, which provide invaluable benefits for early-stage founders.

The startup journey is a marathon, not a sprint. It requires resilience, adaptability, and a continuous learning mindset. Check out Michael True's full episode for more on his remarkable journey with Prescient AI, which provides a great reminder of the zig-zagging path to success within startup-land.