How to Survive a Bear Market in Web3

David Ding: Okay, kia ora kotou. Welcome everyone. Our topic today is How to Survive a Bear Market as a Web3 Business. Got a very special host today who doesn't really need an introduction. Jerome Faury from Immersve CEO and Founder. And the format for today is he's gonna take us through a presentation.

You're welcome to send through chats, any questions that come up in the moment but we will save them to the end for a q and a where he'll answer any questions that you've got. Okay, Jerome, take it away.

Jerome Faury: Cool. Thanks David. Great to be here. I feel like I'm gonna show my age a little bit in a second, but I've been in the tech industry since, since the nineties.

I guess as a professional, and I've been involved in tech since the early eighties. I remember coding on a green screen. I remember using a dial up modem in, in the mid to late eighties, 7.2 k to send a little message from one computer to to another. And my dad telling me that this is gonna change the world.

And at that time I thought three-way calling and the phone was more impressive. In the late nineties, I also sort of did the.com sort of boom, went through the bust. I was actually in Tokyo when the bust happened in sort of 2000 and, and, and one-ish saw a whole bunch of companies. I was, I was in recruitment, so I saw a whole heap of stuff happen as far as, you know, restructuring, redundancies but also opportunities. A lot of companies that sort of grew through that, that period.

I have been involved in Web3 since 2016 17. I was pretty lucky to be one of the I guess early investors and founding execs at Centrality. We did, at the time, the seventh largest ICO. So we raised a hundred million dollars in, I think it was about six, six minutes, something like that, in January, 2018.

And, you know, things were great. We were sort of drinking Cristal. You know, six months later, the price of Ethereum, which is what we sort of raised in, went from sort of, I think it was 1400, give or take, a, a coin down to about 140 a coin, right? So that a hundred million dollars rapidly turned into $10 million.

So it went from the, the Cristal to to, to the Lindauer. I've also been involved in a listed company. So I ran the New Zealand business for Orion Health for a little bit, sort of 2012 to 16. We, we did an IPO, we, we, we did really well. And then we also fell into challenging times and, you know, we had to, had to deal with that.

And I founded two companies of, of my own one Centrapay, one, one Immersve. And they've gone through good times and, and not so good times. So today I wanna share some of those experiences. Hopefully some tips that help other people and companies you know, during, I guess these, you know, potentially difficult bear market times and hopefully have some really good conversation at the end.

And, you know, love to see other people's opinions, ideas. And I think, you know, one of the things that we are really lucky in New Zealand is the fact that we have this really supportive tech ecosystem. I think, you know the amount of collaboration and support that we provide each other is one of the most beautiful things in New Zealand tech right now.

It really feels like everyone's trying to prop each other up. It's almost like we've eradicated tall poppy syndrome from the tech industry, and I think it's something that we can all be very collectively proud of. So if we can support each other and, you know, take our, our products and services to the world, then I think that's good for, for all Kiwis and obviously us as individuals as well.

So I'll, I'll, I'll click into it. This is basically what I'm gonna cover today. I think a lot of this stuff, you know, kind of starts off with, with the founder as far as navigating a a, a bear market. I wanna talk a little about some of the ecosystems that are available for us to be involved in.

I want to also provide some practical examples around what you can do to lengthen your runway to get the plane to take off faster and, and to manage the business. Talk a little bit about, you know, sort of raising capital funds, including some token stuff. Some people considerations. Ultimately, you know, you put your people first, you get better business outcomes. And, you know, generally speaking, the largest cost in any sort of business these days is, is its people, right? So critical in navigating a bear market. And then at the end we'll have the, the q and a.

Jerome Faury: As a founder-CEO, I think, you know, my, my mental health and also the mental health of, of my team is probably the most critical thing to, to deal with. It's arguably one of the most stressful things. It's definitely the most stressful thing I've been through founding a company, you know, and, and during difficult times it's easy to get, to get burnout to feel the pressure and for that to impact the, you know, your decision making the way you lead.

And so some of the tips and tricks that I've found and some of the things that I do on a daily basis that really make a difference to my wellbeing, my leadership, and the way that the company's run are little things. So first off, you know, exercise, even if it's just a walk, you know, the, the process of going for a walk you know, produces really good, I think serotonin keep your device behind. Appreciate what you are sort of walking past, whether those are trees or anything else that, that, that's out there.

I find also that as a founder, I'm highly productive, and this is probably each to their own for sure. But I'm, I'm definitely more productive between sort of the, the 7:00 AM and 1:00 PM timeframe. And I tend to also run pretty hot. I, I push hard. I, I, I push fast. You know, I can redline, but what I also find is that in the afternoon, if I take a bit of a nap and do a meditation, that that redlining that I've done up until that point is manageable, and then I can come back after that nap or that meditation, and I still have clarity of thought.

I can still be calm and considered and I can make good business decisions and deal really well with, with the people. If I, if I don't do that and I keep pushing and pushing similar I guess the physical side, if, if I was running a marathon and I started to feel fatigued, I would naturally, you know, slow down.

Whether I go to walk or just take a bit of a break, I would do something to slow down. For some reason where it comes to our mental health, a lot of people keep pushing and pushing and they don't take that break and they don't take a, a step back. And if you, if you do that, then you go below the line and the further below the line you go, the harder and longer it takes for you to get back into optimal peak performance.

And so, by having daily naps doing regular meditation, also having other support network with other founders and regular breaks, I, I know there's this expectation on founders that we work, you know, Almost 24 7. You know, we don't take breaks, so always, and I, I've done that. I, I, I worked in Tokyo, as I mentioned.

I would start work at 8:00 AM I'd have lunch at my desk at 5:00 PM I'll generally finish around midnight. I work Saturdays. I, I work Sundays, but my productivity now is infinitely greater. My decisions that I make are significantly better, and I would also highly recommend it. I know this might be a bit tough for a lot of people, but I also take quarterly, one week off breaks and I do a digital detox.

I don't have access to my Slack notion email. You know, I, I, I read a book and I just take some time out. And, and by doing these regular kind of breaks, I find that my, my productivity, my leadership and the outcomes that the business has have been far better. During difficult times and even during good times, you know, when I was raising money for, for Immersve, it was during the bull market, but it still, you know, takes it out of you.

Right? I, I did 22 pitches in, in, in 22 hours. You know, probably put to, you know, a hundred companies and, you know, it's not uncommon for a hundred nos to, you know, result in, in, in one yes. You know, lots of people tell you why you can't do it, why it's not possible. You know, during a bear market you get a lot of that as well.

You know, there's a lot of naysayers. And so your ability to believe in what you're doing and to also instill that belief in other stakeholders, whether it's your investors, your customers, or, or your people is, is really critical, right? So you, you need to continue to inspire the team and you need to, to have faith and belief in, in what you're doing.

I think at all times, fundamentals are, are key and there's something that the discipline is quite easy to not do, but if you don't do it, you, you can get yourself in a bit of trouble. And so for me having a documented strategy scorecard, obviously having the right team culture, you get much better productivity.

You know, you, you, you want to have all of this stuff in place so that you have good awareness across your people. Alignment between your people, accountability with your people. You want to get good legal advice if you're raising capital. If you do anything relating to to, to tokens, you wanna have some of these places, these things in place. And I think also from the fundamentals, you want to really understand your, your numbers, right? Where's the next dollar coming from? What's your runway? You know, all, all that type of stuff. When I first got into business, the thing that most I guess employers valued was IQ.

It was your, your, your intelligence. You know, bill Gates always sort of said, you know, I hire intelligent people and, you know, they, they tend to do a good job. We then evolved and transitioned into EQ. So people wanted IQ and then EQ. Today, you know, with the world the way it is, you know, the US military have this term called, called VUCA volatile, uncertain, complex, ambiguous.

There's, there's so much change. The pace of change is, is just getting faster and faster. And so your adaptability quotient your AQ is now the new superpower, and particularly if you're a startup in the Web3 space. If you want to have impact, you kind of need two key ingredients. You need speed and, and you need scale.

You know, so often we get scaled by partnering with larger organizations. That's, that's one way you can get scale through getting adoption and, and traction with your product and service in, in the market. But speed is one of your biggest competitive advantages. So definitely think about how you can leverage that and don't be afraid to adapt or change if you need to.

But equally, if you think you're onto a winner and you really believe that you're on the right track, then you know, stick with that. You don't need to change every time someone gives you a a, a difference of opinion. Listen to that opinion, value, that opinion you can always learn from, from someone else.

But ultimately, make sure that you're in a position with strong mental health, with strong fundamentals to make the right decision that works for you and and for your business. Something else that I think is worth mentioning is this Abroad program. It's run by a guy called Justin Milano. It's focused very much on founder wellbeing and mental resilience and, and health.

In New Zealand, we're super lucky. It's subsidized for about 75%. That means that it costs about $400 to do this program. It's, it's a 12 week program, few hours a week. There's an online portal with a whole bunch of really practical tools, tips techniques to, to support you. And it, it's all about scaling yourself to help scale the company.

If I'll have my details at, at the end, but if you wanna participate either Google Abroad program in, in NZ or, or drop me a note and I can send you some details. But the next cohort is June one. And I highly recommend doing it. It takes, you know, a little bit of time out outta your day to focus on something that's, you know, not, not business related.

And that in itself is, is, is useful. You also connect with other founders so you build a really good network of people, you know, probably in a, in a similar position trying to do similar stuff. And it definitely makes a difference to your mental health and, and wellness.

Jerome Faury: Web3 is very much about ecosystems. You know, sort of in the early days of SaaS you know, it was all kind of proprietary and you wanted to control the value chain end-to-end. Now things are becoming more democratized, more open, more collaborative. Immersve which is my business is, is part of a really cool ecosystem within Outlier Ventures.

Outlier Ventures are the, I think they're the largest Web3 accelerator in the world, definitely top three, and also one of the top three kind of VCs in, in this space. There's over 200 portfolio companies and we've found that being part an alumni and part of that ecosystem, super valuable. Callaghan has obviously put together this, but they've got the Web3 Slack channel.

They've got this Web3 event today down at Callaghan for those, I think it starts at two o'clock. They're in the space, you know, come down, let's have a catch up, let's have a, have a, have a conversation. But we also leverage Callaghan. They have really impressive individuals that can run strategy sessions.

So we've run a couple of strategy sessions with them to really go through the kind of Google design lead methodology to get really crystal on what your strategy is. You know, so you wanna be that water in the middle of the desert. What's your unique value proposition that gives you competitive advantage in the market?

You can get your team together down at Callaghan and work in this in a collaborative way. And so I find, you know, Callaghan's been super useful. We're part of FinTechNZ and I should also mentioned BlockchainNZ again great network and opportunities. Good to meet other founders.

Investors. We've got a number of investors that have backed Immersve. And one thing that I've learned is that the investor is probably the most motivated party in seeing you succeed. You know, they've, they've put a dollar in and, you know, they wanna take $2 or whatever the number out. And they also have other portfolio companies that could be, you know, good customers or, or, or good partners or potentially good suppliers for you.

And I find, you know, regular comms with the investors, quarterly updates, almost operating like a public company. I, I do quarterly zooms. I provide a lot of transparency around how the company's doing, and I really engage our investors. And I find that probably our largest source of revenue leads and opportunities come from those investors.

I let them know what's keeping me up at night. You know, what, what are my problems? They often help with that stuff as well. And I think if you engage actively with your investors during these difficult times, if you do need to go and, and ask for more funding or you're looking to do the next sort of, sort of cap raise the more they understand the business, the more they understand you as a person, the strategy, where you are going.

I think the more likely they are to, to support you. We've been engaging with NZ T & E looking to scale internationally. They provide a whole bunch of, you know, research, insights, reports connections with some pretty influential people in, in, in this space. And then we're also a part of the MasterCard network, so we've found that pretty good.

So each company will have its own ecosystem. I guess my point here is, you know, Web3 is about ecosystem. It is about being collaborative and during these difficult markets, we're all in the same boat. You know, rising tide raises all ships. Figure out who your invest sorry, who your ecosystem is, and then engage with them actively and see what you can do to support others and, you know, maybe get some support in, in return as well.

Jerome Faury: Web3 Accelerators. As I mentioned, we went through the Outlier Venture Accelerator program, and I suspect our business grew probably 12 months in under three months. So we were fortunate this is kind of pre-seed, but they gave us a hundred thousand US dollars for 1% of the company, which we thought was pretty, pretty reasonable, but that wasn't where we got the, the value when we joined the OV program.

They have this really intense and, and, and I mean super intense kind of accelerator, but they also gave us capability that a startup like ours would never have access to. You know, we had UI UX professionals that help with prototypes, product design, web design PowerPoint presentations for investors.

There were sessions with some of the most heavy hitting and experienced execs I've ever come across. As an example, we had multiple sessions with a gentleman by the name of Andy Larke. Andy used to be the chief marketing officer for Xero for Commonwealth Bank. I think he's been involved in companies that have raised over 5 billion dollars.

And so when we're preparing our pitch deck, Andy was the guy that was helping us with that story, with the pitch. You know, how how do we have that, that energy that's gonna excite and engage and, you know, get investors to, to come and, and, and back us. When we went through the program at the end, they introduced us to probably 200 VCs around the world.

We ended up over subscribing around by goodness, I think it was 140 percent. And at this point we are still pre-product, pre-revenue, and we're able to raise I think it was about $5 million on a outer 50 million, oh, sorry, $7 million on a $50 million valuation. And most of that money came from overseas and it was, through being part of this accelerator that we're able to get in that position.

Some others that are pretty well known in this space, and I, I know a bunch of other companies and some people on this call have, have done a blockchain founders fund. They're based out of Singapore. Alliance, they've done some heaps of stuff with Kiwi companies and Techstars and Consensus me sh are two other well-known ones.

It's also worth noting that New Zealand on the global stage has a really strong and valued reputation in, in Web3 and in technology in general. And so I would strongly recommend if you're looking to, to, to raise capital to go through some of these accelerated programs that you consider going overseas and be proud to be a Kiwi and use that to your advantage as soon as they find out we're, we're Kiwis that was actually beneficial to us as opposed to, you know, being local in, in the UK or or Singapore.

There's lots of support globally for Kiwi Web3 businesses.

Jerome Faury: Blockchain grants. There's a bunch of sites you can find online. This is generally non non-dilutive. Here's some of the, the sort of more common ones. Uniswap, Hadera, MakerDAO, Binance, Avalanche, and, and Polkadot. You know, some of these organizations have billions of dollars looking for a good home.

You know, Hadera the H Bar Foundation I think has 2 billion dollars. So if you're building something in the Web3 space and the, you know, Hadera blockchain is something that you want to sort of deploy onto and you can deliver utility and value to, to that infrastructure and to, to that ecosystem.

They've got a reasonably straightforward, simple process where you can raise, or sorry, raise, where you can receive anywhere from sort of, you know, $50,000 up to, you know, I know a guy that received $10 million through, through the foundation. You know, this is, this is non-dilutive. It's reasonably straightforward and as I said, there's online lists that you can find with blockchain grants and if you're doing something that's, particularly if it's de de decentralized and you use a smart contracts and that type of thing, definitely worth looking into blockchain grants.

There's probably some other companies as well. I think you know, James Bayly, you might be on the call here, maybe at the end you can talk, but, you know, Kiwi companies such as a, Acala or Onfinality, I think they've been involved possibly through Polkadot. But not only do you get the sort of funding to support your project and, and, and protocol, but you get a whole bunch of exposure and again, a whole bunch of other opportunity that comes downstream from being part of these grants.

Jerome Faury: When I was at Orion we were listed at, on the Australian and, and New Zealand stock exchanges. And so we had to do, you know, a whole bunch of listed company stuff, which was new for me. I, I've typically only lived in the startup world for, you know, 25 years now, but I, I think some of those disciplines for larger organizations really help build strong foundations for smaller ones and help you scale sustainably, which is ultimately what we're trying to do here. Right?

And so the scorecard is something that we've integrated in, into notion. We're big fans of Notion. We've put our CRM in notion, we've product roadmap items in in, in notion we use it as a source of truth for pretty much everything in, in the business. And we're pretty transparent with all of our people.

And so what we've got is our one kind of singular goal our, our North Star. So what we are looking to achieve is to process 110 million dollars of annual spend via our platform within the first 12 months of going live. And within our scorecard, we have smart goals and business objectives that hold each of us to account that we think are the key things that are gonna help us deliver that goal of the 110 mill USD. This is how it, how it looks. I've had to block out some, some stuff, and I'm happy, you know, if people want to sort of look at this stuff afterwards in a bit more detail, we can sort of talk through it. But we have four pillars in our scorecard. So finance, legal, product tech, sales & marketing, and people.

And within the scorecard we have, you know, smart goals that have, you know, specific, measurable, attainable, realistic, time-bound business objectives with key results. And this is what, as a, a company, a leadership team, this is also what I communicate up to our investors and, and to our board. But this is basically what we're gonna do.

You know, how to a degree, how we're gonna do it. And what this does is it creates the, the foundation to execute against that, that strategy. So obviously we've got our strategy in here as well, and we've got a whole bunch of opportunities. But I find that having this type of discipline in a business, even if it's small business, you don't have to have this much detail.

Make sure that everyone has that, that awareness. You know, what, what are we doing? Why are we doing it? We have alignment you know, between sales, product, engineering, shareholders, customers. Other stakeholders. And then we also have accountability. You know, so my name's against a bunch of these things. Other people on the leadership team have their names against things and we all work together with this blueprint for what we want to build and, and how we want to build it.

Jerome Faury: Predictable revenue. A dollar of capital, you know, adds a, a dollar to the enterprise value of, of your company, but a dollar of revenue could add five, 10, you know, in some cases a hundred dollars of value to, to your organization depending on what your growth rate is.

So during difficult times I'm a big fan... actually, I'm a big fan at all times of of sales. First thing. Sales is a contact sport, you know I used to do the a hundred calls a day to, to get one sale. I remember, you know, selling websites for people in the nineties and people tell me, no, I don't need a website. I'm in the Yellow Pages. Yeah. And I guess right now people may not want to be in Web3, but there's always that one that does see the future and does believe in it.

That does have the values alignment and that you can solve the problem for, but you won't find that person until you do the mahi. So lots of calls, lots of activity. 80% of sales occur after the fifth interaction. So you may get a not so interested or, or, or a no at the start. And, and, and that's okay.

You need to have that perseverance without obviously, you know, pushing too far. There is, there is a fine line on this one. But just understand that 80% of sales occur after the fifth contact. So don't expect to close on call one, two, or even three, you know, have a templated approach. Sales is science.

There's a whole bunch of books around around this stuff. There's different processes, there's different stakeholders, there's different strategies around sales. You know, there's, you know, solution selling is, is quite a common one. If you're in the enterprise kind of game, there's strategic selling.

Figure out what's gonna work for your business and then try and implement that. I'm, I'm a big fan of the doctor as, as a salesperson. So when I first started selling, it was all about features and benefits. You know, I would have this pen, it had a button so I could put the, nubs up. So the benefit was when I put it in my pocket, I wouldn't get ink on my shirt.

And so people, you know, they always think that their, their product is water, you know? And if you don't have this water you know, you could potentially die. But there's a big difference from the customer's perspective or the prospect's perspective. If you're in the middle of the desert and someone is offering you water and you don't have any water and you haven't drunken in two days, then they'll pay anything for your water.

However, if they're next to the Waikato River, then they don't really care about your water, right? So it's no longer about features and benefit. The doctor is one of the best salespeople because. Couple of things. First off, you typically go to the doctor's office, they don't come to yours. And I, I know most, most of the things these days, it's very choice. You don't do the sort of face-to-face thing anymore. But if you ever get the customer to come meet you, that's a much better proposition than you going to to meet them.

The doctor also instills trust almost immediately. I dunno if, if it's the stethoscope or, or the outfit, but we just tend to trust doctors, right? And so you want to be trusted. You wanna be the expert in your field, you want to be the doctor of whatever your protocol, product or, or service is. The other thing that I think the doctor does especially well, Is ask the right questions and, and listen. So when I go visit the doctor, I typically talk you know, probably for 80% of the time the doctor will do the first kind of 10%, you know, do a bit of an intro, ask me how I'm doing that, that, that type of thing.

And then they'll ask me really good questions to get to the root cause of what my issue is, what's my problem. And so in, in sales you want to understand your prospect or or customer strategy, their, their pain points. What does success look like for them? You know, it's no longer about your product, your water, your pen feature or benefit.

It it's all about them. And so if you can get them to talk and really understand who they are as a person. If there's values alignment, if there's a problem or an opportunity that you are reasonably good fit to work with each other on, then when you prescribe the solution at the end. And so when I go see the doctor at the end, they do the final 10% talking.

They understand me and, and my pain and my problem. They also understand what the solution is to solve that problem most of the time. And then they tell me, you need to go take this thing, which I probably can't pronounce. I go to another place to spend money to go pick up that thing. And if he tells me, or she tells me to take it three times a day for the next 10 days, then I do that.

You know, I, I comply. And so I think, you know, taking some of those you know, analogies from, from the doctor patient experience into business and into sales is, is really key. The other thing is know, your numbers you know, the science of of sales has a whole bunch of numbers. You know, 20% of your customers are 80% of your revenue is, is an obvious one.

When you're building a pipeline and whether that's to get revenue or whether to show potential investors that you know, you've, you're getting traction. You've got a pipeline. You need to have three x coverage of your weighted pipeline to achieve the $1. And so when you are creating your weighted pipeline, you will have different sales stages for prospects, you know, everything from a, a lead to qualified to interested, you know, potentially something like integrating, contracting contract signed, implementing, go live.

And during those different phases, you may attribute a different waiting to the revenue that you're gonna forecast. So a lead might be 5% qualified, might be 20% interested, might be 50% contracting might be 80%, something like that. And then you have the go live date or the point at which you expect to receive revenue.

And so if you look at those two kind of metrics, what's the revenue you expect and the likelihood that you're gonna get that revenue? Then you get your weighted pipeline and you want to make sure that your weighted pipeline is three x What your revenue coverage, oh, sorry, what your revenue number is.

I'm also a big fan of doing monthly or quarterly forecasts. I would say quarterly if you don't have a virtual CFO or CFO finance person in the business, because it, you know and particularly if you're a bit smaller and, and monthly if you, if you do have that type of resource, because you know, we operate in a pretty rapid paced environment and things can change. So monthly if you can, but quarterly fine too.

As much as you wanna predict your revenue to lengthen your, your runway. Another way to lengthen the runway is around costs. So people is probably the big one. I'm, I'm, I'm a big fan of sort of people culture, people productivity, and looking at things like employee lifetime value. So, you know, obviously if you can attract the right people, you can develop those people.

They come to work with a smile, go home with a smile, they're challenged, they're learning you're gonna get the best outcome for, for, for them and, and ultimately for, for, for your business. So on, on the people front, given it such a large part to part of the cost, Employee lifetime value is something that's probably worth understanding.

You know, if you use the recruiters, you know, it's not cheap to hire in New Zealand, it's hard to find the right people. Take some time to find the right people. You know, sometimes it's three months and you know, possibly even longer. So if you think about, you know, the three months to hire someone, the, you know, potentially 20,000 in recruitment fees, the cost to onboard that person, and then the time it takes for them to be productive.

So sales is probably the easiest one, but engineering's not, not dissimilar, you know, you don't expect them to be at full speed on day one. You know, generally speaking, the first year if you say, you know, a hundred percent productivity probably the first year they get up to maybe 70%. You get the a hundred percent in year two.

And then in year three you get a good return on investment, you know, 130%. So staff retention is really critical to managing your, your cost and to managing productivity and to managing outcome for customers. So your, your culture is really, really critical in this stuff. And obviously having your people costs and your budget is, is really important.

I've found being transparent with my team and, you know, this is, you know, personal preference and choices is probably a good way to go. I, I share all of the numbers the same information I share with investors in the leadership team, I share with our interns. Yeah, I, I like being, being transparent. I have all the numbers in, in, in the scorecard, and similarly, I do monthly reforecast, so I have an annual budget.

And then I reforecast each month. And then I also have something in my scorecard that I hold the operations leadership accountable on. That my expectation is that our actuals so what we do in a given month is within 10% variance of our forecast. You know, so that's something we hold ourselves to a, to account on.

I've recently started using a virtual CFO, found that super valuable. You know, we're, we're a small company, we're reasonably well, well funded, but we can't justify having had any full-time CFO at this stage. And so having a virtual CFO for half or a whole day a week has been infinitely invaluable.

They've helped us set up in, in other markets such as North America, they've provided a lot of strategic value and advice, and they've brought a whole lot of sort of discipline that we otherwise wouldn't get access to. The other thing that you, if you haven't done already is look at the research and development tax incentives.

So, you know, the New Zealand government is, is reasonably supportive of companies like ours. And so make sure you understand what you can do to, to get the benefit of, of that for your business.

Jerome Faury: Capital raising. I suspect this might be more sort of q and a stuff, but there's a couple of things to, to consider. Equity versus convertible note. For Web3 SAFEs. So simple agreement for future equity is, is pretty common.

There's some good sort of templated agreements out there. There's some law firms in NZ that have done a bunch of these. I've, I've done them before. They're quite easy to, to sign and you can get a reasonably high number, although it doesn't mean that that number is actually the value of your company.

It's not till you you know do some sort of you know, price round that it's the actual value. So people can get a little bit excited when they raise the SAFE on, you know, 20 million US. But it's not until it converts that you actually count what the value is. Doesn't mean your company's worth 20 million US but the paperwork is, you know, five pages along VCs all around the world are very comfortable with it.

You can have New Zealand paperwork with New Zealand law and you, it's also easier because you can get different parties to sign the contract at, at different times as opposed to doing it contemporaneously, which is more common when you're doing equity. Equity has higher upfront legal costs. You typically need your constitution, your shareholder agreement.

You need a subscription agreement, you need term sheets. Often you need a lead investor. So convertible note is easier, particularly for pre-seed, and seed, but as you go into Series A, then you want to convert those into equities so that you've got a, a good valuation for, for the company. When raising offshore, you want to understand the difference between common stock and preferential stock, particularly if you're raising out of the US.

The US, the larger VCs would definitely want prefs, you know managers and, and mitigates their, their downside risk. But what that does mean is that you have two class of shares for your shareholders and one of the techniques or tricks that I've used to get the US shareholders to agree to common stock, Is to say that we value, and you know, in America they, you know, they value freedom, you know, freedom to, to bear arms freedom for their tech companies to, to take our, our data and, and sell it to the highest bidder.

In New Zealand, we value fairness. You know, we're the first to give you know, everyone the ability to, to, to vote. And I think as a culture, fairness is something that I would say has one of the top values in, in New Zealand. And so we want to treat all of our shareholders the same. And for that reason, we only support common stock.

It can be a big risk. I've, I've done this with the expectation and, and a large check at hand, that I could lose the investment and, and that was gonna be material, but you don't wanna compromise your values. And if you can pull off the common stock and treat all shareholders the same, it's a much cleaner capital structure.

It also means that you as a founder get treated the, the same as everyone else, as opposed to the VCs that, you know, could get preferentials and, you know, founders and early shareholders, investors you know come second in, in queue.

When I raised funds for Immsersve I did it pretty much exclusively offshore. I found it reasonably straightforward. I mean, the biggest issues are the time zones to, to be fair. The paperwork was fine. You know, we used New Zealand paperwork, the Multiples or numbers, highly recommend, if you're raising capital, just price it in USD straight away, you got 1.5 x or whatever the exchange rate is at a point in time that, that, that's doing well for you.

If you're raising money in sort of the Web3 space, make sure you've got a Gnosis or similar type wallet. You know, we, we received a bunch of money in USD DC. But I'm a big fan if you're a Web3, Web3 company of raising funds of offshore. Once you've got some funds offshore, what you can do is actually come back to the NZ sort of angel and VC community.

And once you've seen that some other investors overseas have invested at the numbers that you were striving for, then it makes it a lot easier for them to, to, to say yes. But start offshore and come back to NZ would be my sort of advice on, on, on that one. Pitching. You know, before you sell any good or service or you know, convertible node or equity in your company, you gotta sell yourself.

And ultimately what people are, are buying or investing in is, is you. And so you need to have big energy when, when you're pitching, you need to have a compelling story, compelling value proposition. It's quite easy to make things overly complex in the Web3 space. You know, I've been involved in it for a long time and it's not uncommon for me to talk to some parties and have no idea what what they're, they're talking about.

So I think we need to, as a, as an industry community, we need to try and keep it simple. Keep it compelling, keep it nice and crisp, you know, instead of having slides like financials as, as an example, right? If you can rapid pathway to billion dollar company or, or something like that, or billion dollar in gross dollar volume.

Something that's gonna inspire, excite, and, and, and engage. Make sure you've got all your paperwork ready. Make sure you've got a list of VCs or potential investors ready before you start, try and compress the timeframe. The longer you leave it, the harder it is.

If at all possible, now, you don't need a lead investor. I've, I've done it with a lead and without a lead both work. But if you can find a lead investor and particularly one that others trust or would be impressed by, that makes your life a whole, whole lot easier. And others often will just come in just on the back of you having a high profile lead, lead VC.

But stand up when you pitch. Tone of voice is about 67% of the message you communicate when you're, you know, doing that over the phone or, or zoom or similar. So if you can stand up, have plenty of water, you know, do some pushups or some sort of exercise, but beforehand really focus on that tone of voice, really have that energy and practice that story.

There's a whole bunch of speaking specialists and, and in NZ I've done a bunch of training with Miriam Chancellor at, at a naked audience. I've practiced my pitches in front of other people there. And then when you're ready to go for that lead and for the others that's when you'll start getting some really good traction.

Web3, I guess, you know, another way to lengthen the runway. This is not raising capital per se, but you can do different token generating events. You know, you can, you know, sell NFTs, you can do utility tokens, security tokens. Token economics is pretty darn complex. One of the good things about working about participating in the Outlier Venture program is they have token economic design experts that will work with you on that type of stuff.

They'll work with you on your white paper if, if that's the road you wanna go down. But there's no shortage of VCs that want to invest in tokens or SAFE plus tokens. So we did a SAFE with token warrants. SAFT I think is kind of a SAFE for for tokens. So if you can do, yeah, equity and tokens or note and tokens. That generally is quite interesting.

You don't necessarily have to have all of your token economics sorted, by the way, what we did with our both our SAFE note and our equity round is we said that if and when we decide to issue a token, then all the investors will get warrants that they'll get basically prorated tokens in relation to their equity.

Depending on how we do the, the token pulls, because typically there's a little bit there for sort of founders investors and a little bit for community and, you know, other things as well. So something to look, look into, but pre pretty complex. If you haven't done it before, either get good legal advice or do it via an accelerator.

It, it's not as cheap or easy as I guess maybe some of the, the PR and marketing around it may make it. And definitely lots of considerations around tax compliance, regulatory as well. So think about the market, you're gonna do that in.

Jerome Faury: I probably talked about this a little bit too much when I was talking about the, the financials, but it's so important we can do it again. So, yeah, putting people first delivers better business outcomes. I think it's really important to have a single business objective. You know, I think culture is everything, you know, productivity and outcomes. I'm big on alignment, awareness, and accountability is kind of three of my pillars as far as how I communicate and provide clarity to my people.

Something that's also quite useful particularly for, for startups is your, your board. Now, whether you've got directors on the board or an advisory board. Either way, I have a no armchair policy and I typically provide pick people to come into my boards that have different skill sets that can be actively involved in helping us grow our business that can support the strategy and, and what's in the scorecard.

So, you know, for Immersve, we have a payment expert on the board. We have an engineering expert on the board. We have a legal and regulatory expert on the board, and we've got a marketing expert on the board. And in the board services agreement, we have a no arm chair policy. And so the expectation isn't that we're gonna have these board meetings and they're gonna ask me, the CEO, you know, a whole bunch of questions.

I actually want them to work with our leadership team to provide their unique and specific expertise, whether that's engineering. So our board member in engineering, probably one of the top CTOs in the world for, for payments. He was a sort of one of the founders for Afterpay. He ran their platform.

He has weekly one on ones with, with with our CTO and our head of engineering, you know, and, and that's super valuable. We have a marketing expert on, on the board and, and they work with our, our marketing team on, you know, social strategy, PR, comms, brand, all that type of stuff. And so instead of, I guess the, the board managing you in the early stages, I'd be a big fan of I guess you managing the board and more to the point leveraging the board so that you can get the, you know, better business outcomes.

Jerome Faury: All right. That was a lot. I did a lot of talking. I'm gonna need a bit more water, but I think we're ready for q and a.

David Ding: Nice one. Thanks Jerome. Actually just a quick question from my own, from my own perspective, because I'm working with founders on a day-to-day basis and I think founder wellbeing is a big one.

Burnout is a thing I see regularly. And another thing I see regularly is a business that's become investor led rather than founder led. And I think the burden of obligation to your investors can be quite burdensome. Yep. Can we, just to dig into that a little bit more, how do you, how do you ensure that balance on your board that, that you, that it's your vision that's steering the ship?

Jerome Faury: Yeah, it depends, right? So if you do the equity round when you're raising capital, generally speaking, the commons of the rule is if someone has 20% ownership of the company, then they get one board seat. You know, and if you dilute the, the organization too much too, too soon. Then, you know, as a, as a founder or as a a group of early investors, then you can potentially lose the control to investors.

The advisory board is slightly different. You know, they're, they're not directors. You know, often that's when you have a SAFE note. So I started off with a advisory board and I'm working my way to having a more formal governance in place now that we've done the equity round. So you can start off with SAFE Note Advisory Board and transition to equity, you know, governance board.

Yep. But yeah, it comes down to timing and how much you dilute and what's in the shareholder agreement as far as managing that one.

David Ding: Yep. I, I think, you know, I find it interesting that you are, the way you're accessing, you know, more of a global perspective is through fractional, you know, virtual CFO.

And, and I think there are other gaps I can see in the ecosystem around actual CEO and COO. And oftentimes the founder doesn't quite fit those archetypes. Can you possibly give us your perspective on how to approach that, if that's an issue for you as a founder?

Jerome Faury: Early on, you know, the CEOs typically came from a, a sales background, you know, sort of the, the path.

And then we kinda went more into this product kind of CEO, so you know, the Google during the sort of SaaS web two kind of space. And now we're seeing kind of engineering, particularly in Web3. There's a lot of engineers that are, that are founders. Ultimately, you know, you wanna hire people, you know, smarter than you or with different capability than you.

Diversity of thought and, and experience is, is, is, is critical. And have people around you that you, you trust and that compliment you and, and that also challenge you. You know, you don't want yes people that, that actually doesn't, doesn't help. I think also having a bit of a self-awareness around what you are good at and what you're not good at.

So for me, I, I know I'm a reasonably good, should we say founding CEO but I have every expectation that when we, you know, we're working in our way towards being a billion dollar company, and at some point before we hit that mark, my expectation is that there'll be a different type of CEO that comes in.

You know, the, I think the founders, you know, rock the boat. They, they push the boundaries, they challenge the status quo. They're, they're pretty resilient. They're dynamic, you know, they're, yeah, they're doing everything right. Like, I'm involved in product. I have a look at in engineering, I'm involved in sales, I'm doing capital raising, you know, I'll do customer support. I'm in the discord.

You know, a CEO of a billion dollar company doesn't do that kind of stuff, right? So there's gonna be a natural transition, but I think you need to be self-aware and you need to make sure that you've got the right people around you, both from an advisory perspective and also from a management leadership perspective that can compliment and challenge you.

David Ding: Yep. And, and is, is there a pool of resource that people can tap into for that kind of support globally?

Jerome Faury: Probably not, but if there's anyone on the call here that's looking for, you know, some sort of fractional executive, I, I definitely know a bunch of people in sales, operations and, and finance that can, can come in.

So I, I've, I've got a whole bunch of names. I'm happy to, to share those with people. And then I think on the, on the advisory board side, if, if you're kind of a startup, probably, you know, find people, you know, probably is, is the way to do it. But again, if people are looking for a particular advisor or board member, you know, I'm reasonably well connected in the ecosystem and I'm happy to provide names of of people that may be of interest.

The other thing I would add is, you know, do stock or options as opposed to salary. Like I pay my advisors, you know, anywhere between $20 and $30,000 a year in, in stock. It means that they've also got an incentive to see the company succeed and got that alignment as, as well. But, but pay them and, you know, make sure that, you know, you get the best people you can.

David Ding: Yeah, that, that'd be amazing. A lot of people would be, you know, that'll really shift the dial for them. Yeah. So, so I'm keen to get your thoughts on the sophistication of the New Zealand ecosystem as a place to begin that journey. Y you know, you went on that intensive acceleration path overseas.

David Ding: What was it that made you go overseas and, and what's lacking in New Zealand from your perspective?

Jerome Faury: Outlier is the best in the world. I was fortunate that one of I guess my well, another member of the New Zealand Web3 Ecosystem had gone through themselves with one of their companies, and so it was referred to me.

I probably didn't know what I was getting into. To be fair it was more, hey, have it. Check out this accelerator. And I think, you know, I was, I was kind having a, a whiskey at 11 o'clock at night with the CEO of that accelerator, and we just had a conversation and he was like, I like you. And I was like, yeah, I like you.

Let, let's do this. And next thing I know, the following week we had a hundred thousand dollars in our bank account, US. And we had bypassed the normal application process to, to, to, to get in. And then when I got in there, I was like, wow, this is the most amazing thing ever. And I had no, no expectation.

Wow. So definitely a, a bunch of luck relating, relating to that. But I have had a look at the other accelerators and I do know other companies that have been in there and there's a whole heap of kiwi companies that have gone through those accelerators. And there's a whole heap of kiwi companies that have really smashed it out of the park on the global stage.

So our reputation is one of the best in the world where it comes to web, Web3 actually, and, and technology in general. We're highly regarded as, you know, trustworthy people, competent people. I think we are very inventive, you know, not just in technology, but whether it's a jandal or, you know, yeah.

In the atom. We're pretty resilient. You know, look at, you know, climbing Everest, persistent, tenacious. We work well. So we've got a whole bunch of stuff that, you know, from a people's perspective, puts us in good standing with investors in the Web3 space. Yeah. You know, and I think in New Zealand, you know, when I've raised money before, you know, the, the check size is smaller, it's on smaller vows and it's a lot harder to go for.

So I kind of figure I'm big on, you know, I think these days it's not just about your time management or money management, it's about your energy management. So for I can basically invest the same amount of energy to get a 5 million USD check then I could spend to get a 500,000 NZD check here. Yep.

You know, it's a, it's, it's, it's better use of my energy and a better outcome.

David Ding: Yep. Absolutely. You know, that's been my observation as well is there's an incredible pool of talent in New Zealand in terms of builders, people who are really good at standing things up. And you know, they do have quite a bit of global experience as well, but I think it's really hard to bridge that gap between a really technical innovation in this space and the understanding of a local investor.

Yeah. So, so I'm interested in what it was about your deck that resonated with your early investors.

Jerome Faury: I think a couple of things. One You know, you gotta say yourself before a good service. Right. So I've got a reasonably good track record as far as doing stuff in payments and technology over the years.

Okay. I had a pretty good founding team around me that also had a solid track record. We had you know, partnership with MasterCard in the works wasn't yet signed, but it was in, in the works. So that

David Ding: Did you have an MOU?

Jerome Faury: No. No. No. Okay. Interesting. I think we solved a really compelling problem.

You know, in the crypto space it's very easy to buy crypto, but it's not as easy to spend crypto. And so we were all about the off ramping for crypto and doing that in a decentralized way. And lots of people had sort of, Wanted to do this but didn't know how to do this. And it was quite a complex problem to solve and we figured out how to solve that problem, or at least we had hypotheses around how to solve, solve that, that problem.

We didn't start building it. We hadn't had the team together, but we had the right people with the right idea. And if anyone was gonna solve it, I was reasonably confident that we were the ones to, to, to, to do so. Yep. I think also the VCs overseas. Web3, by nature is global from day one. And so if you can find VCs in London, New York, and even Sydney and, and, and Auckland they can see other opportunities and introduce you to their portfolio companies.

So they could see other businesses that they had that were in gaming or gamefi Defi, the NFT space, you know, Web3 wallets, Web3 infrastructure. And they're like, well if we invest in this entity, then I can see other use cases across our portfolio. So this dollar in quite quickly turns into $2.

And then if they can get some traction and adoption and start scaling, then two turns to four to turns to six to 10. And so, you know, if you've got the overseas investors sort of backing you, then you get more distribution opportunity globally. Whereas if you are limiting yourself to NZ VCs, then they typically don't invest in tech companies out of, you know, the Middle East or the UK or the US. Right.

So you, you do tend to kind of, limit yourself to the NZ market and you won't get too much critical mass or scale if you're a Web3 company with adoption only in New Zealand.

David Ding: Yep. Interesting. So really the narrative was around the, on-ramping and off ramping and you just owned that narrative.

Jerome Faury: Yeah. Yeah. And I got it wrong a few times. I mean, you know, definitely, you know, spoke to some VCs and they asked some, some, some tough questions. Questions I didn't have the answers to, and I wasn't able to close them in the round. But what I was able to do was to refine my pitch to solve those, those problems, and to come up with a way forward.

The other thing I'd suggest is one of the VCs that I didn't get during the sort of SAFE round it was a 50 50 call and it just didn't go my way. You know, it could have landed, you know, positively, but it, but it didn't. And they said you know, keep in contact with us. If you do half the stuff you say you're gonna do, then we might be interested in leading your series A.

And so I did keep in contact with them. You know, I, I mentioned, I do those quarterly updates for investors. I actually gave a, you know, similar update to this VC that said, no, I really like them. I liked how they engaged, you know, that really strong alignment and bond connection. Long story short six months after that round closed, they came in with a 5 million USD check. Magic. You know, and, and just by engaging with them post no.

Yeah. You know, and that really trans transformed our business and, you know, now we're in a very strong position to ride out this, you know, bear market cause we've got enough runway to basically get us through to 2025 without any, any cash. And, and that was just through keeping in contact, not getting, you know what's the word?

Knocked down when I, when we got the No. Right. You'll get plenty of nos. Yeah. But 80% of, you know, sales happen after, after the fifth interaction, right? So you, you know, keep persevering, have, have belief you know, be strategic, be smart. Don't, don't push it too far. Don't, don't waste their time. But if you can continue to engage and provide value, then do so.

Because at some point in the future, there's a reasonable chance that there'll be some alignment and when you get that timing, you know, sales is a contact sport, beautiful things can happen.

David Ding: Yeah, absolutely. I, I think you know, that that's typically what our advisement is with really technical innovation, is that what is the small projects that someone can understand right now that is aligned to that big, lofty vision.

David Ding: So, you know, given the nature of what you're doing is. It doesn't require banks as an intermediary. I'm just interested in your vision for what this venture can become because of that.

Jerome Faury: Yeah. Cool. I think you need a bank for a couple of reasons these days, right. Often people get their salaries paid into a bank and the other thing is you get loans, particularly for mortgages from a bank.

Yeah. And the not too distant future, I suspect, you know, an increasingly larger number of people, percentage of people will start getting paid in crypto. Whether it's a central bank digital currency or, or USDC, particularly contractors and, you know, this new kind of digital nomad kind of thing that's, that that's going on.

People now, you know, hold I think 1 million people hold Bitcoin, something like that. But you can also get a loan from Defi protocols. If I own Bitcoin or Ethereum, let's say I've got a hundred thousand dollars worth of Bitcoin I can borrow against that. I know people that have borrowed against their crypto to pay a deposit on a house.

And so if you can get paid in crypto, if you can borrow or earn yield on again on your crypto. And then with us, if you can spend your crypto directly from your Web3 wallet anywhere MasterCards accepted, then why do you need a bank? Yeah. You know? So we're starting to see some of that stuff take, take place.

I think also you know, there's people that don't trust centralized entities. You know, and, in Canada as an example, if you supported the truckers over there, you know, the government forced the banks to disable, you know supporters bank accounts, right? So I have my money in a bank. I believe that we should support the truckers.

You know, my, my partner's a trucker, you know, she drives trucks for a living. I make a donation, and then the government shuts down my bank account and I no longer have access to my money. Like that, that's not particularly cool, right? Obviously there's been some bad actors in the crypto space. FTX being the obvious one.

And then we've had banks fail. Now people, I remember the banks failing, you know, in you know, late eighties, you know, BNZ got a whole, whole bunch of trouble. Obviously went to sell all our banks off to the Aussies some banks in South Australia also went out of business, right? And yeah, you can get up to 220, 50,000, your deposit back, but, you know, banks aren't perfect either.

And so some people like this concept that they can be the master of their money, whether it's cash in their wallet, cash in a save, or digital assets, digital currency in their digital wallet. And so what we enable is for people to spend that digital currency directly from their digital wallet without trusting Immersve.

Without trusting a bank, without trusting an exchange in a very elegant, easy way, anywhere MasterCard's accepted. And so we think that's gonna provide a whole, whole bunch of value. And there's a whole bunch of companies that want issue their own branded MasterCards, and in the old days you had to deal with a bank, have a bank account.

Now we know crypto companies, you know, some of these companies this public information, right? So Binance, I think, process about 7 trillion a year. You know, they can't get a bank account in New Zealand. You know, it's just ludicrous, right? So banks can be quite difficult to, to, to work with. With our platform , anyone can issue their own branded MasterCard. They can just deposit, you know, USDC in a smart contract or into custodial third party settlement account. And they can start with a few lines of code, start issuing their own cards. Apple pay cards, Google pay cards, virtual cards.

And we can even sponsor them into the network. So we we're the principal member, so we can sponsor, you know, crypto exchanges, Web3 projects even web two projects if they're happy to sort of deposit in USDC. And we can do everything now without, without a bank. And if we don't start, if the banks don't start to invest in, you know, technology, particularly around digital identity, digital currency, digital payments, then I think their relevance and the value they provide to individuals and entities is gonna really diminish.

And I would think they're gonna struggle, you know, come, come 2030 if they don't start making some material changes now I, I think that yeah, they're gonna be in a painful place and, in the not too distant future.

David Ding: Yep. They're certainly looking that way. And, and so just one final question I think people might be interested in this, is how did you come up with that figure of 110 for your revenue number?

Jerome Faury: When we did the deal with MasterCard, we had to put some forecasted protections in. Mm-hmm. And what we provide our solutions, a world first solution. And if you look at some of the numbers around crypto wallets, so, you know, meta Mask has 30 million monthly active users, trust Wallet has 10 million.

The numbers are quite significant and so when we did our forecast, it was less than, you know, 1% adoption in the key markets that we're looking to operate in. Okay. And long story short, that came out just over a hundred million in year one. And we're looking to do it 300 million in in year two. Our current weighted pipeline for year one is actually seven, just under 700 million.

So I, I said we want three X coverage. Our qualified opportunities are giving us seven X coverage right now. That's incredible. So only 1% adoption is, is what that's based on. Oh, less. Yeah. And that's only in the markets we operate in and then we've got models to cater for ramp up, because not everyone comes on on day one, right. So you gotta have your month one number, your month two number, all, all that type of stuff. But yeah.

David Ding: That's really impressive. Well thanks so much mate. Thanks for your generosity of time. You know, what you're doing is creating ripples throughout the ecosystem. We're very excited here for what you're doing.

And you know, if you guys wanna pop down to Callaghan Innovation this afternoon from 4:00 to 6:00 PM, Jerome will be here. Might have a few drinks afterwards, you know, who knows. But thanks once again mate. We really appreciate your time.

Jerome Faury: Cool. Thanks David, and thanks everyone for joining. Much appreciated.

David Ding: Cheers team. Bye.