CMU Blockchain speaker event: Austin Mitchell and his VC experience
If you don’t like a venture capitalist’s offer, tell them “hell no.” That was one of the many lessons from a Carnegie Mellon alumnus. At the CMU Blockchain Club’s Speaker Event on Jan. 25, Austin Mitchell, co-founder and CEO of the Bitcoin technology startup Synota, shared some tips for future entrepreneurs: communicate, refine, and dream.
As Bitcoin dropped nearly 50 percent in price in the span of three months, Mitchell wanted to leave his public utility job to ... create a Bitcoin startup. Mitchell saw an opportunity to offer energy services to Bitcoin mining facilities, but because the idea contained cryptocurrencies, it was pushed off the table. So Mitchell assembled a team, raised money for their company Synota in the bear market of May-June of 2021, and by the end of July, they had everything they needed to finish their day jobs. Overall, Mitchell's fundraising experience wasn’t easy, but he did have a high rate of conversations to money. Venture capitalists (VCs) seemed enthusiastic about the intersection between cryptocurrency, energy, and the possibility of solving a big problem. After all, the energy value chain, retrieving and dispersing payments from consumers to multiple suppliers, is filled with overhead and inefficiencies. Synota is the first Bitcoin startup to tackle the issue, and the Bitcoin VCs Austin spoke with emphasized that they had been waiting for this approach for a while.
Everything is about communication, he stated. Simply put, nobody will give you money if they don’t like you. So build relationships, show respect, show up on time, and do all the right things. People in VC land are just like normal people — dig in and make it a priority to get to know them, because it’s a mutual relationship. If you make VCs feel like a priority, you’re a priority to them.
Looking back, Mitchell says he grew tremendously as a person and founder. Although Mitchell had no negotiation classes under his belt, he raised over three million dollars in funds. He said that in any situation, you need to be very deliberate. But also take a moment and put yourself into their shoes. Have a 5-10 minute conversation and try to truly understand their wants and needs in relation to your position.
Mitchell shared with the audience a moment when he had to negotiate a sum of $500,000. About three-quarters into the funding timeline, a Synota investor recommended negotiating hard with another VC. The Synota investor broke down the position for Austin, and he was left with a task: Call someone who’s been in the VC world his entire life, someone who Austin needed a half-a-million dollar check from, and tell him “hell no” followed by a counteroffer. Austin recognized that he didn’t feel good. He shared that at any stage, you’ll have that imposter syndrome, a dreadful thought that you’re just lucky to be there and nothing more. People are lucky, but you also deserve to be there, and how you reconcile with those two things is essential, Austin emphasized. In the end, the VC called him back in 30 minutes and agreed to Austin’s terms.
Finally, dream big. There is no reward through the startup process by being anything less than bold, Mitchell told listeners. He took inspiration from one of Synota’s lead investors, who always pushed the team to think more boldly. The team could see all the next steps and “what if” questions in their journey, so the investor told them to do and say just that. From the lead investor, to Mitchell, and to the next big entrepreneur, know that you’re trying to change the world; don’t discount yourself or the vision.
“You guys might forget about me, or [you] can say 'you knew me [back] when [I wasn’t big yet,]’” Mitchell said. If he can brave an intimidating VC, quit his quantitative analysis job when the market looked grim, and still stand to tell the tale, I look forward to telling everyone that I had the chance to speak with him way back when.