David Rose is the CEO of US Expansion Partners, a firm that helps European venture-backed tech companies expand into the US. With over 20 years of leadership experience, he has served as CEO three times and participated in five venture-backed startups, achieving four successful exits. David Rose has pitched at Google Demo Day, Silicon Valley Open Doors, and TechCrunch Disrupt. He holds a degree in economics from the University of Tennessee and an MBA from the University of North Carolina’s Kenan-Flagler Business School.
Here’s a Glimpse of What You’ll Hear:
- [2:43] David Rose’s first big sale at age 12 and the negotiation skills he learned
- [4:42] The advantages of launching a startup within a Fortune 500 company
- [6:19] Challenges of bootstrapping a startup after working in a Fortune 500 environment
- [7:48] How to evaluate market timing and avoid the risks of being too early in frontier tech
- [9:47] Why geography matters in venture funding
- [11:36] The power of cold outreach to founders for warm investor introductions
- [13:51] What it really takes to stand out in pitch competitions
- [16:41] Fundraising expectations and the reality of hearing 100 noes before a yes
- [22:11] Why founders should avoid tranche deals and their hidden dangers
- [27:07] Finding the right investors by aligning with their investment thesis
In this episode…
Raising venture capital is a daunting challenge, especially for founders outside major tech hubs like Silicon Valley. Many struggle to connect with the right investors, facing rejection after rejection, often without understanding why. How can entrepreneurs improve their chances of securing funding and avoid common pitfalls in the fundraising process?
David Rose, an experienced startup leader and investor, shares key strategies for targeting the right investors and making meaningful connections. He emphasizes the importance of aligning with an investor’s thesis, securing warm introductions through other founders, and refining the pitch to stand out in competitive funding environments. David also warns against tranche deals, which can leave startups vulnerable, and stresses the need for persistence, as it often takes hearing 100 no’s before receiving a term sheet.
Tune in to this episode of the Smart Business Revolution Podcast as John Corcoran interviews David Rose, CEO of US Expansion Partners, about how founders can successfully navigate the fundraising landscape. David shares insights on building investor relationships, overcoming geographic barriers, and leveraging pitch competitions. He also discusses the role of AI in streamlining outreach, lessons from bootstrapping after working in a Fortune 500, and why persistence is key to startup success.
Resources mentioned in this episode:
- John Corcoran on LinkedIn
- Rise25
- David Rose: LinkedIn | X
- US Expansion Partners
Special Mention(s)
Quotable Moments:
- “I learned early on that a personal introduction is crucial for grabbing the right partner’s attention at a venture firm.”
- “Have truth-tellers around you who you trust to tell you when the time isn’t right or when to pivot.”
- “Nothing’s fatal for the most part. Challenges may seem bad, but we can figure it out.”
- “If you’re in it because you believe and are passionate, ensure you have honest voices advising you.”
- “The entrepreneurial road is tough, and having supportive people in your life is invaluable.”
Action Steps:
- Target investors with aligned investment theses: Research venture capital firms that have previously invested in startups within your industry and stage. It increases your chances of securing funding by ensuring your company fits within its predefined focus areas.
- Leverage warm introductions from other founders: Instead of cold emailing investors, reach out to portfolio company CEOs for introductions. Investors are more likely to engage with founders recommended by someone they trust.
- Avoid tranche funding deals: Tranche deals may seem attractive, but they can leave your startup vulnerable to unexpected shifts in investor priorities. Securing full funding upfront ensures stability and prevents last-minute financial shortfalls.
- Refine and test your pitch continuously: Every investor meeting provides valuable feedback. So adjust your messaging accordingly. A well-honed pitch that conveys market potential and traction can significantly improve your chances of raising capital.
- Utilize AI and automation for investor outreach: AI-powered tools can help identify potential investors and automate personalized follow-ups. This streamlines the fundraising process, allowing founders to focus more on building their businesses.
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Episode Transcript
John Corcoran: 00:00
All right. Today we’re talking about how to target the right investors for your company. So if you’re looking to raise money, then we’re going to be talking about the types of mistakes that companies make, sometimes targeting the right, the wrong types of investors. My guest today is David Rose. I’ll tell you more about him in a second, so stay tuned.
Intro: 00:19
Welcome to the Smart Business Revolution Podcast, where we feature top entrepreneurs, business leaders, and thought leaders and ask them how they built key relationships to get where they are today. Now, let’s get started with the show.
John Corcoran: 00:35
Hi. Welcome everyone. John Corcoran here. I’m the host of this show. And you know, every week we talk to smart CEOs, founders, and entrepreneurs from all, all kinds of companies. We’ve had Netflix and Grubhub, Redfin, gusto, Kinkos, YPO, EO, Activision Blizzard. Check out the archives. Lots of great episodes for you to check out there. And of course, this episode was brought to you by Rise25, our company where we have B2B businesses to get client referrals and strategic partnerships with done-for-you podcasts and content marketing. And David is going to talk about how he has built connections with the right people using different strategies.
And that’s something that I love to do. You know, David and I had a great conversation at the beginning before this about some different things we have in common. And so that’s why I love selfishly interviewing people like David here today. So check us out at Rise25.com. All right.
Let me tell you about David. So David, first of all, shout out to Bill Kenny of Meet who introduced me to David today. Meet ROI is Bill’s website. They help companies that exhibit at trade shows to get more ROI out of their trade shows. But David is the CEO of US Expansion Partners.
He has over 20 years of leadership experience with fortune 500 companies and high growth firms and startups in technology, internet and media industries. He is based in North Carolina, but he is a veteran of a number of different pitch days, including Google Demo Day, Silicon Valley Open Doors, TechCrunch Disrupt which to me has always been the most intimidating type of environment going in. And you’ve got, what, 3 minutes or 45 seconds or whatever it is to do your elevator pitch. It seems so intimidating. So I, as a former speechwriter, am in awe of you, David, having, you know, competed in these different exhibitions and won some of them as well.
So we’re going to talk about your background. But first let’s start. I love to start with what people were like as a kid, because I think that oftentimes illustrates what we are as an adult. But you were in fourth, fifth grade and you decided you wanted a motorcycle. You grew up in the country. Now there’s a lot of parents that wouldn’t dare give their kid a motorcycle at age 11 or 12, but you decided you wanted one. And tell us about how you got one.
David Rose: 02:43
Well, it was my first big sale that I closed. It was tough because, you know, we had an orthopedic surgeon who lived across the street who would consistently tell my parents horror stories of motorcycle wrecks. But I wanted a motorcycle really badly. And badly. And we lived in a fairly rural area, so there’s a lot of space to ride.
So, you know, part of the deal was you had to stay off the road. So man, I just really worked with my parents for years and years. It seemed like forever. And when I got to fifth grade, I finally closed the deal and they finally said, okay, you can have a motorcycle. And I was like, great, I have the right one picked out.
Let’s go get it today. And they’re like, oh no, no, no, no, you have to pay for it. I’m like, But I’m 12. How am I going to buy a motorcycle? So that was the first hurdle to overcome. But the second hurdle presented itself pretty quickly.
John Corcoran: 03:26
So you had to figure out a way to make money at age 12. And so what did you do?
David Rose: 03:31
Well, there’s your limited options. When you’re 12, you don’t have a driver’s license. You really can’t travel very far. So I did what a lot of kids my age and in my situation did as I started mowing yards. And I was fortunate in that my mom was in real estate at the time and a top producer, so she had lots of inventory.
You needed to be mowed. So I kind of had a built in inventory Worry of customers I could start with. So I moved a lot of yards, a lot of yards. I think I saved up $600 to buy my first used motorcycle as a 12 year old in the 80s. So yeah, it was something I was really passionate about and spent a lot of time in, a lot of great memories and really loved motorcycles. But that was the start of it. And I know.
John Corcoran: 04:19
You’re a big fan of cycling now, which we talked about earlier, but you have this long history, you’ve worked at so many different startups and I want to get into those. But your first experience was actually a startup within a larger corporate environment. So you actually worked for ADP, which is a large company, and ended up kind of doing a startup within the larger corporate environment. Tell us about that.
David Rose: 04:42
Yeah. So I was really fortunate, I think to this day. ADP was a great place to start my career. I got to do seven different jobs there in seven years. So I got to see and do a lot. And I had a really unique experience where I where I got to be on the launch team for a brand new product. So I was employee number three for a new product that hit. And so we grew it to $150 million in revenue in less than two years. We bought a $400 million publicly traded company, and it’s grown into a $5 billion line of business for ADP called Total Source. It’s the PEO business.
So we launched that for them in the late 90s. So we got to do all the fun startup stuff. We were rapid growth trying to figure it all out, late nights, all those sort of things without having to worry about making, you know, making payroll or raising capital because you’re housed inside a fortune 500 company. So it was definitely a great first corporate experience and great first startup experience.
John Corcoran: 05:35
Did you think that it was easier in that sense because you had resources and things like that, like looking back on it now?
David Rose: 05:43
Absolutely, absolutely. You know, you know, as a startup founder now, you spend an inordinate amount of time thinking about capital and making payroll and cash and those sort of things. When you’re in that environment, you still have the same challenges of trying to figure out product market fit and the right pricing model and the right economics and go to market. But you really don’t have those pressures of, oh my gosh, how are we going to make payroll next week?
John Corcoran: 06:07
Yeah. What was it like then later when you had your own companies and you weren’t housed in a large company and you founded your own company and you had to bootstrap it like, oh crap, this is what it’s really like. Yeah.
David Rose: 06:19
Well, you know, because you do have lots of challenges and lots of hurdles in a startup, even inside a fortune 500 company. I mean, honestly, at this stage my freak out threshold is really high because I’ve kind of seen it, done it all. So I’m like, oh, okay, that problem, we can overcome that. I’ve kind of learned that nothing’s fatal for the most part. So I think it’s kind of a collective experience during that time. And it started with that first startup inside of ADP. But over time you’re kind of like, oh yeah, that challenge. Yeah, that looks really bad. But I think we can figure it out.
John Corcoran: 06:50
Yeah. No, you’ve had different types of companies. You haven’t stuck in one industry. Has that been you following your passion, your interest? Looking for opportunities? You know, talk a little bit about, you know, because there’s some you know, for some people, hopping from industry to industry can prove a big challenge, especially if they don’t know about the industry.
David Rose: 07:12
Yeah, it’s a great question. I think I have this curse where I’m kind of naturally drawn to frontier tech. I can immediately see a new technology that comes on board. I can immediately kind of see, oh man, I really get the value this can deliver to enterprise customers. I’ve spent most of my time in B2B, and so I’m a little bit cursed in this and like, oh, I totally get this new technology.
And there’s been a few times, more than once where I’ve been right, but been a decade too early. So those are pretty painful experiences. But I have this thing where I can kind of look and get it pretty early on and oftentimes, unfortunately, too early.
John Corcoran: 07:48
Well, I mean, there’s lots of examples like that, right? Webvan. Pets.com. Stuff like that. Companies that were way too early, but way later. These, you know, models exist today. It’s just that maybe the market wasn’t ready for it. Looking back now, what is your advice to a young founder that is pursuing that new thing? Maybe now it’s AI or whatever’s after AI. How do you advise them to know whether now is the right time or whether they’re too early?
David Rose: 08:18
I think that’s a really difficult personal judgment call to make. If you’re in it because you believe in, you’re passionate about it. I would say make sure you have truth tellers around you who will, who you trust, who to tell you, like, hey, it’s really not right. I remember I was in a situation when a frontier tech company and I was really, really passionate about it, really believed in it. And I had a really known VC in the LA area who I’ve met a few times, and I told him I was having problems and he said, hey, come, come out and pitch me.
Let me tell you my opinion on it. And he said, look, David, all the things you’re saying are true. And they’re all going to happen in 10 to 12 more years, you know. So having somebody kind of say, hey, you know, you’re right. But the time that somebody you trust to kind of say, hey, you’re right about this, but you’re you’d be better off spending your time and other priorities right now. I think it’s helpful.