S3EP3: Mindset is Everything with Laura J. McDonald

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You meet somebody in person, you sit down, get to know them as people, really learn about them, you remember those people, and they remember you.
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This is the Capital Flex.
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I'm Naseem Saini.
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This joke codifies the Capital Playbook because no founder should have to learn the hard way.
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We talk about what really happens behind closed doors.
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The bias, the breakthroughs, and the things no one says out loud.
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If you've ever walked into a room and felt the system wasn't built for you, you're in the right place.
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Hello and welcome to the Capital Flex.
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My guest today is Laura McDonald.
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She is the co-founder and co-CEO of Flora Fertility, which is an Instratech bringing personally owned insurance to the fertility market to cover everything from diagnostics, medications, IUI, IVF, and everything that comes with that experience.
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I'm a huge fan of what they've built.
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Her career has been focused on the intersection of women and financial security for years.
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Before Flora, she founded, scaled, and sold Canada's largest financial media company, Focused on Women and Wealth, which is another topic I'm very uh excited about.
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She has guided product wholesaling for a major insurance company.
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She's helped scale a DTC AI model in the e-commerce space to global adoption across 100 plus countries.
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And she's authored two best-selling personal finance books.
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I am so excited to have you here with me today.
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Thank you so much for joining.
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I am excited to be here.
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I'm looking forward to this.
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It should be fun.
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So for everyone here, introduce yourself a little bit more and tell us a little bit more about Flora Fertility.
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Okay.
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Laura McDonald.
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Personally, I'm uh I'm a Canadian, like you said, though I operate fully in the US and spend a lot of my time there.
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Um I have four children.
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So just four children is amazing.
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I have one who can barely handle it.
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So good for you.
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And and I have three young and old daughters, and actually, it's such a fun stage of life where the people I most want to hang out with, and they inform a lot of how I build the business, Flora, and I have a son as well.
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Um, and my background, as you said, is really in bringing new products to market across finance, across insurance, really making people care about them because we need to protect ourselves, right?
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And and really always with that lens on women and caregivers and family.
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Um, so Flora was founded a few years ago with myself and Dr.
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Christy Lane.
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Um, we were seeing that there's a huge gap in access to fertility care.
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And really the biggest barrier is finances.
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We know that even the average person, even a high-income earner, they don't have 10,000 set aside in emergency savings, let alone 50,000 to pay for treatment.
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And there's this crazy stat that shows that 90% of infertility cases are actually treatable.
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So that's, I mean, that's the good news.
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The science is getting really good, but only 2% of people can actually afford treatment.
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So we're seeing people delay treatment, not get it, go into go into debt, which, you know, it's unbelievable.
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You're paying potentially double what the actual cost was.
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And so we looked at this and went, how can we, how can we make this better?
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Um, and this was a few years ago, and the existing models that addressed fertility financing were either loans and again, loans and financing, or they were group benefits through Fortune 500 companies, which are fantastic if you, you know, if you work for a Google or a big bank.
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Right.
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But, you know, most of us don't.
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There's a lot of layoffs happening, we won't our entire careers.
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And so we really felt we needed something that you could own that was apart from your health plan, apart from your group plan.
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And that's what Flora is.
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It's the first, and really the first globally individually owned and underwritten fertility insurance policy.
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And so that means when you acquire it, it's yours.
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It stays with you up to age 45 through your childbearing years.
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If you need fertility treatment, you have 50,000 of coverage available to you.
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And the premiums are super affordable.
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They're as little as$15 a month.
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That would be, say, for my daughters acquiring it and locking that in at a young age, to about$100 a month, um, but average$40 a month.
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So you're essentially pennies on the dollar to protect that future which risk, which is a just a very real risk for a significant percentage of the population.
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Yeah, yeah, it's incredible because that the cost of fertility support can be so incredibly high, especially, and I I think we talked about this early on, but I went through two rounds of IBF myself and we paid for the first round out of pocket, and then I was lucky and privileged to be working for a company the second time who completely funded it, but to have paid for that twice myself, we potentially wouldn't have done it the second time because it's$25,000,$30,000.
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And with no, this is where the science will get better.
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There's no guarantee on the other side.
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And so you're you're really hoping for the best the whole time.
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And so to provide something that gives you a little bit more security in your ability to access the care makes a huge difference for so many families because it's already an accessibility problem, and this helps to resolve some of that accessibility problem.
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Yeah, yeah.
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I mean, you're going through enough when you're going through treatment, whether it's the mental, the emotional, the physical, let's at least take away some of the stress that comes from the financial stress, right?
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Depleting your savings, or going, I only have enough for one round.
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I hope it works, like you said.
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And so that's again, we're seeing such a high demand for this type of product, and we can, you know, talk about that, but both from individuals and the employers who have been wanting to step up and support their populations but have found it difficult to do so.
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Right.
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Yeah, absolutely.
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Oh, it's brilliant.
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I'm I'm a big fan.
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Congratulations.
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Uh so you know, the premise of the podcast is to talk about our fundraising experiences and what we've seen, what we've experienced, what's happened, what's been great, what's been not so great, uh, and really what the learnings are from that, so that when other founders listen in, uh they can take something away and they can maybe plan differently or plan more strategically for what they're after when they go after a race.
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So, a question I'd like to start with everyone is if you had to describe your fundraising experience in two or three words, what words would you use?
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Oh, that's a good question.
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Um overall, I would say lengthy, it on ongoing, just never stop fundraising.
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Lengthy, ongoing, overall very positive.
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Okay, that's great.
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Tell us a little bit more about that.
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So when I say lengthy, it's because we did it in, you know, I think every every founder does it in many cases in tranches.
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So, you know, first uh Christy and I had we were almost set up through a common connection because we were both looking at um the fertility challenges, and and we decided to co-found this together after kind of getting to know each other over Zoom for six, six or so months, tail end of COVID.
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Um and we were both had other careers and and jobs and seven children between us to support.
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And so you have to decide, are we ready to go all in on something else?
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And it was important for us to raise at first a little bit of capital to show that the market was ready to support this type of model.
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And insurance is not an inexpensive landscape to launch in.
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There's it's highly regulatory compliance.
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It takes a really long time to get a product to market.
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So it's very hard to bootstrap it.
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So getting that first round of funding, which was really just a few hundred thousand, it was an angel and a smaller fund, um, actually an accelerator fund who was fantastic, called Highline Beta out of Toronto.
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That gave us the push to go, yes, the the market is looking for this type of model, and we are going to go all in.
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And so that really gave us six months or so to test, refine, continue to develop the model.
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Because at that time we really had a deck and our expertise.
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Okay.
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But we had a deck that was super compelling.
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We had identified a problem and not a niche problem.
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I know fertility sometimes gets labeled niche, and so does women's health in some ways.
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Which is a whole different conversation we can get into.
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Right.
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Yeah, keep going.
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Yeah.
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With one in six people affected, even one in five potentially going forward, with almost every single person knowing somebody in their close sphere who has gone through it, absolutely not niche.
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And so we had identified this problem, and it coincided with actually the World Health Organization labeling infertility a global health issue, where we needed precisely new mechanisms of funding.
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So, on that alone, and then based on our expertise, where each of us had decades of experience in insurance and finance and bringing new products to market, we each had an exit behind us.
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That's what allowed us to raise that first bit basically just on the deck and an idea.
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And from there, um, we positioned ourselves with more partners that could help us accelerate, like InsureTech New York.
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And then we went down the path of bringing on more incredible advisors and team members, and then down the path of securing reinsurance for our product.
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So that was the big unlock.
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I'd say at the pre-seed stage, up until we got reinsurance, we raised a couple million dollars.
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This was over a couple years, because again, it takes time.
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We had to build net new actuarial models, underwriting data sets.
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This model had never existed.
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Yeah, it's brand new.
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Right.
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Yeah.
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And again, the the big um question mark was would reinsurers be willing to believe that our models were robust enough that they would put their capital reserves on the line to pay out all future claims.
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The due diligence on that was harder than a series B.
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They're going into your actual models for over a year.
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And remember, they're putting aside tens of millions of dollars to pay out future claims.
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So once we had the reinsurance partners, that's what then.
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That changes how you then how you're able to then raise a seed, right?
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Is having that expertise.
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Yeah.
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And we were the first to secure reinsurance partners for this type of model.
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So that was huge.
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They're A-rated global reinsurers.
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That's what unlocked the seed, even though we had very few, well, we had no customers at that point.
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Then we had to go through the compliance, the licensing in every state, building the tech stack.
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But that allowed us to raise a five million uh USD seed at a quite an attractive valuation, especially for I'm gonna, I hate to say that, especially for a woman's health company, but that it's a challenging space, right?
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You know, say 2% of VC dollars going towards female founders.
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And then when we look at even the women's health space, that was a significant raise.
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And that's you know, that's really what we can talk about today.
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So we've raised about 7 million USD to date, um, up to at the really at the earliest stage, because we are fairly new in market.
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We've absolutely sold policies, but now getting to our next raise will be proving that the market is really willing to adopt this model and identifying which channel is going to be the right channel for the scale, yeah, for growth and scale, right?
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Organic, B2B, because we can play across a number of channels, and now it's on us to learn quickly, maybe it's all, or maybe it's one that we double down on.
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Right, yeah, absolutely.
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It makes perfect sense because now it's proving where the scale and the growth will come from and how you maintain that scale and growth over time.
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Early on, and when you were working through the actuarial models and and working through confirming the reinsurers that would be in your in your network or in the partnership, how did you build the actuarial models?
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Is that expertise that you and Christy had?
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Did you have to pull in others to do that?
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And then building a relationship with the reinsurers, uh, how how was that?
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How did that start?
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Take us through what was great and or what you had to learn in that process.
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So, credit to my co-founder, um Christy.
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So Christy is a has a PhD in rehab medicine, and then she ended up teaching at Stanford Medical School and founding their wearable health lab.
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So she had previously won, um, had an exit with a company that looked at wearable device data, how we use that for life insurance underwriting.
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So knew how to create new risk models.
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And interestingly, she had been studying fertility data and pregnancies going back since you know her PhD, her thesis, and went through infertility herself.
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So we were able to lean on her expertise to, there's a lot of data out there.
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It's not in an actuarial model.
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This isn't life insurance, mortality tables, but we could access, we accessed both public and private data to build these data sets.
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And then we brought in an incredible actuary, So Mal Jane, who really worked closely with us for about 18 months, I would say.
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We met him through Insure Tech New York.
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And the three of us were just in it.
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Like we were in it working, um, you know, how do we is this pricing right?
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Will people be willing to pay this?
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What are the ages that we can offer this?
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What does that risk look like?
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A lot of iterations on the model, very complex model.
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And we looked at even um number of pregnancies that we would anticipate across every age.
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How long would somebody hold the policy?
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When would they start using it?
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How do we mitigate adverse selection?
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Somebody buying it and using it right away, miscarriages.
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Um, you know, so many different elements went into this model.
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And then once we had the baseline model, which was quite intricate, there was a period of time, and this is where we were going, can we just reach the reinsurers ourselves?
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We're fortunate to have a lot of connections.
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But then somebody said to us, No, wait, you need a broker.
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Okay.
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You need a broker to get involved.
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We go, who's the broker?
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And somebody made an introduction to Guy Carpenter.
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Um, and they were, they have been the most fantastic partners, can't recommend enough, who just were true, have been true, true partners with us that believed in this as a new model of insurance going forward, that it actually changed, could entirely change the landscape.
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And then they worked tirelessly for a year plus as that the you know, the in-between between us and the reinsurers and positioning it correctly and building out the right reinsurance panel to diversify that risk and have the A-rated partners.
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And so much credit to them.
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We work with them still, ongoing.
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They're always making sure that we are covered so that our policy holders are covered and we have capacity in place to cover the rest.
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Yeah, it's it's great, right?
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Because it speaks to the sequencing that the very deliberate sequencing of what you did before going out for a seed.
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And this is it's one of those goalposts that's moving in the industry right now where maybe five years ago you could have gone out for a seed while still confirming the models, while still making the reinsure partnerships and getting those in place.
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Uh but to get to the kind of raise that you wanted, getting those things done first was almost critical.
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And and you and you spent about two years getting those things done, right?
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So that you could say, look, we we know the market wants it.
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There's enough demand, we'll come to that question in a minute.
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And but we've got the model in place and we have the partners willing to do it.
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And so now the the level of de-risking that that brings to what your next round of investors is looking for is significant.
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It's funny when you say that because it was so, well, I'm just thinking through the two plus years, it was so much work, but it was behind the scenes.
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So I would have a lot of um friends or acquaintances go, Are you are you working full-time on this?
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Yes, but more than full-time, you're just not seeing it.
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When is it launching?
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Right.
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Like I would get that over and over again because actually we were getting a fair amount of press and visibility.
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We had just launched a more basic website, but we're talking about sort of the future of fertility.
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And so getting a lot of attention because there's a lot of interest in the model, but people sort of assumed that we could just like put it out there, turn it on, yeah.
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People could buy, and there'd be everything would be in place, and it so really was a long build.
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That's the barrier to entry.
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If anybody could do it and launch it right away, then it wouldn't be the value that it is, and we wouldn't be the really this is category creation, right?
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Yeah.
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So super proud of the amount of time, the the due diligence um in getting to it.
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Yeah, yeah, it's incredible.
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As you were then formulating the seed uh and going to market to raise that, you're yes, an InstrTech, and that that is what the business is, but you also sit at the intersection of health tech and fintech and really squarely in women's health, which, as you mentioned, carries all the stigma in the world for reasons that we don't understand, but hopefully we're breaking through.
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How did you position with investors?
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What did they understand?
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What did they not get?
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How did you navigate really making sure investors understood what this was and what you were after?
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I'd say we were fortunate that we had a lot of investors across you know all different channels and theses and sectors reaching out to us because this was category creation, people were very excited about the model.
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And so those ranged from health, you said health tech, fintech, and sure tech, consumer.
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A lot of consumer VCs reached out because this ultimately we serve the consumer.
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This is for them to own their health outcomes and and thumbtech and so forth.
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It became who do we want to lead the round?
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Who is the right investor to lead the round?
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And ultimately what we landed on was that it had to be um a very respected insure tech VC.
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They needed to understand the amount of due diligence that went into, or the amount of effort and then due diligence that resulted from the reinsurers to into building this model and that timelines for insurance, even once the product is launched, for people to understand a net new product.
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This isn't an overnight thing.
00:17:59.680 --> 00:18:01.599
And so we were very fortunate.
00:18:01.759 --> 00:18:04.319
Our number one was Manchester Story.
00:18:04.480 --> 00:18:13.119
Um, they're so uh respected in InsureTech, the the level of integrity um so high, just incredible people.
00:18:13.359 --> 00:18:19.119
We're fortunate to get connected with them and and they expressed pretty strong, strong interest right away.
00:18:19.359 --> 00:18:28.640
Kudos to Nicole Genderson there, who really led um championed Flora and led this to led this to the the close of the seed.
00:18:28.960 --> 00:18:45.519
But they came on as our lead, and that really allowed everybody else who had interest to feel comfortable going, we're into because they didn't necessarily have the expertise and said they didn't to do um the due diligence on the and their their own underwriting on our model in the insure tech space.
00:18:45.680 --> 00:18:59.279
So they were complimented by a fantastic investor, Slawsen and Co., very much culturally aligned consumer, very connected to influencers and celebrities and and you know very known commercial brands.
00:18:59.440 --> 00:19:05.119
And then we also brought on True Stage, which were who works with all the credit unions across the country.
00:19:05.279 --> 00:19:19.440
Um, our earlier investors, we had, you know, Business Development Bank of Canada, BDC, Highline Beta, Cartography Capital, Everywhere Ventures, just an incredible mix of investors who can help us in very different ways, all of them.
00:19:19.680 --> 00:19:32.240
Yeah, yeah, it's great because anchoring a lead investor who understands exactly what the product is and what it's meant to do means that the rest of the cap table, to your point, doesn't have to learn InstaTech overnight.
00:19:32.319 --> 00:19:35.599
They should understand it, but it doesn't have to be their core capability.
00:19:35.839 --> 00:19:48.559
They can then fill out all the other things that you need from a consumer, from a healthcare, from a fintech standpoint, so that you get all the right skills around the table with that that anchor that understands insurance very, very closely.
00:19:48.799 --> 00:19:49.839
It is really interesting.
00:19:49.920 --> 00:19:53.039
And because you look at who their LPs are, that's really important.
00:19:53.200 --> 00:19:55.839
Who are their, who's investing in their fund?
00:19:56.079 --> 00:20:04.799
And so when we look at our InsureTech, Manchester Story, it's carriers, it's re-insurers, it's those that we want to form those longer-term partnerships.
00:20:04.960 --> 00:20:10.480
And then if we look at more culturally aligned funds, they're connected to oh, you want an intro to Bumble?
00:20:10.720 --> 00:20:12.640
Well, we, you know, we know Whitney Wolford.
00:20:12.880 --> 00:20:13.839
Great, fantastic.
00:20:14.000 --> 00:20:18.799
A celebrity who's been through infertility, we can figure out a way to have conversations with them.
00:20:19.039 --> 00:20:28.000
And so that's been very cool to just them being willing to open those doors where they can and see if we can start some of those really interesting conversations.
00:20:28.160 --> 00:20:29.200
Yeah, yeah, absolutely.
00:20:29.440 --> 00:20:37.920
Were there any moments in that raise that were especially hard or moments where you kind of sat and went, oh my God, how will we deal with this?
00:20:38.079 --> 00:20:40.160
Or anything like that that happened along the way?
00:20:40.400 --> 00:20:41.759
I'd say it's always hard.
00:20:41.920 --> 00:20:48.000
You think, I mean, you put these, you go, okay, we're gonna raise and we're gonna put a timeline in place, we're gonna stick to this.
00:20:48.559 --> 00:20:55.200
And I think we started raising more, it was in the fall, early fall, and we thought we're gonna try to close this by end of year.
00:20:55.279 --> 00:20:57.200
Well, then you had Thanksgiving and holidays.
00:20:57.279 --> 00:21:08.400
And fortunately, we got a term sheet by the end of the year, but then it took another three, four, I'm trying to think back, four to close after that when we had everybody almost lined up.
00:21:08.559 --> 00:21:17.759
So for us, I think we went from using safes for the pre-seed to doing a price round for the seed.
00:21:18.160 --> 00:21:21.119
And the amount of legal work, right?
00:21:21.200 --> 00:21:24.720
You've got you're thinking about your legal data room and you're working with your lawyer.
00:21:24.880 --> 00:21:26.799
We were texting our lawyer all the time.
00:21:26.960 --> 00:21:28.319
He was fantastic.
00:21:28.559 --> 00:21:30.000
Um, he was so great.
00:21:30.160 --> 00:21:33.119
He would respond to us really at every minute and every hour.
00:21:33.359 --> 00:21:37.599
But trying to just get it over the finish line because deals can fall apart.
00:21:37.680 --> 00:21:38.720
I've heard it from many of them.
00:21:38.960 --> 00:21:39.759
We've heard so many stories.
00:21:40.160 --> 00:21:40.480
That's great.
00:21:40.960 --> 00:21:44.720
And in the last, you know, 24 hours, something can fall apart.
00:21:44.960 --> 00:22:04.559
And one thing that I did notice is and I would just tell other founders, and we we have I'm very proud of everybody on our cap table, but you have the more people you add to your cap table, and it might have been early on that you took somebody who had a smaller Check or you gave them options because they were very helpful in the early stage.
00:22:05.039 --> 00:22:06.720
Come time for a price round.
00:22:06.880 --> 00:22:10.720
You need signatures and sign-off from all of these individuals.
00:22:10.799 --> 00:22:14.799
And if you in some cases, you're barely in contact with them anymore.
00:22:14.880 --> 00:22:17.440
They want to support you or you're trying to track down their email.
00:22:17.519 --> 00:22:18.000
You're trying to go.
00:22:18.319 --> 00:22:19.920
Well, now you're hurting cats, right?
00:22:20.000 --> 00:22:28.480
Now you're hurting cats and trying to get signatures from people that even that are a I'm gonna make it up, but a thousand dollar check on the cap table, but they've got to convert into a price round.
00:22:28.640 --> 00:22:28.880
Yeah.
00:22:29.039 --> 00:22:34.240
So just careful of that because what you're in a high stress state when you're trying to close your round.
00:22:34.400 --> 00:22:35.759
Your runway is based on that.
00:22:35.839 --> 00:22:38.400
You're you've got salaries that you're paying based on that.
00:22:38.559 --> 00:22:44.400
And anything that holds it up, of course, is is incredibly impactful and stressful.
00:22:44.480 --> 00:22:51.680
So the more signatures you have to go at, the more people you have to contact, um, the more there's room for error or delay.
00:22:51.920 --> 00:22:52.160
Right.
00:22:52.240 --> 00:22:53.440
Yeah, absolutely.
00:22:53.680 --> 00:23:02.799
Uh how important was what role I should say did in-person versus virtual relationship building play as you put this seed around together?
00:23:03.039 --> 00:23:04.400
In-person is everything.
00:23:04.559 --> 00:23:18.880
If I think back to not all of our investors, because I will say that virtual you can form, you know, quite a decent relationship with, but if you can show up in person, it goes so far.
00:23:19.119 --> 00:23:26.319
And I think back to the amount of conversations we're all used to Zoom or Teams or you know, Google chats these days.
00:23:26.480 --> 00:23:30.400
And I have a hard time remembering every single person I got on a virtual call with.
00:23:30.640 --> 00:23:33.839
And it's not that I don't mean to, it's just that we're inundated.
00:23:33.920 --> 00:23:37.359
If you're having, you know, 10 plus calls a day, it's it's really hard.
00:23:37.599 --> 00:23:40.079
And the same goes for people VCs you meet.
00:23:40.160 --> 00:23:44.960
They may not remember you because they're inundated with phone calls and messages and so forth.
00:23:45.200 --> 00:23:59.279
But you meet somebody in person, you sit down, you know, you put a true face to a name, to a voice, get to know them as people, not just talking about the deal, but you know, what do you like to do?
00:23:59.440 --> 00:24:00.640
Maybe we have something in common.
00:24:00.799 --> 00:24:02.240
What does your family look like?
00:24:02.559 --> 00:24:03.759
Really learn about them.
00:24:03.920 --> 00:24:06.480
You remember those people and they remember you.
00:24:06.640 --> 00:24:08.960
And ultimately it's all about relationships.
00:24:09.039 --> 00:24:14.079
And even if they're necessarily not necessarily a fit for you, maybe they're later stage, they're more willing to go.
00:24:14.240 --> 00:24:15.279
You need to meet somebody.
00:24:15.440 --> 00:24:29.519
So I would say of the connections or of our VCs, both angels, sorry, investors, both angels and VCs, it was either through we met them in person or it was a warm introduction.
00:24:29.759 --> 00:24:31.599
I don't think any were were cold.
00:24:31.920 --> 00:24:32.480
We're cold.
00:24:32.559 --> 00:24:32.799
Yeah.
00:24:33.039 --> 00:24:34.240
It makes such a difference.
00:24:34.319 --> 00:24:50.960
I have found, of course, also that for me, the relationships that I've built in the ecosystem with I whether it's with co-investors or with founders, the more time I get in person with people, of course, and COVID warped our minds on this for a little while, but the in-person relationships make everything work.
00:24:51.039 --> 00:24:57.839
And there's a few founders I know, one that I spoke with last week who's like, she'll jump on a plane for an hour meeting and to give someone a hug.
00:24:57.920 --> 00:25:03.359
She's like, it just makes the biggest difference in the world when you're when you're ready to get on a plane for something.
00:25:03.519 --> 00:25:12.240
And in some cases, I think founders don't always want to spend the money doing that, but in the right moments, it it can pay off near-term and long-term, right?
00:25:12.400 --> 00:25:13.279
Yeah, I do agree.
00:25:13.440 --> 00:25:16.240
But I mean, I have heard founders go, oh, it's just so expensive.
00:25:16.319 --> 00:25:16.960
I don't want to do that.
00:25:17.039 --> 00:25:18.480
I can do it via Zoom.
00:25:18.799 --> 00:25:22.079
Go out, absolutely, meet them in person.
00:25:22.720 --> 00:25:27.039
The more relationships you build across your life, just authentic relationships.
00:25:27.200 --> 00:25:29.440
They don't have to mean anything in the moment.
00:25:29.599 --> 00:25:34.960
You're just willing to mutually support one another down the road, the more that will help significantly going forward.
00:25:35.039 --> 00:25:42.880
That's actually how my co-founder and I got introduced because we both had a common connection at Munich Re on their innovation side, Mike, who said that we should connect.
00:25:43.039 --> 00:25:49.920
So, and I will say I'm I'm a founder in my 40s versus some, you know, in my 20s.
00:25:50.160 --> 00:25:56.880
There's those years of maturity, those decades of being able to meet people across various industries.
00:25:57.039 --> 00:25:58.079
It helps, right?
00:25:58.240 --> 00:26:06.480
Because then you have your, you know, this Rolodex in your brain or on LinkedIn of I, okay, this person I can reach out to or they can help me meet this person.
00:26:06.559 --> 00:26:08.079
And you pay it forward to others as well.
00:26:08.160 --> 00:26:08.720
You help them.
00:26:08.880 --> 00:26:09.440
Oh, absolutely.
00:26:09.519 --> 00:26:13.839
It's so interesting you say that because I grew up in consulting and management consulting for years.
00:26:14.160 --> 00:26:18.240
And the the walk the halls mentality of how consulting works.
00:26:18.319 --> 00:26:33.599
And when you're on client side, and yes, you're doing your work in with the team in the team room, but you get out of your chair and you go walk the halls at the client's office and you meet the people and you say hello and you talk about weekends or families or kids or whatever the thing is, where they're going to dinner that night.
00:26:33.759 --> 00:26:46.079
And those relationships stay with you because I have so many past clients who became LPs of my fund or who I've stayed in touch with or who become these brokering relationships to other people.
00:26:46.319 --> 00:26:52.640
And it all of those skills were built in this walk the halls mentality of how I grew up in consulting for 20 years.
00:26:52.720 --> 00:26:54.559
And it doesn't leave you once you build it.
00:26:54.799 --> 00:27:00.960
And it's amazing to see people you worked with, you know, 10, 15 years ago, what they become in their careers.
00:27:01.119 --> 00:27:08.799
I was at um a festival, a Create and Cultivate Festival, a couple weeks ago, and I ran into a I'll say young woman.
00:27:08.880 --> 00:27:15.759
She's only about five years younger than me, but she used to just write for at a digital media company focused on women and wealth.
00:27:15.839 --> 00:27:19.440
And she was one of the uh young women who reached out to me to write for the company.
00:27:19.519 --> 00:27:21.200
She was just super ambitious.
00:27:21.359 --> 00:27:47.119
And we stayed loosely connected over the years, and I was watching her evolution, and she basically became um second in command of this incredible company that I won't provide all the details, but they raised 250 million for a CPG product, and she was there negotiating the contracts with with Skims and with Costco and doing all the viral media and and now working with another company that I really, really admire.
00:27:47.279 --> 00:27:49.359
And I got to just see her and give her a hug.
00:27:49.440 --> 00:27:54.799
And it was we both had such fond memories, respect, and appreciation for one another.
00:27:54.960 --> 00:28:09.440
And interestingly, now we're collaborating as it relates to Flora and one of the companies she's aligned with, but I love that it came full circle, and it was just from you know, 15 years ago, early in careers, early in founding my first business.
00:28:09.599 --> 00:28:10.799
Um it's incredible.
00:28:11.119 --> 00:28:13.599
It's amazing to wait to see people evolve.
00:28:13.759 --> 00:28:14.880
Oh, yeah, absolutely.
00:28:15.119 --> 00:28:21.519
So you and your co-founder found each other by way of a network and an introduction that came for your networks.
00:28:21.599 --> 00:28:24.480
Uh, how important has it been for you to have a co-founder?
00:28:24.799 --> 00:28:27.279
And I think you've had co-founders at previous businesses.
00:28:27.440 --> 00:28:41.680
And do you think, given the equity conversation, the cap table management, is there what is your guidance on how to build a co-founder relationship and or be thoughtful about how many co-founders someone should have?
00:28:42.000 --> 00:28:43.119
Yeah, it's interesting.
00:28:43.200 --> 00:28:45.759
I have had uh two previous co-founders.
00:28:45.920 --> 00:28:50.079
Those businesses were more we we took on a bit of debt or we raised angel money.
00:28:50.160 --> 00:28:55.599
They weren't VC type of businesses and we became profitable at those relatively quickly, had great relationships.
00:28:55.759 --> 00:28:56.880
Those were both friends.
00:28:57.039 --> 00:29:08.480
So it's interesting, it can be hard to be co-founders with people you've known for a long time, because then all of a sudden, maybe you don't want to hang out with each other's friends because you hang out with each other all the time.
00:29:08.640 --> 00:29:13.920
But I would say I still have amazing relationships with those individuals, respect them immensely.
00:29:14.000 --> 00:29:24.880
And one of the benefits was you know the way somebody reacts, the you know their tone, how they react, the way they address things emotionally, and that can all help in interpreting and understanding.
00:29:25.119 --> 00:29:29.279
Um, Christy and I came together again, sort of like a matchmaking.
00:29:29.519 --> 00:29:33.680
And so the way we approached it was one, we both respected each other.
00:29:33.759 --> 00:29:36.079
We both had very different backgrounds.
00:29:36.160 --> 00:29:43.759
We were both moms with kids, so we were also juggling that, although she is a five-year-old and I have a 21-year-old and we're the same age, so different stages.
00:29:44.400 --> 00:29:54.720
And we were at this mature stage where we went, if we're gonna do this, we're just gonna make it happen, own our lanes, um, and be as you know, be very supportive to one another.
00:29:54.880 --> 00:29:57.119
And so that's the way we approached it.
00:29:57.200 --> 00:30:08.000
I would say sometimes we communicate a bit differently and we're we acknowledge that we don't have the understanding of decades of of history to understand how each likes to communicate or interpret.
00:30:08.079 --> 00:30:09.839
And we're, you know, we work through that.
00:30:10.000 --> 00:30:12.720
Um, in terms, I do like having a co-founder though.
00:30:12.880 --> 00:30:21.599
It is very hard to go through this journey and to raise, and you need it's very helpful to have somebody to do it alongside you.
00:30:21.839 --> 00:30:30.000
In terms of equity, though, obviously, you know, you go and raise dollars, that dilutes you quite a bit, and you have a co-founder, then you're you're each, you know You're sharing, right?
00:30:30.079 --> 00:30:31.759
You're splitting that founder, right?
00:30:31.839 --> 00:30:32.000
Yeah.
00:30:32.240 --> 00:30:42.400
And so, yeah, and and I look at other companies that have sometimes you're seeing three, four co-founders, and I'm going, how how do they how do they make this work?
00:30:42.559 --> 00:30:46.799
One from the decision-making process, but that equity process.
00:30:46.880 --> 00:30:49.680
You it's very, very hard building a business.
00:30:49.759 --> 00:30:55.440
So you you you can get paid well, but you also need enough equity that to the right incentive.
00:30:55.839 --> 00:30:56.960
Just feel great.
00:30:57.039 --> 00:30:57.440
Yeah.
00:30:57.680 --> 00:30:58.799
Just feel motivated.
00:30:58.880 --> 00:31:09.680
And you'll have you know great investors over there that over time they'll recapitalize to make sure the the founders continue to have maintained their equity or or even get more over time if they've been diluted significantly.
00:31:09.759 --> 00:31:12.160
And that's what you hope from your investors.
00:31:12.240 --> 00:31:16.480
Um, but it is again like the equity component certainly comes into play.
00:31:16.559 --> 00:31:21.599
And so be cautious when you start a business, how many people you you allow to be involved.
00:31:21.839 --> 00:31:24.240
Yeah, it is, especially as the company grows up.
00:31:24.400 --> 00:31:31.359
And if you're selling what 15-18% of the company per round, let's say, uh, you're gonna get past this series A.
00:31:31.440 --> 00:31:46.079
And if you're more than two co-founders, you have very little left per person to reasonably raise the next round and still maintain enough equity as a founder, especially as your board gets bigger as well, because now it turns into voting rights.
00:31:46.240 --> 00:31:57.839
And and how much voting right does the founder cohort have versus what the investor cohort has, and you run the risk of having more dramatic things happen simply because you don't own enough voting equity.
00:31:58.079 --> 00:31:58.799
That is very true.
00:31:58.880 --> 00:32:12.079
It's something that the complexity you think raising around is hard, but the complexity that comes after the round having a bigger board, having more investors, having less voting rights, having more employees, having more people who want options.
00:32:12.240 --> 00:32:13.759
Again, it's a very complex time.
00:32:13.839 --> 00:32:17.279
And I would say where we're at right now, we are, you know, we're post-seed.
00:32:17.519 --> 00:32:22.720
We're we'll be gearing up for a series A probably in about 18 months, but it's it's a lot to manage.
00:32:22.799 --> 00:32:31.519
I'd say we're probably working 12-hour days most days, and at the, you know, when you've got at the expense of spending time with with your family, but you but you do it, right?
00:32:31.599 --> 00:32:35.920
You're accountable to your investors, you're accountable to your company, you've put so much in it.
00:32:36.079 --> 00:32:39.599
Um, and you're you're in it to have an impact and to ideally have a win.
00:32:39.759 --> 00:32:40.960
Yeah, oh yeah, absolutely.
00:32:41.119 --> 00:32:46.960
So, one other thing I would love to talk about is you're a Canadian company with a US subsidiary.
00:32:47.119 --> 00:33:00.079
Uh, and it's a it's a dynamic that I think a lot of founders think about or have to problem solve around, especially if they their home country or home location is different than the US, but they're raising and going to market in the US.
00:33:00.319 --> 00:33:03.440
How did you think about designing that structure?
00:33:03.599 --> 00:33:09.200
And what what has worked well and and what's been problematic that you've had to solve differently?
00:33:09.519 --> 00:33:11.359
We are a very proudly Canadian company.
00:33:11.440 --> 00:33:14.240
Both Christy and I are based here.
00:33:14.400 --> 00:33:18.160
She's lived in the US, I lived, you know, various places in Canada.
00:33:18.319 --> 00:33:22.400
Um, but we operate, we're unique in that we operate only in the US right now.
00:33:22.480 --> 00:33:28.240
And the reason for that is that when your reinsurers in particular are coming in, you need a large enough market to start in.
00:33:28.400 --> 00:33:32.559
And so Canada is a secondary market for us that will likely launch in 2027.
00:33:32.720 --> 00:33:36.559
At that early stage, you just you want to incorporate, right?
00:33:36.720 --> 00:33:41.279
And you're not thinking there's complexity in incorporating in another country.
00:33:41.359 --> 00:33:45.039
So you're going, let's get our bases covered, let's incorporate, it's gonna be a Canadian company.
00:33:45.119 --> 00:33:46.880
And and and that's what it was.
00:33:46.960 --> 00:33:51.200
And then we have a Delaware subsidiary, um, we have a Delawc.
00:33:51.359 --> 00:34:06.400
But when we went to raise the seed round, we had to look to the US for most of our investors because there isn't there's certainly capital in Canada, but not the the breadth of capital, and particularly for on the maybe on the insure tech side or on the consumer side.
00:34:06.640 --> 00:34:09.920
And a lot of the interest was also from US VCs.
00:34:10.159 --> 00:34:13.679
And so it was, I would say it was a bit of a challenge.
00:34:13.840 --> 00:34:18.239
And do we shift right now to uh to a US parent company?
00:34:18.480 --> 00:34:19.599
Do we do that flip?
00:34:19.679 --> 00:34:22.639
And and it was something we had to give a lot of thought to.
00:34:22.800 --> 00:34:26.960
One, it's you're trying to close the seed, it takes it takes time.
00:34:27.280 --> 00:34:29.119
It's cost a lot of dollars to do that.
00:34:29.199 --> 00:34:33.280
There's there's tax ramifications you know, on on both sides.
00:34:33.440 --> 00:34:40.960
And so we're fortunate to find investors who said, you know what, keep the Canadian parent company right now, US subsidiary, until the next round.
00:34:41.119 --> 00:34:43.039
And there were really some strong reasons to do that.
00:34:43.199 --> 00:34:47.519
Canada is very generous in their tax credits and grants towards Canadian founders.
00:34:47.599 --> 00:34:52.960
We can get a lot of non-dilutive funding with our, you know, with our parent company being based here.
00:34:53.119 --> 00:34:55.599
But it wasn't without some challenges.
00:34:55.679 --> 00:34:58.320
And I would say in some cases we did lose some investment.
00:34:58.719 --> 00:35:02.079
I was going to ask because it can it can be a deal breaker, right?
00:35:02.159 --> 00:35:06.400
For some VCs that the company isn't fully housed in the US.
00:35:06.639 --> 00:35:06.880
Yeah.
00:35:07.039 --> 00:35:21.039
Depending on their criteria, depending on how they report to their LPs, and really often depending on their check size, you would think that it would so the you know, the huge VCs who are writing the massive checks, they're used to dealing with companies who are headquartered anywhere.
00:35:21.119 --> 00:35:29.679
But when it's a smaller check, let's say, but maybe it's a VC you really want, because they have some strategic partners, they can do some incredible introductions.
00:35:30.159 --> 00:35:35.920
It's harder for them to write a smaller check and be unsure about whether that will affect their LPs.
00:35:36.000 --> 00:35:42.719
So again, it really is the smaller checks rather than the bigger checks, but it might be a smaller check that you really, really want because it's a very strategic.
00:35:43.440 --> 00:35:43.679
Yeah.
00:35:43.840 --> 00:35:52.239
It's interesting because I've seen a number of founders navigate this decision between when to do the Delaware flip, whether to do it fully, whether to maintain the subsidiary.
00:35:52.320 --> 00:36:07.920
Uh, but when you can get it to work in a way that provides those tax advantages in your in the home country uh and your VCs understand that that this works and that it's okay and that we can still invest in a way that's productive, I think you get the right balance uh for what you need.
00:36:08.000 --> 00:36:12.719
And then one day if you do a full flip, you can do it, but there's some line of sight towards that, right?
00:36:13.039 --> 00:36:13.920
That's exactly it.
00:36:14.000 --> 00:36:19.199
We need to be very thoughtful about that approach and and and plan it ahead of time and not just be reactive.
00:36:19.440 --> 00:36:20.639
Yeah, absolutely.
00:36:20.880 --> 00:36:31.679
Tell us a little bit about the the gender balance on your cap table and whether you saw any unique things happen between the makeup of your angel investors to then the profile of your VCs.
00:36:32.000 --> 00:36:33.679
Yeah, I was thinking about this.
00:36:33.840 --> 00:36:42.719
Um, so I will say one of our earliest, our earliest angel investor is a woman, Katie Hall Hirsch, who I respect immensely.
00:36:42.960 --> 00:36:44.719
She has been one of our biggest champions.
00:36:44.880 --> 00:36:54.639
But overall, I would say our angels, particularly our strategic angels, were men, which surprises a lot of people because we're female founders.
00:36:54.800 --> 00:36:57.519
It's a very woman's health type of company.
00:36:57.679 --> 00:37:01.360
A lot of them had backgrounds in the fertility landscape or in insurance.
00:37:01.519 --> 00:37:01.760
Okay.
00:37:02.159 --> 00:37:06.000
And so they they definitely saw the business case for this model.
00:37:06.320 --> 00:37:15.760
And on top of that, we established fairly high minimums for angel investors early on, um, you know, 50 to 100,000.
00:37:15.840 --> 00:37:26.480
And and unfortunately, I would say typically that kind of check size from an angel, just the the way it's been today, is usually male investors.
00:37:26.639 --> 00:37:27.920
We're hoping that's changing.
00:37:28.079 --> 00:37:34.719
We're seeing more and more, you know, female angels coming into play, but typically it has been male investors.
00:37:34.800 --> 00:37:37.599
And that's why, because of our check size, where we saw it.
00:37:37.920 --> 00:37:47.280
Um on the VC side, I'm proud to say that a lot of the the partners who championed us at Manchester Story, at Slawsen ⁇ Co.
00:37:47.440 --> 00:37:50.320
at True Stage were were female partners.
00:37:50.480 --> 00:37:59.920
Um, and in in a number of cases, it was one of the first deals they were able to champion and get over the finish line, and that made us really, really proud.
00:38:00.239 --> 00:38:02.239
Um, so definitely a mix.
00:38:02.320 --> 00:38:09.280
Our cap table, I would say, is pretty much actually even split, but it was interesting to see from the VC and angel side where there were some differences.
00:38:09.519 --> 00:38:27.440
Yeah, it's so interesting because it's the it's a bit of a flip from what a lot of female founders see because typically their angel investors early stage are predominantly female, and then they're having to navigate into a much more male-dominated space when they get to a bigger raise or a seed or a series A.
00:38:27.679 --> 00:38:46.159
Uh, and and your makeup looks different than that, which could, which of course speaks to check size early on, and and also to expertise and understanding what you were building in a way that they could bring real knowledge to it uh from an insurance standpoint, probably more than anything, and really understanding how that applies in healthcare.
00:38:46.320 --> 00:38:54.719
And the women's health stigma maybe didn't didn't affect what you were doing at quite the same level that it affects other businesses, but nonetheless was still there.
00:38:54.880 --> 00:39:00.000
Uh, but sounds like wasn't as much of a limiting thought for investors the way it can be.
00:39:00.159 --> 00:39:05.119
And honestly, I didn't feel the the female founder impact.
00:39:05.920 --> 00:39:12.880
There was, I think there was one time where we had a conversation and I said tamp on or something in the conversation.
00:39:12.960 --> 00:39:18.400
I I didn't feel maybe the male investor was kind of feeling a bit squeamish over this.
00:39:18.559 --> 00:39:18.719
Yeah.
00:39:18.960 --> 00:39:26.239
But but in general, being in the women's health space, one, thankfully, there's so much acceleration in this space right now.
00:39:26.320 --> 00:39:33.360
We're we're really understanding that like half the population is is affected by this, and we've been completely underserved.
00:39:33.440 --> 00:39:37.360
So it was a good time for us because women's health space has a lot of momentum right now.
00:39:37.440 --> 00:39:39.119
So does fertility.
00:39:39.280 --> 00:39:44.000
Um, and then yeah, on the female founder side, didn't really see any limitations there, though.
00:39:44.079 --> 00:39:51.119
Again, Christy and I are in our 40s, we've got decades of experience, we're fairly confident in our expertise and knowledge.
00:39:51.440 --> 00:40:05.840
One other interesting and funny story on the insurance side is we were we're meeting with our front-end carrier and just doing a review, and they typically work with trucking companies or flood risk, nothing related to woman's health.
00:40:06.000 --> 00:40:11.199
So during that conversation, the words vaginal microbiome came up.
00:40:11.360 --> 00:40:17.440
And you know, like when has that ever come up in the world of reinsurance discussion?
00:40:17.599 --> 00:40:19.199
But it was so interesting.
00:40:19.280 --> 00:40:28.000
And also on that team, we have an on our Guy Carpenter team, on our um the team for the front and carrier game, yeah, mostly female teams.
00:40:28.079 --> 00:40:29.199
So it's it's very important.
00:40:29.760 --> 00:40:30.159
Right, yeah.
00:40:30.239 --> 00:40:31.440
No, it's interesting that you say that.
00:40:31.599 --> 00:40:40.320
Do you think that's just a a component of just leaving it aside consciously, or is it the byproduct of your experience?
00:40:40.480 --> 00:40:47.840
Or what what did that for you both in in a way that that could be uh other founders could learn from?
00:40:47.920 --> 00:40:48.239
Do you think?
00:40:48.559 --> 00:40:57.760
I do think we definitely had the advantage that this the space that we were focusing on was geared towards women and geared towards children.
00:40:58.000 --> 00:41:00.960
So we could even say, we have seven children between us.
00:41:01.119 --> 00:41:12.079
I don't know if you'd lead with that as a female founder in another industry that was typically male-dominated, where you might be penalized for also having a family that you're caring for.
00:41:12.159 --> 00:41:13.920
So, so that absolutely helps.
00:41:14.000 --> 00:41:16.000
But ultimately, you have to own it.
00:41:16.239 --> 00:41:18.320
Uh, you really just have to own it.
00:41:18.400 --> 00:41:21.119
We never shied away from the fact that we were moms.
00:41:21.280 --> 00:41:25.840
That was important for them to know that we were, we had decades of experience.
00:41:25.920 --> 00:41:29.280
We're not trying to be 20-year-olds, you know, tackling this market.
00:41:29.679 --> 00:41:35.760
Um, and again, never apologized for for being female founders or felt that it was a disadvantage for us.
00:41:36.000 --> 00:41:37.039
Yeah, no, that's great.
00:41:37.119 --> 00:41:39.599
It's such a it's a mindset thing, right?
00:41:39.679 --> 00:41:49.119
And and owning the experience in a way that's very confidence forward uh and instead of assuming the tropes around you in a way that maybe they don't, you know.
00:41:49.280 --> 00:41:52.719
So last question for you as we as we head towards wrapping up.
00:41:52.800 --> 00:42:05.119
Uh, if there were two or three must-nos that you think female founders should know, tips or tricks or things they should absolutely keep in mind for anyone who's headed into a raise or planning for it soon, what would what would you share?
00:42:05.360 --> 00:42:17.840
One I would say be very cognizant that, or know that the people you're talking to, VCs in particular, know exactly what you're going through because they are doing the same thing.
00:42:18.159 --> 00:42:20.960
They're also raising dollars for their fund.
00:42:21.039 --> 00:42:30.000
So they might be getting off a call with you where you're pitching to them and then they are pitching to, you know, to a potential LP.
00:42:30.400 --> 00:42:33.119
So it's interesting when you you understand that flip.
00:42:33.199 --> 00:42:39.519
And often you'll we actually have our investors, they'll be raising their next round and go, Do you know anybody we should have a conversation with?
00:42:39.760 --> 00:42:43.039
So again, it goes it goes both ways in that regard.
00:42:43.199 --> 00:42:43.519
Yeah.
00:42:43.679 --> 00:42:50.639
Um, I would say, you know, confidence is is definitely a big thing, how you how you approach conversations.
00:42:50.800 --> 00:42:56.639
Go up and talk to anybody, connect with people in LinkedIn, go to the conferences, and be confident in what you bring.
00:42:56.880 --> 00:43:00.880
But of course, back that up with doing the work, right?
00:43:01.519 --> 00:43:07.119
And early on, establish a very that data room that you establish, right?
00:43:07.280 --> 00:43:09.119
You need just start that from day one.
00:43:09.280 --> 00:43:13.280
Start getting it in order, ask for tips and advice on how that should be structured.
00:43:13.440 --> 00:43:20.159
And I would get into the habit of, you know, updating it regularly so it's not a huge task when it comes time to raise.
00:43:20.239 --> 00:43:23.840
And you, in some cases, some people are going, like, I don't even know how to build this.
00:43:23.920 --> 00:43:26.719
And now I'm trying to raise dollars, and you look unprepared.
00:43:26.880 --> 00:43:32.079
We were pretty consistently told we had quite a well-organized data room.
00:43:32.239 --> 00:43:34.800
And and that was something I think we we took a lot of pride in.
00:43:34.880 --> 00:43:36.239
I have to go back and look at it again.
00:43:36.320 --> 00:43:42.800
It's been a while since we since we closed our round, but but do that like from day one.
00:43:42.960 --> 00:43:50.719
Just just get into the practice of doing that and and make sure that leaves you ready when somebody goes, Hey, are you looking to raise dollars?
00:43:50.800 --> 00:43:51.519
I'd like to invest.
00:43:51.599 --> 00:43:52.480
Can I see your data room?
00:43:52.559 --> 00:43:53.119
You're ready to go.
00:43:53.280 --> 00:43:54.000
And you're ready to go.
00:43:54.079 --> 00:44:05.360
Yeah, that's great advice because I do talk to a lot of founders who don't start to build the data room until they're already getting requests, and or it either gets overcomplicated or it doesn't have enough.
00:44:05.519 --> 00:44:07.679
Uh, and and the right answer is in between, right?
00:44:07.760 --> 00:44:20.559
So that you give the I had another podcast conversation where the founder said VCs are information gremlins, and so you don't give them too much, but give them what they need so that you can manage the conversation appropriately.
00:44:20.719 --> 00:44:24.639
Uh, but a data room is a data room, so it has to have the right things in it to be effective.
00:44:24.800 --> 00:44:27.039
So thank you so much for joining.
00:44:27.199 --> 00:44:28.320
This has been tremendous.
00:44:28.480 --> 00:44:32.719
So much insight and knowledge for other founders to listen to, and I really, really appreciate it.
00:44:32.800 --> 00:44:40.800
And congrats on a great seed, on building a great company, and and hopefully it keeps to you know being as productive as you want it to be.
00:44:41.199 --> 00:44:42.800
Well, thank you for having me.
00:44:42.880 --> 00:44:50.239
And anybody who hears this and is interested, reach out to me on LinkedIn or we're at heyflora.com if you want to learn more about us.
00:44:50.480 --> 00:44:51.360
Wonderful.
00:44:52.559 --> 00:44:54.639
Thanks for listening to the Capital Flex.
00:44:55.039 --> 00:45:00.400
If today's episode hit home, share it with the founder you love and follow me on LinkedIn for more.