Emil Michael has become an icon of Silicon Valley for his record-breaking fundraising skills. The tech entrepreneur has previously raised $15 billion, which is the most amount of funding for a private company. For those out there seeking investors, Emil Michael says he has some very specific advice.
“The advice that entrepreneurs often get is to ask for a valuation they want,” Emil Michael says. “‘I want to raise $10 million and I think my company’s worth $100 million and I’m going to go find an investor who agrees with me.’ I try to flip that and say, ‘Don’t get attached to a number, get attached to a process.’”
Emil Michael goes further into depth on the concept. The tech executive was the senior vice president of field operations for TellMe Networks — which sold for about $800 million to Microsoft — and chief operating officer of Klout. (Social scoring company Klout was snapped up for $200 million by Lithium Technologies.) Emil Michael has also gone on to invest in British fintech banking brand Revolut and delivery service app Gopuff. He says he never approaches a new project without first establishing a solid strategy.
“What does the process mean in this case?” he asks. “Well, process means I’m going to invite a bunch of investors to look at my numbers, to hear my pitch, and to look at what I’m projecting the future is and I’m going to let them tell me what they think the company’s worth. And I’m [also] going to decide who the best partner is with.”
It’s at the end of that process when he says the market has spoken. “It’s told you what your company’s worth, and you’re not disappointed because it is what it is, right? It’s like a market-driven approach to raising money. And the investors are happy too,” Emil Michael says. “Because they said, ‘Well, I didn’t have to hit a hurdle artificially. I didn’t miss artificially.’”
Michael warns entrepreneurs may come out of the process accepting less capital.
“[You may be] saying, ‘We got to a fair price,’ and you’d be surprised that on average entrepreneurs take less than they should, when they don’t run this kind of process. A well-run process will yield a better answer for an entrepreneur in a company.”
Emil Michael Remains Passionate About Sticking to an Organized Plan
Emil Michael also went into detail on his method for fundraising on the “CorpDev.Ninja” podcast.
“Decide what your process for fundraising is going to be and try to be unemotional about firms and investors that come in and assess them objectively,” Emil Michael said on the podcast. “Don’t fall in love, because if you fall in love, you may end up taking a lower value deal than you should take. Or you may evaluate how much you like that person, not about what their firm could bring to the table. So you want to be clear-eyed about choosing that.”
Emil Michael also says a market-driven and market-led approach is key.
“When you don’t have an expectation, more investors participate in the process,” Emil Michael said on the podcast. “The other alternative is to say ‘Hey, I want $200 million.’ An investor looks at it and says ‘Hey, I’m out.’ If you don’t have an expectation, they’re more likely to participate.”
Emil Michael Sees Fintech as the Future of Business
Emil Michael says he continues to surround himself with cutting-edge tech start-ups and enjoys not only working in tech but assisting with the crucial financing part of tech. As for what’s next for tech, Emil Michael says it’s never been a more exciting time to be in the industry, especially since he sees it continuing to be the dominant growth factor in the world over the next two decades.
“I understand that world and part of it is finance, part of it is business, building, part of it is engineering, and so on,” concludes the Harvard University and Stanford Law School graduate.